Comsumer behavior and marketing communication

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Consumer Behavior and Marketing Communication( MBA 034) Sem 3rd Mahamaya Technical University (MTU,Noida) Unit 1 & unit 2

Consumer Behavior and Marketing Communication( MBA 034) Sem 3rd Mahamaya Technical University (MTU,Noida) Unit 1 & unit 2

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  • 1. Consumer Behavior and Marketing CommunicationDr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 1
  • 2. A CUSTOMER IS THE MOST IMPORTANT VISITOR ON OUR PREMISES, HE IS NOT DEPENDENT ON US, WE ARE DEPENDENT ON HIM. HE IS NOT AN INTERRUPTION ON OUR WORK, HE IS THE PURPOSE OF IT.HE IS NOT AN OUTSIDER ON OUR BUSINESS HE IS A PART OF IT. WE ARE NOT DOING HIM A FAVOUR BY SERVING HIM, HE IS DOING US A FAVOUR BY GIVING US THE OPPORTUNITY TO DO SO. MAHATMA GANDHI Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 2
  • 3. Introduction Study of consumer behaviour is the study of how individuals make decisions to spend their available resources like time, money & effort on consumption related items. It is the study of the processes involved when individuals or groups select, purchase, use or dispose of products, services, ideas, concepts or experiences to satisfy consumer needs & desires. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 3
  • 4. Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer.Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 4
  • 5. Authors definition Consumer behavior is defined as the behavior that consumer display in searching for, purchasing, using , evaluating and disposing of products and services that they expect will satisfy their needs - Schiffman The decision process and physical activity individual engage in when evaluating, acquiring, using or disposing of goods and services. - Loudon & Della BittaDr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 5
  • 6. Consumer behavior roles: Initiator: Individual who determines that some needs or want is not being met and authorizes to rectify the situation. Influencer: Individual who intentionally or unintentionally influence the purchase decision. Buyer: Individual who actually make the purchase transaction. User: Individual who directly consume the product. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 6
  • 7. Importance of studyingconsumer behavior•Consumer is the king.•Consumers do not always act or react as the theory suggest.•Consumer preferences are changing and become highly diversified.•Consumer dislikes identical product and prefer differential products.•Segmenting the market to cater the special needs of consumers.•Rapid introduction of new products with technological advancement•To sell products that might not sell easily Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 7
  • 8. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 8
  • 9. Methods of studying consumer behavior Observational approach In home observation Interviews and surveys Focus group Field experimentation Consumption research productsDr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 9
  • 10. Understanding Consumer A consumer is defined as a person who buys goods and services and makes use of public utilities as well as natural resources like air and water. In its most basic sense, it refers to those who use goods and services for the satisfaction of their personal wants thus excluding buyers who purchase for resale. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 10
  • 11. Understanding Consumer A person who has indicated his or her willingness to obtain goods and/or services from a supplier with the intention of paying for them. Someone who has purchased goods and/or services for personal consumptionDr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 11
  • 12. Principles of consumer behavior Consumer is sovereign Consumer is global Consumers are different Consumer has rightsDr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 12
  • 13. Types of consumers •Personal consumers •Organizational consumersDr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 13
  • 14. Personal ConsumerThe person who buys goods and servicesfor its own use , for use of household oras to gift a friend . The products arebrought for final use by individuals whoare referred to as end users , ultimateconsumers or personal consumers.Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 14
  • 15. Organizational Consumers They include profit and not for profit businesses, govt agencies and institutions which must buy products, equipments and services in order to run their organizations.Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 15
  • 16. Market SegmentationDr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 16
  • 17. The process of dividing a potential market into distinct subsets of consumers and Market selecting one or moreSegmentation segments as a target market to be reached with a distinct marketing mix. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 17
  • 18. Market SegmentsDr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 18
  • 19. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 19
  • 20. Geographic segmentation The market is segmented according to geographic criteria i.e. nations, states, regions, countries, cities, neighborhoods, or zip codesDr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 20
  • 21. Demographic Segmentation Demographic segmentation consists of dividing the market into groups based on variables such as age, gender, family size, income, occupation, education, religion, race and nationalityDr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 21
  • 22. Psychographic Segmentation Psychographics is the science of using psychology and demographics to better understand consumers. According to Psychographic segmentation, consumers are divided according to their lifestyle, personality, values.Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 22
  • 23. Behavioral Segmentation In behavioral segmentation, consumers are divided into groups according to their knowledge of, attitude towards, use of or response to a product. It is actually based on the behavior of the consumer Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 23
  • 24. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 24
  • 25. Why Segment? More precise More accurateMarket definition of marketingsegmentation customers needs objectives and wants Improved resource allocation Better marketing results Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 25
  • 26. Consumer purchases are influenced strongly by four factors. Cultural Factor Social Factor Personal Factor Psychological Factor.Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 26
  • 27. Influences on Consumer Behavior Culture Social Personal Psychological Buyer Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 27
  • 28. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 28
  • 29. Cultural FactorsCultural factors comprise of set ofvalues and ideologies of a particularcommunity or group of individuals. It isthe culture of an individual which decides theway he/she behaves. Cultural factor dividedinto three sub factors: Culture Sub Culture Social Class Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 29
  • 30. CULTUREThe sum total of learned beliefs,values,and customs that serveto direct the consumer behavior of members of a particularsociety. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 30
  • 31. Characteristics of culture Culture is a learned response. Culture includes inculcated values. Culture is a social phenomenon. Culture is gratifying and continues for a long time. Cultures are similar and yet different. Culture prescribes the ideal standards of behavior. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 31
  • 32. Levels of CultureLevel 1:: Cultural differences Groupthat cross national boundaries orcan be seen to be present in morethn 1 country NationalLevel 2:: Unique to a particularcountryLevel 3:: Basically subcultures- Supranationalcan also be Families, shoppinggroups, friendship groupsDr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 32
  • 33. A THEORETICAL MODEL OF CULTURE’S INFLUENCE ON BEHAVIOR PERSONALITY Cognitive TRAIT Belief (thought process) AttitudeSUBJECTIVE CULTURE Practices Behavioral Religious intension Behavior Linguistic National Professional ValuesOrganizational group Social norms Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 33
  • 34. Cultural factors have a significant effect on an individual’s buying decision. Every individual has different sets of habits, beliefs and principles which he/she develops from his family status and background. What they see from their childhood becomes their culture. The child growing up in a society leans a basic set of values, perceptions, preferences and behaviors through a process of socialization involving the family and other key institutions.Examples Females staying in West Bengal or Assam would prefer buying sarees as compared to Westerns. Similarly a male consumer would prefer a Dhoti Kurta during auspicious ceremonies in Eastern India as this is what their culture is. Girls in South India wear skirts and blouses as compared to girls in north India who are more into Salwar Kameez. Our culture says that we need to wear traditional attire on marriages and this is what we have been following since years. People in North India prefer breads over rice which is a favorite with people in South India and East India Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 34
  • 35. Sub Culture Sub-culture is defined as a distinct cultural group that exists as an identifiable segment within a larger, more complex society. Each culture contains smaller sub cultures a group of people with shared value system based on common life experiences and situations. Sub culture includes Nationalities Religions Racial group Geographic regions Many sub culture make up important market segments and marketers often design products.Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 35
  • 36. Divisions of Sub-culture Sub-Nationality subculture:Anglo Indians-A person of mixed English and IndiandescentParsees-The Parsis came to India sometime around the10th century A.D. to escape Arab persecution in Persiawhich began in the 7th centuryMughals- Muslim empire in India, 1526–1857.The dynasty wasfounded by Babur .Pathans- Pathans came from Afghanistan as vendors andbusinessmen. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 36
  • 37. Divisions of Sub-culture Sub- Religious sub-culture : Based on different faiths and beliefs. Muslims Sikhs Christians Hindus BuddhistsDr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 37
  • 38. Divisions of Sub-culture Sub- Geographic & Religious sub-culture; Ex. South Indians, North Indians, North-east Indians. Racial sub-culture: In Caucasians, Africans, Asian, American & American Indians. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 38
  • 39. ◦ Social Class:- Almost every society has some form of social structure, social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests and behavior. Social Classes have several characteristics:- 1) Person with in each social class tend to behave more alike than persons from two different social classes. 2) Persons are perceived as occupying inferior or superior positions according to their social class. 3) Person’s social class is indicated by a number of variables, such as occupation, income, wealth, education , and value orientation, rather than by any single variable 4) Individuals are able to move from one social class to another up or down during their lifetime. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 39
  • 40. Factors Affecting Consumer Behavior: Social Groups Family Social FactorsRoles and Status Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 40
  • 41. Social FactorsA consumer’s behaviour also is influenced by social factors such as the (I) Groups (II) Family (III) Roles and status Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 41
  • 42. What is a Group? Group: ◦ Is defined as two or more persons who share a set of norms, values or beliefs and have certain implicit or explicit defined relationships to one another such that their behavior are interdependent Reference Group: ◦ Is a Group whose presumed perspective or values are being used by an individual as the basis for current behaviorDr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 42
  • 43. Types of GroupsClassification of Groups:◦ Regularity of Contact Primary Group: Interaction on a regular basis Secondary Group: Occasional Contact like religious groups, professional association and trade unions◦ Extent of Formality: Formal Group: Well defined structure, roles and authority levels Informal Group: Loosely defined structure◦ Membership Status: Membership Group: Qualifies certain norms / standards to be a member Symbolic Group: Aspires to be a member of the group Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 43
  • 44. Types of Groups (1)Primary: Daily interaction (2)Secondary: Less regular interaction a. Direct Ex: religious groups, professional associationTypes of and trade unionsGroups (1) Aspirational (+ve) “Want-to-Be” b. Indirect (2) Non-inspirational (-ve) “DON’T Want to Be” Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 44
  • 45. Family:-Family members can strongly influence buyer behavior. Marketers are interested in the roles and influence of the husband, wife and children on the purchase of different products and services. The family of orientation consists of one’s parents. Fromparents a persons acquires an orientation towardsreligious, politics, economics and a sense of personalambitions, self worth and love.In case of expensive products and services, husband andwives engage in more joint decision making. The marketneeds to determine which member normally has the greaterinfluence in the purchase of a particular products orservices. either the husband or the wife , or they haveequal influence . Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 45
  • 46. Family consists of:- Influencer- the person who sense the need for purchase. Decider- the person who takes final buying decision. User- the person who uses the product.For example Husband -dominant: life insurance, automobiles, television Wife - dominant: washing machines, carpeting, non-living room furniture, kitchenware Equal: Living -room furniture, vacation, Housing, outside entertainment.Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 46
  • 47. Dr. Akansha Jain email:dr.akanshajain@gmail.com blog –http://drakanshajain.blogspot.in 47
  • 48. ◦ Roles and Status :- A person belongs to many groups, family, clubs, organizations. The person’s position in each group can be defined in terms of both role and status. For example. M & “X” plays the role of father, in his family he plays the role of husband, in his company, he plays the role of manager, etc. A Role consists of the activities people are expected to perform according to the persons around them. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 48
  • 49. Factors Affecting Consumer Behavior: Personal Personal InfluencesAge and Family Life Cycle Occupation Stage Economic Situation Personality & Self-Concept Lifestyle Identification Activities Opinions Interests Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 49
  • 50. Personal Factors (I) Age and life cycle stage(II) Occupation(III) Economic situation(IV) Life Style (V) Personality and self concept. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 50
  • 51. ◦ Age and Life cycle Stage:- People changes the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are often age related. Buying is also shaped by the stage of the family life cycle. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 51
  • 52. Dr. Akansha Jain email:dr.akanshajain@gmail.com blog –http://drakanshajain.blogspot.in 52
  • 53. The Bachelor Stage (Young and single) In the bachelor stage of the life cycle, income is low relative to future earnings, since most bachelors are just beginning their careers. However, there are few financial burdens. They therefore have relatively high discretionary incomes. They tend to spend substantial amounts on personal consumption items, food, clothing, transportation, certain luxury goods entertainment, vacations, and possibly even a car Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 53
  • 54. The Newly Married Couples (Young,no children) With marriage, the requirements and resources change. Household requirements increase. In addition, in some cases, both partners may be working. This stage therefore represents a high expenditure period. Purchases include durable goods such as refrigerators and other appliances, inexpensive durable furniture, home entertainment items such as TV sets. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 54
  • 55. Full Nest 1 (Young, married, withchild) The arrival of a child creates major changes. Some wives may stop working and they suffer a reduction in income. The financial resources thus change significantly. Child rearing and educational responsibilities increase. Money is now directed to baby furniture, toys, chest rubs, vitamins, baby foods and baby medicines. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 55
  • 56. Full Nest 2 (Older, married, withchildren) The familys financial position starts to improve because of career progress and also because many wives return to work. They present an active market for a wide variety of food products, bicycles, music lessons, magazines and also educational services as children are growing up. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 56
  • 57. Full Nest 3 (Older, married, withdependent children) Income is high for the family at this stage. However, they now represent experienced buyers and tend to be less interested in new product purchases. Expenditures continue to be high due to replacement buying in the later phases of the stage. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 57
  • 58. Empty Nest (Older, married, withno children living with them) With no children living at home, the financial position stabilizes.Savings accumulate. There may be a resurgence in self-education. Hobbies also become an important source of satisfaction. More is spent on luxury appliances, magazines. and health products. Major expenditures are on home ownership, home improvements and also on medical care. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 58
  • 59. Solitary Survivor (Older, single,retired people) More economical lifestyle is observed at this stage. A lower income due to retirement may be a restrictive factor. Health care and other services become important. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 59
  • 60. Dr. Akansha Jain email:dr.akanshajain@gmail.com blog –http://drakanshajain.blogspot.in 60
  • 61. Stage Consumption Pattern Older ( married or single) Divorced Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 61
  • 62. ◦ Economic situation :- A person’s economic situation( rich, poor, middle class, lower middle, upper middle etc) will affect product choice◦ Life Style :- Life Style is a person’s Pattern of living. Understanding these forces involves measuring consumer’s major AIO dimensions. Activities (Work, hobbies, shopping, support) Interest (Food, fashion, family recreation) Opinions (about themselves, Business, Products) Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 62
  • 63. ◦ Personality and Self concept :- Each person’s distinct personality influence his or her buying behavior. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment. Freudian Psychoanalysis Freud thought of human personality as being in threeparts. The Id, the ego and the superego.◦ Occupation :- A person’s occupation affects the goods and services bought. Blue collar workers tend to buy more rugged work clothes, whereas white-collar workers buy more business suit Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 63
  • 64. Factors Affecting Consumer Behavior:Psychological Motivation Psychological Beliefs and Psychological Factors Perception Attitudes Factors Learning Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 64
  • 65. Motivation Motivation Motive or (drive) is need that is sufficiently pressing to direct the Perception person to seekPsychological satisfaction of the need. Factors Learning Beliefs & Attitudes Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 65
  • 66. Perception Motivation The process by which people select, organize and interpret Perception information to from aPsychological meaningful picture of Factors world. Learning Beliefs & Attitudes Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 66
  • 67. Learning Motivation Changes in an individual’s behavior arising from experience. PerceptionPsychological Factors Learning Beliefs and attitudes Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 67
  • 68. Beliefs Motivation A descriptive thought or conviction that a person holds about something. PerceptionPsychological Factors Learning Beliefs and attitude Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 68
  • 69. MotivationThe motivation is the drive that leads the consumertowards buying a product or service. If the motivationis high, meaning the need or perception of need ishigh, the individual will actively seek to satisfy thatneed. This results in the consumer deciding to buy theproduct or service.This factor is directly related to "Maslows Hierarchyof Needs" which states that every individual willactively seek to satisfy physiological needs first,followed by safety, social, esteem and finally, self-actualization needs. Businesses that successfullyleverage these needs will motivate consumers to buytheir products. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 69
  • 70. Maslow’s Hierarchy of Needs Self Actualization (Self-development) Esteem Needs (self-esteem, status) Social Needs (sense of belonging, love) Safety Needs (security, protection) Physiological Needs (hunger, thirst) Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 70
  • 71. PERCEPTION ◦ Process by which people select, organize, and interpret information to form a meaningful picture of the world. ◦ Perception can be influenced by: Selective attention Selective distortion Selective retention Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – 5-71 http://drakanshajain.blogspot.in
  • 72. Perception Information about the environment is conveyed to the brain from eyes, ears and other organs.It is the range and co-ordination of the human senses together with the sensitivity, that provide us with a unique quality and quantity of information about theenvironment. Five sets of senses includes Vision Hearing Touch Taste Smell Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 72
  • 73. LEARNING ◦ Defined as a relatively permanent change in behavior due to experience. ◦ Occurs due to an interplay of drives, stimuli, cues, responses, and reinforcement. ◦ Is strongly influenced by the consequences of an individual’s behavior. Behaviors with satisfying results tend to be repeated. Behaviors with unsatisfying results tend not to be repeated. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – 5-73 http://drakanshajain.blogspot.in
  • 74. Beliefs and attitudes :-◦ Belief is a descriptive thought that a person holds about something◦ Attitude, a Person’s consistently favorable or unfavorable evaluations, feelings and tendencies towards an object or idea Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 74
  • 75. SIMPLE MODEL FOR CONSUMER BEHAVIOUR Motives Attitudes Needs Consumer Purchase Business Decision Learning Family Perception Personality Economic Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 75
  • 76. Diffusion of Innovations Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 76
  • 77. Diffusion ProcessThe process by which the acceptance ofan innovation is spread by communicationto members of social system over aperiod of time. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 77
  • 78. Adoption ProcessThe stages through which an individualconsumer passes in arriving at a decisionto try (or not to try), to continue using(or discontinue using) a new product. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 78
  • 79. Diffusion of Innovations: Meaning The concept of diffusion of innovations usually refers to the spread of ideas from one society to another or from a focus or institution within a society to other parts of that society. Diffusion of innovations between societies is one of the most important processes in cultural evolution. The diffusion of innovations is important because it is relatively hard to invent (or develop) many kinds of useful knowledge. It is usually difficult to invent all the requisite parts in the right order, foresee the advantage of nascent new technology etc. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 79
  • 80. Factors That Affect the Diffusion of InnovationsThe InnovationThe Channels of CommunicationThe Social SystemTime Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 80
  • 81. Product Characteristics That Influence DiffusionRelative AdvantageCompatibilityComplexityTrialabilityObservabilityFelt NeedRisk Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 81
  • 82. Adopter CategoriesA sequence of categories that describeshow early (or late) a consumer adopts anew product in relation to otheradopters. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 82
  • 83. Dr. Akansha Jain email:dr.akanshajain@gmail.com blog –http://drakanshajain.blogspot.in 83
  • 84. Innovators: Description• 2.5% of population• Venturesome• Very eager to try new ideas• Acceptable if risk is daring• Communicates with other innovators Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 84
  • 85. Early Adopters: Description• 13.5% of population• Respected• More integrated into the local social system• The persons to check with before adopting a new idea• Category contains greatest number of opinion leaders• Are role models Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 85
  • 86. Early Majority: Description• 34% of population• Deliberate• Adopt new ideas just prior to the average time• Seldom hold leadership positions• Deliberate for some time before adopting Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 86
  • 87. Late Majority: Description• 34% of population• Skeptical• Adopt new ideas just after the average time• Adopting may be both an economic necessity and a reaction to peer pressures• Innovations approached cautiously Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 87
  • 88. Laggards: Description• 16% of population• Traditional• The last people to adopt an innovation• Oriented to the past Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 88
  • 89. Dr. Akansha Jain email:dr.akanshajain@gmail.com blog –http://drakanshajain.blogspot.in 89
  • 90. Diffusion Process and Marketing StrategyIdentify diffusion inhibitors and find waysto compensate for theseIdentify innovators and early adopters andcater to themMove consumers from awareness toadoptionMake effective use of word-of-mouthcommunications Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 90
  • 91. Consumer Decision Process Need Recognition Information Search Evaluation of Alternatives Purchase Decision Post purchase Behavior email: Dr. Akansha Jain dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 91
  • 92. Need RecognitionThe first stage of the buyer decision in whichthe consumer recognizes a problem or need.Need recognition is •Triggered by internal or external stimuli •Must reach an intensity high enough to becomes drive Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 92
  • 93. Information SearchThe stage of the buyer decision processin which the consumer aroused tosearch for more information; the consumer maysimply have heightened attention or may go intoactive information search.Information search includes •Memory (internal) search •External search: personal, commercial, public, experiential sources of information •Word-of-mouth sources are most influential Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – 93 http://drakanshajain.blogspot.in
  • 94. The consumer can obtain informationfrom any of several sources Personal Sources: (family, friends, neighbors etc) Commercial Sources: (Advertising, Sales people, Dealers etc) Public Sources: (Mass Media, Consumer Rating Organization) Experimental Sources: (Handling, Examining, Using the product) Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 94
  • 95. Evaluation of AlternativesThe stage of the buyer decision process in which theconsumer uses information to evaluate alternativebrands in the choice set.Evaluation of alternatives consists of •The process of evaluating information to make a decision •Attributes and importance weights are chosen •Alternatives compared against the criteria Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – 95 http://drakanshajain.blogspot.in
  • 96. Purchase DecisionThe stage of the buyer decisionprocess in which the consumeractually buys the product. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – 96 http://drakanshajain.blogspot.in
  • 97. Post-Post- purchase BehaviourThe stage of the buyer decision process inwhich the consumer take further action afterthe purchase, based on their satisfaction ordissatisfaction. Performance < Expectations ----- Disappointment Performance = Expectations ----- Satisfaction Performance > Expectations ----- DelightCognitive dissonance: A buyer’s doubts shortly after a purchase about whether it was the right decision. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – 97 http://drakanshajain.blogspot.in
  • 98. Cognitive dissonance:◦ Did I make a good decision?◦ Did I buy the right one? Get a good value?Marketing minimizes through:◦ Effective communication◦ Follow up◦ Guarantees◦ Warranties Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 98
  • 99. MODELS OF CONSUMERBEHAVIOUR •Economic Model •Psychological Model •Pavlovian Model •Input, Process Output Model-Gandhi: Philip Kotler •Sociological Model •HowarthSheth Model •Engel-Blackwell-Kollat Model •Model of Family Decision-making •Nicosia Model •A Model of Industrial Buying Behavior. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 99
  • 100. 1. Economic Model Consumers follow the principle of maximum utility based on the law of diminishing marginal utility. The consumer wants to spend the minimum amount for maximizing his gains. Economic man model is based on: Price effect: Lesser the price of the product, more will be the quantity purchased. Substitution effect: Lesser the price of the substitute product, lesser will be the utility of the original product bought. Income effect: When more income is earned, or more money is available, more will be the quantity purchased. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 100
  • 101. 2. Psychological Model Psychologists have been investigating the causes which lead to purchases and decision-making. This has been answered by A.H. Maslow in his hierarchy of needs. The behavior of an individual at a particular time is determined by his strongest need at that time. This also shows that needs have a priority. First they satisfy the basic needs and then go on for secondary needs Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 101
  • 102. Maslow’s Hierarchy of Needs Self Actualization (Self-development) Esteem Needs (self-esteem, status) Social Needs (sense of belonging, love) Safety Needs (security, protection) Physiological Needs (hunger, thirst) Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 102
  • 103. 3. Pavlovian Learning Model This model is named after the Russian Physiologist Ivan Pavlov. He experimented on a dog and observed how it responded on the call of a bell and presenting it with a piece of meat. The responses were measured by the amount of saliva secreted by the dog. Learning is defined as the changes in behavior which occur by practice and, based on previous experience. This is important to marketers as well. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 103
  • 104. The learning process consists of the following factors:DriveThis is a strong internal stimuli which impels action. Because of the drive, aperson is stimulated to action to fulfil his desires.DrivesCan be innate (in-born) which stem from physiological needs, such ashunger, thirst, pain,cold, etc. Learned drive, such as striving for status orsocial approval. Cause are weak stimuli that determine when the buyer willrespond. We have:Triggering Cues: These activate the decision process for any purchase.Non-triggering Cues: These influence the decision process but do notactivate it.These are of two kinds:Product cues are external stimuli received from the product directly, e.g.,color of package, weight, style, price, etc.Informational cues are external stimuli which provide information about theproduct, like advertisement, sales promotion, talking to other people,suggestions of sales personnel, etc.Response is what the buyer does, i.e., buys or does not buy. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 104
  • 105. ReinforcementThus, when a person has a need to buy, sayclothing, and passes by a showroom and isattracted by the display of clothing, their colorand style, which acts as a stimulus, and he makes apurchase. He uses it, and if he likes it, anenforcement takes place and he is happy andsatisfied with the purchase. He recommends it tohis friends as well, and visits the same shop again.Learning part, thus is an important part of buyerbehaviour and the marketer tries to create agood image of the product in the mind of theconsumer for repeat purchases through learning. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 105
  • 106. 4. Input, Process and OutputModel Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 106
  • 107. This is a simple model of consumer behavior,in which the input for the customer is thefirm’s marketing effort (the product, price,promotion and place) and the socialenvironment. The social environmentconsists of the family, reference groups,culture, social class, etc. which influences thedecision-making process. Both these factorstogether constitute the input in the mind ofthe consumer. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 107
  • 108. Need recognitionWhen one is aware of a want, tension is created and one chooses a product tosatisfy his needs. There is also a possibility that a person may be aware of a productbefore its need is recognized. This is indicated by the arrows going both ways fromthe need to the product and vice-versa.Product awarenessProduct awareness can be had from advertisement or exposure to different typesof media or by the social circle. The awareness and the need leads to the buildingof interest. In some cases, the interest may also breakdown and, the decisionprocess also stops or may be postponed for the time being.EvaluationEvaluation may consist of getting more information about the product andcomparing and contrasting it with other products. This can be done theoreticallyor by taking a trial. Once the evaluation is completed, the consumer’s interest mayeither build up and he has intentions to buy, or he may lose interest and thedecision process may again stop or be postponed.IntentionOnce there is intention to purchase the product, the consumer goes ahead andacts or purchases the product. Once the product is purchased, it is used to fulfilthe need and, the more the product is used, the more the consumer becomesaware of the positive and negative points of the product. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 108
  • 109. Post-purchase behaviorIf, after the purchase and use of the product thecustomer is satisfied, he is happy and goes in for repeatpurchases or recommends the same to his friends andacquaintances. If the customer is dissatisfied, hediscontinues further purchase of the product andbuilds a negative attitude towards it, which may beharmful to the company.The post-purchase behavior is very important for themarketer and the company because it leads to properfeedback for improvement and maintaining the qualityand features desired by the product. If the customer isvery happy with the purchase, he forms a goodimpression about the product and the company. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 109
  • 110. Buyer’s Black-box Model Black- This model is based on input-process-output Approach Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 110
  • 111. Buyer’s Black-box Model Black- The consumer gets the input from the marketing effort of the firm (4 Ps) and the other stimuli. This input is processed in the mind (Black Box), which constitutes the characteristics of the buyer and the process of decision-making. Once the buyer has decided to buy then, he responds in terms of his choice of product, brand, dealer, timing and amount. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 111
  • 112. 5. Sociological Model This is concerned with the society. A consumer is a part of the society and he may be a member of many groups in a society. His buying behaviour is influenced by these groups. Primary groups of family friends and close associates exert a lot of influence on his buying. A consumer may be a member of a political party where his dress norms are different. As a member of an elite organization, his dress requirements may be different, thus he has to buy things that conform to his lifestyles in different groups. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 112
  • 113. 6. Howarth Sheth Model This model is slightly complicated and shows that consumer behavior is complex process and concepts of learning, perception and attitudes influence consumer behavior. This model of decision-making is applicable to individuals. It has four sets of variables which are: Input Perceptual and learning constructs Outputs Exogenous or external variables. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 113
  • 114. Dr. Akansha Jain email:dr.akanshajain@gmail.com blog –http://drakanshajain.blogspot.in 114
  • 115. 7. Engel-Blackwell-Kollat Model Engel-Blackwell- It consists of four components: Information processing Central control unit Decision process Environmental influences. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 115
  • 116. Dr. Akansha Jain email:dr.akanshajain@gmail.com blog –http://drakanshajain.blogspot.in 116
  • 117. 8. Model of Family Decision-Decision- making model, it is important to understand how theIn a family decision-makingfamily members interact with each other in the context of their consumerdecision-making.There are different consumption roles played by variousmembers of the family. These roles are as follows:(i) InfluencersThe members who influence the purchase of the product by providinginformation to the family members, the son in a family may inform themembers of a new fast food joint. He can influence the family members tovisit the joint for food and entertainment.(ii) Gate keepersThese members control the flow of information for a product or brandthat they favour and influence the family to buy the product of theirchoice. They provide the information favourable to themselves and,withhold information about other product which they do not favour.(iii) DecidersThese are the people who have the power or, money and authority to buy.They play a major role in deciding which product to buy.(iv) BuyersBuyers are the people who actually buy. A mother buying ration for thehouse etc. Father buying crayons for his children. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 117
  • 118. 9. Nicosia Model This model is based on four fields Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 118
  • 119. 10. A Model of Industrial Buyer Behavior The purchases made in an industrial organization involve many more people of different backgrounds and it is more complex. There are three main features in this model: There are different individuals involved who have a different psychological make up. Conditions leading to joint decision-making by these individuals. Differences of opinion on purchases or conflicts that have to be resolved to reach a decision. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 119
  • 120. Consumerism Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 120
  • 121. What is consumerism Consumerism refers to wide range of activities of government, business and independent organisations designed to protect rights of the consumers. Consumerism is a process through which the consumers seek remedy for their dissatisfaction and frustration with the help of their all organised or unorganised efforts and activities. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in
  • 122. Definition “Consumerism is not limited toorganized effort only but it is a socialmovement seeking to augment(increase)the rights and powers of buyers in relationto seller” (Philip Kotler) Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 122
  • 123. Importance of consumerism:-1. Stop unfair trade practices2. Provide complete & latest information3. Discourage anti-social activities4. Implementation of consumer protection laws5. Protect against exploitation Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 123
  • 124. Rights of consumers:-1. Right to be informed2. Right to safety3. Freedom to choose4. Right to consumer education5. Right to claim against seller6. Right to secure ecological balance and pollution- free environment Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 124
  • 125. Consumer protection act in India:-1. Consumer protection act, 1986.A) Replacement of defective goods.B) Repair or removal of defects.C) Repayment of price.D) Compensation for loss etc.2. Drugs & cosmetics act, 1940.3. Prevention of food adulteration act, 1954.4. MRTP(monopolies & restrictive trade practices) act, 1969.5.Essential commodities act,1955. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 125
  • 126. Organization buying behavior Organizational buying is a complex process of decision-making and communication. It takes time, involves several members and considerations. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 126
  • 127. Robinson, Faris and Wind have identifiedeight steps in organizational behavior- behavior- Need recognition Definition of characteristic and quantity needed Development of specification to guide the procurement Search for and qualification of potential sources Acquisition and analysis of proposals Evaluation of proposals and selection of suppliers Selection of an order routine Performance feedback and evaluation. Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 127
  • 128. FACTORS INFLUENCINGORGANISTAIONAL BUYING Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 128
  • 129. Dr. Akansha Jain email:dr.akanshajain@gmail.com blog –http://drakanshajain.blogspot.in 129
  • 130. DECISION MAKING PROCESSESEXTERNAL INFLUENCES Experiences and Acquisitions SITUATIONS Culture Problem Subculture Recognition Demographics Social Status Information Reference Groups Search Family Marketing Activities SELF-CONCEPT Alternative Evaluation Desire and and Selection s LIFESTYLE NeedsINTERNAL INFLUENCES Outlet Selection Perception and Purchases Learning Memory Post-purchase Motives Processes Personality SITUATIONS Emotions Experiences and Acquisitions Attitudes Dr. Akansha Jain email: dr.akanshajain@gmail.com blog – http://drakanshajain.blogspot.in 130