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Reflective Notes - Consumer Behaviour

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Reflective Notes - Consumer Behaviour

  1. 1. Reflective notes on the subject of Consumer Behaviour Submitted By: ShubhaBrotaRaha (SIBM EMBA 3rdSem)
  2. 2. Ch. 1. Introduction1) Studying consumer behaviour helps us to understand the mindset of the consumer. It is animportant parameter for a marketer to closely understand the needs and wants of a consumer.2) This subject is closely related to human psychology like the subject of Organizational Behaviour. Ituses factors like age, lifestyle, income, perception, motivation, etc. It helps in positioning of aproduct or service and in establishing an efficient integrated marketing communication system.3) Different consumers behave in different manner and culture, demography, ethnicity have a lot todo in influencing a person’s behaviour. This point was emphasized by a video clip, which showedhow Italian mindset and behavioural pattern is completely different from the rest of the Europe.4) We watched a few advertisements which taught us how to effectively communicate the mainmessage to a customer. The advertisements by Hyundai showed a kid driving the SUV, Santa FE, tocommunicate that driving this vehicle is very simple and lucid. Similarly Bajaj Discover’s ad showedJackie Chan as a zen master whose strong concentration couldn’t stop him from admiring the designand style of the motorcycle. The enamour quotient in the ad, emphasized on the looks and design ofthe Bajaj Discover. Maruti Suzuki ad emphasized on the mileage factor being its strength with thetag line. ‘Ki kara petrol khatam hi nahihonda’. Bajaj’s initial ad for its bike Pulsar, with the tag line,‘definitely male’, made it clear that it was targeted towards the young male population who wantedto make a macho impression and style statement to woo girls. The best of the lot was a ToyotaCorolla ad in which two males driving on a highway find a beautiful damsel asking for lift as her carhad broken down. The guy driving the car didn’t stop and said, ‘That’s a trap. Have you ever seen abroken Toyota,’ laying emphasis on the quality aspect of a Toyota car. Another ad of Toyota shows asea beast trapping a jogging human using the charm of a Toyota car’s life size poster.The major learning from all this is that to sell a product/service, a marketer should make an effort tounderstand its consumer’s psyche and deliver value accordingly. Next he needs to effectively andclearly communicate the value kernel to the end consumer in an interesting way, through hispromotion mix.5) Consumer Behaviour - The behaviour that consumers display in searching for purchasing, using,evaluating, and disposing of products, services, and ideas6) We discussed how consumer research can help in understanding consumer behaviour and inbridging the gap between diversity among consumers, marketers and advertisers. It thus helps us todivide the market into segments and effectively target them. We saw the old ads of Cadbury whenthey had only one product for all; ‘dairy milk’ and also the Airtel ad for all with the tagline ‘expressyourself’. This was an era when markets for both had no segmentation. The ads of the samecompanies have changed today and are different for their different products catering to differentmarket segments.7) Market Segmentation:The process of dividing a potential market into distinct subsets ofconsumers and selecting one or more segments as a target market to be reached with a distinctmarketing mix.
  3. 3. 8)Personal Consumer:The individual who buys goods and services for his or her own use, forhousehold use, for the use of a family member, or for a friend.(Also referred to as the UltimateConsumer or End User.)Organizational Consumer: A business, government agency, or other institution (profit or non-profit)that buys the goods, services and/or equipment necessary for the organization to function.9) Model of Consumer Behaviour: Input (Marketing effort/Sociological influence) Process(Psychological factors) Output (Purchase behaviour/post purchase evaluation)10) Ethics in marketing (unethical practices in design/packaging/advertising/distribution,communication of misleading messages, compromising on quality, excessive mark-ups, etc). Wediscussed on the surrogate ads of liquor companies. No accepted definition of ethics Utilitarianism (the Ethics in Teleological (what is best greatest good for Marketing for everyone involved) the greatest number) Deontological (weight on personal and social values than on economic values)11) Societal Marketing Concept: Social responsibility integral part of all marketing decisionsCh.2. Consumer Research1) Are of 2 types – Quantitative (positivism) and qualitative (interpretivism) in nature2) Positivism: A consumer behaviour research approach that regards the consumer behaviourdiscipline as an applied marketing science. Its main focus is on consumer decision making.3) Interpretivism: A postmodernist approach to the study of consumer behaviour that focuses on theact of consuming rather than on the act of buying
  4. 4. 4) Consumer Research Process:5) Qualitative Research Quantitative Research Depth Interviews Observation (or Mechanical) Focus Groups Project Experimentation Techniques Metaphor Survey Analysis questionnaires
  5. 5. 6) Mail Telephone Personal Online InterviewCost Low Moderate High LowSpeed Slow Immediate Slow FastResponse rate Low Moderate High Self-selectedGeographic flexibility Excellent Good Difficult ExcellentInterviewer bias N/A Moderate Problematic N/AInterviewer Supervision N/A Easy Difficult N/A7) Validity = collects the appropriate data for the study.Reliability = the same questions, asked of a similar sample, produce the same findings.Ch.3. Segmentation1) Market Segmentation:The process of dividing a potential market into distinct subsets ofconsumers and selecting one or more segments as a target market to be reached with a distinctmarketing mix.2) Consumer needs differs. Differentiation helps products compete. Segmentation helps identifymedia Consumer Research Segmenting Targeting Positioning3) Positioning: The value proposition, expressed through promotion, stating the product’s orservice’s capacity to deliver specific benefits.4) Bases for segmentation • Geographic - People living in same area share many similar traits • Demographic
  6. 6. • Psychological - Motivations, Personality, Perceptions, Learning, Attitudes• Psychographic - (Lifestyle Analysis) - AIOs• Socio-cultural - Family Life Cycle, Social Class, Culture, Subculture, and Cross-Culture• Use-Related - Heavy vs. Light, Aware vs. Unaware, Brand Loyal vs. Brand Switchers• Use-Situation – On the basis of special occasions or situations• Benefit Segmentation – Based on the benefit sought by customers• Hybrid – Mix of any two or more of the above e.g. geo-demographic
  7. 7. Ch.4. Motivation1) The driving force within individuals that impels them to action – Produced by a state of tension due to an unfulfilled need – Which leads to conscious/subconscious attempts to reduce the tension2)3) Types of needs:  Innate Needs – Physiological (or biogenic) needs that are considered primary needs or motives  Acquired needs – Generally psychological (or psychogenic) needs that are considered secondary needs or motives4) Goals: The sought-after results of motivated behavior  Generic Goals – the general categories of goals that consumers see as a way to fulfill their needs – e.g., “I want to get a graduate degree”  Product-Specific Goals – the specifically branded products or services that consumers select as their goals
  8. 8. – e.g., “I want to get an MBA in Marketing from Kellogg School of Management.”5) Positive Motivation- A driving force toward some object or condition.Leads to an Approach Goal. A positive goal toward which behavior is directedNegative Motivation - A driving force away from some object or conditionLeads to an Avoidance Goal. A negative goal from which behavior is directed away6) Types of Motives:  Rational Motives – Goals chosen according to objective criteria (e.g., price)  Emotional Motives – Goals chosen according to personal or subjective criteria (e.g., desire for social status)  Latent Motives – Motives that the consumer is unaware of or unwilling to recognize – Harder to identify – Require projective techniques to identify  Manifest Motives – Motives that the consumer is aware of and willing to express7) The Dynamic Nature of Motivation: • Needs are never fully satisfied • New needs emerge as old ones are satisfied • People who achieve their goals set new and higher goals for themselves8) Substitute Goals: • Are used when a consumer cannot attain a specific goal he/she anticipates will satisfy a need • The substitute goal will dispel tension • Substitute goals may actually replace the primary goal over time9) Frustration: • Failure to achieve a goal may result in frustration. • Some people adapt; others adopt defense mechanisms to protect their self-esteem (ego): – Aggression, Rationalization, Regression, Withdrawal, Projection, Identification, Autism, Repression10) Defence MechanismMethods by which people mentally redefine frustrating situations to protect their self-images andtheir self-esteemTypes of Defence Mechanism:  Aggression  Rationalization  Regression  Withdrawal
  9. 9.  Projection  Autism  Identification  Repression11) Philosophies Concerned With Arousal of Motives  Behaviourist School – Behaviour is response to stimulus – Elements of conscious thoughts are to be ignored – Consumer does not act, but reacts  Cognitive School – Behaviour is directed at goal achievement – Need to consider needs, attitudes, beliefs, etc. in understanding consumer behaviour12)13) McClelland’s Trio of Needs  Power – individual’s desire to control environment  Affiliation – need for friendship, acceptance, and belonging  Achievement – need for personal accomplishment – closely related to egoistic and self-actualization needs14) Motivational ResearchQualitative research designed to uncover consumers’ subconscious or hidden motivations.Consumers are not always aware of, or may not wish to recognize, the basic reasons underlying theiractions
  10. 10. Ch.5. Personality and Consumer Behaviour1) Personality - The inner psychological characteristics that both determine and reflect how a personresponds to his or her environment.2) Nature of Personality  Personality reflects individual differences  Personality is consistent and enduring  Personality can change3) Theories of Personality • Freudian theory – Unconscious needs or drives are at the heart of human motivation • Neo-Freudian personality theory – Social relationships are fundamental to the formation and development of personality • Trait theory – Quantitative approach to personality as a set of psychological traits4) Freudian theory • Id – Warehouse of primitive or instinctual needs for which individual seeks immediate satisfaction • Superego – Individual’s internal expression of society’s moral and ethical codes of conduct • Ego – Individual’s conscious control that balances the demands of the id and superego5) Neo-Freudian personality theory • We seek goals to overcome feelings of inferiority • We continually attempt to establish relationships with others to reduce tensions • Karen Horney who was interested in child-parent relationships and desires to conquer feelings of anxiety, proposed three personality groups: – Compliant move toward others, they desire to be loved, wanted, and appreciated – Aggressive move against others – Detached move away from others6) Trait theory • Personality theory with a focus on psychological characteristics • Trait - any distinguishing, relatively enduring way in which one individual differs from another
  11. 11. • Personality is linked to how consumers make their choices or to consumption of a broad product category - not a specific brand7) Major Marketing-Oriented Traits • Innovativeness • Dogmatism • Social character – inner/other-directedness • Need for uniqueness - non-conformity • OSL - the level/amount of stimulus sought • Variety-novelty seeking8) Cognitive Personality Factors • Need for cognition (NC) – A person’s craving for enjoyment of thinking – Individual with high NC more likely to respond to ads rich in product information • Visualizers versus verbalizers – A person’s preference for information presented visually or verbally – Verbalizers prefer written information over graphics and images.9) Consumer Ethnocentrism • Ethnocentric consumers feel it is wrong to purchase foreign-made products • They can be targeted by stressing nationalistic themes10) Brand Personality • Personality-like traits associated with brands • Examples – Purdue and freshness – Nike and athlete – BMW is performance driven – Levi’s 501 jeans are dependable and rugged • Brand personality which is strong and favorable will strengthen a brand but not necessarily demand a price premium11) Self and Self Image • Consumers have a variety of enduring images of themselves • These images are associated with personality in that individuals consumption relates to self- image
  12. 12. Ch.6. Perception1) Perception • The process by which an individual selects, organizes, and interprets stimuli into a meaningful and coherent picture of the world • How we see the world around us2) Elements of Perception • Sensation: The immediate and direct response of the sensory organs to stimuli (a stimulus is any unit of sensory input). • Absolute threshold: the lowest level at which an individual can experience a sensation. • Differential threshold: Minimal difference that can be detected between two similar stimuli (also known as the just noticeable difference (the j.n.d.) • Subliminal perception: Stimuli that are too weak or too brief to be consciously seen or heard may be strong enough to be perceived by one or more receptor cells. No research evidence that subliminal advertising can cause behavior changes3) Weber’s Law • The j.n.d. between two stimuli is not an absolute amount but an amount relative to the intensity of the first stimulus • Weber’s law states that the stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different. • Marketers need to determine the relevant level of j.n.d. so that negative changes are not readily discernible to the public while product/service improvements are very apparent to consumers4) Aspects of Perceptiona) Perceptual Selection • Consumers subconsciously are selective as to what they perceive. • Stimuli selected depends on two major factors – Consumers’ previous experience – Consumers’ motives • Selection depends on the – Nature of the stimulus
  13. 13. – Expectations – Motives • Selective Exposure: Consumers seek out messages which are pleasant, resonate with them, and help them make good purchase decisions • Selective Attention: Heightened awareness when motivated; Prefer different messages and media • Perceptual Defense: Screening out threatening stimuli • Perceptual Blocking: Consumers avoid being bombarded by tuning out, using TiVo etc.b) Perceptual Organization • Figure and ground: experience events by focusing on some part and relegating the rest to a sort of hazy background • Grouping: group stimuli to form a unified impression or concept. Grouping helps memory and recall • Closure: Will often fill in missing pieces Incomplete messages remembered more than complete • Good figures: Familiar, symmetrical and orderly experiences are perceived faster and remembered longer.c) Interpretation (Perceptual Distortion) • Physical Appearances: People seek positive attributes of experiences to relate to. More attractive models are often more persuasive. • Stereotypes: Ascribe meanings based on fragments of past information. • First Impressions: People look for relevant, important, or predictive stimuli. First impressions are lasting • Jumping to Conclusions: based on information captured first. Put persuasive argument first. • Halo Effect: perceive and evaluate multiple objects based on just one dimension5) Positioning • Establishing a specific image for a brand in the consumer’s mind • Product is positioned in relation to competing brands • Conveys the concept, or meaning, of the product in terms of how it fulfills a consumer need • Result of successful positioning is a distinctive, positive brand image6) Positioning techniques • Umbrella Positioning • Positioning against Competition • Positioning Based on a Specific Benefit • Finding an “Unowned” Position • Filling Several Positions • Repositioning7) Perceptual MappingA research technique that enables marketers to plot graphically consumers’ perceptions concerningproduct attributes of specific brands8)Perceived Price • Reference prices – used as a basis for comparison in judging another price
  14. 14. – Internal – External • Acquisition and transaction utilityOne study offers three types of pricing strategies based on perception of valuePerceived qualityPerceived ServiceCh.7. Learning1) Learning • The process by which individuals acquire the purchase and consumption knowledge and experience that they apply to future related behavior • Marketers must teach consumers: – where to buy – how to use – how to maintain – how to dispose of products2) Learning TheoriesBehavioral Theories: Learning result from observable responses to external stimuli. Also known asstimulus response theories.Cognitive Theories: Learning is based on mental information processing, often in response to problem solving.3) Behavioral Theories • Classical Conditioning – Repetition – strengthen association – Stimulus generalization - Helps “me-too” products to succeed and in product extensions – Stimulus discrimination - Basis of positioning for unique ways to fill needs • Instrumental (Operant) Conditioning: learning based on a trial-and-error process, with habits forced as the result of positive experiences (reinforcement) • Observational Learning/modeling/vicarious learning: Observing the behavior of others, and its consequences • Cognitive Learning: human beings learn thru problem solving, which enables them to gain some control over their environment4) Information processing
  15. 15. • Relates to cognitive ability and the complexity of the information • Individuals differ in imagery – their ability to form mental images which influences recall5) Retention • Information is stored in long-term memory – Episodically: by the order in which it is acquired – Semantically: according to significant concepts • Total package of associations is called a schema6) Brand Loyalty • Function of three groups of influences – Consumer drivers – Brand drivers – Social drivers • Four types of loyalty – No loyalty – Covetous loyalty – Inertia loyalty – Premium loyalty7) Brand Equity • The value inherent in a well-known brand name • Value stems from consumer’s perception of brand superiority • Brand equity reflects learned brand loyalty • Brand loyalty and brand equity lead to increased market share and greater profitsCh.8. Attitude1) Attitude - A learned predisposition to behave in a consistently favorable or unfavorable mannerwith respect to a given object2) Structural Models of Attitudes • Tricomponent Attitude Model • Multiattribute Attitude Model • The Trying-to-Consume Model • Attitude-Toward-the-Ad Model3) Tricomponent Attitude Model • Cognitive - The knowledge and perceptions that are acquired by a combination of direct experience with the attitude object and related information from various sources • Affective - A consumer’s emotions or feelings about a particular product or brand • Conative- The likelihood or tendency that an individual will undertake a specific action or behave in a particular way with regard to the attitude object
  16. 16. 4) Multiattribute Attitude ModelAttitude models that examine the composition of consumer attitudes in terms of selected productattributes or beliefs• The attitude-toward-object model • Attitude is function of evaluation of product-specific beliefs and evaluations • Useful to measure attitudes toward brands• The attitude-toward-behavior model • Is the attitude toward behaving or acting with respect to an object, rather than the attitude toward the object itself • Corresponds closely to actual behavior• Theory-of-reasoned-action model • Includes cognitive, affective, and conative components • Includes subjective norms in addition to attitude5) The Trying-to-Consume ModelAn attitude theory designed to account for the many cases where the action or outcome is notcertain but instead reflects the consumer’s attempt to consume (or purchase)6) Attitude-Toward-the-Ad ModelA model that proposes that a consumer forms various feelings (affects) and judgments (cognitions)as the result of exposure to an advertisement, which, in turn, affect the consumer’s attitude towardthe ad and attitude toward the brand.7) Attitude Formation • How attitudes are learned – Conditioning and experience – Knowledge and beliefs • Sources of influence on attitude formation – Personal experience – Influence of family – Direct marketing and mass media • Personality factors
  17. 17. 8) Changing the Basic Motivational Function • Utilitarian • Ego-defensive • Value-expressive • Knowledge9) Elaboration Likelihood Model (ELM)A theory that suggests that a person’s level of involvement during message processing is a criticalfactor in determining which route to persuasion is likely to be effective.10) Why Might Behavior Precede Attitude Formation? • Cognitive Dissonance Theory - Holds that discomfort or dissonance occurs when a consumer holds conflicting thoughts about a belief or an attitude object. • Attribution Theory - A theory concerned with how people assign casualty to events and form or alter their attitudes as an outcome of assessing their own or other people’s behavior.

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