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consumer behavior Unit 3 Pune University
1. Environmental Influences on
Consumer Behavior
Cultural Factors: Culture encompasses the values, beliefs,
norms, and customs shared by a society. It significantly
impacts consumer behavior by shaping individuals'
preferences, perceptions, and consumption habits. Cultural
factors include subcultures, social classes, and cultural
symbols, all of which influence how products are perceived
and consumed.
Social Factors: Social influences play a crucial role in
shaping consumer behavior. Reference groups, family,
friends, and social networks influence individuals'
purchasing decisions through various means such as social
approval, conformity, and peer pressure. Social media
platforms also play an increasingly significant role in
shaping consumer behavior by providing platforms for
social interaction and product recommendations.
2. Personal Factors: Personal factors such as age, gender, occupation,
lifestyle, personality, and self-concept influence consumer behavior.
For example, individuals in different life stages may have distinct
consumption needs and preferences. Personality traits also affect
purchasing decisions, with some individuals being more risk-averse
while others are more adventurous in their choices.
Psychological Factors: Psychological factors encompass individual
perceptions, motivations, attitudes, and learning processes that
influence consumer behavior. Perception involves how individuals
interpret and make sense of information about products and brands.
Motivation drives individuals to fulfill their needs and desires through
consumption, while attitudes shape their preferences and evaluations
of products.
Economic Factors: Economic influences such as income, price levels,
employment status, and economic conditions impact consumer
behavior. Changes in economic factors can affect individuals'
purchasing power, leading to shifts in spending patterns and
preferences. Economic downturns, inflation, and unemployment can
result in consumers being more price-sensitive and opting for cheaper
alternatives.
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4. Technological Factors: Technological advancements influence
consumer behavior by creating new products, services, and distribution
channels. Innovations such as e-commerce, mobile applications, and
digital marketing have transformed how consumers search for
information, make purchases, and interact with brands. Technology
also enables personalization and customization of products and
services to meet individual preferences.
Environmental Concerns: Increasing awareness of environmental
issues has led to a growing influence of environmental factors on
consumer behavior. Consumers are increasingly considering the
environmental impact of products and brands, leading to preferences
for eco-friendly and sustainable options. Companies are responding by
adopting environmentally responsible practices and offering green
products to meet consumer demand.
5. Cultural Influences on Consumer
Behavior
Cultural influences on consumer behavior are among the most
significant factors shaping individuals' buying decisions and
consumption patterns. Culture encompasses the values, beliefs, norms,
customs, and symbols shared by a society or a group of people. Here are
some key ways cultural influences impact consumer behavior:
Cultural Values and Beliefs: Cultural values and beliefs shape
individuals' perceptions of what is desirable, acceptable, and
important. For example, in some cultures, collectivism and family
values may influence purchasing decisions, while in others,
individualism and self-expression may be more prominent.
Understanding these cultural values helps marketers tailor their
products and messages to resonate with specific cultural norms.
Cultural Norms and Customs: Cultural norms and customs dictate
acceptable behaviors within a society. These norms extend to
consumption patterns, influencing aspects such as gift-giving rituals,
dining etiquette, and holiday celebrations. For instance, certain
cultures may place a high value on extravagant gift-giving during
festivals, leading to increased consumer spending during those
periods.
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7. Cultural Symbols and Icons: Cultural symbols and icons play a
significant role in consumer behavior by evoking emotions,
associations, and meanings. Brands often leverage cultural symbols
and icons to create resonance and connect with consumers on a deeper
level. For example, using national symbols or cultural references in
advertising can enhance brand perception and appeal to specific
cultural identities.
Subcultures and Social Groups: Within broader cultures,
subcultures and social groups exist, each with its own unique values,
preferences, and consumption behaviors. These subcultures can be
based on factors such as age, ethnicity, religion, or lifestyle. Marketers
often target specific subcultures with tailored products and marketing
strategies that align with their distinct cultural identities.
Cultural Influences on Product Usage: Cultural factors also
influence how products are used and consumed. For example, food
preferences and dietary habits vary significantly across cultures,
leading to differences in product offerings and marketing strategies.
Cultural considerations also influence product design, packaging, and
messaging to ensure alignment with cultural preferences and
sensibilities.
8. Cultural Influences on Decision-Making: Cultural
values and norms influence decision-making
processes, including information processing, risk
perception, and decision criteria. For example, in some
cultures, decisions may be more consensus-driven and
influenced by group opinions, while in others,
individual autonomy and independence may be valued
more highly.
Cultural Influences on Brand Loyalty: Cultural
factors can also impact brand loyalty and attachment.
Brands that resonate with cultural values and
identities are more likely to foster strong emotional
connections with consumers, leading to greater brand
loyalty and advocacy within specific cultural groups.
9. Concept of Culture
The concept of culture is broad and multidimensional, encompassing
various aspects of human society and behavior. Here's a comprehensive
overview of the concept:
Definition: Culture refers to the shared values, beliefs, norms,
customs, traditions, language, symbols, and artifacts that characterize
a particular group of people or society. It encompasses both tangible
and intangible elements that shape individuals' identities, behaviors,
and interactions within a social context.
Shared Nature: Culture is fundamentally a collective phenomenon,
shared by members of a group or society. It provides a common
framework for understanding the world, guiding social interactions,
and transmitting knowledge from one generation to the next.
Dynamic and Adaptive: Culture is not static; it evolves and changes
over time in response to internal and external influences. Cultural
change can result from factors such as technological advancements,
globalization, migration, social movements, and intercultural
interactions. Despite its dynamic nature, culture also exhibits elements
of continuity and resilience, as certain core values and traditions persist
across generations.
10. Learned and Transmitted: Culture is learned through
socialization processes, wherein individuals acquire knowledge,
attitudes, and behaviors from their interactions with family,
peers, educational institutions, media, and other socializing
agents. This process of cultural transmission begins in early
childhood and continues throughout life, shaping individuals'
identities and worldviews.
Influence on Behavior: Culture exerts a profound influence on
human behavior, shaping individuals' perceptions, attitudes,
values, communication styles, decision-making processes, and
social interactions. Cultural norms and expectations guide
appropriate conduct within a society, dictating behaviors related
to language use, dress codes, gender roles, etiquette, and social
customs.
Diversity and Variation: Cultures vary widely across different
regions, ethnicities, religions, socioeconomic backgrounds, and
historical contexts. Cultural diversity reflects the richness of
human experiences and expressions, encompassing a multitude
of languages, cuisines, belief systems, artistic traditions, and
lifestyles. Within a single society, subcultures may emerge, each
with its own distinct norms, values, and practices.
11. Identity and Belonging: Culture plays a central role in shaping
individuals' sense of identity and belonging. Cultural affiliations
provide individuals with a sense of community, solidarity, and shared
identity, contributing to their social cohesion and emotional well-
being. Cultural identities are often multifaceted, intersecting with
other dimensions of identity such as ethnicity, nationality, gender, and
religion.
Symbolism and Meaning: Cultural symbols, rituals, and traditions
carry symbolic meanings that hold significance for members of a
society. These symbols serve as markers of identity, heritage, and
collective memory, reinforcing social cohesion and providing
individuals with a sense of continuity and belonging. Cultural symbols
can include flags, national anthems, religious icons, artistic
expressions, and monuments.
Adaptation and Integration: In an increasingly interconnected
world, individuals and societies engage in processes of cultural
adaptation, integration, and hybridization. Cultural exchange,
multiculturalism, and cross-cultural encounters contribute to the
emergence of new cultural forms, identities, and expressions. While
cultural globalization can lead to homogenization and cultural
diffusion, it also fosters diversity, creativity, and innovation.
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13. Concept of Values
Values are deeply held beliefs and principles that guide individuals' attitudes,
behaviors, and decision-making processes. They represent what is considered
important, desirable, and worthy of pursuit within a society or culture. Here's a
comprehensive overview of the concept of values:
Core Principles: Values serve as core principles that shape individuals'
perceptions of right and wrong, good and bad, and desirable and undesirable.
They provide a moral compass for navigating ethical dilemmas and making
judgments about appropriate conduct.
Enduring and Stable: Values are typically stable over time and resistant to
change, reflecting individuals' fundamental beliefs and priorities. While
specific attitudes and preferences may vary, core values tend to remain
relatively consistent throughout an individual's life.
Influence on Behavior: Values exert a significant influence on human
behavior, guiding individuals' choices, actions, and interactions with others.
People are more likely to engage in behaviors that align with their values and
avoid behaviors that conflict with them.
Hierarchy and Prioritization: Values often exist within a hierarchical
structure, with some values holding greater importance or priority over others.
Individuals may prioritize certain values over competing values when making
decisions or resolving conflicts.
14. Cultural and Social Context: Values are shaped by cultural,
social, and environmental factors, including family upbringing,
religious teachings, educational experiences, media influences,
and societal norms. Cultural values reflect the collective beliefs
and norms of a particular group or society, while individual
values may vary within that cultural framework.
Universal and Cultural Specificity: While some values may be
universal across human societies (e.g., fairness, honesty, respect
for others), others are culturally specific and vary across different
cultures and subcultures. Cultural diversity contributes to the
richness and complexity of value systems, with each culture
emphasizing certain values based on its unique history,
traditions, and worldview.
Instrumental and Terminal Values: Psychologist Milton
Rokeach distinguished between instrumental values (related to
means or behaviors) and terminal values (related to ends or
outcomes). Instrumental values guide behaviors and actions,
while terminal values represent desired end states or goals.
15. Expressive and Utilitarian Functions: Values serve both
expressive functions (expressing individuals' identities,
beliefs, and affiliations) and utilitarian functions (helping
individuals achieve their goals, fulfill their needs, and adapt
to their environment).
Conflict and Consistency: Individuals may experience
value conflicts when their core values are in tension with
each other or with external demands and pressures.
Resolving value conflicts often requires careful reflection,
prioritization, and negotiation to achieve a sense of
internal coherence and consistency.
Value Change and Evolution: While values are generally
stable, they are not static and may evolve over time in
response to life experiences, social influences, and cultural
shifts. Personal growth, societal change, and historical
events can contribute to shifts in individual and collective
value systems.
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17. Concepts of Sub-cultures
Subcultures refer to distinct groups within a larger society that share a
set of norms, values, beliefs, behaviors, and cultural practices that
distinguish them from the mainstream culture. Here are the key
concepts related to subcultures:
Definition: Subcultures are smaller, cohesive social groups that exist
within a larger society and often develop their own unique identities,
norms, and lifestyles. They can emerge based on various factors such as
age, ethnicity, religion, occupation, hobbies, interests, or shared
experiences.
Shared Identity: Subcultures provide individuals with a sense of
belonging and identity, fostering solidarity and social cohesion among
members. They often serve as communities where individuals with
similar backgrounds or interests come together to express themselves
and connect with like-minded peers.
Distinctive Characteristics: Subcultures typically exhibit distinctive
characteristics in terms of language, fashion, music, symbols, rituals,
values, and social norms. These cultural markers help differentiate
subcultures from the mainstream culture and reinforce group cohesion
and identity.
18. Resistance and Opposition: Subcultures may emerge as a
form of resistance or opposition to dominant cultural
norms, values, or institutions. They often challenge
mainstream conventions and offer alternative perspectives
or lifestyles that diverge from societal norms.
Expression of Identity: Subcultures provide individuals
with a platform to express their identities, beliefs, and
aspirations in ways that may not be accommodated by the
mainstream culture. Subcultural identities are often fluid
and dynamic, allowing individuals to navigate multiple
social identities and affiliations.
Socialization and Enculturation: Subcultures play a
significant role in socializing individuals and transmitting
cultural knowledge, practices, and traditions from one
generation to the next. Through informal networks, shared
experiences, and peer interactions, members of
subcultures learn the values, norms, and behaviors that
define their group identity.
19. Variety and Diversity: Subcultures are diverse and multifaceted,
encompassing a wide range of groups with distinct identities and sub-
cultural expressions. Examples of subcultures include youth
subcultures (e.g., punk, hip-hop), ethnic subcultures (e.g., Hispanic,
Asian-American), countercultural movements (e.g., hippies,
anarchists), and professional subcultures (e.g., medical professionals,
computer programmers).
Globalization and Hybridization: Globalization and digital
connectivity have facilitated the spread of subcultures across
geographical boundaries and cultural contexts. Sub-cultural
expressions often undergo hybridization and adaptation as they
intersect with other subcultures or mainstream culture, leading to the
emergence of new cultural forms and identities.
Commercialization and Mainstreaming: Sub-cultural symbols,
styles, and trends are often appropriated by mainstream culture and
commercialized for mass consumption. This process, known as co-
optation, can dilute the authenticity of sub-cultural expressions and
blur the boundaries between subcultures and the mainstream.
Social Impact and Influence: Subcultures can have a significant
impact on mainstream culture by shaping trends, attitudes, and
cultural movements. They serve as creative hubs for innovation, artistic
expression, and social change, influencing broader cultural narratives
and societal values.
20. Influence of Indian Culture on
Consumers
The influence of Indian culture on consumers is profound and multi-
faceted, encompassing various aspects of values, traditions, beliefs, and
social norms. Here are some key ways in which Indian culture
influences consumers:
Family and Social Structure:
Cultural Festivals and Rituals:
Traditional Attire and Fashion: I
Cuisine and Food Culture:
Religious Beliefs and Practices:
Language and Communication:
Social Hierarchies and Status Symbols:
Cultural Symbols and Icons:
Collectivism and Community Orientation:
Influence of Media and Entertainment:
Understanding the influence of Indian culture on consumers is
essential for businesses operating in India or targeting Indian
consumer markets. By incorporating cultural insights into marketing
strategies, product offerings, and customer experiences, companies can
effectively engage with diverse consumer segments and build
meaningful relationships with Indian consumers.
21. Multiplicity of Indian Cultures and
their influence on consumer
behavior
The multiplicity of Indian cultures reflects the country's rich diversity in terms of
languages, religions, traditions, cuisines, clothing styles, and social customs. This
diversity has a profound influence on consumer behavior, shaping individuals'
preferences, attitudes, and purchasing decisions in various ways. Here's how the
multiplicity of Indian cultures influences consumer behavior:
Regional Diversity:
Language and Communication:
Religious Diversity:
Festivals and Celebrations:
Cuisine and Food Preferences:
Traditional Attire and Fashion:
Social Customs and Etiquette:
Media and Entertainment:
Cultural Symbols and Icons:
Urban-Rural Divide:
Overall, the multiplicity of Indian cultures contributes to a dynamic and heterogeneous
consumer market, presenting both opportunities and challenges for businesses seeking
to understand and engage with diverse consumer segments. By recognizing and
respecting cultural diversity, brands can develop more effective marketing strategies,
product offerings, and customer experiences that resonate with Indian consumers across
different regions and cultural contexts.
22. Cross-Cultural Influences.
Cross-cultural influences refer to the exchange and
interaction of ideas, values, behaviors, and practices
between different cultures. These influences can occur
through various channels such as trade, migration, media,
technology, and globalization. Here are some key aspects of
cross-cultural influences:
Globalization:
Migration and Diaspora Communities:
Media and Entertainment:
Technological Innovation:
Travel and Tourism:
Education and Intercultural Learning:
Cross-cultural Marketing and Branding:
Cultural Fusion and Hybridization:
23. Social Class and Group Influences on
Consumer Behavior
Social class and group influences play a significant role in shaping consumer
behavior, influencing individuals' preferences, attitudes, and purchasing
decisions. Here's how social class and group influences impact consumer
behavior:
Social Class:
Consumption Patterns:.
Brand Preferences:
Shopping Behavior:
Cultural Capital:
Reference Groups: Reference groups are social groups that individuals use as
a basis for comparison in evaluating their attitudes, behaviors, and purchasing
decisions. Reference groups can be formal (e.g., family, friends, colleagues) or
aspirational (e.g., celebrities, influencers, opinion leaders). They influence
consumer behavior in several ways:
Normative Influence:
Informational Influence:
Identity and Self-Expression:
Aspirational Influence:
Understanding the influence of social class and reference groups on consumer
behavior is essential for marketers and businesses seeking to target specific
consumer segments and develop effective marketing strategies. By recognizing
the role of social influences, businesses can tailor their products, messaging,
and promotional efforts to resonate with consumers' social identities,
aspirations, and group affiliations.
24. Concept of Money and Other
Status Symbols
The concept of money and other status symbols revolves around the idea that
individuals use tangible and intangible markers to signify their social status,
prestige, and success within society. These symbols serve as visible indicators of
one's wealth, power, and social standing, influencing perceptions of status and
identity. Here's an overview of the concept:
Money as a Status Symbol:
Conspicuous Consumption:
Brand Signaling:.
Home and Property Ownership:
Educational Attainment:,
Occupational Prestige:
Social Networks and Affiliations:
Cultural Capital:
Physical Appearance and Personal Style:.
Experiential Luxury:.
Overall, money and other status symbols play a crucial role in signaling social
status, prestige, and identity within society. These symbols reflect cultural
values, societal norms, and individual aspirations, shaping individuals'
behaviors, aspirations, and social interactions. Understanding the significance
of status symbols provides insights into patterns of consumption, social
stratification, and identity formation within contemporary societies.
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26. AIO classification of Lifestyle
The AIO classification of lifestyle, also known as the
Activities, Interests, and Opinions model, is a
psychographic segmentation approach used in marketing
and consumer research. It categorizes individuals into
groups based on their patterns of activities, interests, and
opinions. Here's a breakdown of each component:
By segmenting consumers based on the AIO model,
marketers can create more targeted and personalized
marketing strategies. Each lifestyle segment represents a
distinct group of consumers with shared activities,
interests, and opinions, allowing marketers to tailor their
messaging, product offerings, and promotional efforts to
meet the specific needs and preferences of each segment.
This approach enables marketers to better connect with
consumers on an emotional level and build stronger
relationships with their target audience.
27. Activities: This component focuses on the activities and
behaviors individuals engage in regularly. It includes aspects
such as work, leisure, hobbies, sports, shopping habits, social
activities, and travel. By understanding consumers' activities,
marketers can tailor products and services to fit into their daily
routines and lifestyles.
Interests: Interests refer to individuals' preferences, passions,
and areas of focus outside of their daily activities. These can
include hobbies, cultural interests, recreational pursuits, social
causes, and personal interests. Marketers use information about
consumers' interests to identify products, services, and content
that align with their preferences and values.
Opinions: Opinions represent individuals' attitudes, beliefs,
and perceptions about various topics, products, brands, and
societal issues. This component encompasses attitudes towards
politics, religion, social issues, environmental sustainability,
brand preferences, and product attributes. Understanding
consumers' opinions helps marketers gauge their motivations,
decision-making criteria, and potential barriers to purchase.
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30. VALS Typology
VALS (Values, Attitudes, and Lifestyles) typology is a
psychographic segmentation system developed by SRI
International in the 1970s. It categorizes consumers into distinct
groups based on their psychological traits, motivations, and
behaviors. The VALS framework identifies eight segments, each
representing a unique combination of values, attitudes, and
lifestyles. Here's an overview of the VALS typology:
The VALS typology provides marketers with insights into
consumers' motivations, aspirations, and decision-making
processes. By understanding the values, attitudes, and lifestyles
of different VALS segments, marketers can tailor their marketing
strategies, product offerings, and messaging to effectively reach
and engage with specific consumer groups. This segmentation
approach helps marketers identify opportunities for product
innovation, brand positioning, and market expansion based on
the unique needs and preferences of each VALS segment.
31. Innovators: Innovators are successful, sophisticated, and highly
educated individuals who are open to new ideas and experiences.
They are early adopters of innovative products and services,
often leading trends and setting high standards for quality and
performance.
Thinkers: Thinkers are educated, reflective, and rational
individuals who value knowledge, expertise, and intellectual
pursuits. They are analytical and careful in their decision-
making process, preferring products and brands that offer
practical benefits and long-term value.
Believers: Believers are conservative, traditional, and family-
oriented individuals who adhere to established norms, values,
and religious beliefs. They are loyal to familiar brands and
institutions, seeking security, stability, and a sense of belonging
in their communities.
Achievers: Achievers are ambitious, goal-oriented, and career-
focused individuals who value success, status, and material
achievements. They are motivated by external validation and
social recognition, striving for excellence in their professional
and personal lives.
32. Strivers: Strivers are ambitious, energetic, and status-conscious
individuals who aspire to improve their social and economic
standing. They are willing to take risks and make sacrifices to
achieve their goals, often emulating the lifestyles and behaviors
of higher-status groups.
Experience's: Experience's are adventurous, impulsive, and
thrill-seeking individuals who prioritize excitement, variety, and
sensory stimulation. They seek out novel experiences,
challenges, and entertainment, embracing change and
spontaneity in their lives.
Makers: Makers are practical, hands-on, and self-reliant
individuals who value utility, craftsmanship, and authenticity.
They enjoy working with their hands, solving practical problems,
and pursuing DIY projects and hobbies.
Survivors: Survivors are cautious, conservative, and risk-averse
individuals who prioritize safety, security, and stability. They are
typically older adults or individuals facing economic challenges,
seeking comfort, familiarity, and reliability in their purchasing
decisions.
33. Source of Group Influences
Group influences on consumer behavior can stem from various sources,
including social, cultural, and reference groups. Here's an overview of
each source:
Social Groups: Social groups consist of individuals who share
common characteristics, interests, or affiliations,
Cultural Groups: Cultural groups are defined by shared cultural
values, beliefs, customs, and traditions.
Reference Groups: Reference groups are specific individuals or groups
that individuals use as benchmarks for comparison in evaluating their
attitudes, behaviors, and self-concept. Reference groups can be
categorized into two types:
Direct Reference Groups: These are groups to which individuals belong, such
as family, friends, coworkers, or social clubs. Individuals are directly influenced
by the opinions, attitudes, and behaviors of members of their direct reference
groups.
Indirect Reference Groups: These are groups with which individuals do not
have direct membership but aspire to emulate or associate with. Indirect
reference groups can include celebrities, influencers, opinion leaders, and
aspirational groups. Individuals may be influenced by the perceived status,
lifestyle, and values associated with members of their indirect reference groups.
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35. Types & Nature of Reference
Groups
Reference groups are influential in shaping individuals'
attitudes, behaviors, and consumption choices. These groups
serve as benchmarks for comparison and influence individuals'
perceptions of themselves and their social environment.
Reference groups can be categorized into various types based on
their characteristics and relationship with individuals. Here are
some types and nature of reference groups:
Direct Reference Groups:
Family: Family members are among the most influential reference
groups, particularly during early socialization. Individuals often adopt
values, beliefs, and consumption habits modeled by family members.
Family dynamics, roles, and traditions shape individuals' attitudes
towards brands, products, and lifestyle choices.
Friends and Peers: Friends and peers exert significant influence on
individuals' attitudes, behaviors, and consumption patterns. Peer
groups provide social support, validation, and acceptance, leading
individuals to conform to group norms and preferences. Peer pressure
and social comparison influence individuals' decisions regarding
fashion, entertainment, technology, and leisure activities.
36. Aspirational Reference Groups:
Celebrities: Celebrities, influencers, and public figures serve
as aspirational reference groups for many individuals. Their
lifestyles, achievements, and endorsements shape consumer
perceptions and preferences, influencing purchasing
decisions in areas such as fashion, beauty, fitness, and
entertainment.
Opinion Leaders: Opinion leaders are individuals who are
knowledgeable, influential, and respected within specific
domains or communities. They serve as sources of expertise,
advice, and recommendations for others, shaping opinions
and behaviors through their influence and authority. Opinion
leaders play a crucial role in disseminating information,
shaping attitudes, and driving trends in areas such as
technology, fashion, and lifestyle.
37. Indirect Reference Groups:
Professional Associations: Professional associations
and industry networks serve as indirect reference groups
for individuals within specific professions or fields.
Professionals seek guidance, mentorship, and peer
validation from industry leaders and colleagues,
influencing their career choices, professional
development, and networking strategies.
Virtual Communities: Virtual communities, including
online forums, social media groups, and niche
communities, serve as indirect reference groups for
individuals with shared interests or identities. Online
communities provide opportunities for individuals to
connect, share experiences, and seek advice from like-
minded peers, influencing consumer behaviors in areas
such as travel, gaming, parenting, and health.
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45. Reference Group Influences and
Applications
Reference group influences play a crucial role in shaping consumer
attitudes, behaviors, and purchasing decisions. Understanding these
influences is essential for marketers to develop effective marketing
strategies and campaigns. Here are some key applications of reference
group influences in marketing:
Social Proof and Endorsements: Marketers leverage social proof by
highlighting endorsements and testimonials from satisfied customers,
influencers, or celebrities. Positive reviews and recommendations from
trusted sources serve as powerful reference group influences,
encouraging others to follow suit and make purchasing decisions based
on the experiences of others.
Influencer Marketing: Influencer marketing capitalizes on the
influence of opinion leaders and celebrities to promote products and
brands to their followers. Influencers act as reference group members
whose endorsements and lifestyle choices influence their audience's
attitudes and behaviors. By partnering with relevant influencers,
marketers can reach target consumers and build brand credibility
through authentic and relatable content.
46. Peer Recommendations and Reviews: Peer recommendations
and reviews influence consumer decisions across various
industries, particularly in e-commerce, travel, and hospitality.
Consumers trust recommendations from friends, family
members, and online communities, seeking validation and social
proof before making purchasing decisions. Marketers can
encourage positive word-of-mouth and incentivize customer
referrals to leverage the influence of peer networks.
Social Media Engagement: Social media platforms serve as
channels for consumers to connect, share experiences, and seek
advice from their social networks. Marketers leverage social
media engagement to foster community interactions, encourage
user-generated content, and amplify brand advocacy. By
building authentic relationships with consumers and facilitating
conversations within online communities, marketers can harness
the power of reference group influences to drive brand awareness
and loyalty.
47. Celebrity Endorsements and Sponsorships: Celebrity
endorsements and sponsorships are effective in leveraging the
influence of aspirational reference groups. Consumers aspire to
emulate the lifestyles and behaviors of their favorite celebrities, making
celebrity endorsements a persuasive form of social proof. Marketers
strategically align brands with celebrities whose values, image, and
audience demographics resonate with target consumers, enhancing
brand visibility and credibility.
Targeted Segmentation and Messaging: Marketers segment
consumers based on their reference group affiliations, lifestyles, and
psychographic characteristics to tailor messaging and offerings to
specific audience segments. By understanding consumers' reference
group influences, marketers can identify key motivators, values, and
preferences that drive purchasing decisions. Targeted segmentation
enables marketers to deliver personalized and relevant marketing
messages that resonate with consumers' social identities and
aspirations.
Overall, reference group influences provide valuable insights into
consumers' social networks, peer interactions, and aspirational ideals.
By leveraging reference group influences in marketing strategies and
campaigns, marketers can build trust, credibility, and loyalty among
consumers, ultimately driving brand engagement and purchase intent.
48. Group Norms and Behavior
Group norms are informal rules and expectations that guide behavior
within a social group. These norms dictate what is considered
acceptable or appropriate behavior in various situations, influencing
how individuals within the group behave, interact, and make decisions.
Here's how group norms impact behavior:
Conformity: Group norms often lead to conformity, where individuals
adjust their behavior to align with the expectations of the group.
Conformity ensures social cohesion and harmony within the group by
reducing conflict and promoting cooperation. Individuals may
conform to group norms to gain acceptance, approval, and validation
from their peers.
Socialization: Group norms play a crucial role in socialization,
shaping individuals' attitudes, values, and beliefs through interaction
with group members. During the socialization process, individuals
learn and internalize group norms through observation, imitation, and
reinforcement. Group norms influence individuals' perceptions of
social reality and guide their interpretation of social situations.
49. Social Control: Group norms serve as a mechanism for social control,
regulating behavior and maintaining order within the group. Deviating
from group norms may result in social sanctions, such as criticism,
ostracism, or exclusion from the group. The fear of social disapproval or
punishment motivates individuals to adhere to group norms and avoid
deviant behavior.
Normative Influence: Group norms exert normative influence on
individuals' attitudes and behaviors, shaping their judgments and
decisions in conformity with group expectations. Normative influence
is based on the desire for social approval and avoidance of social
rejection. Individuals may conform to group norms even when they
conflict with their personal beliefs or preferences to avoid social stigma
or isolation.
Innovation and Change: While group norms provide stability and
continuity, they can also inhibit innovation and change within the
group. Group members may resist deviating from established norms
and traditions, hindering the adoption of new ideas, practices, or
technologies. Over time, groups may adapt and revise their norms in
response to changing circumstances, leadership, or external influences.
50. Pluralistic Ignorance: Pluralistic ignorance occurs when individuals
privately reject a group norm but publicly conform to it because they
believe others accept it. This phenomenon can perpetuate false
perceptions of group consensus and prevent individuals from
expressing dissenting opinions or challenging established norms.
Pluralistic ignorance highlights the importance of open
communication and transparency within groups to address
misconceptions and facilitate constructive dialogue.
Role Differentiation: Group norms may assign roles and
responsibilities to individuals based on their status, expertise, or
contributions to the group. Role differentiation ensures that tasks are
effectively coordinated and performed within the group, maximizing
efficiency and productivity. Group members may conform to role
expectations and norms associated with their designated roles to fulfill
their obligations and maintain group cohesion.
Understanding group norms and their influence on behavior is
essential for fostering positive group dynamics, promoting
cooperation, and facilitating collective goals. By recognizing the role of
group norms in shaping behavior, organizations, leaders, and
individuals can effectively manage group interactions, foster inclusivity,
and cultivate a supportive and collaborative group environment.
51. Family Life Cycle Stages
The family life cycle consists of distinct stages that individuals and
families pass through as they progress through various life events and
transitions. Each stage is characterized by unique developmental tasks,
roles, and challenges. While specific stages may vary across cultures
and societies, the following stages are commonly recognized in the
family life cycle:
Marriage: The family life cycle typically begins with marriage or
partnership formation, where individuals commit to establishing a
shared household and building a life together. Marriage marks the
beginning of a new family unit and sets the stage for future stages of
the family life cycle.
Childbirth and Early Parenthood: The birth of a child represents a
significant transition in the family life cycle, as individuals become
parents and assume caregiving responsibilities. This stage is
characterized by the challenges of adjusting to parenthood, nurturing
the infant's development, and redefining family roles and dynamics.
52. Preschool Years: During the preschool years,
children continue to grow and develop, and families
navigate the challenges of balancing childcare, work,
and household responsibilities. Parents may face
decisions related to childcare arrangements, preschool
enrollment, and early childhood education.
School-Age Children: As children enter school,
families adjust to new routines, academic demands,
and extracurricular activities. Parents play an active
role in supporting their children's education, fostering
social development, and navigating peer relationships
and school-related challenges.
53. Adolescence: Adolescence is a period of significant change
and transition for both children and parents. Families
navigate the challenges of adolescence, including identity
formation, peer influence, and autonomy-seeking
behaviors. Parents may face the task of balancing support
and supervision while allowing adolescents to develop
independence and self-sufficiency.
Launching Children: Launching children into adulthood
represents a major milestone in the family life cycle, as
young adults transition to independence and pursue higher
education, career opportunities, or starting their own
families. Parents may experience a sense of loss as they
adjust to an empty nest and redefine their roles and
priorities.
54. Empty Nest: The empty nest stage occurs when children leave
home to pursue their own lives, leaving parents with an "empty
nest." This stage presents opportunities for parents to focus on
personal interests, career advancement, and relationship
enrichment. It may also involve adjusting to changes in family
dynamics and redefining the parent-child relationship.
Retirement and Later Life: The retirement and later life stage
marks the transition to older adulthood, where individuals retire
from work and focus on leisure, recreation, and quality of life.
Families may face challenges related to health care, aging, and
end-of-life planning, as well as opportunities for
intergenerational connections and legacy-building.
These stages represent a general framework for understanding
the family life cycle, but individual experiences may vary based
on factors such as cultural background, socioeconomic status,
and family structure. Understanding the stages of the family life
cycle can help individuals and families anticipate transitions,
navigate challenges, and foster resilience and adaptation
throughout the lifespan.
55.
56. Family Purchases
Family purchases refer to the goods and services that families acquire
collectively to meet their needs and preferences. These purchases can
range from everyday necessities to major investments, and they often
reflect the priorities, values, and lifestyle of the family unit as a whole.
Here are some common types of family purchases:
Groceries and Household Supplies
Clothing and Apparel
Housing and Home Furnishings
Transportation
Education and Childcare
Entertainment and Recreation
Technology and Electronics
Gifts and Special Occasions
Financial Planning and Investments
Overall, family purchases encompass a wide range of goods and
services that contribute to the well-being, comfort, and lifestyle of the
family unit. By understanding their collective needs and priorities,
families can make informed purchasing decisions that align with their
values and goals.
60. Word-of-mouth (WOM) communication within groups refers to the
sharing of information, opinions, and recommendations among
members of a social group. This form of communication plays a
significant role in shaping attitudes, influencing behaviors, and
spreading information within social networks. Here are some key
aspects of word-of-mouth communication within groups:
Informal Communication: Word-of-mouth communication is
informal and interpersonal, occurring through face-to-face
interactions, phone calls, text messages, emails, social media, and
other personal communication channels. Members of a group share
experiences, recommendations, and opinions about products, services,
brands, events, and experiences with each other.
Trust and Credibility: Word-of-mouth communication is
characterized by trust and credibility, as individuals value
recommendations and opinions from trusted sources within their
social circles. Group members are more likely to trust information
shared by friends, family members, peers, and opinion leaders who
have personal experience or expertise in a particular area.
61. Social Influence: Word-of-mouth communication is a
powerful form of social influence, as individuals are
influenced by the opinions, behaviors, and experiences of
their peers and reference groups. Group members may
conform to group norms, adopt group preferences, or
change their attitudes and behaviors based on social
influence processes such as social comparison, conformity,
and normative influence.
Information Sharing: Word-of-mouth communication
serves as a mechanism for sharing information, knowledge,
and experiences within social groups. Members exchange
information about product features, benefits, prices,
quality, availability, and customer experiences, helping
each other make informed decisions and choices.
62. Brand Advocacy and Loyalty: Word-of-mouth
communication can foster brand advocacy and loyalty
among group members. Satisfied customers may share
positive experiences and recommendations about their
favorite brands, products, or services with their social
networks, contributing to brand awareness,
reputation, and customer acquisition.
Viral Marketing: Word-of-mouth communication
has the potential to go viral and reach a wider audience
beyond immediate social circles. Memorable
experiences, compelling stories, controversial topics,
or viral content shared within groups can spark
discussions, debates, and sharing among group
members and their extended networks.
63. Opinion Leadership: Word-of-mouth communication is
often driven by opinion leaders and influencers within
social groups who have expertise, knowledge, or influence
in specific domains. Opinion leaders play a key role in
shaping group discussions, influencing attitudes, and
disseminating information to others within their social
networks.
Word-of-Mouth Marketing: Word-of-mouth
communication is increasingly recognized as a valuable
marketing tool for businesses and brands. Marketers
leverage strategies such as influencer marketing, referral
programs, customer reviews, and social media engagement
to stimulate positive word-of-mouth communication and
encourage brand advocacy among consumers.
100. Social Classes in India
Caste System
Economic Disparities
Occupational Groups
Education and Literacy
Lifestyle and Consumption Patterns
Urban-Rural Divide
Emerging Middle Class
101. Old and New Socio-Economic Classes
(SEC) in Urban & Rural Markets
In both urban and rural markets in India, socio-economic
classes (SECs) are characterized by various factors such as
income levels, education, occupation, and lifestyle.
Traditionally, socio-economic classes were broadly
categorized into lower, middle, and upper classes.
However, with economic growth, urbanization, and
changing social dynamics, newer classifications have
emerged to reflect the evolving socio-economic landscape.
Here's a comparison of old and new socio-economic classes
in urban and rural markets:
Old Socio-Economic Classes:
a. Lower Class:
b. Middle Class:
c. Upper Class:
102. New Socio-Economic Classes:
a. Emerging Middle Class: The emerging middle class represents a
growing segment of urban and rural consumers with rising income
levels, improved education, and access to employment opportunities.
They seek better standards of living, consumer goods, and aspirational
lifestyles, contributing to increased consumption and market demand.
b. Urban Poor: Despite economic growth, urban areas also have a
significant population of urban poor who struggle with poverty,
inadequate housing, informal employment, and lack of access to basic
services. They face challenges such as income inequality, urbanization-
related issues, and social exclusion.
c. Urban Affluent: The urban affluent segment comprises high-
income individuals, professionals, and executives who enjoy luxury
lifestyles, upscale residences, and exclusive amenities. They drive
demand for premium products, luxury brands, and high-end services
in sectors such as real estate, automotive, fashion, and entertainment.
d. Rural Middle Class: The rural middle class is an emerging
consumer segment in rural markets characterized by increasing
income levels, education, and access to modern amenities. They are
engaged in diverse occupations, including agriculture,
entrepreneurship, and rural businesses, and they seek improved
quality of life, education, healthcare, and consumer goods.
103.
104.
105.
106.
107.
108.
109.
110.
111.
112.
113.
114.
115.
116.
117. Gen Z Consumers
Generation Z, also known as Gen Z, refers to the
demographic cohort born roughly between the mid-
1990s and the early 2010s. As digital natives who have
grown up in an era of rapid technological
advancement and social change, Gen Z consumers
exhibit distinct characteristics, preferences, and
behaviors that set them apart from previous
generations. Here are some key characteristics of Gen
Z consumers:
118. Digital Natives:
Tech-Savvy:
Socially Conscious:
Individualistic:
Entrepreneurial Spirit:
Visual and Experiential:
Frugal and Value-Conscious:
Influenced by Peers and Influencers:
Demand for Authenticity:
Mobile-First Mindset:
119.
120.
121.
122.
123.
124. HNI Consumers in India
Wealth and Assets: Sophisticated Financial Needs
High Income and Affluence: Luxury Lifestyle:
Sophisticated Investors: Entrepreneurial
Background:
Global Outlook: Philanthropy and Social
Responsibility:
125.
126.
127. HNI Consumers in India
High Net Worth Individuals (HNIs) in India refer to individuals with
substantial wealth and financial assets, typically exceeding a certain
threshold. While there is no universally accepted definition of HNIs,
they are generally considered to be individuals with investable assets
above a certain amount, often in the range of several crores or more.
HNIs represent a small but influential segment of the population, and
understanding their characteristics, preferences, and behaviors is
important for businesses, financial institutions, and service providers
catering to their needs. Here are some key characteristics of HNI
consumers in India:
Wealth and Assets: HNIs in India possess significant wealth and
assets, including cash, investments, real estate, businesses, and other
financial holdings. They often have diverse investment portfolios and
access to specialized investment opportunities, wealth management
services, and private banking solutions.
High Income and Affluence: HNIs typically have high levels of
income and affluence, derived from various sources such as business
ownership, investments, executive positions, professional careers, or
inheritance. They enjoy a luxurious lifestyle, with access to premium
products, services, and experiences across multiple domains.
128. Sophisticated Investors: HNIs in India are sophisticated
investors who seek opportunities to grow and preserve their
wealth through strategic investment strategies, asset allocation,
and risk management. They may invest in equities, bonds,
mutual funds, alternative investments, private equity, real estate,
and other asset classes to diversify their portfolios and generate
returns.
Entrepreneurial Background: Many HNIs in India have
entrepreneurial backgrounds, having built successful businesses
or inherited family wealth from entrepreneurial ventures. They
may be business owners, entrepreneurs, executives, or
professionals with expertise in various industries, sectors, and
domains.
Global Outlook: HNIs in India often have a global outlook and
international exposure, with interests, investments, and
connections spanning multiple countries and regions. They may
engage in cross-border investments, international business
ventures, global travel, and lifestyle pursuits that reflect their
cosmopolitan lifestyle and global perspective.
129. Sophisticated Financial Needs: HNIs have sophisticated financial
needs and requirements, seeking customized solutions and advisory
services to manage their wealth, tax planning, estate planning,
succession planning, philanthropy, and legacy preservation. They value
personalized attention, discretion, and expertise from financial
advisors, wealth managers, and private bankers who understand their
unique circumstances and objectives.
Luxury Lifestyle: HNIs in India enjoy a luxurious lifestyle
characterized by high-end residences, luxury vehicles, fine dining,
exclusive memberships, designer fashion, luxury travel, and indulgent
experiences. They seek luxury brands, premium products, and bespoke
services that reflect their status, taste, and discerning preferences.
Philanthropy and Social Responsibility: Many HNIs in India are
actively involved in philanthropy, social impact, and corporate social
responsibility (CSR) initiatives, leveraging their wealth, influence, and
networks to contribute to social causes, community development, and
nation-building efforts. They may establish charitable foundations,
support non-profit organizations, and participate in social impact
investing to address pressing social, environmental, and humanitarian
challenges.
130. UNICEF conducted a study and told us that the world 20%
enjoys more than 70 per cent of world income. This 20 per
cent population is known as the affluent population. In
contrast, the rest 80 per cent is known as the Bottom of the
Pyramid market.
131. BOP Consumers
The bottom of the pyramid is a term describing the
largest and poorest global socio-economic group.
Franklin D. Roosevelt first used the bottom of the
pyramid (BOP) in a 1932 public address during the
Great Depression. Roosevelt noted that – when talking
about the ‘forgotten man:’ “these unhappy times call
for the building of plans that rest upon the forgotten,
the unorganized but the indispensable units of
economic power.. that build from the bottom up and
not from the top down, that put their faith once more in
the forgotten man at the bottom of the economic
pyramid.“
133. The people in this market segment are also varied because some of their needs are similar to the other
market segment, yet some needs are unique to them.
For example, they have everyday needs like an efficient transportation system, water, electricity
access, health services etc. But their needs for electronics, apparels, entertainment may vary from the
others.
There is a higher chance that people in the BOP are willing to pay for it, but they may not have access
to the same.
Unmet Needs
The people in this market segment are also varied because some of their needs are similar to the other
market segment, yet some needs are unique to them.
For example, they have everyday needs like an efficient transportation system, water, electricity
access, health services etc. But their needs for electronics, apparels, entertainment may vary from the
others.
There is a higher chance that people in the BOP are willing to pay for it, but they may not have access
to the same.
Subsistence Livelihood
Its is defined as the minimum resources one needs for their basic survival needs. The people in the
BOP are dependent on informal sectors and as is highly volatile are living hand-to-mouth.
Most of the products generated in this market segment like agriculture goods, handicrafts, labour,
etc. are unable to fetch a fair price and are highly prone to exploitation by the middlemen.
Poverty Penalty
It can be explained as the poor segment's excessive price against the price paid by the rich for the
same goods and services.
For example, BOP people borrow money from informal sources at a really high rate because their
access to organized banking is highly limited. This charging of high-interest rate can be seen as the
poverty penalty.
After learning about this market's characteristics, let's move on to the next important aspect of
bottom of pyramid marketing -The consumers of the bottom of the Pyramid.
134. Concept Overview
– The Bottom of the Pyramid (BoP) is a
socioeconomic concept that refers to the largest, but
economically poorest segment of the global
population. This segment consists of individuals and
households living in low-income or poverty-
stricken conditions, often earning less than a few
dollars per day. The BoP concept, popularized by
business scholar C.K. Prahalad, emphasizes the
potential market opportunity and the potential for
social impact by serving this underserved
population.
135. Key Characteristics
– Vast Population: The BoP encompasses a significant
portion of the global population, estimated to be around 4
billion people, mainly in developing countries.
– Low Income: Individuals within the BoP typically have
limited purchasing power due to their low incomes.
– Diverse Needs: Despite low incomes, the BoP has
diverse needs in areas such as healthcare, education,
nutrition, housing, and employment.
– Entrepreneurship: BoP markets can foster
entrepreneurship and innovation in developing products
and services that are affordable and accessible to this
segment.
136. Consumers at the Base of the Pyramid (BoP) represent a
significant segment of the global population living in low-
income or resource-constrained environments.
Understanding the characteristics of BoP consumers is
crucial for businesses, organizations, and policymakers
seeking to address their needs, preferences, and challenges.
Here are some key characteristics of BoP consumers:
Low Income Levels: BoP consumers typically have limited
purchasing power, with incomes below the poverty line or
close to it. They often struggle to meet basic needs such as
food, shelter, healthcare, and education, and they allocate a
significant portion of their income to essential expenses.
Informal Employment: Many BoP consumers are
engaged in informal or subsistence-based livelihoods, such
as agriculture, small-scale trading, artisanal work, and
domestic labor. They may lack stable employment
opportunities, formal contracts, social security, and access
to financial services, limiting their income-generating
potential.
137. High Price Sensitivity: BoP consumers are highly
price-sensitive and value-conscious, prioritizing
affordability and value for money in their purchasing
decisions. They seek products and services that offer
essential benefits at affordable prices, often opting for
low-cost alternatives or informal solutions to meet
their needs.
Limited Access to Resources: BoP consumers face
barriers to accessing essential resources such as clean
water, sanitation, electricity, healthcare, education,
and transportation. They may live in remote or
underserved areas with inadequate infrastructure and
public services, hindering their quality of life and
economic opportunities.
138. Informal Networks: BoP consumers rely on informal
social networks, community-based organizations, and
mutual support systems to meet their needs and cope with
challenges. Social capital, reciprocity, and trust play a
crucial role in facilitating resource-sharing, collective
action, and resilience within BoP communities.
Diverse Needs and Preferences: BoP consumers have
diverse needs, preferences, and aspirations shaped by
factors such as culture, geography, gender, age, and
household dynamics. Their consumption patterns vary
based on local contexts, traditions, and socio-economic
circumstances, requiring tailored approaches to product
design, marketing, and distribution.
Limited Access to Information: BoP consumers often
have limited access to information, market knowledge, and
technology, restricting their awareness of available
products, services, and opportunities. Information gaps,
language barriers, and low literacy levels hinder their
ability to make informed decisions and access formal
channels of communication and commerce.
139. Resilience and Resourcefulness: Despite facing
significant challenges, BoP consumers demonstrate
resilience, resourcefulness, and entrepreneurial spirit in
navigating their socio-economic realities. They leverage
local resources, traditional knowledge, and adaptive
strategies to overcome adversity, generate income, and
improve their livelihoods.
Potential for Market Growth: BoP consumers represent a
sizable market opportunity for businesses and
organizations that offer affordable, scalable, and impactful
solutions to address their needs and aspirations. Innovative
business models, inclusive strategies, and partnerships can
unlock the potential of the BoP market while promoting
social impact and sustainable development.
140. Business Opportunities
– The BoP concept suggests that businesses can tap
into this underserved market by developing and
offering products and services that are affordable,
accessible, and tailored to the unique needs and
constraints of the BoP population.
– Examples include low-cost healthcare solutions,
affordable housing, microfinance, and clean energy
solutions. Businesses can achieve financial success
while making a positive social impact.
141. Challenges and Risks
– Operating in BoP markets comes with challenges:
1. Infrastructure: Inadequate infrastructure in many BoP
regions can hinder distribution and access.
2. Cultural Sensitivity: Understanding local customs and
cultures is crucial.
3. Regulatory Hurdles: Navigating complex regulatory
environments can be challenging.
4. Scalability: Achieving scale and profitability while
keeping prices low is a constant challenge.
5. Ethical Concerns: Businesses must operate ethically
and avoid exploitation.
142. Triple Bottom Line
– The BoP approach aligns with the concept of the
triple bottom line, emphasizing profit, people, and
planet. It aims to achieve sustainable profits while
improving the lives of the BoP population and
addressing environmental and social challenges.
The triple bottom line considers the economic, social,
and environmental dimensions of business impact.
143. Social Impact
– Beyond profitability, the BoP approach recognizes
the importance of social impact. It seeks to address
issues such as poverty alleviation, improved
healthcare, education, employment generation,
and access to basic services. It can lead to the
empowerment and upliftment of marginalized
communities.
144. Global Development
– BoP strategies align with global development goals,
including the United Nations’ Sustainable
Development Goals (SDGs), which emphasize
poverty reduction, healthcare, education, clean
energy, and economic empowerment. Businesses
operating in BoP markets can contribute to the
achievement of these goals.
145. Inclusive Business Models
– Successful BoP initiatives often involve inclusive
business models that engage local communities and
provide opportunities for employment, training, and
partnerships. Inclusive models empower individuals
within the BoP to become contributors and
consumers.
146. Microfinance and Social
Enterprises
– Microfinance institutions and social enterprises have
played a significant role in addressing BoP challenges.
Microfinance provides access to financial services for
the underserved, while social enterprises create
innovative solutions to meet BoP needs. These entities
have shown that financial sustainability and social
impact can coexist.
149. What's innovation?
Innovation is anything that proposes an alternative to
something that is done in a certain way, brings economic
and behavioral benefits, solves problems, or makes people's
daily lives more practical.It can be related to a product,
service, process, market, means of production, technology,
or anything else that brings about a change that becomes
sustained and indispensable.For innovation to take place,
people and companies use the countless possibilities
technology offers. Technology is the basis that supports
and enables all types of innovation, since without good
tools innovation can come at the wrong time and lose the
potential to scale your business.Remember that to
innovate is to go beyond and exceed the expectations
of stakeholders and the market. For this to happen, you
need speed, quality, and precision.
150. Radical innovation
As the name suggests, a radical innovation really
changes the circumstances of a brand, whether in
terms of market or of business dynamics.It can occur
due to a complete change in a company's positioning,
work method, processes, services, and products
offered, or how it relates to customers.
An example of radical innovation would be Apple's
iPhone. When it was released, smartphones already
existed, but Apple included features that changed the
market and made it more popular.
151.
152. Incremental innovation
Another type of innovation is incremental innovation. It
adds new features to a product, brand, or production
methods without promoting a very drastic change.
It's usually an evolution of an innovation already
implemented by the brand that complements and offers
improvements, be it to employees, customers, or features
of a business.
An example of incremental innovation is Gmail, which was
created with the purpose of sending emails quickly – but
over time, different features were added to improve the
customer experience and make it more useful and
competitive.
153.
154. Disruptive innovation
Technological and behavioral changes have favored the
emergence of disruptive innovation in recent decades.This type
of innovation follows the market more than a specific brand,
product, or service. It can be leveraged by something a company
has offered and, as a result, made their name, but, in general, it's
a scalable change that reaches many people at the same
time.
Examples of disruptive innovation include Netflix, as the market
used to rely on companies like Blockbuster for movies and TV
series. Netflix started offering DVD-by-mail rental services but
decided to innovate. It started offering video streaming services
through a monthly subscription and, in doing so, drove
Blockbuster out of the market. In addition to being innovative,
this also gave Netflix a predictable monthly revenue.
155.
156. What are the Stages of the
Innovation Process?
Being innovative may seem like something unusual that requires
you to be extremely lucky or a genius. But it can actually occur in
any company, big or small, and in any sector.The stages of the
innovation process are simple, and to innovate you must have a
system and repetition. Learn about them here:
Generation of new ideas: What are the opportunities in the
field? What hasn't been done yet and would actually change a
product, service, or company?
Evaluation: What's necessary to put this into practice, is it
possible, and how do you make it viable?
Experimentation: It's vital to test your ideas and identify what
really works and what needs to be improved.
Marketing: Has it reached the sweet spot? It's time to offer to
customers what before was just an internal project.
Follow-up: Keeping track of what has been implemented is
important to understand public acceptance, audience, and
strategy. To do that, feedback is essential.
157. What are the advantages of
innovation?
Keeping processes organized: By being innovative in
how you perform processes, especially if you use
technology, you create standards and systematize the best
work method for your brand. And this is crucial for
strategies to be successful, results to be achieved, and goals
to be reached.
Developing creativity: With innovation, a company
shows that it's open to changes and that employees can
contribute with new ideas and see in practice the benefits
new things can bring to the day to day.
Increasing the business’s competitiveness: By adopting
strategic resources, a company becomes more attractive to
customers, partners, and talents and gains a competitive
advantage in the market.
158. Increasing productivity: Innovation proposes more
effective processes, more production control, effective
strategy, and more engaged employees.
Adding value to a product or service: When you
innovate, you boost the marketing of products and
services, because you bring something different and
unique for your target audience.
Increasing profits: With more productivity, a more
attractive business, and more effective management,
your business will consequently see greater profits.
159.
160.
161.
162.
163.
164.
165.
166.
167.
168.
169.
170. Diffusion of Innovation in
Consumer Behavior
Diffusion is process by which a new product is accepted and spreads through a
market. It is group phenomenon, in which first an idea is perceived, then it
spreads throughout the market, and then individuals and groups adopt the
product.
Definition
Diffusion is a process by which the acceptance of an innovation/new product, a
new idea, a new service, is spread by communication to members of a social
system over a period of time.
DIFFUSION PROCESS
Diffusion process is the manner in which innovations spread throughout the
market. Spread refers to the purchase behavior where a product is purchased
with some continuing regularity. Spread of innovation can be of three types as
shown in the Figure below:
171.
172. The diffusion process follows a similar pattern, overtime,
irrespective of the social group or innovation.
The typical diffusion process shows a slow growth or
adoption. It later rises rapidly, and then a period of slow
growth is noticed.
In fast diffusion process, the product clicks immediately.
The spread of innovation is very quick. People patronize
the product immediately, and later on there is again slow
diffusion.
In slow diffusion process, the product takes a lot of time
to diffuse or spread, and the consumer follows a pattern of
adoption slowly by getting acquainted with the product.
173. Stages of Diffusion Process
(1) Knowledge:
Consumer is exposed to the innovations
existence and gains some understanding of how
it functions. In this stage, consumers are aware of
the product but have made no judgment
concerning the relevance of the product to a
problem or recognized need. Knowledge of a
new product is considered to be result selective
perception and is more likely to occur through
the mass media than in late stages which are
more influenced by opinion leaders.
174. 2) Persuasion:
In this stage, usually attitude formation takes place that is consumer
forms favorable or unfavorable attitudes toward the innovation.
Consumer may mentally imagine how satisfactory new product might
be in use, i.e., “vicarious trial” of the product in consumer’s mind.
It is also considered as the evaluation of consequences of using the
product. This means consumers weigh the potential gains from
adopting the product against the potential losses of switching from the
product now used.
A person may seek out new stories, pay particular attention to
advertising for the product, subscribe to product rating services, talk to
experts in that product category etc. This is basically done to reduce
perceived risk in adopting new products. Each of the above
information search and evaluation strategies has an economic and/or
psychological cost.
Many persuasion methods are used by marketers. One of the common
arid effective methods is catalogues, specially used for new products
because this provides more information than the typical retail setting.
For example – marketer can show the advantages ones present
solutions of hair problems.
175. (3) Decision:
Consumer engages in activities that lead to a
choice to adopt or reject the innovation (i.e.,
adoption or rejection). Adoption can be defined as
a decision to make full use of an innovation as the
best course of action. This means continued use of
the product unless situational variables (lack of
availability, or money etc.) prevent usage.
Rejection means not to adopt an innovation.
There may be some persons who first consider
adopting an innovation or at least give a trial, but
then deciding not to adopt it. This is called an
active rejection. Others never consider the use of
the innovation, known as passive rejection.
176. (4) Implementation:
Implementation means consumer, puts the innovation into use. Until
this stage, the process is a mental exercise, but in this stage behavioral
change is required Marketing plan is the determinant of whether a
good product has been communicated effectively (i.e., actually sales).
Marketing mix planned should be such that purchase is made easy.
This means proper coordination of the channels of distribution with
new products and their communication process.
(5) Confirmation:
Consumer seeks approval/reinforcement for the innovation decision,
but may reverse this decision if exposed to conflicting messages about
the product. This stage is also influenced by communication sources
and consumers evaluate their purchase experiences. After evaluating,
they try to support their behaviour and later decide to continue or
discontinue using the product.
Marketers consider studying discontinuance to be equally important as
the rate of adoption. They study so that marketing strategies can be
tailor made with respect to the reasons for the same. It is seen that
people who adopt the product later than early adopters, are more likely
to discontinue. Therefore, marketers try to upgrade follow – up service
and feedback as sales of a new product expands.
177.
178. Stages in adoption process
1. Awareness
· Consumer in first expose to the product innovation.
· Lacks in information about the product
· May only know the name of product and its basic features.
2. Interest
· Consumer is interested in product and search for additional information.
· He wants to know what is it, how it works and what its potentialities are.
3. Evaluation
· Consumer decides whether or not to believe this product or service.
· Will it satisfy his needs and requirements?
· Individual makes a mental trial of the idea.
4. Trial
· Consumer uses the product on a limited basis.
· During this stage the individual determines the usefulness of the innovation and may
search for further information about it.
· The trial stage is characterized by small-scale experimental use, when it’s possible.
5. Adoption or Rejection
· If trail in favorable consumer decides to use the product
· If unfavorable the consumer decides to reject it.
179. Types of Innovation
Innovation can take various forms, ranging from incremental
improvements to groundbreaking advancements that disrupt entire
industries. Here are the primary types of innovation:
Product Innovation: Product innovation involves the development of
new or improved products, services, or features to meet customer
needs, enhance functionality, or differentiate offerings in the market.
This type of innovation can include new product designs, features,
functionalities, materials, or performance enhancements. Examples
include the introduction of new smartphone models with advanced
features, the development of electric vehicles with longer battery life,
or the creation of innovative healthcare devices for monitoring and
treatment.
Process Innovation: Process innovation focuses on improving the
efficiency, effectiveness, or productivity of internal processes,
operations, and workflows within organizations. This type of
innovation aims to streamline processes, reduce costs, eliminate waste,
and enhance quality through the adoption of new technologies,
methods, tools, or organizational practices. Examples include
implementing robotic automation in manufacturing processes,
adopting lean manufacturing principles to optimize production
workflows, or digitizing administrative tasks to improve efficiency.
180. Business Model Innovation: Business model innovation
involves the creation of new ways of delivering value to
customers, capturing market opportunities, and generating
revenue streams. This type of innovation can involve changes to
pricing strategies, distribution channels, revenue models,
partnerships, or value propositions that disrupt traditional
business models and create competitive advantages. Examples
include subscription-based business models like Netflix,
platform-based models like Uber, or freemium models like
Spotify.
Service Innovation: Service innovation focuses on developing
new or improved services, experiences, or delivery methods that
address customer needs, preferences, and pain points. This type
of innovation encompasses innovations in service design,
delivery processes, customer interactions, and service
ecosystems across various industries. Examples include the
introduction of online banking services, digital entertainment
platforms, telemedicine services, or personalized shopping
experiences.
181. Technological Innovation: Technological innovation involves
the development and application of new technologies, scientific
discoveries, or engineering breakthroughs to create novel
solutions, products, or services. This type of innovation drives
advancements in various fields such as information technology,
biotechnology, healthcare, energy, transportation, and
manufacturing. Examples include the development of artificial
intelligence (AI) algorithms, gene-editing technologies like
CRISPR, renewable energy technologies, or advanced materials
for aerospace applications.
Marketing Innovation: Marketing innovation focuses on
creating new ways of engaging customers, communicating value
propositions, and promoting products or services in the market.
This type of innovation involves creative marketing strategies,
campaigns, branding initiatives, or customer engagement tactics
that differentiate brands, capture attention, and drive customer
acquisition and retention. Examples include viral marketing
campaigns, influencer collaborations, experiential marketing
events, or social media engagement strategies.
182. Social Innovation: Social innovation involves the development
of new solutions, approaches, or initiatives to address social,
environmental, or community challenges and create positive
societal impact. This type of innovation often involves
collaboration among stakeholders from diverse sectors,
including government, nonprofits, businesses, and
communities, to tackle complex issues such as poverty,
healthcare access, education, environmental sustainability, or
social inequality. Examples include microfinance initiatives,
clean energy projects, social enterprises, or community-driven
development programs.
By understanding the various types of innovation, organizations
can identify opportunities for growth, differentiation, and
competitive advantage, and develop strategies to drive
innovation across different aspects of their business operations,
products, services, and business models.