Consumer Behaviour - Unit I

CONSUMER
PERCEPTION/
SENSATION
COGNITION
AFFECT
BELIEFS
SOCIAL AND
OTHER INFLUENCE
INFO
SEARCH
CHOICES
PREFERENCES
COMMUNICATION
MARKET
RESEARCH
STRATEGY
Influences on and of Consumer Behavior

True or False?
1. If you have bad breath, you cannot smell it
yourself.
2. If you eat a balanced diet, you do not need
vitamin supplements.
3. Using a razor with five blades will reduce the
likelihood of cutting yourself and will result in less
skin irritation.
4. Dell Computers tend to be of higher quality than
those made by HP and Sony.
5. Rust stains on clothes can be removed with the
use of lemon juice. Bleach actually makes these
stains worse.

Questions Faced By Consumers
• Are veggie burgers actually healthy?
• What makeup should you use to get an “even”
skin tone?
• Do I get any useful benefits from spending
more than $125 on a digital camera?
• Should I get a “make-over?” What am I
looking for? What should I do?
• Is my mechanic honest?
• Which tie should I wear for a job interview?
• Should I give my wife roses, chocolate, or
software?

Consumer Problems and
Recognition
• Consumer problem:
Discrepancy between ideal and
actual state--e.g., consumer:
– Has insufficient hair
– Is hungry
– Has run out of ink in his or her
inkjet cartridge
• Problems can be solved in
several ways--e.g., stress reduction
<----- vacation, movie, hot bath,
medication

CONSUMER DECISIONS:
Theory and Reality in Consumer Buying
INFORMATION
SEARCH
PROBLEM
RECOGNITION
EVALUATION OF
ALTERNATIVES
PURCHASE
POSTPURCHASE
EVALUATION/
BEHAVIORS
Theory
Complications

Approaches to Search for
Problem Solutions
INTERNAL
EXTERNAL
Memory
Thinking
Word of mouth, media,
store visits, trial CATALOG

Options Identified and Considered
UNIVERSAL SET
RETRIEVED SET
EVOKED SET
All possible options
Options that readily
come to mind
Options that will be
considered by the
consumer
Note: Retrieved and
evoked sets will vary
among different
consumers

REMINDER
• For low involvement
products, efforts aimed
at affecting internal
search tend to be more
effective—the consumer
is usually not willing to
expend energy on
external search.
• External search is more
likely for higher
involvement products.

Decision Making Issues
• Involvement level
– Temporary
– Enduring
• Consumer locus of control
– Internal
– External
• Product category complexity
• Consumer knowledge

Evaluation Type
– Compensatory: Decision based on overall value
of alternatives (good attribute can outweigh bad
ones)
– Non-compensatory: Absolutely must meet at
least one important criterion (e.g., car must have
automatic transmission)
– Hybrid: Combination of the two (e.g., one non-
compensatory measure, then compensatory
tradeoffs on other attributes
– Abandoned strategy: Consumer finds initial
criteria unrealistic and proceeds to less desirable
solution
IMPORTANT
LESS
IMPORTANT

Heuristics—Low Involvement Decision
Rules
• If either Coke or Pepsi is on
sale, buy that brand;
otherwise, buy Coke
• The larger the navels, the
better the orange
• The larger package is likely to
offer a lower unit price (not
true in reality)

Attitudes―components
BELIEFS
AFFECT
(FEELING)
BEHAVIORAL
INTENTIONS

Attitude Components
• Beliefs
– Can be positive, negative,
or neutral
– May or may not be
accurate
– May contradict other
beliefs held by the other
person
• Affect
– May be positive or negative
– May take on specific
dimension (e.g., pleasure,
disgust)
• Behavioral
Intentions
– An individual’s plan or
expectations of what he or
she will do
– May appear inconsistent
with beliefs
– May not predict well what
the individual will do in
reality

Generating Beliefs Through Advertising
• Statements must be
– Perceived
– Comprehended
– Remembered
– Believed (at least in part)

Positioning Through Creating Beliefs
• “It’s not delivery; it’s De Journo!”
• “Wal-Mart. Always low prices.
Always.”
• “I just saved a bunch of money on
my auto insurance.”
• “U-um Good!” (Campbell’s Soup)

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Consumer Behaviour
The behaviour that consumers
display in searching for,
purchasing, using, evaluating, and
disposing of products and
services that they expect will
satisfy their needs.

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Personal Consumer
The individual who buys goods and
services for his or her own use,
for household use, for the use of
a family member, or for a friend.

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Development of the Marketing
Concept
Production
Concept
Selling Concept
Product Concept
Marketing
Concept

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The Production Concept
• Assumes that consumers are
interested primarily in product
availability at low prices
• Marketing objectives:
–Cheap, efficient production
–Intensive distribution
–Market expansion

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The Product Concept
• Assumes that consumers will buy the
product that offers them the highest
quality, the best performance, and the
most features
–Quality improvement
–Addition of features
• Tendency toward Marketing Myopia

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The Selling Concept
• Assumes that consumers are unlikely to
buy a product unless they are
aggressively persuaded to do so
–Sell, sell, sell
• Lack of concern for customer needs and
satisfaction

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The Marketing Concept
• Assumes that to be successful, a
company must determine the needs and
wants of specific target markets and
deliver the desired satisfactions better
than the competition
– Profits through customer satisfaction

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Business Leaders Who Understood
Consumer Behaviour
• Alfred Sloan, General Motors
• Colonel Sanders, KFC
• Ray Kroc, McDonald’s

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Implementing the Marketing Concept
• Consumer Research
• Segmentation
• Targeting
• Positioning

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Segmentation, Targeting, and Positioning
• Segmentation: process of dividing the
market into subsets of consumers with
common needs or characteristics
• Targeting: selecting one ore more of the
segments to pursue
• Positioning: developing a distinct image
for the product in the mind of the
consumer

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Successful Positioning
• Communicating the benefits of the product,
rather than its features
• Communicating a Unique Selling Proposition
for the product

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The Marketing Mix
• Product
• Price
• Place
• Promotion

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The Societal Marketing Concept
• All companies prosper when society
prospers.
• Companies, as well as individuals,
would be better off if social
responsibility was an integral
component of every marketing decision.
• Requires all marketers adhere to
principles of social responsibility.

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Digital Revolution in the Marketplace
• Allows customization of products,
services, and promotional messages
like never before
• Enhances relationships with customers
more effectively and efficiently
• Has increased the power of customers
and given them access to more
information

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Digital Revolution in the Marketplace -
Continued
• The exchange between consumers and
marketers has become more interactive
• May affect the way marketing is done

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Why study consumer behaviour?
• Understanding consumer behaviour will
help you become better marketers as it is
the foundation for
 Segmenting markets
 Positioning products
 Developing an appropriate marketing
 continued

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• Knowledge of consumer behaviour is
essential for non-profit organizations
–Non profits have different customers to
please
–Donors, users, volunteers, general public,
government
» continued

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• Public service initiatives have to be
based on an understanding of
consumer behaviour
–Canada’s largest advertiser is the federal
government
–Most government initiatives (e.g.,
antismoking campaigns) need a
knowledge of consumer behaviour to
succeed
» continued

1-35
• Better understanding of our own consumption
behaviour

Consumer
Purchase
Decision
Motives
Personality
Needs
Perception
Learning
AttitudesBusiness
Economic
Family
SIMPLE MODEL FOR CONSUMER BEHAVIOUR

Important models of consumer
behaviour:
• The Economic Model
• Learning Model
• Psychological Model
• The Sociological Model
• The Howard Sheth Model of buying behaviour
• The Nicosia Model
• The Engle-Kollat-Blackwell Model
• Engle, Blackwell and Miniard (EBM) Model
• Webstar and Wind Model of organizational buying
behaviour
• The Sheth Model of Industrial buying

Traditional Models
• The Economic Model
• Learning Model
• Psychological Model
• The Sociological Model
Contemporary Models
• The Howard Sheth
Model of buying
behaviour
• The Nicosia Model
• The Engle-Kollat-
Blackwell Model
• Engle, Blackwell and
Miniard (EBM) Model
• Webstar and Wind
Model of organizational
buying behaviour
• The Sheth Model of

Economic Model:
This model assumes that with limited purchasing power and
a set of needs and tastes, a consumer will allocate his/ her
expenditure over different products at a given prices so as
to maximize utility.
Bases for Economic Model:
– Price Effect
– Substitution Effect
– Income Effect
Criticism:
• Fails to explain how does the consumer actually behave.
• Incompleteness in the Model.
• Lack of broader perspective.

Learning Model:
This model help marketers to promote association of products
with strong drivers and cues, which would lead to positive
reinforcement from the consumers.
In marketing context, ‘learning’ will help marketers to
understand how consumer learn to respond in new marketing
situations, or how they have learned and respond in the past in
similar situations.
As Consumers also learn to discriminate and this information
will be useful in working out different marketing strategies.

Psychological Model:
This model based on the work of psychologists who were
concerned with personality. The view was human needs
and motives operates on buying.
This theory was developed by Sigmund Frued. Acc. To him
human behaviour is the outcome of
– Id
– Super Ego
– Ego
This model is concerned with personality and says that
human behaviour to a great extent is directed by a complex
set of deep seated motives.
Helps the marketer to know how buyers influenced by
symbolic factors in buying a product.

The Sociological Model:
As per this model, an individual buyer is a part of the
institution called society, gets influenced by it and in turn, also
influences it in its path of development.
The interactions with all the set of society leave some
impressions on him and may play a role in influencing his
buying behaviour.
The marketers, through a process of market segmentation can
work out on the common behaviour patterns of a specific class
and group of buyers and try to influence their buying pattern.

The Howard Sheth Model of buying
behaviourIt attempts to throw light on the rational brand behaviour
shown by buyers when faced with situations involving
incomplete information and limited abilities.
The model refers to three levels of decision making:
• Extensive problem solving
• Limited problem solving
• Routinized response behaviour
The model has borrowed the learning theory concepts to
explain brand choice behaviour when learning takes places as
the buyer moves from extensive to routinized problem
solving behaviour.

Four components involved in the
model:
• Input variables
• Output variables
• Hypothetic constructs
• Exogenous variables
The model makes significant contribution to
understand consumer behaviour by identifying
the variables which influence consumers.

Input Variables: these variables acts as stimuli in the
environment.
Stimuli can be of Significative, Symbolic & Social
Significative stimuli are those actual elements of brands
which the buyer confronts, where as Symbolic stimuli are
those which are used by marketers to represent their
products in a symbolic form. Social stimuli are generated by
the social environment such as family, friends, groups etc.

Output variables:
These are which buyer’s observable responses to stimulus
inputs. They appear in the sequence as below:
• Attention: Based on the importance of the buyer’s
information intake.
• Comprehension: the store of information the buyer has
about the brand.
• Attitude: the buyer’s evaluation of the particular brand's
potential to satisfy his or her motives.
• Intention: the brand which the buyer intends to buy.
• Purchase behaviour: the act of actually purchasing,
which reflects the buyer’s predisposition to buy as
modified by any of the inhibitors.

Hypothetical Constructs:
The model proposes a number of intervening variables which
have been categorised into two major groups: perceptual and
learning constructs.
Perceptual Constructs include:
• Sensitivity to information: the degree to which the buyer
regulates the stimulus information flow.
• Perceptual bias: refers to distorting or altering information
• Search for information: it involves actively seeking
information on the brands or their characteristics.

The buyer’s learning constructs can be defined as:
• Motives are general or specific goals impelling action.
• Brand potential of the evoked set refer to the buyer’s
perception on the ability of brands in his pr her evoked
set to satisfy his or her goals.
• Decision mediators are based on the motives. The buyer
will have certain mental rules for matching and ranking
the purchase alternatives.
• Predisposition refers to a preference towards brand in
the evoked set which expresses an attitude towards
them.
• Inhibitors refers to environmental forces like price and
time pressure which may inhibit or put restrain on the
purchase of a preferred brand.
• Satisfaction the extent to which, post actual purchase will
measure upto the buyer’s expectation of it.

• Exogenous variables:
These are list of a number of external variables
(external to the buyer) which can significantly influence
buyer decisions.

The Howard Sheth Model of buying
behaviour

Limitations of the model:
• There is a absence of sharp distinctions between
exogenous variables and other variables.
• Some of the variables, which are not well defined,
and are difficult to measure too.
• The model is quite complex and not very easy to
comprehend.

The Nicosia Model
This model attempts to explain buying behaviour by establishing
a link between the organisation and its prospective customer. It
analyse human being as a system with stimuli as the input to the
system and the human behaviour as an output of the system.
The model suggests that message from the first influences the
predisposition of the consumer towards the product or services.
Based on the situation, the consumer will have a certain attitude
towards the product. This may result in a search for the product
or an evaluation of the product attributes by the consumer.
If the customer satisfies with above it may result in a positive
response, with a decision to buy the product otherwise the
reverse may occur.

The Nicosia Model explains in 4 basic areas:
Field 1:- the consumer attribute and the firm’s attributes. The
advt. message sent from the company will reach the consumer
attributes.
Field 2:- it is related to the search and evaluation, undertaken by
the consumer, of the advertised product and also to verify if
other alternatives are variable.
Field 3:- it explains how the consumer actually buys the product.
Field 4:- it is related to the uses of the purchased items. It can
also be related to an output to receive feedback on sales results
by organisation.

Limitations:
• The flow is not completed and does not mention the various
factors internal to the consumer.
• The assumption about the consumer being involved in the
decision process with no predisposition about the various
brands is restricting.
• Overlapping between firm’s attributes and consumers
attributes.

The Engel – Kollat – Blackwell (EKB)
Model:
• This model talks of consumer behaviour as a decision
making process in the form of five steps (activities) and
other related variables which occur over a period of time.
• 5 steps involved in the decision process:
– Problem Recognition
– Information Search
– Alternative Evaluation
– Choice
– Outcome

• Other related Variables included in this
model:
– Information input
– Information processing
– Product – brand evaluation
– General motivating influences
– Internationalised environment influences

About the model
• The model has emphasised on the conscious decision
making process adopted by a consumer.
• The model is easy to understand and is flexible.
• This model recognises that a consumer may not go
through all the steps always. This is because in case of
repeat purchases the consumer may bypass some of the
steps.
• One limitation, the inclusion of environmental variables
and general motivating influences but not specifying the
effect of these on the buyer behaviour.

Engel, Blackwell and Minirad (EBM)
Model:• It shares certain things with Howard-Sheth model.
• The core of the EBM model is a decision process which is
augmented with inputs from information processing and
other influencing factors.
• Four sections of the Model:
• Input
• Information Processing
• Decision process and
• Variables influencing decision process.

• The EBM Model when compared to the Howard-seth
model is more coherent and flexible than the latter.
• This model also includes human processes like
memory, information processing and considers both
the positive and negative purchase out comes.

Consumer Buying Behavior
• Consumer Buying Behavior refers to the
buying behavior of final consumers -
individuals & households who buy goods and
services for personal consumption.
• All these consumers make up the consumer
market.
• The central question for marketers is:
– “How do consumers respond to various marketing
efforts the company might use?”

High
Involvement
Significant
differences
between
brands
Few
differences
between
brands
Low
Involvement
Types of Buying Decision Behavior
–Lawson’s model
Complex
Buying
Behavior
Variety-
Seeking
Behavior
Dissonance-
Reducing Buying
Behavior
Habitual
Buying
Behavior

Model of Buyer Behavior –
Lawson’s model
Marketing and
Other Stimuli
Marketing
Product
Price
Place
Promotion
Other
Economic
Technological
Political
Cultural
Buyer’s Black Box
Buyer Characteristics
Buyer Decision Process
Buyer Responses
Product Choice
Brand Choice
Dealer Choice
Purchase Timing
Purchase Amount

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• Stimulus Response Model
– Marketing and other stimuli enter the buyer’s
“black box” and produce certain choice /
purchase responses.
– Marketers must figure out
what is inside of the buyer’s
“black box” and how stimuli
are changed to responses.
Model of
Consumer Behavior
?

Factors Influencing
Consumer Behavior-Lawson’s
model (Fig.2.3)
Social
Reference
groups
Family
Roles
and
status
Personal
Age and
life-cycle
Occupation
Economic
situation
Lifestyle
Personality
and
self-concept
Psycho-
logical
Motivation
Perception
Learning
Beliefs and
attitudes
Buyer
Culture
Sub-
culture
Social
class
Cultural

6 - 70
Characteristics Affecting Consumer
Behavior
• Culture
• Subculture
– Hispanic consumers
– African Americans
– Asian Americans
– Mature consumers
• Social Class
Cultural
Social
Personal
Psychological
Key Factors

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• Hispanics
– 35 million consumers
purchase $425 billion worth
of goods and services.
– Expected to grow 64% in 20
years.
– Spanish media makes group
easy to reach.
– Brand loyal group.
Behavior

Sears uses the Fiesta mobile to visit
Hispanic neighborhoods regularly

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• African Americans
– 35 million consumers purchase
$527 billion worth of goods and
services.
– Growing more affluent /
sophisticated.
– Price and brand name
conscious; quality and selection
are important.
– Certain media target this group.
Behavior

Hallmark offers an Afrocentric line of greeting cards called
Mahogany. What other brands have been targeted specifically to
African Americans?

6 - 75
• Asian Americans
– 10 million consumers
purchase $229 billion worth
of goods and services.
– Fastest growing, most
affluent subculture.
– Many nationalities comprise
this group.
– Consumer packaged goods
firms now target this group
more heavily.
Behavior

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• Mature Consumers
– 75 million consumers age 50+will grow to 115 million
within 25 years.
– Mature consumers
control 50% of all
discretionary income.
– Attractive market for
travel, restaurant, and
cosmetics products,
among others.
Behavior

6 - 77
Behavior
• Groups
– Membership
– Reference
• Inspirational
groups
– Opinion leaders
• Buzz marketing
• Family
– Kids can influence
• Roles and Status
Cultural
Social
Personal
Psychological
Key Factors

6 - 78
Behavior
• Age and life-cycle
• Occupation
• Economic situation
• Lifestyle
– Activities, interests, and
opinions
– Lifestyle segmentation
• Personality and self-
concept
– Brand personality
Cultural
Social
Personal
Psychological
Key Factors

Lifestyles:
Jeep targets
people who
want to “leave
the civilized
world behind”
What other
types of images
could be used
to appeal to this
lifestyle?

Think about Tide
detergent.
What brand
personality
seems to
describe Tide
best?
Can you think of
examples of
brands that fit
each personality
type?

6 - 81
Behavior
• Motivation
– Needs provide motives
– Motivation research
– Maslow’s hierarchy of needs
• Perception
– Selective attention, selective
distortion, selective retention
• Learning
– Drives, stimuli, cues, responses
and reinforcement
• Beliefs and attitudes
Cultural
Social
Personal
Psychological
Key Factors

SOURCES OF EXTERNAL INFLUENCES ON CONSUMER
BEHAVIOUR-Wilkie (1990)
SCOPE STRENGTH IMMEDIACY
CULTURE general High Long-term
SUBCULTURE general High Long-term
FAMILY specific High Long-term
FRIENDS specific High/low Long term/short term
MKT STIMULI specific low Long term/short term
SCOPE – the sweep or reach of the impact
STRENGTH- the power to impact behaviour
IMMEDIACY – direct or focused influence on behaviour; the impact
is felt with no or little influence coming into play.

(Fig. 2.4)-Lawson’s model
Postpurchase
Behavior
Purchase
Decision
Information
Search
Need
Recognition
Evaluation
of Alternatives

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The Buyer Decision Process
• Need recognition
• Information search
• Evaluation of
alternatives
• Purchase decision
• Postpurchase behavior
• Needs can be
triggered by:
– Internal stimuli
• Normal needs
become strong
enough to drive
behavior
– External stimuli
• Advertisements
• Friends of friends
Stages

Attempt to stimulate need recognition

Need or Problem Recognition
• The realization that there is a difference
between actual and desired states
– The higher the gap, the stronger the need (or
bigger the problem)

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Types of Problems
• Active Versus Inactive problems
– Active: those you are aware of
– Inactive: those that you are not yet aware of (but
exist)
• Those that require immediate solutions and
those that do not require immediate solutions

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Problem Recognition and Marketing
Strategy
• Identify existing consumer problems and find
solutions for these
• Lower the actual state
• Increase the desired state
• Increase the importance of the gap between actual
and desired states
• Convert inactive problems to active problems
• Convert problems into ones requiring an immediate
solution

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Pre-Purchase Search
• Types of Information Sources
• Types of Information Sought
• Factors Affecting Extent of Information Search

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• Evaluation of
alternatives
• Consumers exhibit
heightened attention or
actively search for
information.
• Sources of information:
– Personal
– Commercial
– Public
– Experiential
• Word-of-mouth
Stages

14-91
Figure 14-3: Types of Information
Sources
PERSONAL
Friends
Neighbors
Relatives
Co-workers
Computer salespeople
Calling the electronics store
IMPERSONAL
Newspaper articles
Magazine articles
Consumer Reports
Direct-mail brochures
Information from product
advertisements
Internal web site

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Types of Information Sought
• Brands or alternatives available
• Evaluative criteria to be used
– Generally, product features
• Ratings of brands on evaluative criteria

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• Evaluation of
alternatives
• Evaluation procedure
depends on the consumer
and the buying situation.
• Most buyers evaluate
multiple attributes, each of
which is weighted differently.
• At the end of the evaluation
stage, purchase intentions are
formed.
Stages

Step 3. Evaluation of Alternatives
Product Attributes
Evaluation of Quality, Price, & Features
Degree of Importance
Which attributes matter most to me?
Brand Beliefs
What do I believe about each available brand?
Total Product Satisfaction
Based on what I’m looking for, how satisfied
would I be with each product?
Evaluation Procedures
Choosing a product (and brand) based on one
or more attributes.

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• Evaluation of
alternatives
• Two factors intercede
between purchase
intentions and the
actual decision:
– Attitudes of others
– Unexpected situational
factors
Stages

Step 4. Purchase Decision
Purchase Intention
Desire to buy the most preferred brand
Purchase Decision
Attitudes
of others
Unexpected
situational
factors

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• Evaluation of
alternatives
• Satisfaction is key:
– Delighted consumers
engage in positive word-
of-mouth.
– Unhappy customers tell on
average 11 other people.
– It costs more to attract a
new customer than it does
to retain an existing
customer.
• Cognitive dissonance
Stages

Step 5. Postpurchase Behavior
Consumer’s Expectations of
Product’s Performance
Dissatisfied
Customer
Satisfied
Customer!
Product’s Perceived
Performance
Cognitive Dissonance

BUYER ROLES
INITIATOR
• First individual who suggests product/service should be
evaluated/purchased.
INFLUENCER
• Provides view and advice which are valued by others and can
subsequently influence the final decision.
DECIDER
• The individual who will take the decision in the buying process
at what, how , when and where to buy (store choice), etc.
BUYER
• The individual who actually makes the purchase
USER
• The individual who consumes or users the service/product.

FACTORS INFLUENCING SHOPPERS’
STORE CHOICE
Kelly and Stephenson ( 1967) identified 8 factors ;
1. General store characteristics-reputation, no of stores
2. Physical characteristics – décor,cleanliness, checkout
services.
3. Convenience –time, parking etc.
4. Products – variety, dependability, quality.
5. Prices charged – value special sales.
6. Personnel – courteous, helpful, friendly.
7. Advertising –informative, aggressive, believable.
8. Friends’ perception of the store- well known, liked,
reccommended.

ASSUMPTION ON CONSUMER BEHAVIOUR-
Behavioural versus Cognitivists view
BEHAVIOURIST
COGNITIVIST

BEHAVIOURIST VERSUS
COGNITIVIST APPROACHES
BEHAVIOURIST
• Observed behaviour is all
important
• People are info transmitters
• People are all alike
• Behaviour is rational
• Human characteristics can
be studied independently.
• Emphasis is on what a
person is and does.
• Behaviour can be
understood
COGNITIVIST
• What goes on in a person’s
mind is the key to
comprehension.
• Behaviour is not predictable
• People are info generators
• Each person is unique
• Behaviour is irrational
• People must be studied as a
whole
• Emphasis is on what a person can
be.
• Behaviour can never be
completely understood.

THEORIES OF CONSUMER BEHAVIOUR
• The Engel-Kollat-Blackwell (EKB)
model.
• Howard & Sheth model
• Maslow’s Hierarchy model

The Engel-Kollat-Blackwell
(EKB) model.
• First developed in 1968.
• A key feature of the EKB model is the differences
between high and low involvement as part of the
buying process.
• High involvement is present in the high risk purchase
• Low involvement is present in the low risk purchase.

Models of Consumer Behaviour
The Engel-Kollat-Blackwell (EKB) model
• Consumers are seen as active agents following
rules of behaviour, fairly easy to follow and
implement because they require only a limited
amount of information and capability of
elaboration
• For instance, a consumer, being aware of a
certain need and believing a certain good
category satisfies it, might fix a maximum price
he/she can afford and search for the best good
available under such a constraint.

Howard & Sheth model
• The model claims that a person’s purchase decision is
often influenced by more than one individuals.
• A family buying decision involves multiple influences
from its members.
• This theory shows the concept of role structure, that
is individuals members of the family takes on roles
such as collecting information, deciding on the
information budget, etc.
• The theory also states that retailers /businesses are
not only dealing with a homogeneous unit but a
collection of individuals with different goals, needs,
motives and interests.

Howard & Sheth model
• Acoording to the model, the 'inputs' (stimuli) that the
consumer receives from his or her environment are:
1. significative - the 'real' (physical) aspects of the product or
service (which the co make use of)
2. symbolic - the ideas or images attached by the supplier
(for example by advertising)
3. social - the ideas or images attached to the product or
service by 'society' (for example, by reference groups)

• The 'outputs' are what happens, the consumer's
actions, as observable results of the input stimuli.
• Between the inputs and outputs are the
'constructs', the processes which the consumer
goes through to decide upon his or her actions.
Howard and Sheth group these into two areas:
1. perceptual - those concerned with obtaining and
handling information about the product or service
2. learning - the processes of learning that lead to
the decision itself
-Howard & Sheth model

MASLOW’S HIERARCHY MODEL
• Theory of motivation developed by Abraham
Maslow(1943)
• Illlustrated into low needs to high needs.
• Comprises of physiological, safety, belongingness,
esteem and self actualization.
• Can be applied by retailers to understand a targeted
segment’s needs and wants and offer the right
product at the right price, promotion and place.

Physiological Needs
(hunger, thirst)
Safety Needs
(security, protection)
Social Needs
(sense of belonging, love)
Esteem Needs
(self-esteem)
Self
Actualization
(Self-development)
Maslow’s Hierarchy of Needs
(Fig. 2.5)

The milk
moustache
campaign
changed
attitudes
toward milk.

6 - 112
Buyer Decision Process for New
Products
• New Products
–Good, service or idea
that is perceived by
customers as new.

6 - 113
Products
• Stages in the Adoption
Process
–Marketers should help
consumers move from
awareness to adoption.

6 - 114
for New Products
Stages in the Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption

6 - 115
Products
• Individual Differences
in Innovativeness
– Consumers can be classified
into five adopter categories,
each of which behaves
differently toward new
products.

Figure 6-7:
Adopter Categories Based
on Relative Time of Adoption

6 - 117
Products
• Product Characteristics and
Adoption
–Five product characteristics
influence the
adoption rate.

6 - 118
for New Products
Product Characteristics
Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

14-119
Factors That Affect the Type of
Decision Making Process Used
• Importance of the decision
• Extent of previous experience
• Existence of well-established decision
criteria
• Amount of information at hand about each
alternative
• The number of alternatives available
• Model of consumption being followed

14-121
Factors that Increase the Level of Pre-
purchase Search
• Product Factors: Higher search when
– It is a long-lasting or infrequently used product
– There are frequent changes in product styling
– Large volume is purchased
– The price is high
– There are many alternative brands
– There is much variation in features
» continued

14-122
purchase Search
• Situational Factors: Higher search when:
– Experience is lower
– Previous experience was unsatisfactory
• Social Acceptability: Higher search when:
– Purchase is a gift
– Product is socially visible in use
» continued

14-123
purchase Search
• Value-Related Factors: Higher search when:
– Purchase is discretionary
– All alternatives have both positive and negative
qualities
– No agreement among users exists
– Conflicting information is available
– Other considerations exist
» continued

14-124
purchase Search
• Consumer Factors: Higher search when:
– Consumers are well-educated, have higher
income levels and are younger
– Consumers are low in dogmatism and risk
perception
– Level of involvement is high
– Shopping is seen as an enjoyable activity
» continued

14-125
Evaluation of Alternatives – Types of
Consumer Choice Processes
• Affective choices
– More holistic; an overall evaluation
– based on how one feels about a purchase
• Attribute-based choices
– Have pre-determined evaluative criteria
– May require both external and internal search
– Complicated decision rules may be used

14-126
Nature of Evaluative Criteria
• Can be tangible or intangible
• Include surrogate indicators
– Attributes that are used as indicators of another
attribute
• Are often ranked in order of importance

14-127
Consumer Decision Rules
• Procedures used by consumers to facilitate
brand or other consumption-related choices

14-128
Consumer Decision Rules
• Compensatory
– Brands evaluated in terms of each relevant criteria
and the best brand (or one with the highest score)
is chosen
• Non-compensatory
– Positive evaluations do not compensate for
negative evaluations

14-129
Non-Compensatory Consumer
Decision Rules
• Conjunctive Decision Rule
–Product attributes are identified
–a minimally acceptable cutoff point is
established for each attribute
–brands that fall below the cutoff point on
any one attribute are eliminated from
further consideration.
» continued

14-130
Non-Compensatory Consumer
Decision Rules
• Disjunctive Decision Rule
–consumers identify product attributes
–establish a minimally acceptable cutoff
point for each attribute
– accept the brand that meets or exceeds the
cutoff for any one attribute
» continued

14-131
Non-Compensatory Consumer Decision
Rules
• Lexicographic Decision Rule
– Product attributes are identified
– Product attributes are ranked in terms of
importance
– brands are compared in terms of the attribute
considered most important
– Brand that scores highest on the first attribute
is chosen
– If there is a tie, the scores on the next attribute
are considered

14-132
Information Search and Marketing
Strategy
• Get products into consumers’ evoked set
• Limit information search if your brand is the
preferred brand
• Increase information search if your alternative
is not the preferred brand
• Use point-of-purchase advertising effectively

14-133
Alternative Evaluation and Marketing
Strategy
• Identify decision rule used by target market and use
suitable promotional messages
• Influence the choice of evaluative criteria
• Influence the rating of your product on evaluative
criteria used
• Use surrogate indicators effectively
• Use ‘consumption vision’

CONSUMER BEHAVIOR IN RURAL
MARKET

RURAL CONSUMER BEHAVIOR
• Consumer Buyer Behavior refers to the buying
behavior of final consumers ‐ individuals and
households who buy goods and services for personal
consumption.
• The consumer market in this case is Rural India.
• About 70% of India’s population lives in rural areas.
There are more than 600,000 villages in the country
as against about 300 cities and 4600 towns.
•

• Consumers in this huge segment have displayed vast
differences in their purchase decisions and the
product use.
• Villagers react differently to different products,
colours, sizes, etc. in different parts of India.

FACTORS INFLUENCING BUYING BEHAVIOR
• The various factors that affect buying behavior
of in rural India are:
1) Environmental of the consumer
2) Geographic influences
3) Family
4) Economic factors
5) Place of purchase
6) Creative use of product

Cultural factors influencing consumer
behaviour
1) Product (colour, size, design, and shape):
2) Social practices
3) Decision‐making by male head
4) Changes in saving and investment patterns

Factors affecting consumer behavior
Rural Taste Subject Urban Taste
Bold and Primary Colors Colors Liked Shades of Colors, Light
Hues
Cinema, Nautanki,
Dangals, Melas
Entertainment Theme Parks, Internet,
Travel
Synthetics, Colourful Clothes Denim, Cottons, Designer
Red – Happiness,
Auspicious. Green -
Prosperity
Color Relevance Red – Danger
Green - Safety

Social factors
• Touching feet
• Hair should not be left open after washing.
• Housing in rural areas based on caste and in
urban areas based on Socio economic class.
• Influenced by NGOs, Opinion Leaders,
Aanganwadi workers.
• Joint Family in rural areas and Nuclear Family in
urban areas.
• Role and Status of Sarpanch, retired military
personnel, priests, teachers, medical
practitioners.
• Product choice features
• Very Social in Rural Areas

Products and Status Symbols
Rural Urban
Social/Political status Educational Degree
Tractor/Jeep/Car Car
Large Pucca House with courtyard House Locality
Children’s city education / jobs Children’s school / college
Land Airconditioning
Telephone Club membership
Pilgrimage Holiday Abroad

Technological Factors
• Rural India is beginning to experience the impact of
technology, leading to major changes that are
transforming the countryside. Opportunities, products,
services, knowledge, information are all exploding.
• Introduced with the purpose and need to create an
instant network for good governance,
telecommunications has transformed rural India in so
many other ways that is of interest to marketers. STD
booths and PCOs have emerged as the new community
centre in the villages for the exchange of news and
views for every age group and therefore an important
place for marketers to display brand communication
messages.

Economic Factors
• The entire economic environment of rural
India shows a much improved prosperity due
to repeated benevolent monsoons, new and
improved techniques, higher quality of inputs
and increasing awareness and education on
agriculture.
• Banking is reaching out to the doorstep of
more and more farmers. Finance is now more
readily available and so is credit.

Political Factors
• Schemes launched by Government has led to the
development of rural areas.
• The Government of India is empowering the
Panchayati Raj and other village institutions by
making available developmental funds. This has
resulted in major purchases of equipment and
materials needed for infrastructure development.
• 30% compulsory representation of women in
local bodies is leading to their empowerment,
encouraging women in rural India to explore
income generation and entrepreneurial activities.

Fundamentals of rural consumer
behavior
• Demonstrations, Targeting Opinion Leaders,
Employing Trained Sales Persons
• Lack of Strong Brand Consciousness
• Generally ask for the product and not the
brand.
• Indian consumers, on an average, try about six
brands of same package goods product in one
year, compared to two for Americans.

Lifestyle of rural consumer
• Rural Consumer is very religious – Dabur
developed a religious calendars and gave
Hanuman Chalisa along with their products.
Ganga made of milk and holy water of Ganga.
Govinda as a Brand Ambassador.
• Rural Consumers prefer to work Hard themselves
– Machines to be sold on the basis of benefits
offered and not on the basis of comfort and
convenience.
• Strong Family ties and respect for Family Values
• Likes to play Cards and Hangs out at Choupal.

Rural Shopping Habits : Consumer
Insights
• Preference for small or medium Package –
Britannia’s Tiger Biscuits, Cavinkare’s Chik
Shampoo, and small Coke for Rs. 5.
• Role of Retailer
• Role of Opinion Leaders for durables –
Opinion Leaders like Sarpanch, village elders
and educated Youth of the village.

Consumption by Age and Stages of the life cycle
Age Life-Cycle stage Urban Rural
Below 12 Child Video games, Chocolates,
beverages, health drinks
Toys, ice candy,
daliya
13-19 Teenage Cell phones, motor cycles,
Internet
Bicycle, television,
cinema
20-40 Young Car, Personal Computer,
branded clothing, alcohol,
stores/malls
Motorcycle,
telephone, LPG,
tailored/unbranded
clothes, local liquor,
haat
40-60 Middle Aged Luxury Car, Credit Cards,
House, health insurance,
holiday trips
Tractors, Kissan
Credit Card, postal
savings, mela
Above 60 Old Clubs, theatre, parks Chaupal, Playing
Cards, pilgrimage.

Occupation and Income
• In the rural sector, a range of goods and
services beyond the very basic ones are
bought by a consumer, influenced by the
occupation and income of the individual.
Fishermen buy a boat and large nets, whereas
a farmer opts first for a tractor and pump set.

Lifestyle – Comparison of rural and
urban Lifestyle
Dimensions Urban Rural
Demographics Convent Educated, salary
earner, small nuclear family,
large dense population,
apartments
Govt school, self-employed,
large family, small/scattered
population, ordinary spacious
houses
Activities Office jobs, internet surfing.
Health club, shopping,
clubs and party
Agriculture, physical sports,
gossip, playing cards, cinema,
religious congregation.
Interests Chinese, Continental foods,
designer clothes, beauty
salons, holiday trips
Desi food, milk, bright colored
clothes, jewellery, visiting
towns, markets/melas

Information Search and pre-purchase
evaluation
• The rural consumer primary seeks and gets his information
from opinion leaders and influencers, rather than the
media. However, this information search is fuelled by
exhibitions and road shows, because of the opportunity of
personal interaction and leisurely pace of absorbing and
understanding the information and its relevance.
• In the case of high involvement products, this information
search needs to be supplemented by an out of village visit
to a company outlet with an opportunity for personal
interaction. The need to demonstrate individual accessories
of the product and their performance also becomes critical.
• The ultimate clincher is always the ‘touch and feel’
experience. Anything less will not lead to a purchase.

Urban Buying Process Rural
High-involvement product,
comfort, status, drive,
consumer’s recognition for need
Need Recognition High involvement product -
productivity drives consumer’s
recognition for need.
First hand information from TV,
Internet, Newspaper Ads/
Consults a fellow owner before
dealer visit
Information search First hand information from a
fellow owner and nearby dealer at
district town.
Educated/aware understands,
analyses technical specifications.
At most looks for test drive
Evaluation of
alternatives
Lower education and awareness.
More importance to fellow owner
and illustration of dealer. Consults
opinion leader like progressive
farmers. Live field demonstration.
Normally buyer makes final
decision. Family influences color
and looks,. Drives new car home
with family.
Purchase decision Collective decision by buyer, adult
son, mechanic and progressive
village farmer.

Contd.
Higher satisfaction or
dissonance because of
greater risk factor.
Higher risk taking ability,
because of wanting
experimentation. After
sales service no issue
Post-purchase behavior Higher satisfaction, lower
dissonance. Because risk-
taking is lower and
expectation level is low.
Low risk-taking ability
because life-attached
product, lack of technical
know how, low confidence
on after sales service.

Organizational Buying Behavior

Organizational Buyers
• Types
– Industrial
– Reseller
– Government and non-
profit organizations
• Purchase types
– Straight rebuy
– Limited decision
making
– Extended decision
making
• Characteristics
– Greater involvement
– Bureaucracy
– Long term relationships
– Price is important but
may not be the most
important factor

Supplier-Buyer Relationship
• Why work closely?
• How?

Organizational
Buying Process
1. Problem
Recognition
2. General
Description
of Need
3. Product
Specifications
4. Supplier
Search
5. Acquisition
and Analysis
of Proposals
6. Supplier
Selection
7. Selection
of
Order Routine
8. Performance
Review

Three Buying Situations
1. New task
2. Modified rebuy
3. Straight rebuy

1. New Task
• New task—the problem or need is totally
different from previous experiences.
– Significant amount of information is required.
– Buyers operate in the extensive problem solving
stage.
• Buyers lack well defined criteria.
• Lack strong predispositions toward a solution.

2. Modified Rebuy
• Modified rebuy—decision makers feel there
are benefits to be derived by reevaluating
alternatives.
– Most likely to occur when displeased with the
performance of current supplier.
– Buyers operate in the limited problem solving
stage.
• Buyers have well defined criteria.

3. Straight rebuy
• Straight rebuy—the problem or need is a
recurring or continuing situation.
– Buyers have experience in the area in question.
– Require little or no new information.
– Buyers operate in the routine problem solving
stage.

Forces Influencing Organizational Buying Behavior
Environmental
Forces
Organizational
Forces
Group
Forces
Individual
Forces
Organizational
Buying
Behavior
•Economic Outlook:
Domestic & Global
•Pace of Technological
Change
•Global Trade Relations
•Goals, Objectives, and
Strategies
•Organizational Position
of Purchasing
•Roles, relative
influence, and patterns
of interaction of buying
decision participants
•Job function, past
experience, and buying
motives of individual
decision participants
A projected change in
business conditions can
drastically alter buying
plan.

Forces on Organizational Buying
• Environmental Forces
– Economic influences
• ↓economy=
• Selective shifts
– Technological influences
• Foresee changes

• Organizational Forces
– Role of purchasing agents
– Should it be centralized?
• Benefits
– Better integrate purchasing
– Cut costs
– Favorable terms
– Work better with engineers
– Specialization
• When to centralize or decentralize?

• Group Forces
• Buying Center
– Different people play different roles
– New task
– Straight rebuy/modified rebuy
• Predicting Composition
– Why?

• Group Forces (cont’d)
– Buying center influences
• Users
• Gatekeepers
• Influencers
• Deciders
• Buyers
– Identifying patterns of behavior
• Isolate personal stakeholders
• Follow flow of information
• Identify experts
• Trace connections to the top
• Understand purchasing’s role

Individual Forces
• Differing Evaluative Criteria
• Information-processing
• Selective processing
– Selective exposure
– Selective attention
– Selective perception
– Selective retention
• Risk-reduction strategies
– Perceived risk

Questions for the Industrial Salesperson
1. Which member takes part in the buying
process?
2. What is each members relative influence in the
decision?
3. What criteria is important to members in the
evaluation process?

Members of the buying center assume different roles
throughout the procurement process.
Clues for
Identifying
Powerful
Buying
Center
Members

Consumer Behaviour - Unit I

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Consumer Behaviour - Unit I