This document provides background information on consumer behavior and discusses various influences on consumer decision making. It covers key topics like the definition of consumer behavior, influences from different behavioral science disciplines, why studying consumer behavior is important, factors that influence buying behavior like culture, social factors and personal factors, and consumer decision making models. It also discusses research approaches to study consumers, different demographic and psychographic variables, and the relationship between involvement levels and decision making types.

2. Background
A definition of consumer behaviour –
…the decision process and physical activity individuals
engage in when evaluating, acquiring, using, or
disposing of goods and services.
CB is a subset of Human Behaviour
Behavioral Sciences have studied Human Behaviour

3. ….contd
 BS disciplines which have greatly contributed to our understanding of
consumers are :
 Psychology : study of the behaviour and mental processes of
individuals
 Sociology : study of the collective behaviour of people in groups
 Social psychology : study of how individuals influence and are
influenced by groups
 Economics : study of people’s production, exchange, and
consumption of goods and services
 Anthropology : study of people in relation to their cultural and
racial heritage

4. Why Study Consumer Behaviour
CB affects, directly and significantly, decisions
Decisions in the market place have other effects, in turn !
Micro perspective : understanding consumers for the
purpose of enabling a co to accomplish its objectives; eg
the need of advertising managers / product designers to
understand the consumer
Societal perspective : macro or aggregate level; collective
behaviour of consumers; eg western world and
automobile tptn – cars, highway systems/services, petro
prods, where many live and how daily life is run (shop,
eating, entertainment)

5. Foundations of Consumer
Behaviour (2 h)
Customer oriented marketing
..the need for studying consumer behaviour emanates from the
demands of customer oriented marketing
 According to Marketing Experts –
‘Successful marketing requires that companies fully connect with their
customers. Adopting a holistic marketing orientation means
understanding consumers – gaining a 360-degree view of both their
daily lives and the changes that occur during their lifetimes. Gaining a
thorough, in-depth consumer understanding helps to ensure that the
right products are marketed to the right consumers in the right way

6. Customer Oriented Marketing
Consumers’ needs and wants, co objectives,
integrated strategy
Mkt-opportunity analysis, eg fitness centres/ eqpt
Target-mkt selection, eg deodorant soap Irish
Spring captured 15% mkt share – Col Palm
identified unique group thru segmentation
Mktg-mix determination, eg expensive watches

7. Influences on Buying Behaviour
Cultural factors
Social factors
Personal factors

8. Consumer Buying & Consumption
Process
Making a purchase with little or no influence from
others
Purchase involving joint decision
Purchasing for someone else
Purchase situation may involve at least one person in
each such role, or a single individual can take on
several roles
Focus on actual buyer useful – decisions…..

9. Consumer Buying & Consumption
Process (….contd)
Classification of roles
Initiator – individual who determines that some need or
want is not being met and authorizes a purchase to rectify
the situation
Influencer – person who by word or action, intentional or
unintentional, influences the purchase decision, actual
purchase, and/or the use of the product or service
Buyer – individual actually making the purchase
transaction
User – person most directly involved in the consumption
or use of the purchase

10. (…..contd)
Consumer behaviour involves
A mental decision process
Physical activity
Actual act of purchase is just one stage in a series of
mental and physical activities that occur during this phase
Some of these activities preceded the actual buying, while
others follow it
Consumption system – who, how, when, where….
All these factors capable of influencing the adoption of
products or services

11. (….contd)
Primary psychological processes involved are
Motivation
Perception
Learning
Memory
We shall study these in details as we go along….

12. Consumer Decision Making Models
 External environmental variables influencing behaviour – culture,
subculture, social class, social group, family, personal influences
 Individual determinants of behaviour – learning / memory,
personality/ self-concept, attitudes, motivation/ involvement
 Consumer’s decision process – problem recognition, information
search (internal & external), info processing, evaluating, purchase
process, post-purchase behaviour
 Level of Consumer Involvement
 Decision Heuristics and Biases
 Mental Accounting

13. Consumer Decision Model
 The Consumer Decision Model (also known as the Engel-Blackwell-
Miniard Model) - originally developed in 1968 by Engel, Kollat, and
Blackwell and has gone through numerous revisions
 many of the elements of the model are similar to those presented in the
Theory of Buyer Behaviour (Howard AND Sheth 1969), however the
structure of presentation and relationship between the variables differs
somewhat
 model is structured around a seven point decision process: need
recognition followed by a search of information both internally and
externally, the evaluation of alternatives, purchase, post purchase
reflection and finally, divestment.
 These decisions are influenced by two main factors.
 Firstly stimuli is received and processed by the consumer in conjunction with
memories of previous experiences, and
 secondly, external variables in the form of either environmental influences or
individual differences. The environmental influences identified include:
Culture; social class; personal influence; family and situation. While the
individual influences include: consumer resource; motivation and
involvement; knowledge; attitudes; personality; values and lifestyle
(Blackwell,Miniard et al. 2001).

14. Researching the Consumer
Exploratory research – consumer feedback, focus
groups; primary objective is hyothesis
formulation, ie forming a conjectural statement
about the relationship between tow or more
variables
Conclusive research – builds upon exploratory
research; main objectives are to describe
consumer behaviour and to offer explanations for
its causes; also, behaviour forecast and methods of
influencing it can be determined
Market segmentation

16. Demographics
Age – stage in life cycle : people buy different
goods and svcs over a lifetime
Gender – differing needs, preferences
Occupation – influences consumption patterns;
eg factory worker’s outfit vs co director’s apparel,
software engineer vs construction engineer
Education – fashions mindset, shapes choice
process and preferences, can catalyse income

17. Economic Status
Buying behaviour vis-à-vis buy-not-buy or
product choice greatly affected by economic
circumstances
Income : level, stability, time pattern – personal
income, disposable income, discretionary income
The problem with specification of ‘necessities’
and the usefulness of the concept of subjective
discretionary income (SDI)

18. Needs and Motivation
Needs and motivation related to demographics
and economic logic
Different stages of life produce varying needs –
say, progression from toys to walking stick;
similarly motivation – amusement to functionality
Economic circumstances form the logic of one
man’s luxury being seen by another as necessity

19. Level of Involvement and
Decision Making Type
Involvement defined in terms of the level of
engagement and active processing undertaken by
the consumer in responding to a marketing
stimulus
Is related to consumer’s values and self-concept, which
influence the degree of personal importance ascribed to
a product or situation
Can vary across individuals and different situations
Is related to some form of arousal
Involvement is characterised by – intensity or
degree of arousal and directional influence

20. (….contd)
 Dimensions of involvement
 Antecedents : person, stimulus/object, situations – a persons
needs, values, interests, etc and closeness of the product (or
stimulus) to these, in relation to the use (situational context) of
the product – govern involvement
 Properties of involvement
 Intensity : degree > high or low, ie how much a consumer will
invest in decision making for purchase
 Direction : focus or target < strong influence of antecedents; eg
women and perfume, men and cars
 Persistence : length of time consumer remains engaged; eg bird
watchers, sport fishing, auto enthusiasts

21. (….contd)
 High involvement decision making
 Low involvement decision making
 Flowing from the above :
 Central route (to processing) in which cognition and extensive
critical evaluation leads to attitude formation followed by
behaviour
 Peripheral route, in which cognition, at low attention, continues
with weak brand knowledge and interest, without developing
strong attitude about any of the specific brands; thus mere
familiarity or association with non-central cues, like good shop
ambience or salesperson, leads to decision
 Marketing strategies are tailored to account for these

22. Psychographics
 Personality
 A set of distinguishing human psychological traits that lead to
relatively consistent and enduring responses to environmental
stimuli
 Traits such as self-confidence, dominance, autonomy, deference,
sociability, defensiveness, and adaptability
 Major Personality Theories
 Psychoanalytic Personality Theory – id, ego, superego; the
reality principle, defence mechanisms (repression, projection,
identification, reaction formation)
 Social Theories
 Trait and Factor Theories
 Can be a useful variable in analyzing consumer brand choices

23. (….contd)
Brands also have personalities, and consumers are likely
to choose brands whose personalities match their own
Brand personality : the specific mix of human traits that
may be attributed to a particular brand; eg one such
identification
sincerity (down-to-earth, honest, cheerful)
Excitement (daring, spirited)
Competence (reliable, intelligent)
Sophistication (upper-class and charming)
Ruggedness (outdoor-type and tough)
 Ruggedness – Levis, competence – BBC, LH

24. Lifestyle
A person’s pattern of living as expressed in activities,
interests, and opinions
Lifestyle portrays the ‘whole person’ interacting with his
or her environment
Broadly, two segments : money-constrained (Wal-Mart’s
target thru low prices bringing high sales) or time-
constrained (breakfast on feet – bagels rather than cereals)
Lifestyle segmentation further into brand-user, product-
user, situation segmentation…..
AIO (activity, interest, opinion) analysis

25. Self-concept
Self-image > a person’s perception of himself which
includes his physical being, other characteristics such as
strength, honesty, and good humour in relation to others,
and even extending to include certain possessions and his
creations
How one views oneself – actual self-concept
How one would like to view oneself – ideal self-concept
How one thinks others see one – others’ self-concept
Affects publicly consumed products as compared to
privately consumed goods; congruence with actual or ideal
self-concept

26. Interpersonal Factors
Culture
 Culture refers to the cumulative deposit of knowledge, experience, beliefs,
values, attitudes, meanings, hierarchies, religion, notions of time, roles, spatial
relations, concepts of the universe, and material objects and possessions
acquired by a group of people in the course of generations through individual
and group striving.
 Culture is a collective programming of the mind that distinguishes the
members of one group or category of people from another
 Culture consists of material and non-material components :
 Material culture: consists of all the physical substances that have been
changed and used by people, such as tools, automobiles, roads, and farms;
in the context of markets and CB, artifacts of material culture would
include all the products and services which are produced and consumed,
eg Big Bazaar, Spencers
 Non-material culture: includes the words people use, the ideas, customs,
and beliefs they share, and the habits they pursue; eg the way in which
consumers shop in supermarkets, our desire for newer and better
products, and our responses to the word “sale”

27. Culture (….contd)
Significance of culture lies in –
The understanding of the extent to which people are
more than just chemistry, physiology, or a set of
biological drives and instincts
Thus, although all customers may be biologically
similar, their views of the world, what they value, and
how they act differ according to their cultural
backgrounds

28. Culture & Marketing Decisions
Culture influences consumers – historically
acknowledged
All activities people engage in are culturally
determined
All purchases of goods are made either to provide
physical comfort or to implement the activities
that make up the life of a culture
…..an understanding of culture enables the
marketer to interpret the reaction of consumers to
alternative marketing strategies.

29. (….contd)
 Culture manifests through –
 National character
 Differences in subcultures such as blacks, Jews, and Hispanics in America,
and regional population groups in India
 Silent language of gesture, posture, food and drink preferences, and other
nonverbal clues to behaviour
 Symbols in society; semiotics – how signs function within a culture ie
anything that conveys a meaning : advertising uses this to invest products
with meaning for a culture whose dominant focus is consumption
 Taboos, or prohibitions in a culture, relating to various things such as the
use of particular colours, phrases, or symbols
 Ritualised activities in which people participate at home, work, or play,
both as individuals and as members of a group. Such behaviour occurs in a
fixed episodic sequence, and tends to be repeated over time

30. Cultural Manifestations
Cultural meaning can be communicated by
consumer goods
Commonly observed consumption rituals
 Morning tea/coffee, newspaper, TV/radio news, weather, traffic
 Shower and grooming : items used
 Dresses for work : as appropriate
 Drives : car model
 En route visits temple, posts a b’day card
 Business meetings / lunch
 En route home takes in a movie, beverage
 Home for dinner over TV, then bed

31. (….contd)
These activities are associated with various types of
rituals : media, household, grooming, religious, gift-
sending, business, eating,entertainment / recreation,
bedtime
Observe how rituals involve aspects of consumer
behaviour processes in obtaining goods and services,
exchanging them, or using and disposing of them

32. Characteristics of Culture
Culture(s) is / (are)
Invented : ideological system (ideas, beliefs, values, and
ways of reasoning in defining what is desirable or not),
technological system, organisational system
Learned
Socially shared
Similar but different
Gratifying and persistent
Adaptive
Organised and integrated
Prescriptive

33. Cultural Values
Can be defined as
A widely held belief or sentiment that some activities,
relationships, feelings, or goals are important to the
community’s identity or well-being
Or
Centrally held and enduring beliefs that guide actions
and judgments across specific situations and beyond
immediate goals to more ultimate end-states of
existence

34. (….contd)
Values produce inclinations to respond t specific
stimuli in standard ways
A specific behaviour is expected to either help or
hinder the attainment of some value or group of
values
Consumers then, are motivated to engage in
behaviours designed to enhance the achievement
of certain values and to avoid those behaviours
perceived to hinder the attainkent of certain value
states
Values vs attitudes

35. (….contd)
 Values are culturally determined
 Values are learned from social interaction, largely from our families
and friends in settings such as schools and other places of aggregation
 Values strongly influence consumer hehaviour; even though specific
situations may dictate slightly different actions, overall there is much
similarity in consumer behaviour within a given culture, such as in
tastes, methods of shopping, etc
 A marketer must understand society’s basic value structure so that
strategy decisions are consistent with ingrained cultural patterns
 Much easier to harmonize with the culture than to attempt to change
fundamental cultural values

36. Core Cultural Values
 Individualism – interrelated with ideas such as freedom, democracy,
nationalism, and patriotism; founded on a belief in the dignity, worth,
and goodness of the individual
 Equality
 Activity
 Progress and achievement
 Efficiency and practicality
 Mastery over the environment
 Religious and moral orientation
 Humanitarianism
 Youthfulness
 Materialism
 Social interaction and conformity

37. Values and Consumer
Behaviour
Culture is a strong force in the consumer’s milieu
affecting his or her choice of behaviour
Marketers have long recognised the importance of
appealing to consumers’ values in marketing
Values guide actions, attitudes, and judgments

38. Illustrative Listing of Indian
Contrasts
INDIAN VALUES NON-INDIAN VALUES
Leaders are the servants Leaders are the masters
Cooperation Competition
Group Emphasis Individual Emphasis
Passive Assertive
Informal Courtesy Formal Politeness
Patient Impatient
Sharing Saving
Time - Constant Time - Fleeting
Respect for Age Respect for Youth
Harmony with Nature Conquest over Nature
Religion = Way of Life . . . Sacramental, Religion = Segment of Life . . . Intellectual,
Symbolic Gnostic
Non-verbal Verbal
Extended Family Nuclear Family
Tradition Novelty
No Eye-to-eye Contact Eye-to-eye Contact
Holistic Problem Solving . . . Vision of Total Analytical Problem Solving . . . Piece by Piece
Happiness = Spiritual Harmony Happiness = Wealth Accumulation

39. Implications of Cultural Change
for the marketer
Values are dynamic, not static or fixed
Cultural change may happen gradually, as an
evolution, or rapidly; the latter places more stress
on the system
Marketers need
to understand that cultures do change and
to appreciate the implications this may have for
consumer behaviour
e.g. frozen foods

40. Cultural Change & Marketing Strategies
What the consumer wants, expects, associates
Will affect product planning, pricing, distribution
channels, promotion
Increasing importance of market segmentation
Knowledge of consumer value orientations provides a
measurable set of variables, related to needs, which
gives the marketer deeper insight
Growing diversity of individual tastes, abetted by
increasing incomes and the concept of pleasure
Finer segmentation of the market on the basis of value
profiles

41. Cross-cultural Understanding of
Consumer Behaviour
 Global outlook
 Cultural differences among international and regional markets,
influence consumer behaviour
 Time
 Thought and communication process
 Personal space
 Materialism and achievement
 Family roles
 Religion
 Competitiveness and individuality
 Social behaviour
e.g. Goodyear : found consumers make three key decisions when buying tyres –
outlet, brand, and price – and the sequence of their pairing critical; identified four groups for global
marketing purposes : quality buyers, value buyers, price buyers, and commodity buyers. While
segment sizes vary from country to country, the elements in each segment’s profile remain largely
the same; the extent to which these elements vary determines how Goodyear must customise its
marketing programs

42. Decision areas for the
International Marketer
Elements of CB analysis in a cross-cultural setting
Determine underlying values and their rate of change;
what are more strongly held
Evaluate the product concept as it relates to this culture
: does it harmonize with current and evolving values;
what changes; positive values; satisfies what needs
Determine characteristic decision-making process
Determine appropriate promotion methods
Determine appropriate distribution channels
Determine appropriate pricing approaches

43. Market Segments
As in domestic, successful marketing in
international also requires mkt segmentation
Illustrative case of one survey identifying across
14 countries, five distinct global segments with
shared attitudes, values, actual purchasing
patterns:
Strivers
Achievers
Pressureds
Adapters
Traditionals
But their consumption pattern can be distinct

44. Marketing Strategies
Across boundaries-cultures, separate marketing
mixes and programs may be needed
Product considerations : home appliances use in
Germany vs Spain – 128 : 54
Promotion considerations
Distribution channel considerations
Pricing considerations

45. Indian Culture & Changes
 Cultural values in India are good health, education, respect for age and
seniority. But in our culture today, time scarcity is a growing problem,
which implies a change in meals. Some changes in our culture:
 1.Convenience: as more and more women are joining the work force
there is an increasing demand for products that help lighten and relieve
the daily household chores, and make life more convenient. This is
reflected in the soaring sale of Washing machines, microwaves,
Pressure cookers, Mixer grinders, food processors, frozen food etc.
 2.Education: People in our society today wish to acquire relevant
education and skills that would help improve their career prospects. This
is evident from the fact that so many professional, career oriented
educational centers are coming up, and still they cannot seem to meet
the demand. As a specific instance count the number of institutions
offering courses and training in computers that has opened in your city.

46. (….contd)
 3. Physical appearance: Today, physical fitness, good health and smart
appearance are on premium today. Slimming centers and beauty parlours
are mushrooming in all major cities of the country. Cosmetics for both
women and men are being sold in increasing numbers. Even exclusive
shops are retailing designer clothes.
 4.Materialism: There is a very definite shift in the people’s cultural value
from spiritualism towards materialism. We are spending more money than
ever before on acquiring products such as air-conditioners, cars CD players
etc, which adds to our physical comfort as well as status.

47. Subcultures
Culture - consists of basic behavioural patterns which
exist in a society
However, all segments of a society may not have the same
cultural patterns
Within the heterogeneous national society more
homogeneous subgroups can be distinguished
These groups are subcultures – having values, customs,
traditions, and other ways of behaving that are peculiar to
a particular group within a culture, eg students,
academics, professional sportspersons, musicians, etc
Individuals may be members of more than one subculture;
thus marketers must identify the most relevant sub…..

48. Sub-cultural Segmentation
Marketers also segment overall societies into smaller
subgroups (subcultures).
A subculture consists of people who have the same
ethnic origin or customs or behaviors.
Sub-cultural divisions are based on various socio-cultural
and demographic variables such as nationality, religion,
geographic locality, race, age, and gender
CB in the sub-cultural context explores marketing
opportunities created by specific sub-groups within
society

49. Two Broad Subcultures
Ethnic – normally minority group of a society;
identification based on what a person is when
born; descend from common forbears; tend to
reside in the same area, distinct from other
groups, over generations; marry within; share a
common sense of peoplehood (kindredness)
Commonly, three ethnic types – race, nationality,
religion

50. Two Broad Subcultures
(….contd)
Age
youth subculture
olders subculture

51. Youth Subculture
 Money to spend – discretionary almost entirely
 Primary purchaser product patterns – clothes, music,
entertainment, travel, cosmetics, fashion accessories, electronic items
(including games)
 Style, colour, make, model
 Emergence of brand loyalties; may be long lasting
 Shopping behaviour – rely more on personal sources for information
on high value products and on media for others
 At the product evaluation stage, price (….discounts) and brand
perceived as important
 Promoting to youth – all media; gimmicky ads, use of celebrities,
sports themes, humour

52. Olders Subculture
Product p – brand, demand guarantees and
warrantees, less experimenting unless recommended
Shopping behaviour – near homes, store loyalty
particularly with high income and high value, value
for money
Promoting – all media; quality, comfort,
independence

53. MajorIndian Sub-cultural
Categories
Categories Examples
Nationality original nationality : indian, nepali,
bangladeshi, pakistani ancestral pride is
manifestedin CB termsby their consumption of ethnic foods, travel to
the homeland, purchase of ethnic cultural
artefacts, art, music
Religion hinduism, islam, buddhism,
jainism, christianity (140
different organised religious subcultures
symbolic and ritualistic products
Geographical regions NorthIndian, SouthIndian,
North Eastern, Western, Eastern, etc many
languages, food habits, clothing, etc
Race Aryan (high consumption/ experimental/
flamboyant), Dravidian (conservative/ subtle/ non-experimental), Mongoloid (fashion
conscious/ trendy/ techno-inclined)
Age appreciate different music, movie, lit, clothing
between generations

54. (….contd)
Gender Traditionally society assigns certain traits to males
and females
‡Males: aggressiveness, competitiveness, providers
‡Females: gentleness, talkativeness, neatness, nurturers
‡Within every society certain products are either male or female eg.Cigars,
pants, ties-males and colognes, hair dryers, hair sprays-females
internet use: Males seek out investments, free software, discovery;females-
reference materials, online books, medical information
Men are likely to purchase more on the internet than women because of the
latter’s concern with privacy and security
Occupation govt, business, professional, exec
Social class upper, middle, lower

55. Social Class
A group consisting of a number of people who have
approximately equal positions in a society
Positions may be achieved or ascribed/ inherited
Opportunity may exist for upward or downward
movement to other classes

56. Basic Characteristics of Social
Class
 Social class exhibit status – linked to status ie one’s rank in the social
system, as perceived by other members of society
 Symbols of status – the need for prestige and how products satisfy
this; the attributes of such products
 Blurring of symbolism – technology, mass marketing,
functionality, upward shift of products
 S c are multidimensional – not determined solely by one criterion; mix
of occupation, income, heredity
 S c are hierarchical – vertical order
 S c restrict behaviour – stay within a class due common traits
 S c are homogeneous – similar attitudes, activities, interests, and
other behaviour patterns – thus similar media, purchases, shopping
locations; which marketers can take advantage of thru suitable mktg
mixes
 S c are dynamic – closed and open systems; if latter, people can move
up or down thru achievements

57. Social Class categorisation
Upper, middle, lower
Upper-upper, lower-upper, upper-middle, lower-
middle, upper-lower, lower-lower
Problems in measurement : based on an average
of the person’s position ignoring inconsistencies
like high income-low education; assumed to be
stable ignoring mobility; ignores reference group
effects from other classes; examines usually only
the adult male wage earner in the family

58. Role of social class in
segmenting markets
S c and income related to lifestyle patterns
S c and income related to consumer behaviour patterns –
product purchase patterns : shopping habits, store
preferences, and media usage
S c may not often be a relevant basis ie segmentation by
other criteria, eg age / gender, more appropriate
For undifferentiated products benefits may be less
S c segmtn is usually more effective when used in
conjunction with addl variables eg life-cycle stage, ethnic
group

59. Social Class and Consumer
Behaviour
Products and services consumed
Shopping behaviour
Promotional response patterns
Price-related behaviour

60. Reference Groups & Opinion Leaders
 Group – consists of people who have a sense of relatedness as a
result of interaction with each other
 Or
 Two or more individuals who share a set of norms, values, or
beliefs and have certain implicitly or explicitly defined
relationships to one another such that their behaviours are
interdependent
 Classification of groups by
 Content or function
 Degree of personal involvement : primary and secondary
 Degree of organisation : formal and informal
 Group properties – status, norms, role, socialisation, power

61. Reference Groups
Reference groups are those an individual uses (ie
refers to) in determining his judgments, beliefs, and
behaviour OR one whose presumed perspectives or
values are being used by an individual as the basis of
her/his current behaviours – use as guide for
behaviour in a specific situation

62. Types of Reference Groups
Membership
Nonmembership
Anticipatory aspirational group
Symbolic aspirational group
 Positive versus negative
Influence on consumers group properties (ref. Sl. 59)

63. Reasons for reference-group
influence
Informational benefits
Utilitarian benefits
Value-expressive benefits- +ive / -ive may come into
play
Comparative influence

64. Variability of reference-group
influence on consumers
 Variability among products – conspicuousness; seen or identified by
others; influence on prod purchase or choice of brand; publicly /
privately consumed luxury / necessity : impact on prod / brand
 Variability among group – urge to conform : group cohesiveness;
proximity to grp members; indiv’s relationship; similarity to grp
characteristics, outlook, values
 Variability among individuals – personality; social character;
demographic
 Variability by type of influence – type of product and relevance of the
influence in terms of informational, utilitarian, value-expressive
 Variability by situation – nature of the consumer situation and the
reference influence connect : patronage of retail stores, home
maintenance services, etc

65. Opinion Leaders
People who are able to exert personal influence
on others, in a given situation
Ability to influence others through verbal
communication, as others seek advice and info
Can influence +ively or –ively
Consumers tend to be influenced by those with
whom they identify
O L present in every group and each status level,
but may be more functional at higher income /
status level

66. Characteristics of Opinion
Leaders
 Long-term involvement with the product category – enduring
involvement
 Enhanced knowledge about the product, leading to opinion leadership
 Tends to be product specific
 Functionss through communications and observations
 Usually within the same social-class, but viewed as of higher status
 Tend to be more gregarious and willingness to act differently
 Greater exposure to mass media, relevant to their interest
 Expertise and sociability
 Tend to be older in age, particularly in eastern world, eg India,
Indonesia, Korea – value maturity

67. Situations
High involvement product purchase – seek info and advice
Low involvement purchase – less likely to seek direct
opinion; but may observe others group members, esp
those viewed as leaders
Stimulating opinion leadership – marketers can advertise
with endorsement of health related products by doctors
Generate communications concerning a product by
sending samples to potential and influential customers –
cosmetics to beauty clinics; salesmen and retailers can
encourage current customers to pass on to others by
word-of-mouth
Market mavens – neighbourhood expert

68. Family
A type of small group
Often predominant in its influence over consumer
behaviour
Primary group (characterised by intimate, face-to-face
interaction)
Reference group (with members referring to certain family
values, norms, and standards in their behaviour)
Strongly bonded group, functioning as an economic unit,
earning and spending money
Thus individual and collective consumption priorities,
decide on products and brands, where to buy, how to use
to further family members’ goals
Moulded often by the family they grew up in

69. FLC
Bachelor stage
Newly married couples
Full Nest I
Full Nest II
Full Nest III
Empty Nest I
Empty Nest II
Solitary Survivor I
Solitary Survivor II
Income and needs vary with change in the FLC stages
- buying behaviour will differ accordingly

70. Non-traditional FLC
Some of the stages identified :
Bachelor I
Young couple : female head; married/ unmarried; no
kids
Full Nest I : female head; md / unmd; kid<6
Single Parent I / II
Delayed full nest : female head 35-64; youngest child
6 or +

71. Family Decision-making
When two or more members are involved as opposed
to individual decisions
How money is to be spent
Role structure (instrumental and expressive; initiator,
influencer / opinion leader, info gatherer, decision
maker, purchaser); power structure (patriarch,
matriarch, equalit); resolve conflict

72. (….contd)
Husband / wife influences :
H tends to dominate in products like hardware,
sports eqpt, financial svcs, etc
W tends to dominate – women’s clothing,
toiletries, groceries, kitchenware, child clothing,
etc
Autonomous decisions – women’s jewellery,
cameras, men’s casual clothing, toys and games
Joint decisions – fridge, furniture, TV, family car;
greater tendency for this now, with influence of
working wives

73. (….contd)
Implications for marketers depending on who
decides :
Media selection
Advt msge target
Requirement of separate ad campaigns
Education, occupation, and income of hus/
wife shapes who tends to decide; the better
person does so
Increasing influence of children
Perceived knowledge of prod, importance to them,
more purchasing power
The effects of authoritarian parents, neglecting,
democratic, permissive

74. Interpersonal Factors and
Symbolic Consumption
As recognized since long, consumption serving to signal
social status, group membership, or self-esteem is a
socially contingent activity
The corresponding expenditures are motivated mainly by
the symbolic value they have for transmitting the signal
This presupposes some form of social coordination on
what are valid, approved symbols
Unlike consumption not serving signaling purposes, the
technological characteristics of the goods and services
consumed may be secondary that counts is their socially
agreed capacity to function as a symbol

75. Consumption central to meaningful practice of
daily life
Consumption choices not only from product’s
utilities, but also symbolic meanings
Not only to create and sustain self, but also to
locate in society
The latter may also enslave us in the illusive
world of consumption

76. Environmental Factors
Product offerings and
innovations
Product exists in an environment
The nature of the physical product and service
features are influenced by consumer behaviour
What size, shape, and features should the prod have
How should it be packaged
What aspects of service are most important to
consumers
What types of warranties and service programs should
be provided
What types of accessories and associated products
should be offered

77. (….contd)
 Consumers’ attempts to directly evaluate physical prod attributes –
intrinsic cues
 Difficulty in distinguishing between different prod offerings on the
basis of direct attributes, eg taste of colas
 May be able to discriminate between brands, but not be able to
determine whether these differences are important in predicting
which brand will provide greater satisfaction, eg best grade of
waterproofing, adhesives, carpeting, paint, etc
 Use of extrinsic cues : consumer’s experience, how cues are encoded
(wrapper saying ‘freshly packed’, ‘hygienically sealed’); not encoded
meaningfully (chemical names); additional inferential beliefs or
interpretations (by association)

78. Product offerings-new
 New-product innovation is an essential element of market dynamics
 Among various definitions – ‘an innovation is a product, service, attribute, or
idea that consumers within a mkt segment perceive as new and that has an
effect on existing consumption patterns
 Continuous innovns – least disrupting to established consumption patterns;
prod alteration only, eg fluoride toothpaste, salt in toothpaste, auto model
variants
 Dynamically continuous innovns – more disrupting, but usually not altering
estbld patterns; new prod or alteration, eg wall TV, mobile phone with qwert
key pad
 Discontinuous innovns – new prod with new behaviour patterns, eg genset to
inverters, pc to laptop, swipe card tech
 Some offerings and innovations influence how, when, where, why, or whether
we acquire products

79. Mkt segmentation and segment consumer behaviour
lead to importance of how consumers perceive the
marketer’s prod
Cause for product positioning
Positioning on : prod features, benefits, usage (or
situation, eg Campbell’s soup, Gatorade), user
(Johnson baby oil), competition

80. Delivering product
The place variable involves consideration of where and
how to offer products and services for sale
Also concerned with the mechanisms for transferring
goods and their ownership to consumers
What type of retails outlet
Retail outlets – location and number
Logistics of supplying retailers
How much control necessary over channels
What image and clientele should the retailer seek to
cultivate

81. The When
The time dimension :
when do consumers buy – seasonality, occasions,
demographics;
also working hours, free time, 24 hours necessity;
purchase time – existing and new prods;
in-shop browsing and decision-making time

82. Value ….or, price
Marketers must make decisions regarding the
prices to charge for the company’s products or
services and any modification to those prices
These will determine the revenues the firm will
generate
How price-aware are consumers in the prod
category
Price sensitivity among brands
What reduction needed to encourage buying
during new intros and promotions
What discount size for cash, seasonality, etc

83. Letting the consumer know
Promotion to communicate aspects of firm and its
offerings – goals and methods
Methods of promos and specific sits
Most effective means for gaining attention
Methods which best convey intended msge
Advt repeat - periodicity

84. Public Policy Issues
 Comparative advertising – compare the co’s brand directly with competitor’s;
present prod info on which consumers can base purchase decisions;
encourages competition & can lead to lowering of prices (Pepsi-Coke)
 Consumers dislike comp ads : due lacking in reliability and usefulness
 Confuse consumers and foster –ve attitudes
 CB and govtl decision making
 Govt services : govt provision of public svcs can benefit significantly from
an understanding of the consumers; eg public tptn – metro vs car (address
long lines, last mile issues, crowding and behaviour)
 Govt & other agencies for consumer protection : regulating business
practices to protect consumers’ interest and welfare; also designed to
influence certain consumer actions directly; protection against claims not
substantiated by research (food supplements, toothpastes); anti-smoking
campaigns

85. Consumerism – activities of govt, business, and
independent orgns that are designed to protect
the rights of consumers
Why :
Disillusionment with the system
Performance gap
Consumer info gap
Advertising content
Impersonal and unresponsive mktg institutions
Intrusions of privacy

86. Consumer’s Fundamental
Rights
Right to safety
Right to be informed
Right to choose
Right to be heard

87. Safety
Unsafe product and physical injury
Drug controller : medicines and allied prods
Certification authorities : RTOs, DGCA, Municipality
(elevators)
ISI, AGMARK, etc

88. Information
Deception : capacity to deceive – puffery to
deception; claim-fact discrepancy; claim-fact
interaction
Corrective advtg
Affirmative disclosure
Availability of sufficient info – unit pricing,
nutritional labeling, dating, information overload

89. Choice
Consumers must have choice to benefit from market
forces interplay
A different take – consumers should be given not
what they want, but what is ‘best’ for them
Too much choice may confuse and lead to unsuitable
choice

90. Hearing and redressal
Consumer inputs as a means of setting govt policies
and complaints directed to businesses – the facility
and response
Restitution
Punishment

91. Environmental Concerns
Right to a clean environment
Concern about potential environmental damage
caused by consumer products and packaging
Companies trying to protect the environment –
majority consumers for it
Change in shopping and lifestyle to help protect
the environment
Consumer mindset changing – willingness to pay
extra for the environment – yet not enough in
ratio; a challenge

92. Privacy
Consumer information collected, merged, and
exchanged through computer and communication
technologies has become a tool of power
Concern over threats to privacy
Public still willing to give personal info when
convinced about the need and fairplay
Consumer privacy protection policies

93. Social and ethical issues
 Good businesses have responded to this responsibility :
 Thru varied constitution of their Board of Directors, emphasis
on ethics, and use of social performance disclosures (social
audits)
 Marketing as the most visible activity of an orgn thus has the onus
of developing useful products, fair pricing of prods and svcs, and
promoting them in an accurate manner
 What should be considered ethical : the relevance of an ethical
base
 Relative standards : utilitarianism, intuitionism
 Absolute standards
Consumer responsibilities : obligation – choose wisely,
keep informed, put safety first, help protect the
environment

94. Marketer response to
consumer issues
Understanding the issues – heed the consumer voice
and complaints
Designing a consumer response system –
understanding what consumers experience,
establishing a consumer advisory board, listening to
consumers and responding effectively, estblng a corp
consumer affairs/ svcs unit, educating consumers

95. Information Receipt,
Processing, and Outcomes

96. Stimulus, Exposure, and Attention
Stimulus serves as the raw material to be
processed
Internally produced stimulus like hunger pangs,
and stimuli which impinge upon the five senses of
taste, touch, smell, vision, and hearing
A stimulus is not in isolation, but of a larger
stimulus situation consisting of many stimuli

97. (….contd)
Acquisition process enables consumers to confront certain
stimuli in their environment and begin to process them
Exposure, a part of the acquisition process, has two major
categories :
Active search : to seek out specific types of stimuli, eg
nutritional content per serving of a baby food;
influenced by this factor under conscious control;
internal, external
Passive reception : consumers confront stimuli in the
process of living their daily lives; exposure to advts (TV,
magazines), news reports, info as by-product of
shopping activities; advtsr tries to counter zapping by
chameleon advt

98. Sensation
Awareness threshold
Differential threshold; Weber’s Law
Attention : allocation of processing capacity to
stimuli
Voluntary and involuntary – former enables filtering,
the latter helps keep in touch with environment
Characteristics – can attend to a limited number of
items at any time, many stimuli require attention to be
processed while some do not, can be allocated to
stimuli on a rapid basis

99. How consumers allocate their attention – mainly
affect involuntary attention :
Selective attention : stimulus factor – colour, novelty
and contrast, size and position, humour,
Selective attention : individual factors – attention span,
adaptation, perceptual vigilance and defence

100. Encoding & Decoding of
Message Processing
Encoding – a highly individualised process that is
used to derive personal meaning from stimulus
experiences
Subsequent actions and thoughts based on
interpretations derived from stimuli rather than
on the actual stimuli themselves
Processing the sensations (from the stimulus) –
individual ability, knowledge and experience
Feature analysis
synthesis stage
catergorisation

101. Opportunity – situation, time, aids
Motivation or willingness – inclination, incentive to
engage
Depth of processing – degree of effort consumer
expends in developing meaning from the stimulus

102. Perception
Perception is the way in which an individual gathers,
processes, and interprets information from the
environment.
Perception is the process of making sense out of an
experience – the imputing of meaning to experience

103. Factors ImpactingPerception
Internal:
Sensory Abilities
Comprehension Skills
Memory Capacity
Needs
Experience/Knowledge
Involvement
Confidence
Pre-dispositions
(Attitudes, Beliefs, Mood)

104. External:
Stimulus(I) Characteristics:
Motion, Intensity, Shape,
Format, Color, Contrast,
Location, Size
Competing Stimuli
Setting Characteristics

105. Selective perception
The various elements of selective perception are:
selective exposure
selective attention
selective comprehension
selective retention

106. Selective comprehension
Selective comprehension:
This stage involves interpreting discrepant
information so that it is consistent with beliefs and
attitudes

107. Perception
The process by which an individual uses
information to create a meaningful picture of
the world by
selecting,
organizing
interpreting
Perception is important because people
selectively perceive what they want and it
affects how people see risks in a purchase.

108. Selective Perception
 Filtering
 exposure,
 comprehension, and
 retention
 in the human brain’s attempt to organize and interpret information.
 Selective exposure
 Consumers can pay attention to messages that are consistent with
their own attitudes and beliefs
 Consumers can ignore messages that are inconsistent.
 Selective comprehension

109.  Involves interpreting (distorting?) information so that it is
consistent with a person's attitudes and beliefs.
Selective retention
 Consumers do not remember all the information they see,
read, or hear.
Subliminal perception
 Consumers see or hear messages without being aware of
them.
 This is a hotly debated issue with more popular appeal than
scientific support.
 Research suggests that such messages have limited effects on
behavior

110. Perceived Risk
 Anxieties felt
 Consumes cannot anticipate the outcomes of a purchase
 Believe that there may be negative consequences.
 Marketers try to reduce a consumer's perceived risk and
encourage purchases by strategies such as providing
 Free trial of a product
 Securing endorsements from influential people
 Providing warranties and guarantees.

111. Learning
Those behaviors that result from repeated
experience and thinking.
Behavioral Learning
The process of developing automatic
responses to a situation built up through
repeated exposure to it.

112. Four variables central to how consumers
learn from repeated experience are:
Drive - a need that moves an individual to action
Cue - a stimulus or symbol perceived by consumers
Response - the action taken by a consumer to satisfy the
drive
Reinforcement - the reward
 Employed in conjunction with the methods of learning
connections :
 Classical conditioning
 Instrumental conditioning

113. Marketers use two concepts from behavioral learning
theory:
Stimulus generalization - occurs when a response
elicited by one stimulus (cue) is generalized to
another
 using the same brand name for different products is an
application of this concept
 Brand extension aspects play on this and marketers frequently
use this to advantage (reference should be made vis-à-vis brand
management)
Stimulus discrimination - refers to a person's ability
to perceive differences in stimuli
 the advertising for Hayward X000 beers is an example of this
concept

114. Cognitive learning
Involves making connections between two or
more ideas
Or, simply observing the outcomes of others’
behaviors and adjusting one's accordingly
Brand loyalty
Is a favorable attitude and consistent
purchase of a single brand over time
Brand loyalty differs across cultures,
countries, etc

115. Beliefs and Attitudes
Attitude Formation
 Attitude
 A learned predisposition to respond to an object or class of
objects in a consistently favorable or unfavorable way.
 Shaped by our values and beliefs, which are learned.
 Values
 personally or socially preferable modes of conduct or states of
existence that are enduring.
 Beliefs
 consumer's subjective perception of how well a product or brand
performs on different attributes.
Degree of learning
 Rate, wearout, maintain, extinction, recovery, recall

116. Memory and Retrieval
Experience has shown that all that consumers have
‘learned’ is not always readily retrievable – eg brand
names, shelf location, etc may be recalled easily, but
other details not so
Structure of memory and its operation is relevant to
divine consumer behaviour

117. Memory Systems -
characteristics
Structure of memory and its operation :
Multiple store approach – sensory, short-term, long-term
Sensory : fraction of a second, all perceived by sensors,
direct representation of reality, forgetting by decay
(size, shape, colour – used heavily by advtsrs)
Short-term : < 1 min, limit 7 items approx, indirect
(thru chunking), decay (tele nos.)
Long-term : many years, unlimited store, indirect
(clustering via meaningfulness), forget due interference
(new phone models and features)
Levels of processing – treatment of stimuli how rigorous
Activation model – stimuli activating only an appropriate
section of memory; spreading activation (eg sports-car
attributes extending to info on other sports-cars)

118. Retrieval of information
Accessing information in long-term memory and
activating it into consciousness
Correlated with other material from s-t memory
and processed into meaningful package for use
Influences :
Extent of original learning
Goal of original learning
Contextual relevance

119. Advertising applications
Advtg msge with unique aspects – long term impact on
memory
Order in which material is presented – beginning and end
most remembered
Msges that encourage immdte rehearsal – remembered
(eg tele no., address)
Chunked – more processing and better retention (7 items)
Amount of info transferred to long term memory is a
function of time avble for processing
Cue-dependent – eg babbling mountain brook for healthy
water
Meaningfulness of individual – better retained

120. Methods
Visual material
Interactive imagery
Showing mistakes
Incomplete msges
Mnemonic techniques (jingles, numbers, melodic
patterns)

121. “Habit strength" - said to develop as a function of
practice
Habits were depicted as stimulus-response
connections based on reward
Responses (rather than perceptions or expectancies)
participate in habit formation, the process is gradual,
and reward is an essential condition

122. Adoption & Diffusion of Innovation
 Any idea, practice, or material artifact perceived to be new by the
relevant adopting unit
 Continuous, dynamically continuous, discontinuous
 Adoption – acceptance and continued use of a product or brand by an
individual
 Adoption process – awareness, comprehension, attitude, legitimation,
trial, adoption
 Some consumers pass thru the adoption process early in the product’s
life or it could be later
 Relevant for marketers : early stages of the adoption process, mass
media appear most effective in creating awareness; later stages :
personal sources of info, so effective personal selling and word-of-
mouth communications at these points

123. Diffusion Process
The nature of the process by which innovations
spread
Diffusion process refers to a group phenomenon (as
against the indiv phenomenon for adoption),
indicating how an innovation spreads among
consumers
Trickle-down, trickle-across, subcultural group’s
propagation, leadership

124. (….contd)
Innovators, early adopters, early majority, late
majority, laggards
Factors influencing rate of diffusion – relative
advantage, compatibility, complexity, trailability,
observability, cost
Marketing implications – from product design to
packaging, distribution and selling, to promotion

125. Purchase, Consumption, &
Post-purchase
Problem Recognition(awareness of need)--difference
between the desired state and the actual condition. Deficit
in assortment of products. Hunger--Food. Hunger
stimulates your need to eat.
Can be stimulated by the marketer through product
information--did not know you were deficient? See a
commercial for a new pair of shoes, stimulates your
recognition that you need a new pair of shoes.

126. Problem Recognition
Marketers develop products and services to help
consumers solve problems
Marketers also attempt to help consumers anticipate
and recognise problems ….. sometimes well in
advance of their occurrence

127. Process of Problem Recognition
 Consumers must become aware of the problem through information
processing arising as a result of internal or external stimuli
 This leads to motivating consumers; then arousal and activation to
engage in some goal directed activity ie purchase decision-making
 This response action for solution finding depends on the
 magnitude of the discrepancy between the current state and the desired or
ideal, and / or
 the importance of the problem for the concerned consumer
 Any time the desired state is perceived as being greater than or less
than the actual state, a problem exists
 Important to appreciate that it is actually the consumer’s perception
of the actual state that stimulates problem recognition and not some
‘objective’ reality
 Relative importance also is a critical concept in several purchase
decisions because almost all consumers have budget or time
constraints

128. Types of Consumer Problems
Immediacy of problem solution is a relevant aspect in
determining
How soon solution is needed
Length of time involved in decision-making
Intensity of decision effort
Routine – those where the difference between actual
and desired states is expected to be felt and would call
for immediate solution
Emergency – unexpected and need immdte solution
Planning – expected in the future, but immdte solution
not called for
Evolving – unexpected and there is no need for an
immdte solution

129. Activating Problem Recognition
Influencing the desired state
Influencing perceptions of the actual state
Influencing the timing of problem recognition
Utilising problem-recognition information
Analyzing purchase-intention categories
Analyzing conversion of purchase intentions

130. Types of Decisions
The myriad decision options of today’s market place
may be summed up in five main types :
What to buy
How much to buy
Where to buy
When to buy
How to buy

131. (….contd)
Routine Problem Solving or Nominal Decision-
Making
Limited Problem Solving or Limited Decision-Making
Extensive Problem Solving or Extended Decision-
Making
All are related to the level of involvement

132. Information Search
 Knowledge obtained about product / services, or facts related to
these, thru mental as well as physical information-seeking and
processing activities which one engages in to facilitate decision
making regarding some goal-object in the marketplace
 After problem recognition, the natural progress is to information
search
 Forms of search :
 Prepurchase search
 Ongoing search
 Internal search
 External search

133. Types and Sources of
Information
Types :
Info about existence and availability of products and
service offerings
Info useful in forming evaluative criteria
Info on properties and characteristics of alternatives
Sources :
Marketer dominated sources
Consumer sources
Neutral sources

134. (….contd)
The amount of external search that consumers
engage in varies considerably across individuals
and different purchase situations
Influences on external-search behaviour :
Market conditions
Buying strategies
Individual factors
Situational factors
Perceived risk
 Influencing situations
 Types of risk

135. Evaluation Process
Evaluation involves those activities undertaken by
the consumer to appraise carefully, o the basis of
certain criteria, alternative solutions to market-
related problems
The search process determines what the
alternatives are, and in the evaluation process
they are compared so that the consumer is ready
to make a decision

136. Criteria
 The standards and specifications the consumer uses in evaluating
products and brands
 Definition of the preferred product/brand features that consumer
seeks in a purchase and may be either objective or subjective in nature
 Evaluative criteria may vary from one consumer to another, as also
product to product
 Criteria evaluated by consumer are likely to differ in their importance,
usually with one or two criteria being more important than others
 Types :
 Salient
 Determinant
 Critical
The marketer should be careful in assuming that a certain feature
ranked as most important by consumers is actually determinant

137. (….contd)
 Reducing the range of alternatives
 Evaluating alternatives
 CPB (choice by processing brands)
 CPA (choice by processing attributes)
 Though CPB strategy seems to be common, research also indicates
that consumers in early stages of the decision process use a CPA
strategy, switching to a brand-processing approach in later stages
 Consumers may use noncompensatory or compensatory processes as
decision rules in evaluating product-alternative attributes
 Noncompensatory decision rules
 Disjunctive rule : setting minimum stds and selecting one for
eliminating
 Conjunctive rule : setting minimum level of acceptability for each
criterion
 Lexicographic rule : assessment on criteria in order of importance
priority
 Sequential elimination rule : establish acceptable performance
minima for each evaluative criterion and then proceed to evaluate
each brand and eliminate any not measuring up to these minima

138. Decision rules (….contd)
Compensatory decision rule - consumers allow
perceived favourable ratings or brand evaluative
criteria to offset unfavourable evaluations
Consumers tend to initially use rules enabling easy
reduction of alternatives, and then use more rigorous
one to assess the remaining brands for a final decision

139. Important for Marketer
Determine sources of information
Determining source influence
Determining which criteria are used by consumers
Determining the relative importance of criteria used by
consumers
Determining consumers’ evaluations of brand criteria
performance
Determining consumers’ cue usage
Influencing consumers’ evaluation
 Altering cue characteristics
 Altering information value
However, criteria that fly in the face of consumers’
common-sense perceptions find difficulty in acceptance

140. Choice Making and Purchase
Decision
Why do people shop ?
Personal motive
Social motive
Except for a very small percentage, the vast majority
of sales takes place in stores
Choosing an outlet or a store is critical step in
purchase, and hinges upon various factors

141. Choice of Outlet
Determinants
Store location – intercity, intracity, interstore
choices
Store design and physical facilities
Merchandise (and image)
Advertising and sales promotion
Personnel
Customer services
Clientele

142. In-store purchasing behaviour
Merchandising techniques
Store layout and traffic patterns
Point-of-purchase media
Product shelving : shelf height, shelf space, price
awareness, promotional pricing, discount coupons
Packaging
Brand choice : among known brands, between known
brands and local/private brands
Personal selling effects : buyer-seller dyad

143. Non-store Purchasing
Direct marketing
TV home shopping networks
Mail order
Internet
Door to door selling
Shopping convenience most important motivator
Subject to risk of buying factor

144. Purchasing Patterns
Two important patterns
The extent to which consumers develop repeat
purchasing patterns : nature of brand loyalty, effect of
out of stock conditions
The extent to which purchases are unplanned : impulse
purchasing – pure impulse, suggestion impulse,
reminder impulse, planned impulse

145. Paying for the Purchase
Store checkouts should be easy
Acceptance of a variety of credit and debit cards
Smooth cash transaction
Depending on the store layout/system, easy bagging

146. Consumption and Post-consumption
behaviour
The post-purchase phase – product installation and/or
use; decisions on products or services related to the item
purchased
Product set-up and use :
 Providing information and assistance
 Understanding the user’s consumption system
 Decisions about warranties
Related products and services
 Buyers’ interests in related items

147. Post-purchase Evaluation
 Consumer satisfaction/ dissatisfaction – disconfirmation of
expectations : positive and negative; can be related to instrumental
performance and symbolic performance
 Consumer complaint behaviour
 Post-purchase dissonance : will motivate the person to reduce it; will
avoid situations that produce more dissonance
 Consumer’s dissonance : probability and magnitude can be related to
–
 Degree of irrevocability of decision
 Importance of decision to consumer
 Difficulty of choosing among alternatives
 Individual’s tendency to experience anxiety

148. Dissonance Reduction
Changing product evaluations – increase desirability of the
purchased item
Seeking new information – to confirm the wisdom of their
choice; may be through devaluing alternatives
Changing attitudes – decrease importance of the purchase
decision
Marketing implications for the marketer’s action :
Confirming expectations
Inducing attitude change
Reinforcing buyers

149. Product Disposition
Disposition alternatives and determinants
Disposition choice can be influenced by :
Psychological characteristics of decision maker
Factors intrinsic to the product
Situational factors extrinsic to the product
Alternatives for disposing of (routinely) :
Get rid of it permanently – trash it, give it away, trade
it, sell it
Get rid of it temporarily – rent or loan it
Keep - for use, new use, or store

150. (….contd)
Marketing implications
Public policy effects of disposition, eg environment
Marketing strategy factors (to facilitate disposing of by
consumer
 Disposing of to raise funds for new purchase
 Disposing of to create space for new
 Forecasting of replacement buys
 Identification of reasons for disposing of may enable marketer to
gain knowledge of why consumer wants replacement

151. Indian Consuming Classes
Snapshot
 300 million odd middle class - the Real consumers - is catching the
attention of the world
 Estimated over 600 million effective consumers by 2015; India is
bound to emerge as one of the largest consumer markets of the world
 About one-third of households in India can afford white goods, such
as washing machines, refrigerators and air conditioners.
 However, consumers are price-conscious, and demand for many white
goods is restrained by long replacement cycles in urban areas.

152. (….contd)
India has around 192 million households, as per India's
Marketing Whitebook by Business World
Of these only a little over six million are 'affluent' – that is,
with household income in excess of INR 215, 000.
Another 75 million households are in the category of 'well
off' immediately below the affluent, earning between INR
45,000 and INR 215,000.
This is a sizable proportion which offers excellent
opportunity for organized retailers to serve.

153. Consumer Profile
One of the key reasons for increased consumption is the
impressive growth of the middle class.
Around 70 per cent of the total households in India reside
in the rural areas.
The total number of rural household estimated to rise
from 135 million to 162 million in the period 2001 to 2015.
This presents the largest potential market in the world.
According to the study conducted by NCAER :
the number of `lower middle income' group in rural
areas is almost double as compared to the urban areas,
having a large consuming class with 41% of the Indian
middle class and 58% of the total disposable income

154. Potential
 The Indian rural market has been growing at 3-4% per annum, adding
more than 1 million new consumers every year and now accounts for
close to 50% of the volume consumption of fast-moving consumer
goods (FMCG) in India
 Some projections forecast the market size of the fast moving
consumer goods sector at around US$ 23.25 billion
 As a result, it is becoming an important market place for fast moving
consumer goods as well as consumer durables.
 Interestingly, there were nearly 75 mn households (33% of the total)
with an income of more than US$3,000 in 2009. These "well-off"
households already owned relatively expensive consumer durables,
such as air conditioners and refrigerators.

155. Age & Income Research
India – a young nation
 550 mn+ under the age of 20 by 2015
 In the age group of 15-19 years, above average growth in urban and
rural areas
 Population in the age group of 0-14 years is 65%
 Today brand identification is a major factor in motivating purchase
by youngsters
(Ernst & Young)
Income classes
 70 mn+ earn Rs. 8,00,000+ ($18,000) a year – number to rise to 140
mn by 2011
(no authentication survey results published yet)

156. India's Income classes
 The following offers a good picture, even though the data pertains to
the period 1990-00 - 2005-06
RICH (annual income > US$ 4,700)
* Own cars, PCs
3million households
6milliion households
CONSUMING (US$ 1000-4700)
* Have bulk of banded consumer goods, 70% of 2-wheelers,
refrigerators, washing machines
55million
75million

157. (….contd)
 CLIMBERS (US$500-1000)
* Have atleast one major durable (mixer, sewing machine/tv)
66million
78million
ASPIRANTS (US$350-500)
* Have bicycles, radios and fans
32million
33million
DESTITUTES (Less than US$350)
* Not buying
24million
17million
Source: The Great Indian Retail Story 2006, Ernst & Young.

158. Consumer Behavior
 Availability of lifestyle spending options is increasing for Indian
consumers and inducing higher spends on "status acquisition“
 Traditionally, Indian consumer is cautious about debts. In recent
past, this attitude has changed radically and in recent year's credit
is no more a feared entity.
 Indian consumer buying behavior to a large extent has a western
influence. Foreign brands have gained wide consumer acceptance
in India and they are much more open for experimentation.
 Beauty parlors in cities, eateries, designer wear, watches, hi-tech
products are a few instances which reflect these changes.
 Purchasing priorities in India also influence the level of sales of
individual products.
 Penetration data bear this out: televisions in use in 2006, a
particularly high sales year till then, were estimated at 95 per
1,000 populations, far higher than the level for white goods. This
reflects the growing demand for entertainment in India.

159. (….contd)
 The emergence of a larger middle and upper middle classes and the
substantial increase in their disposable income has changed the
nature of shopping in India from need based to lifestyle dictated
 The self-employed segment has replaced the employed salaried
segment as the mainstream market, thus resulting in an increasing
consumption of productivity goods, especially mobile phones and 2 -
4 wheeler vehicles
 There is also an easier acceptance of luxury and an increased
willingness to experiment with the mainstream fashion, resulting in
an increased willingness towards disposability and casting out from
apparels to cars to mobile phones to consumer durables
(Ernst & Young report)

160. The (Indian) Millenium Woman
Well-wired – uses all market offerings (of superior quality
generally); lives in cities and larger towns
Serial mom – reasonably high consuming, but with a
touch of traditionalism; lives in South India and some in
West
Golden oldies – traditional; lives mostly in Northern India
followed by East
Devoted caretaker – mainly family care; lives in Southern
India, followed by East, West, and smaller towns

161. Consumer Spending
The rate of growth of spending on discretionary items
(unlike basic necessities like food) has been growing at
an average of 9 per cent per year in recent years
A nation of savers, India, has now altered into a nation of
spenders.
An estimate suggests that an average Indian spends
40% of his monthly salary on food and grocery and 8%
on personal care products. (KSA Technopak's Consumer
Outlook report)

162. Urban-Rural divide in Spending (%)
Category Rural Urban
Entertainment 33 67
Consumer 44 56
Services
Durables 50 50
Misc. Consumer 57 43
Goods
Clothing & 61 39
Footwear
Food 64 36

163. Indian Growth Prospect Estimates
Average household disposable income growth in the 20 year band
range of 2005 to 2025 projected as :
 All India : 5.3%; Urban : 5.8%; Rural : 3.6%
 Upward shift in income classes projections :
(%- due rounding off, may not total to 100) (McKinsey
report)
Category 2005 (Est) 2015 2025
(Forecast) (Forecast)
Globals 0 1 2
(rich)
Strivers 1 1 9
Seekers 4 19 32
Aspirers 41 43 36
Deprived 54 35 22

164. Indian Consumer – evolution
brief
 Income growth
 Affordability growth
 Rural India looks beyond agriculture
 Rise of the self-employed
 Elevation of women as partners in family progress
 Preference for ‘real value’ products and services
 Increased demand for entertainment
 Comfortable with :
 Borrowing (funds)
 Acquiring luxuries
 Technology
(also refer to relevant slides under Culture section, for other regional
and grouping characteristics)

165. Salient Regional India Segments
The North – West skew
 Mumbai and Delhi account for :
 28 million people (almost equal to the population of Canada)
 60% of all domestic traffic
 70% of all Indian travellers going abroad
 At No.7, the Mumbai-Delhi air corridor is amongst world’s 10
busiest
 Roughly half the country’s ‘super rich’ families (annual income >
Rs 10 million) live in Mumbai and Delhi
 Mumbai, Delhi, and Bengaluru are 3 cities among 24 rated as
Rising Urban Global Stars
 Further market centres of cognizance : Ahmedabad, Chennai,
Hyderabad, Kolkata, Pune