ajaykumarta-unit 2 consumer behavior
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Consumer BehaviorUnit - 2
Discussion Questions1. How do consumer characteristics influence
buying behavior?
2. What major psychological processes influence
consumer responses to the marketing
program?
3. How do consumers make purchasing decisions?
4. In what ways do consumers stray from a
deliberative, rational decision process?
True or False? If you have bad breath, you cannot smell it
yourself.
If you eat a balanced diet, you do not need
vitamin supplements.
Using a razor with five blades will reduce the
likelihood of cutting yourself and will result in
less skin irritation.
Dell Computers tend to be of higher quality than
those made by HP and Sony.
Rust stains on clothes can be removed with the
use of lemon juice. Bleach actually makes these
stains worse.
Consumer BehaviorThe study of how individuals, groups, and
organizations select, buy, use, and dispose
of goods, services, ideas, or experiences to
satisfy their needs or wants.
Consumer behaviour refers to the mental
and emotional processes and the
observable behaviour of consumers
during searching, purchasing, and post
consumption of a product or service.”
TYPES OF CONSUMER BUYING BEHAVIORRoutine Response/Programmed Behavior
Limited Decision Making
Extensive Decision Making
Impulse Buying
ROUTINE RESPONSE / PROGRAMMED BEHAVIOR Frequently purchased low cost items.
Low involvement required.
Little search and decision effortPurchased almost automatically.
Examples
LIMITED DECISION MAKING Occasional buying.
When information is needed for a
unfamiliar brand in a familiar product
category.
Requires a moderate amount of time for
information gathering.
Loyalty to a brand
Example
EXTENSIVE DECISION MAKING Complex process- requires high involvement
unfamiliar, expensive, infrequently bought
products.
High degree of economic / performance /
psychological risk.
Lot of time spent seeking information and
deciding.
Examples
IMPULSE BUYING Basis - purchase of the same product does not always
elicit the same Buying Behavior.
Reason determines the extent of decision-making.
THIS or THIS ??
going for the dinner- reason can be an anniversary celebration, or a meal with a couple of friends.
Examples
FACTORS INFLUENCING CONSUMER BEHAVIORSocial Factors
Culture and Subculture Roles and Family Social Class
Reference Groups
Psychological Factors
Motivation Perception Learning Attitudes
Personality
Personal Factors
Demographic Factors Lifestyle Situational factors
Involvement Level
ProblemRecognition
Information Search
Alternatives’ Evaluation
Purchase Action
Post purchase Actions
Consumer Decision-Making Process
Factors influencing consumer Behavior
Cultural Factors
Social Factors
Personal Factors
Cultural Factors
Culture
Subculture
Culture is the fundamental determinant of a person’s wants and behavior.
Marketers must closely attend to cultural values in every country to understand
how to best market their existing products
Cultural Factors• Culture influences consumers through the
norms and values established by the society in which they live.
• The sum total of knowledge, beliefs, art, morals, laws, customs, and any other capabilities and habits required by humans as members of society.
• Perceptions, wants & behavior learnt by an individual, influence his buying behavior.
• Culture reflects what to eat, what we wear, the code of conduct, buying habits
• E.g., Kellogg’s
Sub- Culture
• Subcultures exist within a given dominant culture.
• The group have similar habits, behavior patterns, shared value system, buying behavior on basis of– Nationality– Religion– Region– Ethnicity– Age– Gender– …and many more.
• Advertisement strategies of a firm are also affected by
subculture differences
Social Factors
Reference Groups
Family
Role and Status
Social factors refer to forces that other people exert and which affect consumers’ purchase behaviour
Reference Groups• Groups are many like clubs, friends, schools colleges which influences consumer socialization& learning • Two types of reference groups• Primary reference Groups
– Membership reference – club – regular & informal contact – Aspiration reference group – copy the attitude & behaviour– Disclaimant reference group – holds membership but does not belong & opposed to group– Avoidance group – reset the values & beliefs
• Secondary Reference Groups – Religious group, professional & trade unions– Opinion leaders are perceived as people with skills, knowledge
Roles and Status• Groups often are an important source of information and help to define norms for behavior. • A role consists of the activities a person is expected to perform. • Each role in turn connotes a status. • People choose products that reflect and communicate their role and their actual or desired status in society. • Marketers must be aware of the status-symbol potential of products and brands.
Joint Decision Making process
InitiatorInfluenc
erGatekee
per Decision- maker Buyer User
two or more persons related by blood, marriage or adoption and
reside together
Social Class• ‘Social class defines the ranking of people in a society
into a hierarchy of distinct status classes;
• Upper, upper-middle, middle and lower classes, so that
the members of each class have relatively the same
status based on their power and prestige.’
• Socio economic factor – social class – Unique behaviors
• The things what consumers buying become symbols
which tell others who they are
Personal Factors
Age
Life Cycle Stage
Personality
Personal factors include those aspects that are unique to a person and influence purchase behaviour. These include demographic factors, lifestyle, and situational factors.
Personal Factors
ValuesOccupation
Economic situation
lifestyle
Psychological factors
• Psychological factors are internal to an individual and generate forces within that influence her/his purchase behaviour. • The major forces include
– Motives , – Perception ,– Learning , – Attitude , and – Personality.
MOTIVATIONThis refers to driving forces within an individual produced by a state of tension caused by unfulfilled needs, wants, and desires.
Motivation Process
Learning
Unfulfilled
Needs, Wants and Desires
Felt
Tension
Drive Appropriate
Behaviour
Goal or Need
Fulfillment
Cognitive Processes
Tension Reduction
MOTIVATIONFreud
Maslow
Herzberg
peoples behavior are unconscious
driven by different needs at different times
dissatisfiers from satisfiers
Abraham Maslow (1943) Need Theory
MOTIVATION RESEARCH
Some of the methods used to probe the subconscious mind include: In-depth interviews
– Talk freely by asking questions Association tests
– With a stimulus such as word, picture to check the first thing comes to their mind Projective techniques
– Pictures & designs are used Focus group
– Small group brought together
PERCEPTION
Selective Distortion
Selective RetentionSelective Attention
Subliminal Perception
Perception is the process by which an individual selects, organizes, and interprets stimuli into a meaningful and coherent picture of the world.People tend to remember
information that supports our attitudes and beliefs
allocation of processing capacity to some stimulus
tendency to interpret information in a way that fits our preconceptions
are not consciously aware of them
LEARNING
Driver
Cues
Discrimination
Learning is viewed as a relatively permanent change in behaviour occurring as a result information or experience, both direct and indirect.strong internal stimulus
how a person responds
adjust our responses accordingly
LEARNING• There are two basic approaches to learning:
(1) Behavioral approach
• Stimulus – response
• Classical conditioning (Respondent conditioning)
• Favorable association with product or service
• Operant conditioning (instrumental conditioning)
• Positive or negative reinforcement
• If positive use to purchase regular, negative results in decrease
(2) Cognitive learning approach.
• Learning takes place as a result of consumer thinking & problem solving
• Consumers need to exercise some control over environment
ATTITUDES
“An attitude is an enduring organization of motivational, emotional, perceptual, and cognitive processes with respect to some aspect of our environment.” • Feeling, action & beliefs• Research will be conducted to study consumer attitudes
MEMORY
Brand Associations
Mental Maps
Memory Processes
Encoding Retrieval
Brand
Association
Association
Association
Association
Association
HYPOTHETICAL MENTAL MAP – LIFE INSURANCE
Buying Decision Process
Planned & unplanned problems
Personal, commercial, public
Brand A or Brand B
The Buying Decision Process
Problem or need recognition
information search
alternatives evaluation
purchase decision
post-purchase evaluation
PROBLEM RECOGNITION
Stimulus
•Internal - is triggered by a
person’s normal needs
•External - seeing a
commercial for a vacation
“I’m Hungry”
INFORMATION SEARCH
Personal
Commercial Public
Experiential
looking for reading material, phoning friends, going online, and visiting stores to learn about the product
SUCCESSIVE SETS INVOLVED IN CONSUMER
DECISION MAKING
EVALUATION OF ALTERNATIVES
Attitudes
Beliefs
No single process is used by all consumers
trying to satisfy a need.
looking for certain benefits
product as a bundle of attributes with varying abilities
that a person holds about something
person’s enduring favorable, emotional feelings
AttributeMemory Capacity
Graphics Capacity
Size and Weight Price
Model Weight: 40% Weight: 30% Weight: 20% Weight: 10%
A 8 9 6 9
B 7 7 7 7
C 10 4 3 2
D 5 3 8 5
EXPECTANCY-VALUE MODEL
Model A = 0.4 (8) + 0.3(9) + 0.2(6) + 0.1(9) = 8.0Model B = 0.4 (7) + 0.3(7) + 0.2(7) + 0.1(7) = 7.0Model C = 0.4(10) + 0.3(4) + 0.2(3) + 0.1(2) = 6.0Model D = 0.4 (5) + 0.3(3) + 0.2(8) + 0.1(5) = 5.0
by combining their brand beliefs — the positives and negatives —according to importance
A B
PURCHASE DECISION
Brand
Dealer
Quantity
Timing
Payment method
Purchase sub decisions
sets a minimum acceptable cutoff level for each attribute
chooses the best brand on the basis of its perceived
POST-PURCHASE BEHAVIORPost-purchase Satisfaction
Post-purchase Actions
Defect
Loyal
Dissatisfied
Satisfied
Delighted
Stay or Go
public action by complaining to the company, going to a lawyer, stop buying the product
closeness between expectations and the product’s perceived performance
How Customers Use or Dispose of Products
consumption rate—the more quickly buyers consume a product, the sooner they may be back in the market to repurchase it.
Moderating Effects
Low-involvement consumer
Variety seeking consumer
consumer involvement
Types of Decision Situations
New
Task
Item purchased for 1st time
Straight Re-buy
Inventory reaches par level
Modified Re-buy
Repurchase with some minor modifications
MARKET RESEARCHUnit – 2 Contd…
Discussion Questions1. What constitutes good marketing research?
2. Use of marketing research
3. What are the best metrics for measuring
marketing productivity?
4. How can marketers access their return on
investment of marketing expenditures?
MARKETING RESEARCH SYSTEM
Insight
Market Researchto help them better understand the customers and markets
how’s and why’s certain things happen in the market
Marketing ResearchIt is the process of finding a solution to a
problem or a answer to question
through the use of scientific tools &
techniques
The systematic design, collection, analysis,
and reporting of data and findings
relevant to a specific marketing
situation facing the company.
Defined
Creative Research MeansRivals
Marketing partners
Student projects
Internet sourcesCheck out rivals
BUSINESS RESEARCH
Three major forms of business research are
Market research– Understanding & examining the marketplace in which company
operates– Helps to device effective business policies & strategies
Operations research– Use of mathematical. Logical & analytical methods to find optimal
solutions to business problems– Used for forecasting demand, optimizing production & investment
plans etc.,
Motivational research– Analyzing the reasons & motives behind people’s behavior– Used to understand consumer behavior
Marketing Research processIdentifying & defining problem / opportunity
Planning the research design
Selecting a research method
Selecting a sampling procedure
Data collection
Evaluating the data
Preparing & presenting the research design
DEFINE THE MARKETING PROBLEM & SET OBJECTIVE
Problem definition
– The statement clearly defines the specific & measurable problem that
the research project has to address
– This will facilitate the company to develop appropriate marketing plan
Research objectives
– Who are our customers?
– Who are the customers of competing brands
– What do these customers like & dislike
– How are we currently perceived among customers
– What must we do clarify & improve the customers existing perceptions
Focused inquiry
CATEGORIES OF RESEARCH
Exploratory research
– Carried out to make problem suited to more precise investigation or to frame a working
hypothesis
– It is not used in cases where a definite result is desired
– Rely upon secondary data’s
Descriptive studies
– Comes under formal research where objectives are clearly defines
– May range general survey of consumers age, education, market potential etc.,
Casual Research (Experimental)
– To establish cause & effect relationship between different variables
– Possible relationship can arise may be – symmetrical (Fluctuate each other), reciprocal
(mutually influence each other) & Asymmetrical (changes in one variable are responsible
for changes in another variable)
Discotheques & parties is depend on lifestyle, Ads vs. sales, & price increases sale increase
DEVELOP THE RESEARCH PLAN
Sampling planContact method
Data Sources• Secondary data• Primary data
Research Approaches• Observation• Focus groups• Surveys• Behavioral data• Experiments
Research instrument• Questionnaires• Qualitative measures• Technological devices
SAMPLING DESIGN
Who is to surveyed (Sampling Unit) Define the target population (universe)
How many to survey (Sampling Size) The needed amount of data
How should the respondents be chosen (Sampling procedure)
DEFINITION
Sample Is a part of total population
It can be an individual or groups of elements
Sample size is represented by “n”
Sampling Process of selecting a sample from a
population using special techniques
SAMPLING APPROACH
Probability Sampling
If the purpose of a research is to arrive at conclusion or make
predictions affecting the population as a whole
Non – Probability Sampling
Research purpose is directed towards evaluating how a small
representative group, is doing for purposes of illustration or
explanation
PROBABILITY SAMPLING
Simple random sampling
Each element in the target population has an equal chance of inclusion in the sample
Randomly generated or picked out of a box
Systematic sampling
Selection of every kth element from a sampling
Population size / Sample size
Stratified random sampling
Process of grouping members of the population into relatively homogeneous subgroups like age,
gender & samples are selected randomly
Multistage cluster sampling
Grouping the elements in a population into various clusters & then selecting a few clusters
randomly like cities, villages etc.,
Simple random samplingSystematic sampling
Stratified random sampling Multistage cluster sampling
NON – PROBABILITY SAMPLING Convenience Sampling
Based on their easy availability & accessibility of the researcher
Quota Sampling The entire population is segmented into mutually exclusive groups or categories The number of respondents to be drawn from each categories is specified in
advance 15 males & 15 females
Judgment sampling Selection of unit on judgment of an experienced researcher. Mumbai
Snowball sampling Involve the selection of additional respondents based on referrals of initial
respondents Chain system may be used when samples are not available
COLLECT THE INFORMATION
Online surveys
Telephone surveys
Interviews In-home surveys
Most expensive stepMost prone to errors
DATA COLLECTION INSTRUMENT
Depends on type of research
Mainly they use questionnaire for
quantitative study
Questionnaire
Set of questions to be asked from respondents
with appropriate instructions indicating which
questions to be asked
Tips to prepare Effective questionnaire
Clear objectives
Should be short to maintain interest
Should be clear & understanding
Opening statement should be minimized
Structure questions logically like general first & important
followed by
No suggestive type of questions
Questions which Cross checks previous answer
Pretest the questionnaire & then sharpen it & polish it
Nominal scale– Uses numbers or letters to identify different objects– 1) 5-10, 2)11-15, 3) 16-20, 4) 21-25 etc.,
Ordinal scale– Used to arrange objects to some particular order– Airtel ____ Hutch____ Idea____ BSNL____ Reliance____
Interval scale– Similar to ordinal but they also arrange objects in a particular objects– Between the points on the scales are equal– 10_____ 9______ 8_______ 7____ 6_____ 5______.......... So on– The value of difference can be identified
Ratio scale– Fixed zero point & have equal intervals– Used to calculate yards, meters, height, weight, money
Types of Measurement Scales
Attitude Measurement scales
Open ended
The respondents is free to express
Dichotomous (Closed ended)
Choose only one from yes or no
Multiple item scale
The respondent can make two or more choices
Semantic Differential scales
The respondent can rate on the scale divided between 1 & n
where “n” be the excellent & “1” poor
Other Measurement Scales
Comparative scales
Between X & Y product
Pictorial scales
Constant sum scales
Respondents are asked to divide the given numbers
among various attributes
Likert scale
Series of statements where the respondents provide
answer in the form of degree of agreement or
disagreement
ANALYZE THE INFORMATION
Develop summary measures
Compute averages
Analyze the information Raw data does not serve the purpose of research
Data need to be analyzed based on requirement to extract the data satisfying objectives
Stages of data analysis
– Validation• Helps to confirm if the interview was really conducted
– Editing• Checking for mistakes by respondent & interviewer
– Coding• Assigning numbers or other symbols to answers in order to group
– Data entry• Consistency checks & treatment of missing response
– Tabulation & analysis• One-Way frequency tabulation & cross tabulation
PRESENT THE FINDINGS
Present the Findings
Prefatory Information
– Letter of transmittal
– Title page
– Authorization statement
– Executive summary
– Table of contents
Introduction
– Problem statement
– Research objectives
Methodology
– Sampling design
– Research design
– Data collection
– Data analysis
– Limitations
Findings
Conclusions & recommendations
Appendices
Bibliography
Components of research findings
Types of presentation
Written presentation
Oral Presentation– Initial planning
– Preparation
– Making The Presentation
– Delivery• Vocal problems• Physical behaviour• Handling Questions
Visual Aids– Tables
• Title & number• Foot notes• Source
– Charts & graphs• Line graphs• Pie charts• Bar charts
MAKE THE DECISION
Research DecisionsResearch should guide decisions, not be used to support decisions already made.
MARKETING INFORMATION SYSTEM (MKIS)
Discussion Questions1. What are the components of a modern marketing
information system?
2. What are useful internal records for such a system?
3. What makes up a marketing intelligence system?
4. What are some influential macroeconomic developments?
5. How can companies accurately measure and forecast
demand?
Introduction What is MKIS?
‘MKIS (MIS) is a set of procedures and methods for the regular, planned
collection, analysis and presentation of information for use in marketing decisions
Information about Factors that affect marketing
Changing marketing environments
Expanding business boundaries
Shifts in income,
Changing lifestyles
By the use of technology also companies fail to gain the information that
required
Collecting InformationCustomers
Competitors External Factors
Marketing Information System - consists of
People
Equipment
Procedures
to gather, sort, analyze, evaluate, and distribute information that is needed, timely and accurate.
Insight
Marketing Information System – From Where
Marketing Research
Marketing Intelligence
Internal Records
provide managers with up-to-date information on the current sales
Internal RecordsOrder-to-Payment Cycle
Databases / Data Mining
Sales Information Systems
the process that orders go through once Includes invoices and shipping documents
such as purchase history, product preferences
Marketing IntelligenceNews and Trade Publications
Meet with customers, suppliers, distributors, and other managersMonitor social
media sites
a set of procedures and sources that managers use to obtain everyday information about developments in the marketing environment
Improving Marketing Intelligence
Sales Force
External Experts
Establish industry network
Customer Advisory Panel
Marketing Intelligence & the Internet
Independent Online Forums
Distributor or sales agents feedback sites
Customer review and expert opinion sitesCustomer complaint sites
Using Marketing Intelligence
Share Information
Quickly
should be gathered and shared with decision makers quickly in order to effectively use the information.
Analyzing the Macro Environment
Elements that can impact a company, but cannot be controlled
Major Environmental Forces
Economic
Sociocultural
Natural
Technological
Political-Legal
Demographics
Attributes of good marketing information
Relevance to decision
making
Confidentiality
Cost reasonable
Reliability
Clarity
Timeliness
Objectivity (unbiased)
Completeness
Accuracy
Strategic value
Needs and Trends
FadMegatrend
Trend
Unpredictable, short-lived, and without social, economic, and political significance
Offer a view of the future due to their momentum and durability
Changes that are slow to form but once established
last for 7 – 10 years
Estimating Future Demand
Sales Force OpinionsForecasting
Past Sales Analysis
Buyer’s Intentions
Expert Opinions