ajaykumarta-unit 2 consumer behavior

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