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Consumer Behavior and Marketing Strategies unit1 and Unit 2

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Consumer Behavior and Marketing Strategies unit1 and Unit 2

Books for Reference:
Kurder, Consumer Behaviour, PHI/Pearson.
Schiffman.L.G. & Kanak.L.L., Consumer Behaviour, PHI/Pearson.
Loudon.D, Consumer Behaviour, Concepts & Applications, Albert Biutta, McGraw Hill.
Ingel, Roger & Blackwell, Consumer Behaviour.
 Schiffman and Kaunuk “Consumer Behavior”-Prentice-Hall of India.
Sheth Mittal “Consumer Behavior-A Managerial perspective- Thompson
NK Sahani, Meenu Gupta “Consumer Behavior”-Kalyani Publishers.
Suja R Nair “Consumer Behavior –Text and cases-Himalaya Publishing House.

Books for Reference:
Kurder, Consumer Behaviour, PHI/Pearson.
Schiffman.L.G. & Kanak.L.L., Consumer Behaviour, PHI/Pearson.
Loudon.D, Consumer Behaviour, Concepts & Applications, Albert Biutta, McGraw Hill.
Ingel, Roger & Blackwell, Consumer Behaviour.
 Schiffman and Kaunuk “Consumer Behavior”-Prentice-Hall of India.
Sheth Mittal “Consumer Behavior-A Managerial perspective- Thompson
NK Sahani, Meenu Gupta “Consumer Behavior”-Kalyani Publishers.
Suja R Nair “Consumer Behavior –Text and cases-Himalaya Publishing House.

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Consumer Behavior and Marketing Strategies unit1 and Unit 2

  1. 1. •Consumer Behaviour and Marketing Strategy, nature and scope of Consumer Behaviour •Market segmentation and Consumer Behaviour. •Learning - nature, conditions relevant to high and low involvement strategies, characteristics and types of learning, •Brand loyalty, Brand equity & leverage. •Perception - Process, interpretation, Perception and marketing strategy. Perceptual process and buying behaviour. •Perception - Elements, Just notice able difference - its application to Consumer Behaviour, Perceptual organization and defense, consumer imagery.
  2. 2.  Kurder, Consumer Behaviour, PHI/Pearson.  Schiffman.L.G. & Kanak.L.L., Consumer Behaviour, PHI/Pearson.  Loudon.D, Consumer Behaviour, Concepts & Applications, Albert Biutta, McGraw Hill.  Ingel, Roger & Blackwell, Consumer Behaviour.  Schiffman and Kaunuk “Consumer Behavior”-Prentice-Hall of India.  Sheth Mittal “Consumer Behavior-A Managerial perspective- Thompson  NK Sahani, Meenu Gupta “Consumer Behavior”-Kalyani Publishers.  Suja R Nair “Consumer Behavior –Text and cases-Himalaya Publishing House.
  3. 3.  Business orientations: ◦ 1. Production (Focus on production and production related activities) ◦ 2. Sales (Focus on increasing sales. ◦ 3. Promotion(Efforts to increase sales) ◦ 4. Consumers (Focus upon consumers needs and aspirations
  4. 4.  Who buys?  How do they buy?  When do they buy?  Where do they buy?  Why do they buy?  How often they buy?
  5. 5. Leon G. Schiffman and Kanuk  “Consumer behavior is the study of how individuals make decisions to spend their available resources (Time, Money and Efforts) on consumption related items. It includes the study of what they buy, why they buy it, when they buy it, how often they buy it and how often they use it”.
  6. 6. S.A. Chunnawalla  “Consumer behavior refers to the behavior of consumers in deciding to buy or not to buy or use or not to use or dispose of or not to dispose of the products which satisfy their needs.
  7. 7.  Suja R Nair “Consumer Behavior can be defined as all psychological, social and physical behavior of all potential consumers as they become aware of, evaluate, purchase, consume and tell others about products and services”
  8. 8.  “It is the process of dividing the total heterogeneous market into relatively distinctly homogeneous sub-groups of consumers with common needs or characteristics and selecting one or more segments to target with distinct marketing program”.  A market segment is a portion of a larger market in which the individuals, groups or organizations share one or more characteristics that cause them to have relatively similar product needs.
  9. 9. Sl. No Bases Examples 1 Geographic Segmentation= Area/place North, South, West, East Karnataka, Andra, Tamil nadu, Kerala 2 Demographic Segmentation= Demographic variables of people Age, gender, family size, family life cycle, occupation, education, religion, nationality etc 3 Psychographic Segmentation = personality characteristics Ambitious, confident, aggressive, impulsive, modern, conservative, gregarious, loners, extrovert, introvert 4 Life style segmentation Life, spend time and money, social events, vacation, entertainment, Work, likings, hobbies, Recreation, entertainment, shopping, travel etc.,
  10. 10. Sl. N o Bases Examples 5 Behaviorist Segmentation Occasion, benefits sought, user status, usage rate, loyalty status, buyer readiness, attitude etc., 6 Benefit Segmentation=specific benefits expected by consumers In tooth paste market= new benefits like fresh breath, decay prevention and white teeth have emerged 7 Demographic and Psychographic segmentation (Hybrid)=Both Age, gender, family size, family life cycle, occupation, education, religion, nationality etc (Demographic) Ambitious, confident, aggressive, impulsive, modern, conservative, gregarious, loners, extrovert, introvert(Psychographic)
  11. 11. SL. No Bases Examples 8 Geo-Demographic North, South, West, East Karnataka, Andra, Tamil nadu, Kerala (Geographic) Age, gender, family size, family life cycle, occupation, education, religion, nationality etc (Demographic)
  12. 12.  Difficult to define learning.  No consensus about learning by learning theorists.  Cognitive Theorists –” it is a function of purely learning process”  Behavioral Theorists-” It is a result of responses that occur as a result of exposure to stimuli”  Marketing view Point” Consumer learning is a process by which individuals acquire the purchase and consumption knowledge and experience they apply to future related behavior”
  13. 13.  1. It is a process – reading, observation, thinking, real life experiences etc.,  2. Mostly intentional  3. Happens incidentally –it is intentional, un- intentional and incidental.  4. It is comprehensive – It includes simple to complex learning
  14. 14.  Motivation (stimulates learning)  Cues (directs motivation)  Response (reaction to drive/cues)  Re-inforcement (repetition of response)
  15. 15. Behavioral Learning Theories is purely based upon Input and output (Input=stimulus and Output=Response). Not concerned with the process of learning Behavioral Learning Theories having relevance to marketing are: 1. Classical Conditioning. 2. Instrumental Conditioning.
  16. 16. 1. Classical Conditioning: “Both Animals and Human beings are passive entities who could be taught certain behavior through repetition or conditioning”
  17. 17. 1. Classical Conditioning: (Pavlov an Learning Model) “Russian Psychologist Ivon Pavlov experimented how a dog responded to various conditional and unconditional stimuli's” Hunger of the Dog: (Drive) Ringing Bell & Giving meat: (Cue) Saliva secreted: (Response) Drive: (Strong internal urge) Cue: ( External stimuli) Response: (Reaction to the stimuli)
  18. 18. 2. Instrumental Conditioning: “Consumer learns by trial and error process in which some purchase behavior results in favorable rewards than other purchase behavior” “ A favorable behavior motivates individuals to repeat specific behavior”
  19. 19. 2. Instrumental Conditioning: Try Brand A Try Brand B Try Brand C Try Brand D Unrewarded Legs too tight Unrewarded Tight seat Unrewarded Baggy in seat Rewarded Perfect fit Stimulus Situation (Need good jeans) Repeat behavior
  20. 20.  According to cognitive theorists “learning happens as a result of thinking and problem solving”  “Learning involves complex mental processing of information and emphasizes the role of motivational and mental processes in producing desired response”.  Among the cognitive theories Involvement theory is important.
  21. 21.  Involvement Theory:  Is Result of split brain theory. Human brain has two hemispheres: Left hemisphere and right. Left: Reading, speaking etc Right: Images/pictorial
  22. 22.  Accordingly “Individuals passively process and store non-verbal/pictorial information without active involvement” Therefore:  TV viewing=is Not active  Newspapers/magazines=is highly active “Highly visualized TV commercials induce purchase behavior”
  23. 23.  Many factors influence a consumer’s behavior.  The level of involvement varies from low involvement to high involvement  We think about many products we want to buy but did not buy  Sometimes we look at products, compare them, and then decide not to purchase
  24. 24.  Low-involvement decisions are, however, typically products that are relatively inexpensive and pose a low risk to the buyer if the buyer makes a mistake by purchasing them.  Ex: we routinely buy our favorite brand of toothpaste, not thinking much (Low effort)
  25. 25.  High -involvement decisions are, however, non-repetitive products that are relatively expensive and pose a high risk to the buyer if the buyer makes a mistake by purchasing them.  When it comes to the car, you might engage in extensive problem solving but, again, only be willing to consider a certain brand or brands.
  26. 26.  1.The consumer is not informed of the product or service offering.  2.The consumer is not aware about the various decision criteria used to evaluate the product or service offering, and he is also not aware of the various brands that are available and from which to evaluate.  3.The purchase process involves significant effort on part of the consumer. Examples: Jewellery, electronic goods, Real estate and property etc.
  27. 27.  1.The consumer is familiar of the product or service offering; but he is unaware of the various brands.  2.The consumer is aware of some brands and also of the various criteria used to evaluate  the product or service offering; he is unaware of the new brands that have been introduced.  3.He has not evaluated the brands amongst the awareness set and has not established preferences amongst the group of brands.  4. The purchase process is more of a recurring purchase and it involves only a moderate effort on part of the consumer.  Examples: A laptop replacing a desktop.
  28. 28.  1.The consumer is well informed and experienced with the product or service offering.  2.The consumer is aware of both the decision criteria as well as the various brands available.  3.The purchase process involves no effort on part of the consumer. It is simple and the process is completed quickly; purchases made out of habit. These are routine purchases. Examples: Staples, Cold drinks, Stationery etc.
  29. 29. Sl. No Parameters High consumer efforts Moderate consumer efforts Low consumer efforts 1 Consumer Involvement High Medium Low 2 Time taken to make decisions High Low to high Low 3 Information gathering Yes Yes No 4 Information sources Many Few Few or none 5 Awareness and knowledge of Decision criteria No No Yes 6 Awareness and knowledge of Alternative brands avaiable Somewhat Yes Yes 7 Evaluative criteria Complex Moderate Simple 8 Brands considered Many Few One (repeat purchase)
  30. 30.  1. Physical behavior  2. Symbolic Learning and problem Solving  3. Affective Learning
  31. 31.  1. Physical behavior  We learn many physical behaviors to respond to a situation e.g. learn to walk , talk , interact with others, and also the method of responding to various purchase situations.  Consumers learn certain physical activity through the process of , imitation. They mimic the behavior of other individual such as celebrities.
  32. 32.  2. Symbolic Learning and problem Solving ◦ Thinking involves the mental manipulation of symbols representing the real world to form meanings. ◦ This leads to insight (that is relationships of products with problems) ◦ For example we may be interested in buying an alarm for car due to but after some insight knowledge that our car is always in secured parking we may decide not to waste money and spend it for some thing else.
  33. 33.  Affective Learning  People learn to like and value certain elements and dislike others from their environment.  This means that consumers learn many of their wants, needs, motives as well as what products satisfy these needs.  Learning also influence the consumers in developing a favorable or unfavorable attitudes towards some product.
  34. 34.  A Brand includes a name, sign, symbol, logo etc which is used to distinguish the product/service with competitors .  It conveys a promise: Ex
  35. 35. Sl.No Brand Promise 1 Maruti 800 Economical, Fuel efficient car for higher middle class customers 2 Maruti Zen Rich, Young upwardly mobile people 3 Cielo Family car of the young rich 4 Contessa, Maruti zen Cielo Corporate cars 5 Mercedez Benz Car of the super rich 6 Tata sumo Utility vehicle for rough-n-tough conditions
  36. 36. Brand loyalty in the commitment of the consumers towards a brand to make repeat purchases again and again.  Brand loyalty is a result of consumer behavior and is affected by a person's preferences.  Loyal customers will consistently purchase products from their preferred brands,  Companies will often use different marketing strategies to cultivate loyal customers, be it is through loyalty programs (i.e. rewards programs) or trials and incentives (ex. samples and free gifts).
  37. 37. 1. Hard Core Loyals 2. Soft Core Loyals 3. Shifting Loyals 4. Switchers
  38. 38.  1. Hard core Loyals: very committed, undivided loyalty, speak for the brand.  2. Soft core Loyals: Loyal to 2 to 3 brands, divided loyalty.  3. Shifting Loyals: shifting nature from one brand to other.  4. Switchers: No loyalty, fickle minded, keeps on changing
  39. 39.  Perception is how we see the world around us. Schiffman and Kanuk: “Perception is a process by which individuals selects, organizes and interprets stimuli into a meaning and coherant picture of the world”.
  40. 40. Perceiver Receiving Stimuli Selecting Stimuli Organizing Stimuli Reacting to stimuli Checking stimuli Inter preting stimuli Object Situation
  41. 41. 1. Receiving Stimuli: sense organs (eye,ear,nose,skin,tongue) receive stimuli internally from within and externally from environment 2. Selecting Stimuli: Response will not be for all stimuli. To respond, stimuli needs to be selected.
  42. 42. 3. Organizing Stimuli: Process of arranging bit of information into a meaningful whole is organizing. 4. Interpreting Stimuli: a) Perceptual set (Previously held beliefs) b) Attribution (Individuals give reasons for their behavior)
  43. 43. c) Stereo Typing: (People follow the group) d) Halo Effect (Attributing good qualities whom we like and bad qualities whom we dis-like) e)Perceptual Context (context in which object is placed) f) Perceptual Defence (Tendency to put defence when confronted with unacceptable stimuli
  44. 44. g) Implicit Personality Theory (Human traits are associated with one another Ex: hard working with honesty) h)Projection (People tend to see their traits in others)
  45. 45. 5. Checking Stimuli: perceiver of stimuli verifies whether his interpretations was correct or not. 6. Reacting to Stimuli: Reaction could be favorable or unfavorable
  46. 46. •Motivation - Nature, motivational strategies, theories and their relevance, marketing strategies based on motivational conflict. •Personality - Psycho-analytical neo-Freudian and social approaches to personality •Understanding consumer diversity, Brand personality, Self and self image.
  47. 47. “Forces that make people behave in particular ways. It encompasses pressures and influences that trigger channelized and sustained consumer behavior” “Inner drive that is sufficiently pressing and directing a person to seek satisfaction of a need”
  48. 48.  “Motivation is the driving force for human behavior guided by Cognition (Thinking process), Learning, Group and cultural influences”  “Purpose of mans motives, values, attitudes, needs, emotions and behavior is to Protect, satisfy & enhance”
  49. 49. Features: 1. Needs are never fully satisfied. 2. New needs comes when old needs are satisfied. 3.Extent of fulfillment of needs affects human behavior. 4.Non fulfillment of a need may influence the need negatively. 5.Needs vary among individuals.
  50. 50. Maslow’s Theory of Needs: Hierarchy in Human Needs: According to Maslow human beings try to satisfy five types of needs: a. The physiological needs: Basic needs like food, clothing, water, shelter. Top the hierarchy, They enjoy the highest level of motivation till they are satisfied.
  51. 51. Maslow’s Theory of Needs: b. The Safety needs: Next in hierarchy only after psychological needs. It is a need to be free from physical danger and self protection.
  52. 52. Maslow’s Theory of Needs: c. The Social needs Man is a social human being Expects to belong and accepted by various groups Look forward for belongingness and love from people around
  53. 53. Maslow’s Theory of Needs: d. The Self-Esteem needs  Concerned with fulfilling needs relating to self-respect, self-confidence, personal worth etc.  Prestige, power/control etc., in human beings
  54. 54. Maslow’s Theory of Needs: e. The Self-actualization needs: Need to develop intrinsic capabilities Need to enhance potentialities Need to become what is possible.
  55. 55.  Motivational conflict is one important source of frustration.  It results when two or more motives drive behaviour towards incompatible goals. (Contradicting goals)  “Psychologists treated conflict in terms of positive tendencies to approach certain goals and negative tendencies to avoid others.”
  56. 56.  Are you trying to avoid (negative) or achieve (positive) outcome?  What would be an outcome for a consumer to avoid? (too many calories, fat content, high price, unclean clothes) or  to pursue? (good taste)  In Reality, Many Outcomes are in Conflict  Eg: high calorie food which tastes great! leads to need for low calorie food which tastes great leading to fake fat.
  57. 57.  They identified four major ways in which these tendencies could oppose one another and, thus, defined four major types of conflict as :  (i) Approach-approach conflict  (ii) Avoidance-avoidance conflict  (iii) Approach-avoidance Conflict  (iv) Multiple approach-avoidance
  58. 58.  (i) Approach-Approach:  In this type of conflict, a person is faced with two attractive alternatives, only one of which can be selected.  EX: There are two courses that you want to take, but they are scheduled for the same time. Approach-approach conflicts are usually easy to resolve. You choose one course and decide to take the other next semester.  Approach- approach conflict become serious only if the choice of one alternative means the loss of an extremely attractive alternative.
  59. 59. (ii) Avoidance-avoidance Conflict:  A second type of conflict, avoidance-avoidance, involves two negative goals and is a fairly common experience.  EX:  A boy must do his arithmetic homework which he dislikes or get a spanking.  A student must spend the next two days studying for an examination or face the possibility of failure.  A woman must work at a job she intensely dislikes or take the chance of losing her income.
  60. 60.  (iii) Approach-avoidance Conflict:  Approach-avoidance, is often the most difficult to resolve because, in this type of conflict, a person is both attracted and repelled by the same goal object. Because of the positive valence of the goal, the persons approach it; but as it is approached the negative valence becomes stronger.  People in these conflicts approach the goal until the negative valence becomes too strong, and then they back away from it. Often however, the negative valence is not repellent enough to stop the approach behaviour.  In such cases, people reach the goal, but much more slowly and hesitatingly than they would have without the negative valance; and until the goal is reached, there is frustration. Even after the goal is reached, an individual may feel uneasy because of the negative valence, attached to it. Whether a person is frustrated by reaching a goal slowly or by not reaching it at all, emotional reactions such as fear, anger, resentment commonly accompany approach-avoidance conflicts. 
  61. 61.  (iv) Multiple Approach Avoidance Conflicts:  Many of life’s major decisions involve multiple approach- avoidance conflicts, meaning that several goals with positive and negative valences are involved.  Suppose a woman is engaged to be married; suppose, further, that the goal of marriage has a positive valence because she loves the man she will be marrying. Suppose, on the other hand that marriage is repellent to her because it will mean giving up an attractive offer of job in another city.  With respect to her career, the woman is attracted to new job, but also repelled by the problems it will create for her marriage.
  62. 62.  Derived from a Latin word “Persona” Meaning Mask which the Greek actors wore while acting. According to MUNN “Personality is the most characteristic integration of an individuals structure, modes of behavior, interest, attitudes, capacities, abilities and aptitude”.
  63. 63. 2.According to Gordon Allport  “Personality is the dynamic organization within the individual of those psycho- physical systems that determine his unique adjustment to his environment”.
  64. 64.  1. Individual Differences  2. Consistent and Enduring  3. Change in Personality
  65. 65.  1. Freudian Theory  2. Neo-Freudian Theory
  66. 66.  Sigmund Freud Theory is known for psychoanalytic theory  It is the corner stone of modern psychology  It states that “Unconscious needs or drives are at the heart of human motivation and personality”  Human personality consists of three interacting systems ID, SUPER EGO AND EGO
  67. 67.  1. ID: “Source of all driving psychic energy and innate to man, his instincts, needs and desires and impulses that demands immediate gratification.”  But, man in bound by social norms.  He cannot express his impulse.
  68. 68.  2. Super-ego: “Internal representative of traditional values & customs”.  It is the moral sense and conscience of personality
  69. 69.  3. Ego: “ It is the planner, thinker and the executor of personality”  It controls and re-directs ID so that gratification is achieved through reality principles.
  70. 70. Neo-Freudians (Alfred Adler, Harry Stack Sullivan and Karen Horney) Disagreed personality theory of Freud According to Neo-Freudians social relationships are fundamental to the formation and development of personality
  71. 71.  According to Alfred Adler “human beings seek to attain various rational goals which he calls as life style. He emphasizes on the individuals efforts to overcome feelings of inferiority and to strive for superiority”.
  72. 72. According to Harry Stack Sullivan “People continuously attempt to establish significant and rewarding relationships with others. He stressed on the individuals efforts to reduce tension such as anxiety”.
  73. 73. According to Karen Horney “individuals can be classified into three personality groups. Complaint, Aggressive and Detached”.(CAD) Complaint individuals move towards others. Aggressive individuals move against others and Detached individuals move away from others.
  74. 74.  The global marketplace is a celebration in diversity. People differ not only among cultures, but within cultures.  Once newcomers sought assimilation (Culture of a group resembles that of another group culture) they now value transnationalism.  Multiculturism has become a major contributing factor to the diversity of consumer behavior.
  75. 75.  Consumers differ not only in the usual ways, but also in their activities and interests, their preferences and opinions, the foods they eat and the products they buy.  How do they know which people to target, where and how to locate them, and what message would be most effective? Through consumer research.
  76. 76.  The cultural diversity of India manifests itself in the 29 states (geographical territories) of the country through food habits, languages spoken, religious practices within the same religion and the lifestyles of consumers.  About 72.2% of the Indians live in over 6,38,596 hamlets (Human settlements) and only 1,00,000 of these hamlets have a population of more than 3,500) add to the cultural diversity.  While around 54% of Indians earn less than one dollar per day, there are consumers who consume brands like Tag Heuer, Mont Blanc, Mercedes Benz, Louis Vuitton, Baskin-Robbins and Tropicana.
  77. 77.  There are around 15 million small retail outlets (called as kirana shops) and modern retailing in the form of supermarkets and hypermarkets are steadily growing in major metropolitan cities and tier two cities.  “Marketers need to build a sound business model after taking into consideration the psychographics and cultural diversity aspects of consumer segments.”
  78. 78.  Brand personality is nothing but personification of brand.  It is a means of assigning human traits to a brand so as to achieve differentiation.  For instance:  Allen Solley brand speaks about personality and makes the individual who wears it stand apart from the crowd.  Infosys represents uniqueness, value, and intellectualism.  Dove as honest, feminist and optimist;  Hewlett Packard brand represents accomplishment, competency and influence).
  79. 79.  Brand personality needs to be differentiated from brand image.  Brand image are the tangible thoughts about (physical and functional) the benefits and attributes of a brand.  Brand personality is the emotional associations of a brand with the consumers mind.
  80. 80.  Self-concept, is the totality of our beliefs, preferences, opinions and attitudes organized in a systematic manner, towards our personal existence.  Simply put, it is how we think of ourselves and how we should think, behave and act our various life roles.
  81. 81.  The self-concept theory holds many assumptions about our personal judgment towards our selves. Here are some of them:  1. Self-concept is learned:  One of the very basic assumptions of this theory is that no person is born with a self-concept. Self-concept is believed to have been develop as a person grows old.  This means that our perceptions towards our selves can be shaped and can be altered, and can also be affected by environmental factors.  In this sense, self-concept is actually a product of socialization and development. A person may have a perception of himself different from what other people thinks of him.  For example, an individual feels that he is generous while others see him as a selfish person.
  82. 82.  2. Self-Concept is organized.  A person may have numerous views about himself. He may think that he is kind, patient, loving and caring, or selfish, cruel, rude and stubborn.  No matter how many different perceptions a person has on him , still, there is one perception that facilitates all of these insights, causing one organized self-concept.
  83. 83.  3. Self-concept is dynamic.  As a person faces different situations and new challenges in his life, his insight towards himself may constantly change depending on the way he responds to such life changes.  We see things depending on our self-concept. We behave according to how we see ourselves in a situation.  Therefore, self-concept is a continuous development wherein we tend to let go of the things and ideas that are not congruent to our self-concept, and we hold on to those that we think are helpful in building a more favorable perception of our personal existence.

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