Set-1

1(a) Define consumer ethnocentrism and consumer materialism.

Sol Ethnocentric consumers refuse to buy products and services that are imported from
foreign countries. ... Nevertheless, consumers in developed countries tend to have a
more favorable perception of domestic than foreign products.

Materialism refers to cultures in which the majority of the people in the

society value material objects highly. In other words, individuals who value
materialism pursue material possessions and the accumulation of income and
wealth.

As an Indian consumer, discuss the different ways for arousal of motives with
relevant examples.

1. Physiological Arousal
2. Emotional Arousal
3. Cognitive Arousal
4. Environmental Arousal
Physiological Arousal: Bodily needs at any one specific moment in time are based
on the individual’s physiological condition at that moment. Like a drop in blood
sugar level or stomach contractions will trigger awareness of a hunger need.
A decrease in body temperature will induce shivering, which makes the individual
(b) aware of the need for warmth. Secretion of sex hormones will awaken the sex need.
For example, a person who is cold may turn up the heat in his bedroom and also
make a mental note to buy a warm cardigan sweater to wear around the house

Bodily needs, at any one specific moment in time, are rooted in an individual’s
Sol physiological condition at that moment.
Most physiological cues are involuntary; however, they arouse related needs that
cause uncomfortable tensions until they are satisfied.

Emotional Arousal: Sometimes day dreaming results in the arousal or stimulation

of latent needs. People who are bored or who are frustrated in trying to achieve
their goals often engage in day dreaming (autistic thinking) in which they imagine
themselves in all sorts of desirable situations.
People who are bored or frustrated in trying to achieve their goals often engage in
daydreaming, in which they imagine themselves in all sorts of desirable situations.
These thoughts may produce tension that drives them into goal-oriented behavior.
Like, a young man who dreams of being a famous novelist may enroll in a writing
workshop
 Cognitive Arousal: Sometimes random thoughts can lead to a cognitive
awareness of needs. An advertisement that provides reminders of home might
trigger instant yearning to speak with one’s parents. Sometimes random thoughts
can lead to a cognitive awareness of needs.
Advertisements are cues(clues) designed to arouse needs.
Without these cues, the needs might remain dormant.
Creative advertisements arouse needs and create a psychological imbalance in the
consumer’s mind.
When people live in a complex and highly varied environment, they experience
many opportunities for need arousal. Conversely, when people live in a poor or
deprived environment, fewer needs are activated.

Environmental Arousal : The set of needs an individual experiences at a

particular time are often activated by specific cue or indication or reminder in the
environment. Without these cues, the needs might remain dormant. For example,
the 6° clock news, the sight or smell of bakery goods, fast food commercial on
television, the end of school day- all of these may arouse the “need” for food.
Based on your own past experience & observation, identify the various types of
perceived risk that influence on purchase. Explain more by yourself

Any time customers consider purchasing a new product or signing up for a new
service, they also face a set of uncertainties about the product or service collectively
(c) referred to as perceived risk.

The degree of uncertainty (risky) perceived by the consumer as to the consequences

Sol
(outcome) of a specific purchase decision.

Types of Perceived Risk:

1. Functional Risk: Is the risk that product will not perform as expected.
2. Physical Risk: Is the risk to self and others that the product may pose.
3. Financial Risk: Is the risk that the product will not be worth its cost.
4. Social Risk: Is the risk that a product choice will bruise the consumer’s ego.

Time Risk: Is the risk that the time spent on in the product such may be wasted if
the product does not perform as expected.

Functional risk
One of the most common types of perceived risk, functional or quality risk refers to
the fear that a product or service will fail to deliver promised functions or benefits.
A new computer, for example, might fail to run the resource-intensive, audio
editing program a sound engineer needs to perform her job.
 Social risk refers to the possibility that buying a product or using a service can
reduce a person’s status with friends, family or neighbors.
If, for example, someone purchases a pure-bred dog and finds his friends consider
adopting animals from shelters the socially responsible behavior, he suffers a loss
of status.

Financial risk boils down to a fear that a potential purchase can tax or exceeds a
person’s monetary resources, now or in the future. Financial risk operates on both
a subjective and objective level. A person with low or variable income can
experience a high level of subjective financial risk, even with low-cost items. The
purchase of a home, on the other hand, often means an objectively high level of
risk, even for those with stable finances

Physical risk refers to the perceived potential for a purchase to cause bodily harm
to a person or loved one. A firearm, for example, might create a high level of
perceived physical risk in the minds of some customers. A book or magazine, by
contrast, prompts physical risk concerns in few customers. The increasing pace of
contemporary life means more customers worry about time risks, in particular time
lost when a product turns out to need replacement or fails to deliver as promised.
It can also include pragmatic concerns about how much time you might spend
waiting in line at a crowded retail outlet. Many businesses seek to alleviate this
concern by offering online purchase options on their websites or through online
retailers. Consumers also face questions about whether a given purchase is the
morally right choice. For example, a customer may want to buy from a particular
company because it offers inexpensive alternatives, but feel ambivalent due to the
company’s labor practices

2(a) Enumerate the concept of self image.

Sol Self-concept can be described simply as how one perceives himself and his behavior
in the market place. It is the attitude one holds towards himself

(b) Explain briefly Neo-Freudian and Trait theory.

Neo-Freudian Personality Theory
They argued that social relations or human relationship are fundamental to
personality development. Alfred Adler viewed human beings as seeking to attain
various rational goals, which he called style of life, placing emphasis on the
individual’s efforts to overcome feelings of inferiority.
People continuously attempt to establish significant and rewarding relationships
Sol with others, placing emphasis on efforts to reduce tensions.
Karen Horney focused on the impact of child-parent relationships, especially the
individual’s desire to conquer feelings of anxiety.
She proposed three personality groups:
a. Compliant individuals,
b. Aggressive individuals, and
c. Detached individuals.

 Compliant individuals are those who move toward others—they desire

to be loved, wanted, and appreciated. This is those who desire to be
included in activities of the groups

 Aggressive individuals move against others—they desire to excel and

win admiration.

 Detached individuals move away from others—they desire

independence, self-sufficiency, and freedom from obligations. A
personality test based on the above (the CAD) has been developed and
tested. It reveals a number of tentative relationships between scores and
product and brand usage patterns. It is likely that many marketers have used
some of these neo- Freudian theories intuitively.

Trait Theory

 Trait theory is a significant departure from the earlier qualitative measures

that are typical of Freudian and Neo-Freudian theory. It is primarily
quantitative or
 empirical, focusing on the measurement of personality in terms of specific
 Psychological characteristics called traits. A trait is defined as any
distinguishing, relatively enduring way in which one individual differs from
another. Selected single-trait personality tests increasingly are being
developed
 Specifically for use in consumer behavior studies.

Personality traits to be discussed include:

1. Consumer innovativeness.
2. Dogmatism.
3. Social character.
4. Need for uniqueness.
5. Optimum stimulation level
6. Variety-novelty seeking.
Consumer Innovativeness
These consumers have the character to accept or adopt the new changes and
purchase the new product.
How receptive are consumers to new products, new services, or new practices?
Recent consumer research indicates a positive relationship between innovative use
of the Internet and buying online.

2. Dogmatism
These consumers have the character to oppose or avoid the unfamiliar products &
this consumer characters cant be easily changed to make them to accept the new
products.
Dogmatism is a personality trait that measures the degree o
rigidity(opposes/avoids) an individual shows toward the unfamiliar and toward
information that is contrary to their established beliefs. Consumers low in
dogmatism is more likely to prefer innovative products to established ones.
Consumer’s high in dogmatism are more accepting of authority- based ads for new
products.

3. Social Character

These consumers have the character that they prefer social environment and social
acceptance.
Social character is a personality trait that ranges on a continuum from inner
directed
to other-directed. Inner-directed consumers tend to rely on their own “inner”
values or standards in evaluating new products and are innovators. They also
prefer ads stressing product features and personal benefits. Other-directed
consumers tend to look to others for direction and are not innovators. They prefer
ads that feature social environment and social acceptance.

4. Need for Uniqueness

These consumers have the character that they prefer new products & try to unique
from the others.These people avoid conformity are the ones who seek to be unique!

5 Optimum Stimulation Level

These consumers have the character that they prefer to try with new , complex,
and unusual experiences. Persons with optimum stimulation levels (OSL s) are
willing to take risks, to try new products, to be innovative, to seek purchase-
related information, and to accept new retail facilities. The correspondence
between an individual’s OSL and their actual circumstances has a direct
 relationship to the amount of stimulation individual’s desire. If the two are
equivalent, they tend to be satisfied. If bored, they are under stimulated, and vice
versa.

6. Variety-Novelty Seeking.
This is similar to OSL. Primary types are variety or novelty seeking. There appear
to be many different types of variety seeking: exploratory purchase behavior (e.g.,
switching brands to experience new and possibly better alternatives), vicarious
exploration (e.g., where the consumer secures information about a new or different
alternative and then contemplates or even daydreams about the option), and use
innovativeness (e.g., where the consumer uses an already adopted product in a new
or novel way).
(c) Anil wants to purchase refrigerator in Pai store, determine the various
Psychological motives of Mc Guire’s that motivates to purchase the product.

According to McGuire, there are 12 psychological motives, 12 reasons why

consumers are motivated to make purchases.

1. Need for consistency

2. Need for attribute causation
Sol 3. Need to categorize
4. Need for cues
5. Need for independence
6. Need for self-expression
7. Need for ego-defense
8. Need for reinforcement
9. Need for affiliation
10. Need for modeling
11. Need for novelty
12. Need for Assertion

Need for consistency

People have a basic desire to have all parts of the product must be consistent and
they purchase products that fulfill this need. People that listen to country music
will purchase products like cowboy boots, heavy duty trucks and pets.

2. Need for attribute causation

People have the need to determine who or what causes things to happen to them.
For example, some people choose to attribute it to themselves, fate or an outside
force like God.
3. Need to categorize
Categories allow people to process a large amount of information. Vehicles are
categorized into cars, SUV’s, light trucks, heavy duty trucks, van, sporty, mid-size,
hybrid, electric and so on. This helps consumers quickly narrow down their
choices when purchasing a vehicle.

4. Need for cues

Most people will view others’ behavior and infer what they feel and think. Clothing
plays an important role in presenting image of a person. People quickly judge
others by the clothing they are wearing and the vehicle they drive.

5. Need for independence

Americans strive for individuality and self-expression and many products are
marketed as “limited edition” or being different and uniqueThe Japanese culture
discourages individuality and focuses on affiliation, and behavior that enhances
family and culture.

6. Need for self-expression

Americans are known for letting others know who and what they are by their
extravagant purchases, especially clothing and cars. Who really needs a $1,200
pen? What is that saying about that person?

7. Need for ego-defense

The need to defend your identity. An insecure customer will purchase well-known
brand names for fear of being labeled socially incorrect.

8. Need for reinforcement

People are motivated to act because they are rewarded for doing it. For example,
showing off a new diamond ring to your friends creates acceptance and approval.

9. Need for affiliation

The need to associated with other people is called affiliation. The person who has a
strong need for affiliation concerns for establishing, maintaining or repairing
friendly relation. She or he never miss the opportunity to be with friends, families
and other people.
Affiliation is the need to develop mutually helpful and satisfying relationships with
others, which is a critical part of all people’s lives.

10. Need for modeling

Conformity and the need to base behavior on that of others. This is the major
motivation of children, tweens (8-12 year olds), and especially teenagers-and in
their social world conformity mean acceptance.
 11. Need for novelty
People have variety seeking-behavior and this may be a reason for brand switching
and impulse buys, but that depends on the person. People experiencing rapid life
changes will seek stability, while people in stable life situations will seek change.
The travel industry uses this by changing up their ads and showing adventure
vacations where people are actively having fun and some ads showing relaxing
vacations where people are swinging in a hammock.

12. Need for Assertion

Customer’s need to engage in activities that will increase self-esteem and self-
esteem in the eyes of others. Most consumers respond positively to ads that appeal
to this need. In an advertisement for a ladies razor, it will say “show off your
beautiful legs to your man,” this will appeal to women by showing that the product
increases your self-esteem

3(a) What do you mean by Attitude? List out the Function of attitude.
Sol Attitude may be defined as a feeling of favorableness or unfavorableness that an
individual has towards an object. Consumer attitude basically comprises of beliefs
towards, feelings towards and behavioral intentions towards some objects.

Function of attitudes

• The adjustment Function

• The Ego-defensive Function
• The Value-expressive Function
• The Knowledge Function

(b) Explain the Classical Conditioning Pavlovian model and Elaboration Likelihood
Model.

Sol Classical Conditioning theory

Classical Conditioning theory deals with the concept of pairing two or more
stimulus and then relating the output response with different stimuli.

Examples: Pairing a likeable celebrity with a new product in advertising or

associating a likeable song with a particular product.

Examples: Pairing product purchase with the use of a credit card.

For example a Maths teacher with his or her defective method of teaching and
improper behavior in the classroom may be disliked by Learners. The Learners
 develop hatred towards Maths due to teacher's behavior.

Simply put, an organism is conditioned in such an environment that it produces the

conditioned response from the conditioned stimulus. The conditioned stimulus is
neutral prior to the experiment. The repetitive trial of pairing the neutral stimulus
with the unconditioned stimulus leads to the neutral or conditioned stimulus causing
the organism to produce the conditioned response.

Classical conditioning (also known as Pavlovian or respondent conditioning):

Learning in which a stimulus initially incapable of evoking a certain response
becomes able to do so by repeated pairing with another stimulus that does evoke the
response. It refers to learning procedure in which a biologically potent stimulus (e.g.
food) is paired with a previously neutral stimulus (e.g. a bell). It also refers to the
learning process that results from this pairing, through which the neutral stimulus
comes to elicit a response (e.g. salivation) that is usually similar to the one elicited
by the potent stimulus. When both the artificial or neutral stimulus¬ (ringing of the
bell) and natural stimulus (food) are brought together, several times, the dog
becomes habituated or conditioned to response to this situation.

Elaboration Likelihood Model

As per the Elaboration Likelihood Model (ELM), a person’s high/low level of

involvement determines which route to persuasion would be more effective.

In cases of high-involvement, where a consumer would put in more cognitive effort,

he would follow the central route to persuasion and focus on the message content;
on the other hand, in cases of low involvement, he would follow the peripheral route
to persuasion and focus on the message context, background, scenery and music.

(c) As a marketer in consumer goods, identify the Tri-component that influence

consumer attitude in market for sales.
Tri-component model :
According to the tri-component model, attitudes consist of three major components
–
Sol
(1) cognitive (knowledge, leering),

(2) affective (feelings, emotions), &

(3) conative (tendency, intention or inclination)

1. Cognitive component – The first part of the tri-component attitude model

cognitive component consists of a person’s cognitions, i.e., the knowledge &
perceptions that are acquired by a combination of direct experience with the
 attitude object & related information from various sources. This knowledge &
resulting perceptions commonly take the form of beliefs, i.e., the consumer
believes that the attitude object processes various attributes and that specific
behaviour will lead to specific outcomes.
2. Affective component – The second part of the tri-component attitude model
affective component consists of a person’s emotion or feelings about a
particular product or a brand. These emotion & feelings are frequently treated
by consumer researchers as primarily evaluative in nature, i.e., they can be rated
with degrees of an attribute – good/bad, favourable/unfavourable. Additionally
the state of mind (emotionally charged states like happiness, sadness, anger,
disgust, distress, shame, guilt, surprise etc.) also affects the attitudes by
enhancing positive or negative emotions or feelings.
3. Conative component - The third part of the tri-component attitude model
conative component consists of a person’s likelihood or tendency to undertake a
specific action or behaviour towards the attitude object. Often this means the
actual action or behaviour itself, or the intention to buy a particular product.
Buyer intention scales like – “How likely one is to buy” or “The chance that one
will buy” are used to assess the likelihood / chances that a person buying a
product.

4(a) Write a note on Instrumental conditioning.

Operant/Instrumental conditioning theory

• “A behavioral theory of learning based on a trial-and-error process, with habits

forced as the result of positive experiences (reinforcement) resulting from certain
responses or behaviors”.
• It requires a link between a stimulus and a response. In Instrumental
Conditioning, the stimulus that results in the most satisfactory response is the one
that is learned. In consumer behavior terms, it suggests that consumers learn by
trial and error process in which some purchase behaviors results in more
favorable outcomes (i.e., rewards) than other purchase behaviors.
• A favorable experience is “instrumental” in teaching the individual to repeat a
specific behavior.
• Occurs as the individual learns to perform behaviors that produce positive
outcomes and avoid behaviors that yield negative outcomes.
• Operant conditioning is the process in which the frequency of occurrence of a
behavior is modified by the consequences of the behavior. That is, the
consequences of a purchase will affect the probability of a re-purchase.
• Marketers need to understand the impact of trial and error, on the learning
 process. Consumers learn by trial and error. Some purchases are more rewarding
than others, i.e. they result in favorable outcomes; this favorable outcome leads to
an instrumental conditioning, and the consumer learns to repeat the purchase
behavior (in favor of the brand/marketer).
Explain briefly the models of attitude and marketing implications.
(b)
1. Attitude towards object model – This model is especially suitable for
measuring attitudes towards a product/service category or specific brands.
Sol According to this model the consumers’ attitude towards a product or specific
brands of a product is a function of the presence or absence and evaluation of
certain product specific beliefs and/or attributes. In other words, consumers
generally have favourable attitudes towards those brands that they believe have
an adequate level of attributes that they evaluate as positive, and they have
unfavourable attitudes those brands they feel don’t have an adequate level of
desired attributes or have too many negatives or undesired attributes.
2. Attitude towards behaviour model – This model is individual’s attitude
towards “behaving or acting” with respect to an object rather than the attitude
towards the object itself. The appeal of the attitude toward behaviour that it
seems to correspond somewhat more closely to the actual behaviour than the
attitude towards object model. Ex. It’s important for the marketers to know the
individual’s attitude about the act of purchasing a BMW (attitude toward
behaviour) rather than to know about his attitude toward the car (attitude toward
object). This seems logical for a consumer might have a positive attitude
towards an expensive BMW but a negative attitude towards his prospects for
purchasing the vehicle.
3. Theory of reasoned action model – This model is similar to the tri-component
model of Reason-Emotion-Intention. In the tri-component model all these
components complement & supplement one another and the result is a
combined one. But in the theory of reasoned action model we have another
component “subjective norms” which additionally influences the intention. This
subjective norm is the perception & belief of others about the intention or
behaviour that are very close to the buyer. Thus this theory says that the buyer
weighs the behaviour by analysing all the conceivable outcomes of a behaviour
or action and also by considering the opinion that other people around him have
about such a behaviour. If both are favourable then the buyer purchases the
product.
(c) Determine the various elements of consumer learning that influence on an
individual’s lifestyle.
The exact nature and strength of these elements or components influence what are
Sol learned, how and at what pace. The most important among them are presented
below :
 Motives
 Cues
 Response
 Reinforcement
Motives :
Unfulfilled needs are the underlying drivers that lead to motivation. It also activates
the energy needed to do so. The degree of relevance or involvement determines the
consumer’s level of motivation to search for information about a product / service.
For example, if you’ve just visited the doctor and he has informed you that you need
to live a more active lifestyle to reduce your elevated cholesterol levels, your
unfulfilled need is to live a more active, healthy lifestyle. Therefore, you may be
motivated to learn as much as you can about local gyms in the hopes of joining one,
leading a more active lifestyle and improving your health.
For example, showing ads for winter goods just before winter and summer products
just before summer.

Cues :
Motives stimulate learning, whereas “Cues” are the stimuli that give direction to
these motives. Cues are the stimuli that suggest a specific way to satisfy your
motivations. There are often many cues competing for a customer’s attention, some
of which can be created by marketers and others that are simply part of the external
environment.
In the case of our example, in order to learn about local gyms, cues could take the
form of advertisements for gyms you see online or hear about on the radio,
conversations you have with salespeople at those gyms or even a conversation about
a local yoga studio you overhear between two friends at a coffee shop.
Some cues, like the conversation with a salesperson, are deliberately sought, while
others, like overhearing the conversation at a coffee shop, are not. Regardless, you
can learn from both the cues that are deliberately sought and those that are
incidental.
For example, in the market place, price, styling, packaging, store display all serve as
cues to help consumer to decide a particular product from a group. But if the
consumer doesn’t have a motive to buy a particular product group, he may not buy.
Marketers must be careful in providing cues so that they don’t upset the consumers’
expectations driven by motives.

Response :
A response is the consumer’s reaction to a cue. While there can be many responses
 to each cue, the response the consumer chooses often depends heavily on their
previous experiences. A marketer’s understanding of consumer learning could
enable them to elicit the desired response. Often marketers may not succeed in
stimulating a purchase. But over a period of time they may succeed in forming a
favourable image of a particular product in the consumer’s mind. So when the
consumer is ready, he is likely to buy that.

Reinforcement :
Reinforcement is an important element which increases the probability (tendency or
likelihood) of a particular response to occur in future as a result of a given set of
motives and cues. The reward -- the pleasure, enjoyment and benefits -- that the
consumer receives after buying and using a product or service is called
reinforcement. Reinforcement is critical to the learning process and can significantly
impact future responses, even though this element typically happens after purchase.
Returning to our gym example, if you choose to join the local gym, reinforcement
may take the form of a positive experience, where the machines you want to use are
readily available along with the occasional 10% off coupon for the juice bar. This
reinforcement may lead you to remain satisfied with the gym and perhaps even
recommend it to a friend, contributing cues to their learning process. Because
reinforced behaviour tends to be repeated, consumers can learn to develop
successful means of responding to their needs or changing conditions.
PART-C
5 Case Study:
Harley was the world's leading designer and manufacturer of heavyweight
motorcycles with over a 50% market share in US. Harley bikes were known for
their distinctive design and heavy customization. By adopting a focused
differentiation strategy, the company was able to command a premium for its
products. The problems faced by the company which include plummeting sales due
to the global economic recession and the changing demographics of its purchasers.
To manage through the recession and expand the strength of the Harley-Davidson
brand, the company launched a long-term business strategy called "Delivering
Results through Focus" in October 2009. The objectives of this focus strategy and
how it improved productivity and profitability through continuous improvement in
manufacturing, product development, and business operations. As part of the
strategy, Harley transformed its operations to become more flexible and customer
led. It focused on shortening product development lead times, implemented flexible
manufacturing, and expanded globally.
Questions

1. Select the strategies that the company might adopt in the future to enhance
 profitability and productivity.
Sol:

 By adopting a focused differentiation strategy, the company was able to

command a premium for its products.
 Improved productivity and profitability through continuous improvement in
manufacturing, product development, and business operations.
 It focused on shortening product development lead times, implemented
flexible manufacturing, and expanded globally.
Set B

1(a) Define Motivation.

Sol The driving force within individuals by which they attempt to achieve some goal in
order to fulfill some needs or expectation

Motivation can be described as the driving force within individuals that impels them to
action. This driving force is produced by a state of tension, which exists as the result
of an unfilled need.

(b) As a marketer, discuss the Maslow motive hierarchy used in developing marketing
strategy with relevant examples.
Maslow proposed a motive hierarchy that is common to all individuals.

Level 1- Physiological needs: Food, water, sleep, and sex are physiological motives.
Sol
These motives need to be satisfied in order to achieve other levels of the hierarchy.

Level 2- Safety needs: Seeking physical safety and security, stability, familiar
surroundings are signs of safety needs. They are aroused after physiological motives
are minimally satisfied and before other motives.

Level 3-Social needs: These motives are reflected in a desire for love, friendship,
affiliation and group acceptance. Activated after safety and physiological needs are
satisfied.

Level 4- Self esteem: Desires for status, superiority, self respect and prestige are
examples of esteem needs. these needs relate to the individuals feelings of usefulness
and accomplishment.

Level 5- Self-Actualization: This involves the desire for self-fulfilment that is,
becoming all that one is capable of becoming. This level is only activated when all
others have been satisfied.

(c) Based on your own experience & observation, identify the various elements of
perception that encounters consumer behaviour.

Sol
Elements of perception :
The following are the elements of perception :
1. Sensation
2. Absolute threshold
3. Differential Threshold
4. Subliminal Perception
1.Sensation – is the immediate & direct response of the sensory organs to stimuli. A
stimulus is a single input of any of the senses. Human beings have sensory receptors
 called sensory organs. They are :
Eyes for sights & seeing,
Ears for sounds & hearing,
Nose for smells & smelling,
Tongue for tastes & tasting,
Skin for textures, touch & feeling,
Marketers try to stimulate the sensory organs of a consumer to create a favourable
perception towards their products.

Absolute threshold – is the minimum level that the individual can experience a
sensation. In other words, he can distinguish the difference between something &
nothing. This level varies from person to person & vary with time, place &
environment. Marketers often try to provide stimuli more than this level.

Differential Threshold or Just Noticeable Difference (JND) – is the minimal

difference that can be detected between two similar stimuli. German scientist Ernst
Weber discovered that the JND between two stimuli is not absolute, but an amount
relative to the intensity of the first stimulus. Thus marketers try to change certain
attributes which are just short of JND.
Ex: The price of juice pack can’t notice but the price of milk powder/electricity will be
noticed.

Subliminal Perception – there are certain types of stimuli which are not strong
enough to exceed the absolute threshold, but somehow stimulates the subconscious
mind & get recorded there, sometimes without the knowledge of the perceptor. At a
later stage this might surface as some form of expression or perception. Here the
marketers try to stimulate the subconscious mind of an individual. Some think it’s
unethical, but there are several positive outcome of this method if applied in a
constructive way.

2(a) What is Brand Personality?

Sol It is a set of human characteristics that become associated with a brand and are a
particular type of image that some brands acquire.

For instance, with some help from frequent advertising, consumers tend to see

• Woodland associated with human character like hard & ruggedness.

• Dove Brand for with human character of softness.
• BMW as performance driven,
• Nike as the athlete in all of us
(b) You are planning to buy a laptop for your office and personal use. Illustrate the
various types of perceived risk that influence on purchase. Outline the methods to
handle risk.

Any time customers consider purchasing a new product or signing up for a new
service, they also face a set of uncertainties about the product or service collectively
Sol
referred to as perceived risk.
The degree of uncertainty (risky) perceived by the consumer as to the consequences
(outcome) of a specific purchase decision.
Types of Perceived Risk:
1. Functional Risk: Is the risk that product will not perform as expected.
2. Physical Risk: Is the risk to self and others that the product may pose.
3. Financial Risk: Is the risk that the product will not be worth its cost.
4. Social Risk: Is the risk that a product choice will bruise the consumer’s ego
5. Time Risk: Is the risk that the time spent on in the product such may be wasted if
the product does not perform as expected.
Functional risk
One of the most common types of perceived risk, functional or quality risk refers to
the fear that a product or service will fail to deliver promised functions or benefits. A
new computer, for example, might fail to run the resource-intensive, audio editing
program a sound engineer needs to perform her job.

Social risk refers to the possibility that buying a product or using a service can reduce
a person’s status with friends, family or neighbors.
If, for example, someone purchases a pure-bred dog and finds his friends consider
adopting animals from shelters the socially responsible behavior, he suffers a loss of
status.

Financial risk boils down to a fear that a potential purchase can tax or exceeds a
person’s monetary resources, now or in the future. Financial risk operates on both a
subjective and objective level. A person with low or variable income can experience a
high level of subjective financial risk, even with low-cost items. The purchase of a
home, on the other hand, often means an objectively high level of risk, even for those
with stable finances

Physical risk refers to the perceived potential for a purchase to cause bodily harm to a
person or loved one. A firearm, for example, might create a high level of perceived
physical risk in the minds of some customers. A book or magazine, by contrast,
prompts physical risk concerns in few customers. The increasing pace of
contemporary life means more customers worry about time risks, in particular time
lost when a product turns out to need replacement or fails to deliver as promised. It
 can also include pragmatic concerns about how much time you might spend waiting in
line at a crowded retail outlet. Many businesses seek to alleviate this concern by
offering online purchase options on their websites or through online retailers.
Consumers also face questions about whether a given purchase is the morally right
choice. For example, a customer may want to buy from a particular company because
it offers inexpensive alternatives, but feel ambivalent due to the company’s labor
practices.

Strategies to avoid perceived risk

1. Seek Information
2. Stay Brand Loyal
3. Select by Brand Image
4. Rely on Store Image
5. Buy the Most Expensive Model
6. Seek Reassurance
(c) Jackson wants to purchase refrigerator in Pai store, identify the Mc Guire’s
psychological motives that influences on the purchase decision.

Mc Guires Psychological motives.

According to McGuire, there are 12 psychological motives, 12 reasons why consumers
are motivated to make purchases.
1. Need for consistency
2. Need for attribute causation
Sol
3. Need to categorize
4. Need for cues
5. Need for independence
6. Need for self-expression
7. Need for ego-defense
8. Need for reinforcement
9. Need for affiliation
10. Need for modeling
11. Need for novelty
12. 12 Need for Assertion

Define E-CRM. List the merits & demerits of it.

3(a)

Sol Electronic customer relationship management (E-CRM) is the application of Internet-

based technologies such as emails, websites, chat rooms, forums and other channels to
achieve manages and retain the customers to achieve the CRM objectives.

The benefits of E-CRM include the following:

 1. Improved customer relations, service and support.
2. Matching the customers' behavior with suitable offers.
3. Increased customer satisfaction and loyalty.
4. Greater efficiency and cost reduction.
5. Increased business revenue.
Disadvantages of E-CRM

1. CRM costs. One of the greatest challenges to CRM implementation is cost.

2. Business culture. A lack of commitment or resistance to cultural change from
people within the company can cause major difficulties with the CRM
implementation.
3. Poor communication.
4. Illiterate people cant be reached.
5. Hacking of data.
6. Lack of leadership.
(b) Explain the classical conditioning Pavlovian model and its marketing implication.
Sol • Classical Conditioning theory deals with the concept of pairing two or more
stimulus and then relating the output response with different stimuli.
• Examples: Pairing a likeable celebrity with a new product in advertising or
associating a likeable song with a particular product.
Examples: Pairing product purchase with the use of a credit card.
For example a Maths teacher with his or her defective method of teaching and
improper behavior in the classroom may be disliked by Learners. The Learners
develop hatred towards Maths due to teacher's behavior.
• Simply put, an organism is conditioned in such an environment that it produces the
conditioned response from the conditioned stimulus. The conditioned stimulus is
neutral prior to the experiment. The repetitive trial of pairing the neutral stimulus
with the unconditioned stimulus leads to the neutral or conditioned stimulus causing
the organism to produce the conditioned response.
Classical conditioning (also known as Pavlovian or respondent conditioning):
Learning in which a stimulus initially incapable of evoking a certain response becomes
able to do so by repeated pairing with another stimulus that does evoke the response. It
refers to learning procedure in which a biologically potent stimulus (e.g. food) is
paired with a previously neutral stimulus (e.g. a bell). It also refers to the learning
process that results from this pairing, through which the neutral stimulus comes to
elicit a response (e.g. salivation) that is usually similar to the one elicited by the potent
stimulus. When both the artificial or neutral stimulus (ringing of the bell) and natural
stimulus (food) are brought together, several times, the dog becomes habituated or
conditioned to response to this situation.
(c) The ITC wants to market its cigarettes in Saudi Arabia and south Africa. However, the
marketing manager wants to make a marketing research to identify the various
Sol
elements of consumer learning.
The exact nature and strength of these elements or components influence what are
learned, how and at what pace. The most important among them are presented below :
 Motives
 Cues
 Response
 Reinforcement
Motives :
Unfulfilled needs are the underlying drivers that lead to motivation. It also activates
the energy needed to do so. The degree of relevance or involvement determines the
consumer’s level of motivation to search for information about a product / service.
For example, if you’ve just visited the doctor and he has informed you that you need
to live a more active lifestyle to reduce your elevated cholesterol levels, your
unfulfilled need is to live a more active, healthy lifestyle. Therefore, you may be
motivated to learn as much as you can about local gyms in the hopes of joining one,
leading a more active lifestyle and improving your health.
For example, showing ads for winter goods just before winter and summer products
just before summer.

Cues :
Motives stimulate learning, whereas “Cues” are the stimuli that give direction to these
motives. Cues are the stimuli that suggest a specific way to satisfy your motivations.
There are often many cues competing for a customer’s attention, some of which can be
created by marketers and others that are simply part of the external environment.
In the case of our example, in order to learn about local gyms, cues could take the
form of advertisements for gyms you see online or hear about on the radio,
conversations you have with salespeople at those gyms or even a conversation about a
local yoga studio you overhear between two friends at a coffee shop.
Some cues, like the conversation with a salesperson, are deliberately sought, while
others, like overhearing the conversation at a coffee shop, are not. Regardless, you can
learn from both the cues that are deliberately sought and those that are incidental.
For example, in the market place, price, styling, packaging, store display all serve as
cues to help consumer to decide a particular product from a group. But if the consumer
doesn’t have a motive to buy a particular product group, he may not buy. Marketers
must be careful in providing cues so that they don’t upset the consumers’ expectations
driven by motives.

Response :
 A response is the consumer’s reaction to a cue. While there can be many responses to
each cue, the response the consumer chooses often depends heavily on their previous
experiences. A marketer’s understanding of consumer learning could enable them to
elicit the desired response. Often marketers may not succeed in stimulating a purchase.
But over a period of time they may succeed in forming a favourable image of a
particular product in the consumer’s mind. So when the consumer is ready, he is likely
to buy that.

Reinforcement :
Reinforcement is an important element which increases the probability (tendency or
likelihood) of a particular response to occur in future as a result of a given set of
motives and cues. The reward -- the pleasure, enjoyment and benefits -- that the
consumer receives after buying and using a product or service is called reinforcement.
Reinforcement is critical to the learning process and can significantly impact future
responses, even though this element typically happens after purchase.
Returning to our gym example, if you choose to join the local gym, reinforcement may
take the form of a positive experience, where the machines you want to use are readily
available along with the occasional 10% off coupon for the juice bar. This
reinforcement may lead you to remain satisfied with the gym and perhaps even
recommend it to a friend, contributing cues to their learning process. Because
reinforced behaviour tends to be repeated, consumers can learn to develop successful
means of responding to their needs or changing conditions.
Define Attitude. List out the Functions of attitude.

Attitude may be defined as a feeling of favorableness or unfavorableness that an

4(a)
individual has towards an object. Consumer attitude basically comprises of beliefs
Sol towards, feelings towards and behavioral intentions towards some objects.

OR

Attitude is tendency to like or dislike a product or a person based on learning.

Functions of attitude.

1. Value-expressive
2. Ego-defensive
3. Knowledge function
4. Utilitarian
(b)
Amazon launched with the mission “to be Earth's most customer-centric company”.
Explain briefly the various types of CRM introduced to be customer-centric.
 There are several different approaches to CRM, with different software packages
Sol 1. Operational CRM
2. Analytical CRM
3. Collaborative CRM
4. Social CRM
Operational CRM
Operational CRM provides support to "front office" business processes.
Interactions with customers are stored in customers' contact histories, and staff can
retrieve customer information as necessary. The contact history provides staff
members with immediate access to important information on the customer (products
owned, prior support calls etc.), eliminating the need to individually obtain this
information directly from the customer.

Analytical CRM
Analytical CRM generally makes use of large volumes of data and other techniques to
produce useful results for decision-making. The more information that the analytical
software has available for analysis, the better its predictions and recommendations will
be.

 Designing and executing targeted marketing campaigns

 Analyzing behavior of the customer in making decisions relating to products
and services (e.g. pricing, product development)
 Analysing customer profitability.

Collaborative CRM
Collaborative CRM information of company’s dealings with customers that are
handled by various departments within a company, such as sales, technical support and
marketing. Staff members from different departments can use information collected
when interacting with customers.

Consumer Relationship CRM

Consumer Relationship System (CRS) covers aspects of a company's dealing with
customers handled by the Consumer Affairs and Customer Relations department
within a company. Departments handle in-bound contact from anonymous consumers
and customers. Early warnings can be issued regarding product issues (e.g. item
recalls) and consumer feedback.

Social CRM
The rapid growth in social media and social networking forced CRM product
 companies to integrate "social" features into their traditional CRM systems. Other
emerging capabilities include messaging, sentiment analysis, and other analytics.
Many industry experts contend that Social CRM is the way of the future, but there are
certain disadvantages. Top CRM minds agree that online social communities and
conversations can be dangerous for companies. They must be monitored frequently

(c) As a marketer of Consumer durables, identify the impact of Tri-component that

influence on attitude of consumer behaviour.
4. Cognitive component – The first part of the tri-component attitude model
cognitive component consists of a person’s cognitions, i.e., the knowledge &
perceptions that are acquired by a combination of direct experience with the
Sol
attitude object & related information from various sources. This knowledge &
resulting perceptions commonly take the form of beliefs, i.e., the consumer
believes that the attitude object processes various attributes and that specific
behaviour will lead to specific outcomes.
5. Affective component – The second part of the tri-component attitude model
affective component consists of a person’s emotion or feelings about a particular
product or a brand. These emotion & feelings are frequently treated by consumer
researchers as primarily evaluative in nature, i.e., they can be rated with degrees of
an attribute – good/bad, favorable/unfavorable. Additionally the state of mind
(emotionally charged states like happiness, sadness, anger, disgust, distress,
shame, guilt, surprise etc.) also affects the attitudes by enhancing positive or
negative emotions or feelings.
6. Conative component - The third part of the tri-component attitude model conative
component consists of a person’s likelihood or tendency to undertake a specific
action or behaviour towards the attitude object. Often this means the actual action
or behaviour itself, or the intention to buy a particular product. Buyer intention
scales like – “How likely one is to buy” or “The chance that one will buy” are
used to assess the likelihood / chances that a person buying a product.

5 Marketers are now working to harness the new-found communications power of their
everyday customers by turning them into influential brand ambassadors, Companies
like Sony, Microsoft and McDonald’s are now developing a new breed of brand
ambassador programs that organize and multiply consumer to consumer interactions
about their brands. Marketers select their brand ambassadors very carefully, based on
customers’ devotion to brand and the size of their social circles. For the ambassador,
rewards include product samples, gifts discounts and token cash payments. Perhaps
most important to many brand enthusiasts, they get inside access to company’s
information about new product and services about to be launched. One such success
story was Sony. Sony used brand ambassadors to jumpstart the launch of its new GPS
camera, a high tech device that draws on satellite tracking technology to let you record
the exact location of every picture you take and later map them out using Google
maps. Out of 2000 or more online applicants, Sony picked only 25 brand ambassadors.
The ambassadors were given a free camera and other equipment along with lesson on
how to use them. They were encouraged to show the camera to friends, associates, and
anyone else who asked handout discount coupons and blog weekly about their travel
and picture taking adventures on a dedicated Sony micro site.
Questions

1. Based on your own understanding of reference groups, determine how effective

would brand ambassadors be as reference groups for relatively expensive,
infrequently bought product and services?
Sol

 Brand ambassador will be effective as reference group if they select some

industrial experts like manager or CEO to share the knowledge.
 They were encouraged to show the camera to friends, associates, and anyone else
who asked handout discount coupons and blog weekly about their travel and
picture taking adventures on a dedicated Sony micro site.
 Sony used brand ambassadors to jumpstart the launch of its new GPS camera, a
high tech device that draws on satellite tracking technology to let you record the
exact location of every picture you take and later map them out using Google
maps.