Consumer Behavior unit -1

Definition: The behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs Need for consumer Behavior study:

by Prof. SUNNY GUPTA

The objective of providing value is to retain highly satisfied customers. Loyal customers are key They buy more products They are less price sensitive They pay less attention to competitors advertising Servicing them is cheaper They spread positive word of mouth

The study of consumer behavior provides companies with valuable information about its consumers and prospects, including probable likes and dislikes, spending patterns and motivators to purchase. This information helps companies time product launches and sales promotions, schedule customer service staff and more.

Impact of Digital Technologies Consumers have more power and access to information Marketers can gather more information about consumers The exchange between marketer and customers is interactive and instantaneous and goes beyond the PC. Marketers must offer more products and services

Marketing Strategy Consumer research allows companies to market more effectively by including images and text designed to resonate with a target demographic and by scheduling those ads during certain shows or time slots. As well, understanding behavior may lead to changes in the design of a pilot product, a product's packaging or its position within the store. Understanding why customers buy what they do also helps a company create campaigns to encourage repeat purchase and referrals. Find a Competitive Edge-

Types of Buying Decision Behavior Complex Highly involved, significant brand differences Example computer Dissonance-reducing Highly involved, little brand differences Example carpet Habitual Low involvement, little brand differences Example salt Variety-seeking Low involvement, significant perceived brand differences Example cookies

Consumers make decisions for different reasons, such as price, style, durability and taste. These reasons differ across categories and even within categories across time. By being aware of consumers' current behavior, a company has an opportunity to create a competitive edge and to steal business from the competition. This can include strategically timed sales, new designs, improved customer service or even a new channel. For example, many companies found a competitive edge and experienced tremendous growth by offering enhanced service or shipping discounts when online shopping became commonplace. Stay in Business-Periods of time, such as the great recession of 2008, show another fundamental reason why companies need consumer behavior research. Knowing when a turnaround is going to begin can be crucial for production schedules. But, even more important, knowing that a recession is beginning---and that it's not just a slow month or two---can mean the difference between making quick changes to meet new consumer needs and the potential failure of a business. Be Better Consumers-By studying and understanding consumer behavior, we can all become better consumers. When you know that hardware stores always have paint on sale on Memorial Day weekend, you may decide to delay a project by a few weeks or even to stock up at that time. Such awareness can also pay dividends at the grocery store. Many items are typically cheaper (per ounce, pound, etc.) in the larger size. However, some consumers may be surprised to know that this is not always the case. Knowing this fact can lead some people to begin always checking the unit price. Successful Relationships Customer Value-Defined as the ratio between the customers perceived benefits and the resources used to obtain those benefits Perceived value is relative and subjective Developing a value proposition is critical Customer Satisfaction-The individual's perception of the performance of the product or service in relation to his or her expectations. Customers identified based on loyalty include loyalists, apostles, defectors, terrorists, hostages, and mercenaries LOYALISTS Who keep purchasing APOSTLES Whose experiences exceed their expectations & spread +ve WOM. DEFECTORS- who are merely satisfied & are likely to stop doing business with co. TERRORISTS who have ve experiences and spread ve WOM. HOSTAGES who are unhappy but stick due to low prices and make frequent complaints. MERCENARIES very satisfied but are not very loyal and may defect for a low price. Customer Retention-

Stages of the Buying Decision Process Ways to find out the buying decision process by marketers: 1) 2) 3) 4) Introspective Method: they would think how they would behave Retrospective Method: Ask people to recall their buying decision process Prospective process: Ask prospective customers to think aloud Prescriptive process: Ask customers the ideal way to buy the product

Five stage Process of Consumer Buying Decision

Problem Recognition

Information search Eval Of alternatives

Purchase Decision

Postpurchase Behaviour

Consumer Behavior unit -1

Problem Recognition At the first stage in consumer buying behavior, a person begins to recognize a problem or desire. If the problem or desire is complex, such as a losing weight, most of the person's focus will be on understanding their situation. Using weight loss as an example, your marketing materials at this stage would need to focus on answering very general questions, such as "how to determine healthy weight?" Information Search: An inclined customer wud look for more information. At the first level it is called heightened attention. He simply becomes more receptive for information At the next level is the active information search information from friend, reading material, etc. lookin for more

by Prof. SUNNY GUPTA

factors Affecting Consumer Behavior

Consumer behavior refers to the selection, purchase and consumption of goods and services for the satisfaction of their wants. There are different processes involved in the consumer behavior. Initially the consumer tries to find what commodities he would like to consume, then he selects only those commodities that promise greater utility. After selecting the commodities, the consumer makes an estimate of the available money which he can spend. Lastly, the consumer analyzes the prevailing prices of commodities and takes the decision about the commodities he should consume. Meanwhile, there are various other factors influencing the purchases of consumer such as social, cultural, personal and psychological. The explanation of these factors is given below. 1. Cultural Factors Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture, and social class. Culture Basically, culture is the part of every society and is the important cause of person wants and behavior. The influence of culture on buying behavior varies from country to country therefore marketers have to be very careful in analyzing the culture of different groups, regions or even countries. Subculture

Sources of information for the customer: Personal Sources: family, friends Commercial sources: Ads, sales people Public sources: Mass media Experimental sources: Handling, examining

Successive sets involved in consumer Buyin decision process: Evaluation of IDEAS The consumer is tryin to satisfy his needs , get some benefits and finally look at the product as a bundle of benefits. The consumer wud give weightages to the various attributes to the product and find out the total points to the product. Some methods which can help change the consumers perception of the product 1) 2) 3) Real repositioning: redesign the product Psychological repositioning: Alter the belief of the brand Competitive repositioning: Alter belief about the competitors brand

Each culture contains different subcultures such as religions, nationalities, geographic regions, racial groups etc. Marketers can use these groups by segmenting the market into various small portions. For example marketers can design products according to the needs of a particular geographic group. Social Class Every society possesses some form of social class which is important to the marketers because the buying behavior of people in a given social class is similar. In this way marketing activities could be tailored according to different social classes. Here we should note that social class is not only determined by income but there are various other factors as well such as: wealth, education, occupation etc. 2. Social Factors Social factors also impact the buying behavior of consumers. The important social factors are: reference groups, family, role and status. Reference Groups Reference groups have potential in forming a person attitude or behavior. The impact of reference groups varies across products and brands. For example if the product is visible such as dress, shoes, car etc then the influence of reference groups will be high. Reference groups also include opinion leader (a person who influences other because of his special skill, knowledge or other characteristics). Family Buyer behavior is strongly influenced by the member of a family. Therefore marketers are trying to find the roles and influence of the husband, wife and children. If the buying decision of a particular product is influenced by wife then the marketers will try to target the women in their advertisement. Here we should note that buying roles change with change in consumer lifestyles. Roles and Status Each person possesses different roles and status in the society depending upon the groups, clubs, family, organization etc. to which he belongs. For example a woman is working in an organization as finance manager. Now

Purchase Decision After a comprehensive review of solutions and specific products and services, the consumer makes a purchase decision. At this point in the buying process, supporting information needs to be provided to reinforce the decision to buy. Depending on your product or service, you may need to provide different payment options or billing terms Postpurchae behaviour: Postpurchase Satisfaction: the customer may either be satisfied, delighted or dissatisfied after the purchase. these feelings make a lot of difference to the customers perception and behaviour towards the company. Postpurchase actions: the customer may take different actions depending upon his satisfaction level. The dissatisfied customer may stop buying ( exit opition) or the customer may be tell his friends not to buy the product ( voice option) Postpurchase use and disposal: Marketers need to monitor what the consumer does with the product after purchase and how it is disposed off to maintain environmental friendliness of the product.

Consumer Behavior unit -1

she is playing two roles, one of finance manager and other of mother. Therefore her buying decisions will be influenced by her role and status. 3. Personal Factors Personal factors can also affect the consumer behavior. Some of the important personal factors that influence the buying behavior are: lifestyle, economic situation, occupation, age, personality and self concept. Age Age and life-cycle have potential impact on the consumer buying behavior. It is obvious that the consumers change the purchase of goods and services with the passage of time. Family life-cycle consists of different stages such young singles, married couples, unmarried couples etc which help marketers to develop appropriate products for each stage. Occupation

by Prof. SUNNY GUPTA

support what the customers already believe. Similarly, in case of selective retention, marketers try to retain information that supports their beliefs.

Beliefs and Attitudes

Customer possesses specific belief and attitude towards various products. Sin and attitudes make up brand image and affect consumer buying behavior there are interested in them. Marketers can change the beliefs and attitudes of launching special campaigns in this Model of consumer behaviour

5. Self Actualization Needs (Self Development and realization)

The occupation of a person has significant impact on his buying behavior. For example a marketing manager of an organization will try to purchase business suits, whereas a low level worker in the same organization will purchase rugged work clothes. Economic Situation Consumer economic situation has great influence on his buying behavior. If the income and savings of a customer is high then he will purchase more expensive products. On the other hand, a person with low income and savings will purchase inexpensive products. Lifestyle Lifestyle of customers is another import factor affecting the consumer buying behavior. Lifestyle refers to the way a person lives in a society and is expressed by the things in his/her surroundings. It is determined by customer interests, opinions, activities etc and shapes his whole pattern of acting and interacting in the world. Personality Personality changes from person to person, time to time and place to place. Therefore it can greatly influence the buying behavior of customers. Actually, Personality is not what one wears; rather it is the totality of behavior of a man in different circumstances. It has different characteristics such as: dominance, aggressiveness, self-confidence etc which can be useful to determine the consumer behavior for particular product or service. 4. Psychological Factors There are four important psychological factors affecting the consumer buying behavior. These are: perception, motivation, learning, beliefs and attitudes. Motivation The level of motivation also affects the buying behavior of customers. Every person has different needs such as physiological needs, biological needs, social needs etc. The nature of the needs is that, some of them are most pressing while others are least pressing. Therefore a need becomes a motive when it is more pressing to direct the person to seek satisfaction. Perception Selecting, organizing and interpreting information in a way to produce a meaningful experience of the world is called perception. There are three different perceptual processes which are selective attention, selective distortion and selective retention. In case of selective attention, marketers try to attract the customer attention. Whereas, in case of selective distortion, customers try to interpret the information in a way that will

4. Esteem Needs (self-esteem, recognition, status) 3. Social Needs (Sense of belonging, love) 2. Safety Needs (security, protection) 1. Physiological Needs (food, water, shelter)

The degree of relevance or involvement determines the consu motivation to search for knowledge about a product or service This theory postulates that individuals seek to satisfy lower level need needs emerge. The lowest level of chronically unsatisfied need th experiences serves to motivate his or her behavior. when that nee satisfied, a new (and higher) need emerges that the individual is motiv

Physiological Needs These are the most basic level of human needs. These needs which are required to sustain biological life, include food, water, air, shelter, clothing.

Safety Needs These needs are concerned not only with physical safety but also include order, stability, familiarity, and control over ones life and environment. Health and the availability of health care are important safety concern.

Saving accounts, insurance policies, education and vocational training are all means by which individuals satisfy the need for security Social Needs Includes such needs as love, affection, belonging, and acceptance. People seek warm and satisfying human relationships with other people and are motivated by love, for their families.

Because of the importance of social motives in our society, advertiser of many product categories emphasize this appeal in their advertisements Egoistic Needs-

Consumer Behavior unit -1

These needs can take either an inward or an outward orientation or both. Inwardly-directed ego needs reflect an individuals need for selfacceptance, self esteem, success, independence and personal satisfaction with a job well done. Outwardly-directed ego needs include the needs for prestige, reputation, status, and recognition from others. The presumed desire to show off ones success and achievement through material possessions is a reflection of an outwardly-oriented ego need.

by Prof. SUNNY GUPTA

A drive is that part of an actualized need referring to the purely physiological urge in relation to the physiological gratification received Stimulus : a thing that evokes a specific functional reaction in an organ or tissue or something that promotes activity, interest, or enthusiasm. Cues: Cues are the stimuli that give direction to the motives. The ad is a cue, or stimulus, that suggests a specific way to satisfy a salient motive. In market, price, styling, packaging, advertising and store displays all serve a s cues to help consumers fulfill their needs. Response: How individuals react to a drive or cue-how they behaveconstitutes their response. Reinforcement: Reinforcement increases the likelihood that a specific response will occur in the future as a result of particular cues or stimuli.

Self Actualization This need refer to an individuals desire to fulfill his or her potential-to become everything he or she is capable of becoming. A young man may desire to be a Olympic star and work single mindedly for years to become best in his sports. An artist must express herself on canvas A researcher scientist may strive to find a new drug that eradicates cancer. PERCEPTION is the process by which an individual selects, organizes and interprets information inputs to create a meaningful picture of the world. 1. 2. 3. Selective Attention Selective Distortion Selective retention

Major Factors influencing Buying Behaviour Cultural Factors Culture : values, perceptions, preferences and behaviours. Subculture : nationalities, religions, racial grps & geographic regions. Social Class : homogeneous & enduring divisions, hierarchically ordered, members share common values. Indicated by occupation, income, education, etc.

1. Selective Attention: a person cannot possibly attend to all (1500 ads), most stimuli will be screened out- a process called selective attention. People are likely to notice stimuli that relate to a current need. People are more likely to notice stimuli that they anticipate. People are more likely to notice stimuli whose deviations are large in relation to normal size of the stimuli. Selective Distortion: Selective Distortion is the tendency to interpret information in a way that will fit our preconceptions. consumer will often distort information to be consistent with prior brand and product belief. Selective Retention: People will fail to register much information to which they are exposed in memory, but will tend to retain information that supports their attitudes and beliefs. Because of Selective retention we are likely to remember good points about a product we like and forget good points about competing products. Learningit involves changes in an individuals behavior arising from experience. It is produced through the interplay of drives, stimuli, cues, responses and reinforcement. Drive:

Social Factors Reference Groups : all groups that have a direct (membership groups) or indirect influence on attitudes or behavior. These groups 1. expose us to new behaviors & lifestyles 2. influence attitudes & self concept 3. create pressures for conformity that influence brand choice Family : Most important & influential primary reference grou Family of orientation parents & siblings Family of procreation spouse & children

Roles and Statuses A person participates in many groups family, clubs, and organizations. The persons position in each group can be defined in terms of role and status. A role consists of the activities that a person is expected to perform. Each role carries a status. People choose products that communicate their role and status in society. Thus CEOs drive Mercedes, etc. Marketers are aware of the status symbol potential of products and brands.

PERSONAL FACTORS A buyers decisions are also influenced by personal characteristics. These include the buyers age and stage in the life cycle, occupation, economic circumstances, lifestyle and personality and self-concept. Age and stage in the life cycle People buy different goods and services over a lifetime.

Consumer Behavior unit -1

Consumption is shaped by the family life cycle. Marketers often choose life cycle groups as their target market. Yet target households are not always family based: there are also single households, gay households and cohabitor households.

by Prof. SUNNY GUPTA

1. Motivation: A person has many needs at a given time i. Biogenic Needs Arising from psychological states of tension such as hunger, thirst, discomfort. ii. Psychogenic needs Arising from psychological states of tension such as need for recognition, esteem or belonging. iii. Motive: A need becomes a motive when it is aroused to a sufficient level of intensity causing a person to act. Theories related to Motivation: i. Freuds Theory: Psychological forces shaping a persons behavior are largely unconscious. Laddering can be used to trace a persons motivations from the stated instrumental ones to the more terminal ones. This helps the marketer decide at what level the message/appeal is to be developed. Motivation researchers collect consumer interviews for insights using techniques like word association, sentence completion, picture implementation & role playing. Motivational positioning: The whisky example Whisky can attract someone who seeks social relaxation, status or fun. Hence whisky brands have specialized in these three kinds of appeals. ii. Maslows theory: Maslows theory helps marketers understand how various products fit into the plans goals and lives of consumers.

Some recent work has identified psychological life cycle stages. Adults experience certain passages or transformations as they go through life. Marketers pay close attention to changing life circumstances divorce, widowhood, remarriage and their effect on consumption behavior. Occupation & economic circumstances Occupation also influences a consumption pattern. A company can even specialize its products for certain occupational groups. Product choice is greatly affected by economic circumstances: spendable income (level, stability, time pattern), savings and assets (including the % that is liquid), debts, borrowing power, and attitude towards spending Vs saving. Marketers of income-sensitive goods pay constant attention to trends in personal income, savings and interest rates. If economic indicators point to a recession, marketers can take steps to redesign, reposition, and re price their products so they continue to offer value to target customers. Stages in the Family Life Cycle 1. Bachelor stage: young, single not living at home Few financial burdens Fashion opinion leaders Recreation oriented. Buy:basic home equipment, furniture, cars, vacations 2. Newly married Couple: Young no children Highest purchase rate & highest average purchase of durables Cars, appliances, furniture, vacations 3.Full nest I: youngest child under 6 Home purchasing at peak. Liquid assets low Interested in new products, advertised products Buy: washers, dryers, TV, baby food, vitamins, dolls, 3. Full Nest II: youngest child 6 or over Financial position better Less influenced by advertisements Buy larger sized packages, multiple unit deals Buy: cleaning material, bicycles, piano 5. Full Nest III: older married couple with dependent children Financial position still better Less influenced by advertising High average purchase of durables Auto, boats, dental services, magazines 6. Empty Nest I: older married couple, no children living with them, head of house in labor force Home ownership at peak Interested in travel, recreation, self education Not interested in new products Buy: vacations, luxuries, home improvements 7. Empty Nest II: older married couple, no children living with them, head of house retired Drastic cut in income Keep home Buy: medical appliances, medical care products 8. Solitary survivor: in labor force Income still good but likely to sell home 9. Solitary survivor: retired Same medical and product needs as other retired group Drastic cut in income Special need for attention, affection, security 2. Psychological Factors: 4 major psychological factors that influence a persons buying choices:

5. Self Actualization Needs (Self Development and realization) 4. Esteem Needs (self-esteem, recognition, status) 3. Social Needs (Sense of belonging, love)
H e r 2. z Safety Needs (security, protection) b e r 1. Physiological Needs (food, water, shelter) g s T heory: Two-factor theory Dissatisfiers Factors that cause dissatisfaction. Satisfiers Factors that cause satisfaction. The Seller should do his best to avoid dissatisfiers. The manufacturers should identify the major satisfiers or motivators of purchase in the market and then supply them. Perception: How a motivated person acts is influenced by his or her perception Perception is the process by which an individual selects organizes and interprets information inputs to create a meaningful picture of the world. iii.

Consumer Behavior unit -1

Perception is individual. Selective Attention: i. People are more likely to notice stimuli that relate to current need ii. People are more likely to notice stimuli that they anticipate iii. People are more likely to notice stimuli whose deviations are large in relation to the normal size of the stimuli Selective Distortion: It is the tendency to twist information into personal; meanings and interpret information in a way that will fit a persons preconceptions. Marketers cannot do much about this. Selective Retention: People tend to forget much that they learn but tend to retain information that supports their attitudes and beliefs. (Marketers use drama and repetitions in sending messages to their target market) Learning: When people act they learn. Learning involves changes in an individuals behavior arising from experience. Learning is produced through interplay of: i. Drives A strong internal stimulus impelling action ii. Stimuli iii. Cues Minor stimuli that determine when, where and how a person responds iv. Responses v. Reinforcement Beliefs and Attitudes: A belief is a descriptive thought that a person holds about something. Beliefs may be based on knowledge, opinion or faith. They may or may not carry emotional charge. An attitude is a persons enduring favorable or unfavorable evaluations, emotional feelings, and action tendencies towards some object or idea

by Prof. SUNNY GUPTA

Methods of Segmentation Geographic segmentation: it calls for dividing the market into different geographic units such as nations, states, regions, counties, and cities. The company can operate in one or few geographic areas or operate in all but pay attention to local variations. Demographic segmentation: in this the market is divided into groups on the basis of variables such as age, family, size, life cycle, gender, income, occupation, education, religion, race, generation, nationality, social class. These variables are the most popular basis for distinguishing customer groups. One reason is that consumer wants, preferences, usage rates are often associated with demographic variables. Another reason is that demographic variables are easier to measure even when the target market is defined in non-demographic terms. The link back to demographic characteristics is needed in order to estimate the size of the target market and the media that should be used to reach it efficiently. Age and life cycle stage: consumer wants and abilities change with age. Gerber realized this and began expanding beyond its baby food lines. Nevertheless age and life cycle can be tricky variables. Gender: gender segmentation has been applied to clothing hairstyling cosmetics and magazines. Other marketers also noticed opportunity for gender segmentation for eg the cigarette market where brands like Virginia slims was launched to reinforce female image. Income: it is a long standing practice in such product and service categories e.g. Automobile, clothing and cosmetic and travel. Generation: Baby boomers born between 1946-64 Generation X born between 1964-84 more sophisticated in evaluating products, turn off by advertising that has too much hype or takes itself too seriously Cohort segmentation: cohorts are groups of people who share experiences of major external events that have deeply affected their attitudes and preferences. Members of cohort groups feel the bonding with each other for having shared the same major experiences. Advertising to a cohort group should be done using icons and images prominent in their experiences.

3.

4.

Buying behavior: Complex buying behavior three-step process develops belief about the product, attitude about the product and then makes a thoughtful choice. Dissonance reducing buying behavior consumer is highly involved in a purchase but sees little difference in brands. Marketing communication should supply beliefs and evaluations that help the consumer feel good about his/her brand choice. Habitual buying behavior bought under conditions of low involvement and absence of significant brand differences. Variety seeking buying behavior characterized by low involvement but significant brand differences.

Social Class: has a strong influence on preference in cars clothing home furnishing, leisure activities reading habits and retailers. The taste of social class can change with years. Psychographic segmentation: Buyers are divided into different groups based on personality and values. People within the same demographic group can exhibit very different psychographic profiles. Lifestyle: people generally exhibit more lifestyle than are suggested by social classes generally the goods they consume express their lifestyle such as cosmetics, alcoholic beverages, furniture etc. Personality: Marketers can use personality variables to segment markets. They endow their products with brand personalities that correspond to consumer personalities. Values: some marketers segment by core values, the belief systems that underlie consumer attitudes and behaviours. Core values go much deeper than behaviour or attitude and determine at a basic level peoples choices and desires over long term. Marketers who segment by values believe that by appealing to peoples inner selves it is possible to influence their outer selves- their purchase behaviour. Behavioral Segmentation Buyers are divided into groups on the basis of their knowledge of, attitude toward, use of, or response to a product.

High Involvement Significant differences between brands Few differences between brands Complex behavior buying

Low Involvement Variety seeking buying behavior

Dissonance reducing buying behavior

Habitual behavior

buying

MARKET SEGMENTATIONMarket Segmentation consists of taking the total heterogeneous market for a product and dividing it into several sub-markets each of which tends to be homogeneous in all significant aspect.

Consumer Behavior unit -1

Starting points for constructing market segments Ocassions: Distinguish buyers according to the occasions they develop a need, purchase a product, or use a product Benefits: Buyers classified on the basis of the benefits they seek User status: Market segmentation into non-users, ex-users, potential users, first time users and regular users of a product. Usage rate: Market segmented into light, medium and heavy product users. Loyal status: Consumers can be divided into 4 groups according to the brand loyalty status: Markets Hard-core loyals one brand all the time Split loyals loyal to 2 or 3 brands Shifting loyals consumers who shift from one brand to another Switchers no loyalty to any brand

by Prof. SUNNY GUPTA

Five Basic Stages : Bachelorhood : Young Single Adult living alone Honeymooners : Young Married Couples with no children Parenthood :Married Couples with at least one child Post parent Hood: Older Married Couple with no children at home Dissolution: One Surviving Spouse Stage One:Bachelor Hood: Single Working Men/Women Two Groups: Living with Parents: Entertainment, Clothes & Personal Care Living Independently: Rent, Home Furnishings, Automobile , Clothes & accessories Stage Two:Honeymooners : Post Marriage before Kids Lifestyle shifts to Joint Lifestyle Joint Decisions & Shared Roles Savings, Household Furnishings, Major Appliances and host of utensils and accessory items Movie Tickets, Expensive Cloths and outings Stage Three:Parenthood: Changes in Lifestyle after addition of child Three Stages: Full Nest I: Immediately after birth of child New Purchase in areas of Baby Clothes, Furniture, Food and Health Care Products Full Nest II: Improved Financial Position of Family Better Buying Experiences Relatively Low Influence of Advertising Full Nest III: Children Start getting employed High Expenditure for Durable Goods, New Furniture, Luxury Appliances and Cars Stage Four:Post Parent Hood: Children Leave homes Empty Nest I: Satisfactory Financial Position Leisure Time, Frequent Traveling, Vacations & Gifts Empty Nest II: Low Income Medical Care, Health Product a& basic necessities Dissolution Stage : Death of one Spouse Simple Pattern of living and very economical

Brand loyal markets high % of hard-core brand loyal buyers Buyer readiness stage: A market consists of people in different stages if readiness to buy a product. Stages of readiness: Attitude: Five attitude groups can be found in the market: Enthusiastic Positive Indifferent Negative Hostile Aware of product Informed about product Interested in product Desirous of buying the product Intention to buy product

FAMILY DECISION MAKING 1. Influencers: Those family members who provide information and advice and thus influence the purchase.

Family influences Family Influence on consumer bahavior Family is the most influential group for the consumer. From parents a person acquires an orientation toward religion, politics, and economics and a sense of personal ambition, selfworth, and love. The other is the family of procreation-the buyers spouse and children-exert a more direct influence on everyday buying behaviour. Family Life Cycle A series of Predictable Stages A progression of stages through which many Family members pass It is a composite variable created by systematically combining demographic variables as Marital Status, Size of Family, Age of Family members & Employment Status Helps to understand the behavior of consumers at various stages of their lives so as to effectively design the right Marketing Strategy The housewife tells her family about the new eatery that has opened in the neighborhood and her favorable description about it influences her husband and teenaged children to also patronize the restaurant. Family member(s) who provide information to other members about a product or service. 2. Gatekeepers: Those family members who control the flow of information about a product/service thus influencing the decisions of other family members. The teenaged son who wants a racing bicycle, may withhold from his father much of the relevant information on all brands except the one that he fancies, thereby influencing his fathers decision in favour of his preferred brand. Family member(s) who control the flow of information about a product or service into the family. 3. Deciders: Family members who have the power to unilaterally or jointly decide whether or not to buy a product or service. The husband and wife may jointly decide about the purchase of a new refrigerator. Family member(s) with the power to determine unilaterally or jointly whether to shop for, purchase, use, consume, or dispose of a specific product or service.

Consumer Behavior unit -1

4. Buyers: Those family members who actually buy a particular product or service. A housewife may be the person who actually buys all the foodstuffs, rations and toiletries, which are consumed by all the family members. Family member(s) who make the actual purchase of a particular product or service. 5. Preparers: Those family members who transform or prepare the product into the form in which it is actually consumed. The housewife may prepare the family meal using raw vegetables, lentils, spices, oil and other ingredients. Family member(s) who transform the product into a form suitable for consumption by other family members. 6. Users: Those family members who use or consume a particular product or service. All family members may use the car, watch the television, and listen to the stereo music system Family member(s) who use or consume a particular product or service. 7. Maintainers: Family member(s) who service or repair the product so that it will provide continued satisfaction. 8. Disposers: Family member(s) who initiate or carry out the disposal or discontinuation of a particular product or service. The nuclear family The nuclear family is the most basic type of family portrayed by media as a happy family living in total harmony. This is the family that God first envisioned. It consists of two parents living with one or more children in the same house. Nuclear families are not only basic but, very common in The Bahamas. One child living with two parents is also common. Some may refer to the child as an only child (no siblings). A nuclear family is seen as an ideal family many advertisers use nuclear families to symbolize many things in the media. You will always see two parents hugging one or more of their children, all smiling. They may be seen anywhere. For example this may be seen in newspapers, television, newspapers, etc. Extended or (Joint Families)

by Prof. SUNNY GUPTA

Personal influence is best described as the effect or change in persons attitude or behavior as a result of communication with others Opinion leaders are the ones to whom others look for advice. Features of opinion leadershipCredibility Positive and Negative product information Information and price

Personal influence The influence that friends , neighbors, acquaintances, coworkers and others have on individuals consumption behavior. Personal influence is best described as the effect or change in persons attitude or behavior as a result of communication with others Opinion leaders are the ones to whom others look for advice. Features of opinion leadership Credibility Positive and Negative product information Information and price Diffusion of innovationDiffusion of Innovations is a theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures. Everett Rogers, a professor of rural sociology, popularized the theory in his 1962 book Diffusion of Innovations. He said diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system. The framework for exploring consumer acceptance of new products is drawn from the area of research known as the diffusion of innovations An innovation is an idea, practice, or product perceived to be new by the relevant individual or group. The manner by which a new product spreads through a market is basically a group phenomenon. New products can be placed on a continuum from no change to radical change, depending on the markets perception. Elements

These may be seen as a contrast to nuclear families and are seen as pretty basic as well. An extended family is several generations of the same family living in the same household or in near vicinity or neighborhood. Extended Families may include aunts, uncles, grandparents, parents, grandchildren, children, etc. Extended families are seen as a little more closely knit than other types of families. This may be because of their wants to be near each other or live under the same roof. Some may see this as signs of showing care, love and compassion for their family members. Extended families are common in countries like Mexico, India and Africa. Single-parent families Single-parent families have the same definition as their name, one parent living with one or more children. They must basically bring up their children themselves, considering they have no spouse. Many factors can provoke the creation of single-parent families, including a death of a spouse, divorce between the two spouses, etc. It is said that children living with one parent may be a little off balance as opposed to children living with both parents. No father for a son or mother for a daughter may have side effects on the childrens morale, behavior and possibly health. The single mother or father will be forced to work long hours to provide, causing them to miss out on quality time with their children. Even the long hours may cause financial problems in the family, not only stressing the mother but consequently affecting the children. Divorced spouses often let their children visit both parents; this may help the childrens morale Factors affecting family purchase decision Culture Sub-culture Social class Reference group Geographical Children Personal Influence The influence that friends , neighbors, acquaintances, coworkers and others have on individuals consumption behavior.

The key elements in diffusion research are: Element Definition Rogers defines an innovation as "an idea, practice, or object that is perceived as new by an individual or other unit of adoption". A communication channel is "the means by which messages get from one individual to another". "The innovation-decision period is the length of time required to pass through the innovation-decision process"."Rate of adoption is the relative speed with which an innovation is adopted by members of a social system". "A social system is defined as a set of interrelated units that are engaged in joint problem solving to accomplish a common goal".[

Innovation

Communication channels

Time

Social system

Rate of AdoptionThe rate of adoption is defined as: the relative speed with which members of a social system adopt an innovation. It is usually measured by the length of time required for a certain percentage of the members of a social system to adopt an innovation . The rates of adoption for innovations are determined by an individuals adopter category. In general individuals who first adopt an innovation require a shorter adoption period (adoption process) than late adopters.

Consumer Behavior unit -1

Within the rate of adoption there is a point at which an innovation reaches critical mass. This is a point in time within the adoption curve that enough individuals have adopted an innovation in order that the continued adoption of the innovation is self-sustaining. In describing how an innovation reaches critical mass, Rogers outlines several strategies in order to help an innovation reach this stage. These strategies are: have an innovation adopted by a highly respected individual within a social network, creating an instinctive desire for a specific innovation. Inject an innovation into a group of individuals who would readily use an innovation, and provide positive reactions and benefits for early adopters of an innovation. Rogers five factorsRogers defines several intrinsic characteristics of innovations that influence an individuals decision to adopt or reject an innovation. Factor Definition Relative Advantage Compatibility Complexity or Simplicity Trialability How improved an innovation is over the previous generation. The level of compatibility that an innovation has to be assimilated into an individuals life. If the innovation is too difficult to use an individual will not likely adopt it. How easily an innovation may be experimented with as it is being adopted. If a user has a hard time using and trying an innovation this individual will be less likely to adopt it. The extent that an innovation is visible to others. An innovation that is more visible will drive communication among the individuals peers and personal networks and will in turn create more positive or negative reactions.

by Prof. SUNNY GUPTA

opinion leadership. Individuals in this category are the last to adopt an innovation. Unlike some of the previous categories, individuals in this category show little to no opinion leadership. These individuals typically have an aversion to change-agents and Laggards tend to be advanced in age. Laggards typically tend to be focused on traditions, likely to have lowest social status, lowest financial fluidity, be oldest of all other adopters, in contact with only family and close friends, very little to no opinion leadership. Stages of adoption: Awareness - the individual is exposed to the innovation but lacks complete information about it Interest - the individual becomes interested in the new idea and seeks additional information about it Evaluation - individual mentally applies the innovation to his present and anticipated future situation, and then decides whether or not to try it Trial - the individual makes full use of the innovation Adoption - the individual decides to continue the full use of the innovation

Observability

Categories of innovation Continuous Innovation Adoption of this type of innovation requires relatively minor changes in behavior(s) that are unimportant to the consumer. Dynamically continuous Innovation Adoption of this type of innovation requires a moderate change in an important behavior or a major change in a behavior of low or moderate importance to the individual. Discontinuous Innovation Adoption of this type of innovation requires major changes in behavior of significant Innovators are the first individuals to adopt an innovation. Innovators are willing to take risks, youngest in age, have the highest social class, have great financial lucidity, very social Innovators and have closest contact to scientific sources and interaction with other innovators. Risk tolerance has them adopting technologies which may ultimately fail. Financial resources help absorb these failures. This is the second fastest category of individuals who adopt an innovation. These individuals have the highest degree of opinion leadership among the other adopter categories. Early adopters are typically younger in age, have a higher social status, have more financial lucidity, advanced education, and are more socially forward than late adopters. More discrete in adoption choices than innovators. Realize judicious choice of adoption will help them maintain central communication position Individuals in this category adopt an innovation after a varying degree of time. This time of adoption is significantly longer than the innovators and early adopters. Early Majority tend to be slower in the adoption process, have above average social status, contact with early adopters, and seldom hold positions of opinion leadership in a system. Individuals in this category will adopt an innovation after the average member of the society. These individuals approach an innovation with a high degree of skepticism and after the majority of society has adopted the innovation. Late Majority are typically skeptical about an innovation, have below average social status, very little financial lucidity, in contact with others in late majority and early majority, very little

Early Adopters

Early Majority

Late Majority