CONSUMER BEHAVIOR

Influences on and of Consumer

Behavior
PERCEPTION/
SENSATION

MARKET
RESEARCH

INFO
SEARCH

COGNITION
STRATEGY

CHOICES

AFFECT
PREFERENCES
BELIEFS
CONSUMER
COMMUNICATION
SOCIAL AND
OTHER INFLUENCE

True or False?
1. If you have bad breath, you cannot
smell it yourself.
2. If you eat a balanced diet, you do not
need vitamin supplements.
3. Using a razor with five blades will
reduce the likelihood of cutting yourself
and will result in less skin irritation.
4. Dell Computers tend to be of higher
quality than those made by HP and
Sony.
5. Rust stains on clothes can be removed
with the use of lemon juice. Bleach
actually makes these stains worse.

Questions Faced By
Consumers

Are veggie burgers actually healthy?

What makeup should you use to get
an even skin tone?
Do I get any useful benefits from
spending more than $125 on a digital
camera?
Should I get a make-over? What
am I looking for? What should I do?
Is my mechanic honest?
Which tie should I wear for a job
interview?
Should I give my wife roses,
chocolate, or software?

Consumer Problems and

Recognition

Discrepancy
between ideal and actual
state--e.g., consumer:
Has insufficient hair
Is hungry
Has run out of ink in his
or her inkjet cartridge
Consumer problem:

Problems can be
solved in several
ways--e.g., stress reduction

<----- vacation, movie, hot bath,

medication

CONSUMER DECISIONS:
Theory and Reality in Consumer Buying

PROBLEM
RECOGNITION

INFORMATION
SEARCH

EVALUATION OF
ALTERNATIVES
PURCHASE
POSTPURCHASE
EVALUATION/
BEHAVIORS

Theory
Complications

Approaches to Search for

Problem Solutions

INTERNAL
Memory
Thinking

EXTERNAL
Word of mouth, media,
store visits, trial

CATALOG

Options Identified and

Considered
UNIVERSAL SET

All possible
options

RETRIEVED SET

Options that
readily come to
mind
Options that will
be considered by
the consumer

Note: Retrieved and

evoked sets will vary
among different
consumers

EVOKED SET

REMINDER
For low involvement
products, efforts aimed
at affecting internal
search tend to be more
effectivethe consumer
is usually not willing to
expend energy on
external search.
External search is more
likely for higher
involvement products.

Decision Making Issues

Involvement level
Temporary
Enduring
Consumer locus of
control
Internal
External
Product category
complexity
Consumer knowledge

HeuristicsLow Involvement
Decision Rules
If either Coke or Pepsi is
on sale, buy that brand;
otherwise, buy Coke
The larger the navels,
the better the orange
The larger package is
likely to offer a lower
unit price (not true in
reality)

Attitudescomponents

AFFECT
(FEELING)

BELIEFS

BEHAVIORA
L
INTENTIONS

Attitude Components
Beliefs
Can be positive,
negative, or neutral
May or may not be
accurate
May contradict other
beliefs held by the
other person

Affect
May be positive or
negative
May take on specific
dimension (e.g.,
pleasure, disgust)

Behavioral
Intentions
An individuals plan or
expectations of what
he or she will do
May appear
inconsistent with
beliefs
May not predict well
what the individual will
do in reality

Generating Beliefs Through

Advertising
Statements must be
Perceived
Comprehended
Remembered
Believed (at least in part)

Positioning Through Creating Beliefs

Its not delivery; its De
Journo!
Wal-Mart. Always low
prices. Always.
I just saved a bunch of
money on my auto
insurance.
U-um Good! (Campbells
Soup)

Consumer Behaviour

The behaviour that

consumers display in
searching for, purchasing,
using, evaluating, and
disposing of products and
services that they expect
will satisfy their needs.
1-16

Personal Consumer

The individual who buys

goods and services for his
or her own use, for
household use, for the use
of a family member, or for
a friend.
1-17

Development of the
Marketing Concept
Production
Concept
Product Concept
Selling Concept
Marketing
Concept
1-18

The Production Concept

Assumes that consumers are
interested primarily in product
availability at low prices
Marketing objectives:
Cheap, efficient production
Intensive distribution
Market expansion

1-19

The Product Concept

Assumes that consumers will buy
the product that offers them the
highest quality, the best
performance, and the most
features
Marketing objectives:
Quality improvement
Addition of features

Tendency toward Marketing

Myopia
1-20

The Selling Concept

Assumes that consumers are
unlikely to buy a product unless
they are aggressively persuaded
to do so
Marketing objectives:
Sell, sell, sell

Lack of concern for customer

needs and satisfaction
1-21

The Marketing Concept

Assumes that to be successful, a
company must determine the
needs and wants of specific
target markets and deliver the
desired satisfactions better than
the competition
Marketing objectives:
Profits through customer satisfaction
1-22

Business Leaders Who

Understood Consumer Behaviour

Alfred Sloan, General Motors

Colonel Sanders, KFC
Ray Kroc, McDonalds

1-23

Implementing the
Marketing Concept

Consumer Research
Segmentation
Targeting
Positioning

1-24

Segmentation, Targeting, and

Positioning

Segmentation: process of
dividing the market into subsets
of consumers with common
needs or characteristics
Targeting: selecting one ore more
of the segments to pursue
Positioning: developing a distinct
image for the product in the
mind of the consumer
1-25

Successful Positioning
Communicating the benefits of
the product, rather than its
features
Communicating a Unique Selling
Proposition for the product

1-26

The Societal Marketing

Concept
All companies prosper when
society prospers.
Companies, as well as
individuals, would be better off
if social responsibility was an
integral component of every
marketing decision.
Requires all marketers adhere
to
principles of social
responsibility.
1-27

Digital Revolution in the Marketplace

Allows customization of products,

services, and promotional messages
like never before
Enhances relationships with
customers more effectively and
efficiently
Has increased the power of
customers and given them access to
more information
1-28

Digital Revolution in the

Marketplace - Continued
The exchange between consumers
and marketers has become more
interactive
May affect the way marketing is done

1-29

Why study consumer

behaviour?
Understanding consumer
behaviour will help you become
better marketers as it is the
foundation for
Segmenting markets
Positioning products
Developing an appropriate marketing
continued

1-30

Why study consumer

behaviour?
Knowledge of consumer
behaviour is essential for nonprofit organizations
Non profits have different
customers to please
Donors, users, volunteers, general
public, government
continued

1-31

Why study consumer

behaviour?

Public service initiatives have to

be based on an understanding of
consumer behaviour
Canadas largest advertiser is the
federal government
Most government initiatives (e.g.,
antismoking campaigns) need a
knowledge of consumer behaviour
to succeed
continued

1-32

Why study consumer

behaviour?
Better understanding of our own
consumption behaviour

1-33

SIMPLE MODEL FOR CONSUMER BEHAVIOUR

So
ci
al

e
r
tu
l
Cu
Motives

Attitudes
Consumer
Purchase
DecisionLearning

Perception
Personality
Economic

Family

Business

Needs

MODELS OF
CONSUMER
BEHAVIOUR

Important models of
consumer behaviour:

The Economic Model

Learning Model
Psychological Model
The Sociological Model
The Howard Sheth Model of buying
behaviour
The Nicosia Model
The Engle-Kollat-Blackwell Model
Engle, Blackwell and Miniard (EBM) Model
Webstar and Wind Model of organizational
buying behaviour

 The Howard Sheth

Model of buying
Traditional Models Contemporary Models
behaviour
The Economic
The Nicosia Model
Model
The Engle-Kollat Learning Model
Blackwell Model
Psychological
Engle, Blackwell
Model
and Miniard (EBM)
The Sociological
Model
Model
Webstar and Wind
Model of
organizational
buying behaviour
The Sheth Model of
Industrial buying

Economic Model:
This model assumes that with limited purchasing
power and a set of needs and tastes, a consumer
will allocate his/ her expenditure over different
products at a given prices so as to maximize utility.
Bases for Economic Model:
Price Effect
Substitution Effect
Income Effect

Criticism:
Fails to explain how does the consumer actually
behave.
Incompleteness in the Model.
Lack of broader perspective.

Learning Model:
This model help marketers to promote association of
products with strong drivers and cues, which would
lead to positive reinforcement from the consumers.
In marketing context, learning will help marketers to
understand how consumer learn to respond in new
marketing situations, or how they have learned and
respond in the past in similar situations.
As Consumers also learn to discriminate and
this information will be useful in working out
different marketing strategies.

Psychological Model:
This model based on the work of psychologists who
were concerned with personality. The view was
human needs and motives operates on buying.
This theory was developed by Sigmund Frued. Acc.
To him human behaviour is the outcome of
Id
Super Ego
Ego

This model is concerned with personality and says

that human behaviour to a great extent is directed
by a complex set of deep seated motives.
Helps the marketer to know how buyers influenced
by symbolic factors in buying a product.

The Sociological Model:

As per this model, an individual buyer is a part of
the institution called society, gets influenced by it
and in turn, also influences it in its path of
development.
The interactions with all the set of society leave
some impressions on him and may play a role in
influencing his buying behaviour.
The marketers, through a process of market
segmentation can work out on the common
behaviour patterns of a specific class and group of
buyers and try to influence their buying pattern.

The Howard Sheth Model of buying behaviour

It attempts to throw light on the rational brand
behaviour shown by buyers when faced with situations
involving incomplete information and limited abilities.
The model refers to three levels of decision making:
Extensive problem solving
Limited problem solving
Routinized response behaviour
The model has borrowed the learning theory concepts
to explain brand choice behaviour when learning takes
places as the buyer moves from extensive to
routinized problem solving behaviour.

The model makes significant

contribution to understand
consumer behaviour by identifying
the variables which influence
consumers.

Four components involved in

the model:

Input variables
Output variables
Hypothetic constructs
Exogenous variables

Input Variables: these variables acts as stimuli in

the environment.
Stimuli can be of Significative, Symbolic &
Social
Significative stimuli are those actual elements of
brands which the buyer confronts, where as
Symbolic stimuli are those which are used by
marketers to represent their products in a symbolic
form. Social stimuli are generated by the social
environment such as family, friends, groups etc.

Output variables:
These are which buyers observable responses to
stimulus inputs. They appear in the sequence as below:
Attention: Based on the importance of the buyers
information intake.
Comprehension: the store of information the buyer
has about the brand.
Attitude: the buyers evaluation of the particular
brand's potential to satisfy his or her motives.
Intention: the brand which the buyer intends to buy.
Purchase behaviour: the act of actually purchasing,
which reflects the buyers predisposition to buy as
modified by any of the inhibitors.

Hypothetical Constructs:
The model proposes a number of intervening variables
which have been categorised into two major groups:
perceptual and learning constructs.
Perceptual Constructs include:
Sensitivity to information: the degree to which
the buyer regulates the stimulus information flow.
Perceptual bias: refers to distorting or altering
information
Search for information: it involves actively seeking
information on the brands or their characteristics.

The buyers learning constructs can be defined as:

Motives are general or specific goals impelling action.
Brand potential of the evoked set refer to the buyers
perception on the ability of brands in his pr her
evoked set to satisfy his or her goals.
Decision mediators are based on the motives. The
buyer will have certain mental rules for matching and
ranking the purchase alternatives.
Predisposition refers to a preference towards brand in
the evoked set which expresses an attitude towards
them.
Inhibitors refers to environmental forces like price and
time pressure which may inhibit or put restrain on the
purchase of a preferred brand.
Satisfaction the extent to which, post actual purchase
will measure upto the buyers expectation of it.

 Exogenous variables:
These are list of a number of external
variables (external to the buyer) which can
significantly influence buyer decisions.

The Howard Sheth Model of buying behaviour

Limitations of the model:

There is a absence of sharp distinctions
between exogenous variables and other
variables.
Some of the variables, which are not well
defined, and are difficult to measure too.
The model is quite complex and not very
easy to comprehend.

The Nicosia Model

This model attempts to explain buying behaviour by
establishing a link between the organisation and its
prospective customer. It analyse human being as a system
with stimuli as the input to the system and the human
behaviour as an output of the system.
The model suggests that message from the first influences
the predisposition of the consumer towards the product or
services. Based on the situation, the consumer will have a
certain attitude towards the product. This may result in a
search for the product or an evaluation of the product
attributes by the consumer.
If the customer satisfies with above it may result in a positive
response, with a decision to buy the product otherwise the
reverse may occur.

The Nicosia Model explains in 4 basic areas:

Field 1:- the consumer attribute and the firms attributes.
The advt. message sent from the company will reach the
consumer attributes.
Field 2:- it is related to the search and evaluation,
undertaken by the consumer, of the advertised product
and also to verify if other alternatives are variable.
Field 3:- it explains how the consumer actually buys the
product.
Field 4:- it is related to the uses of the purchased items. It
can also be related to an output to receive feedback on
sales results by organisation.

The Nicosia Model

Limitations:
The flow is not completed and does not mention
the various factors internal to the consumer.
The assumption about the consumer being
involved in the decision process with no
predisposition about the various brands is
restricting.
Overlapping between firms attributes and
consumers attributes.

The Engel Kollat Blackwell (EKB) Model:

This model talks of consumer behaviour as a

decision making process in the form of five steps
(activities) and other related variables which
occur over a period of time.
5 steps involved in the decision process:

Problem Recognition
Information Search
Alternative Evaluation
Choice
Outcome

 Other related Variables included in

this model:
Information input
Information processing
Product brand evaluation
General motivating influences
Internationalised environment influences

About the model

The model has emphasised on the conscious
decision making process adopted by a consumer.
The model is easy to understand and is flexible.
This model recognises that a consumer may not
go through all the steps always. This is because
in case of repeat purchases the consumer may
bypass some of the steps.
One limitation, the inclusion of environmental
variables and general motivating influences but
not specifying the effect of these on the buyer
behaviour.

Engel, Blackwell and Minirad (EBM) Model:

It shares certain things with Howard-Sheth model.

The core of the EBM model is a decision process
which is augmented with inputs from information
processing and other influencing factors.

Four sections of the Model:

Input
Information Processing
Decision process and
Variables influencing decision process.

 The EBM Model when compared to the

Howard-seth model is more coherent and
flexible than the latter.
This model also includes human processes
like memory, information processing and
considers both the positive and negative
purchase out comes.

Consumer Buying
Behavior
Consumer Buying Behavior refers to
the buying behavior of final
consumers -individuals & households
who buy goods and services for
personal consumption.
All these consumers make up the
consumer market.
The central question for marketers is:
How do consumers respond to various
marketing efforts the company might

Types of Buying Decision

Behavior Lawsons model
Low
Involvement

DissonanceReducing Buying
Behavior

Habitual
Buying
Behavior

VarietySeeking
Behavior

Complex
Buying
Behavior

Significant
differences
between
brands
Few
differences
between
brands

High
Involvement

Model of Buyer Behavior

Lawsons model
Marketing and
Other Stimuli

Buyers Black Box

Marketing

Buyer Characteristics
Product Choice
Buyer Decision Process Brand Choice
Dealer Choice

Product
Price
Place
Promotion

Other
Economic
Technological
Political
Cultural

Buyer Responses

Purchase Timing
Purchase Amount

Model of
Consumer Behavior
Stimulus Response Model
Marketing and other stimuli enter the
buyers black box and produce
certain choice / purchase responses.
Marketers must figure out
what is inside of the buyers
black box and how stimuli
are changed to responses.

6 - 66

Factors Influencing
Consumer Behavior-Lawsons model (Fig.2.3)
Cultural
Social
Social
Culture
Culture
SubSubculture
culture
Social
Social
class
class

Personal
Personal

Age
Age and
and
Reference
Reference
life-cycle
life-cycle
groups
groups
Occupation
Occupation
Economic
Economic
Family
situation
Family
situation
Lifestyle
Lifestyle
Roles
Personality
Roles
Personality
and
and
and
and
status
self-concept
status
self-concept

PsychoPsychological
logical

Motivation
Motivation
Perception
Perception
Learning
Learning
Beliefs
Beliefs and
and
attitudes
attitudes

Buyer
Buyer

Characteristics Affecting Consumer

Behavior

Key Factors
Cultural
Social
Personal
Psychological
6 - 68

Culture
Subculture
Hispanic
consumers
African Americans
Asian Americans
Mature consumers

Social Class

Characteristics Affecting
Consumer Behavior
Hispanics
35 million consumers
purchase $425 billion
worth of goods and
services.
Expected to grow 64%
in 20 years.
Spanish media makes
group easy to reach.
Brand loyal group.
6 - 69

Sears uses the Fiesta mobile to visit

Hispanic neighborhoods regularly

Characteristics Affecting
Consumer Behavior
African Americans
35 million consumers
purchase $527 billion
worth of goods and
services.
Growing more affluent /
sophisticated.
Price and brand name
conscious; quality and
selection are important.
Certain media target this
group.
6 - 71

Hallmark offers an Afrocentric line of greeting cards called

Mahogany. What other brands have been targeted specifically to
African Americans?

Characteristics Affecting
Consumer Behavior
Asian Americans

6 - 73

10 million consumers
purchase $229 billion
worth of goods and
services.
Fastest growing, most
affluent subculture.
Many nationalities
comprise this group.
Consumer packaged
goods firms now target
this group more
heavily.

Characteristics Affecting
Consumer Behavior
Mature Consumers
75 million consumers age 50+will grow to 115
million within 25 years.
Mature consumers
control 50% of all
discretionary income.
Attractive market for
travel, restaurant, and
cosmetics products,
among others.
6 - 74

Characteristics Affecting Consumer

Behavior

Key Factors
Cultural
Social
Personal
Psychological
6 - 75

Groups
Membership
Reference
Inspirational
groups

Opinion leaders
Buzz marketing

Family
Kids can influence

Roles and Status

Characteristics Affecting Consumer

Behavior

Key Factors
Cultural
Social
Personal
Psychological

Age and life-cycle

Occupation
Economic situation
Lifestyle
Activities, interests,
and opinions
Lifestyle segmentation

Personality and selfconcept

Brand personality

6 - 76

Lifestyles:
Jeep targets
people who
want to leave
the civilized
world behind
What other
types of images
could be used
to appeal to this
lifestyle?

Think about Tide

detergent.
What brand
personality
seems to
describe Tide
best?
Can you think of
examples of
brands that fit
each personality
type?

Characteristics Affecting Consumer

Behavior

Key Factors
Cultural
Social
Personal
Psychological

Motivation
Needs provide motives
Motivation research
Maslows hierarchy of
needs

Perception
Selective attention,
selective distortion,
selective retention

Learning
Drives, stimuli, cues,
responses and
reinforcement

Beliefs and attitudes

6 - 79

SOURCES OF EXTERNAL INFLUENCES ON

CONSUMER BEHAVIOUR-Wilkie (1990)
SCOPE the sweep or reach of the impact
STRENGTH- the power to impact behaviour
IMMEDIACY direct or focused influence on behaviour; the impact
is felt with no or little influence coming into play.

SCOPE

STRENGTH IMMEDIACY

CULTURE

general

High

Long-term

SUBCULTURE

general

High

Long-term

FAMILY

specific

High

Long-term

FRIENDS

specific

High/low

Long term/short
term

MKT STIMULI

specific

low

Long term/short
term

Buyer Decision Process

(Fig. 2.4)-Lawsons model
Purchas
e
Evaluation Decisio
Postpurchase
n
of
Behavior
Alternatives
Informatio
n
Search
Need
Recognitio

The Buyer Decision Process

Stages
Need recognition
Information search
Evaluation of
alternatives
Purchase decision
Postpurchase
behavior
6 - 84

Needs can be
triggered by:
Internal stimuli
Normal needs
become strong
enough to drive
behavior

External stimuli
Advertisements
Friends of friends

Attempt to stimulate need recognition

Need or Problem
Recognition
The realization that there is a
difference between actual and
desired states
The higher the gap, the stronger the
need (or bigger the problem)

Types of Problems
Active Versus Inactive problems
Active: those you are aware of
Inactive: those that you are not yet
aware of (but exist)

Those that require immediate

solutions and those that do not
require immediate solutions

14-87

Problem Recognition and Marketing

Strategy
Identify existing consumer problems and
find solutions for these
Lower the actual state
Increase the desired state
Increase the importance of the gap
between actual and desired states
Convert inactive problems to active
problems
Convert problems into ones requiring an
immediate solution
14-88

Pre-Purchase Search
Types of Information Sources
Types of Information Sought
Factors Affecting Extent of
Information Search

14-89

The Buyer Decision Process

Stages
Need recognition
Information search
Evaluation of
alternatives
Purchase decision
Postpurchase
behavior
6 - 90

Consumers exhibit
heightened attention or
actively search for
information.
Sources of information:

Personal
Commercial
Public
Experiential

Word-of-mouth

Figure 14-3: Types of Information

Sources
PERSONAL

IMPERSONAL

Friends
Neighbors
Relatives
Co-workers
Computer
salespeople
Calling the
electronics store

Newspaper articles
Magazine articles
Consumer Reports
Direct-mail brochures
Information from
product
advertisements
Internal web site

14-91

Types of Information Sought

Brands or alternatives available
Evaluative criteria to be used
Generally, product features

Ratings of brands on evaluative

criteria

14-92

The Buyer Decision Process

Stages
Need recognition
Information search
Evaluation of
alternatives
Purchase decision
Postpurchase
behavior
6 - 93

Evaluation procedure
depends on the
consumer and the
buying situation.
Most buyers evaluate
multiple attributes,
each of which is
weighted differently.
At the end of the
evaluation stage,
purchase intentions are
formed.

The
The Buyer
Buyer Decision
Decision Process
Process

Step
Step 3.
3. Evaluation
Evaluation of
of Alternatives
Alternatives
Product
ProductAttributes
Attributes

Evaluation
Evaluationof
ofQuality,
Quality,Price,
Price,&&Features
Features
Degree
Degreeof
ofImportance
Importance

Which
Whichattributes
attributesmatter
mattermost
mostto
tome?
me?
Brand
BrandBeliefs
Beliefs

What
Whatdo
doIIbelieve
believeabout
abouteach
eachavailable
availablebrand?
brand?
Total
TotalProduct
ProductSatisfaction
Satisfaction

Based
Basedon
onwhat
whatIm
Imlooking
lookingfor,
for,how
howsatisfied
satisfied
would
wouldIIbe
bewith
witheach
eachproduct?
product?
Evaluation
EvaluationProcedures
Procedures

Choosing
Choosingaaproduct
product(and
(andbrand)
brand)based
basedon
onone
one
or
ormore
moreattributes.
attributes.

The Buyer Decision Process

Stages

Two factors
intercede
Need recognition
between
Information search
purchase
Evaluation of
intentions and the
alternatives
actual decision:
Purchase decision
Postpurchase
behavior
6 - 95

Attitudes of others
Unexpected
situational factors

The Buyer Decision Process

Step 4. Purchase Decision
Purchase
Purchase Intention
Intention
Desire
Desire to
to buy
buythe
the most
most preferred
preferred brand
brand

Attitudes
of others

Unexpected
situational
factors

Purchase
Purchase Decision
Decision

The Buyer Decision Process

Stages
Need recognition
Information search
Evaluation of
alternatives
Purchase decision
Postpurchase
behavior
6 - 97

Satisfaction is key:
Delighted consumers
engage in positive
word-of-mouth.
Unhappy customers
tell on average 11
other people.
It costs more to
attract a new
customer than it
does to retain an
existing customer.

Cognitive
dissonance

The
The Buyer
Buyer Decision
Decision Process
Process
Step
Step 5.
5. Postpurchase
Postpurchase Behavior
Behavior
Consumers
ConsumersExpectations
Expectations of
of
Products
ProductsPerformance
Performance
Products Perceived
Performance

Satisfied
Satisfied
Customer!
Customer!

Dissatisfied
Dissatisfied
Customer
Customer
Cognitive Dissonance

BUYER ROLES
INITIATOR
First individual who suggests product/service should be
evaluated/purchased.
INFLUENCER
Provides view and advice which are valued by others and
can subsequently influence the final decision.
DECIDER
The individual who will take the decision in the buying
process at what, how , when and where to buy (store choice),
etc.
BUYER
The individual who actually makes the purchase
USER
The individual who consumes or users the service/product.

FACTORS INFLUENCING
SHOPPERS STORE CHOICE
Kelly and Stephenson ( 1967) identified 8 factors ;
1. General store characteristics-reputation, no of
stores
2. Physical characteristics dcor,cleanliness,
checkout services.
3. Convenience time, parking etc.
4. Products variety, dependability, quality.
5. Prices charged value special sales.
6. Personnel courteous, helpful, friendly.
7. Advertising informative, aggressive, believable.
8. Friends perception of the store- well known, liked,
reccommended.

The Marketing Mix

Product
Price
Place
Promotion

1-101

Service Marketing
7ps(Extended Marketing Mix)
People
Process
Physical Evidence/ Environment

New Age of Marketing

the 11ps of Marketing: Online
Marketing

Privacy data protection acts in this digital age.

Privacyfrom
unwanted
spam,
junk
and
telecommunications provides customers with a sense
of anonymity and allows for more selective forms of
marketing.
Personal Interest - As services are becoming more
interactive, advertising and promotion are becoming
morepersonalizedwith the incorporation of personal
tastes. Personal interests are becoming an increasing
important decision making process for customers.
Personal Networks social media marketing
Public Commentary - Important in the age of
online trading and entrepreneurship. For instance
online auction sites like E-Bay, Amazon

Technomadic Age of
Marketing New Ideas and
Philosophies of Trade and
Commerce
The concept ofNomadic
Marketswas developed out of the growing

awareness that the statistically defined traditional markets were

rapidly becoming more diverse and fragmented. In addition that the
role of the customer is moving away from being a passive instrument
in marketing towards a more engaging interactive approach.
Idris Mootee developed a New 4Ps model ofNomadic Marketingin
2001 to supplement the traditional marketing 4Ps of the marketing
mix.
Personalization (increasing form interaction between customers via
the internet, there is a greater degree of customization of products
and services. )
Participation (creating a free flow of information between customers
and companies.)
Peer-to-Peer (customers bases are being replaced by active
customer communities.)
Predictive Modeling (predict the best probability of an outcome on
the basis of detection theory. )

Summary of the 15 Ps of Marketing

1.
2.
3.
4.
5.
6.
7.
8.

Product
Price
Place
Promotion
People
Process
Physical Evidence
Privacy

9. Personal Interest
10.Personal Social
Networks
11.Public
Commentary
12.Personalization
13.Participation
14.Peer to Peer
15.Predictive
Modeling

ASSUMPTION ON CONSUMER BEHAVIOURBehavioural versus Cognitivists view

BEHAVIOURIST

COGNITIVIST

BEHAVIOURIST VERSUS
COGNITIVIST APPROACHES
BEHAVIOURIST
Observed behaviour is all
important
People are info
transmitters
People are all alike
Behaviour is rational
Human characteristics can
be studied independently.
Emphasis is on what a
person is and does.
Behaviour can be
understood

COGNITIVIST
What goes on in a persons
mind is the key to
comprehension.
Behaviour is not predictable
People are info generators
Each person is unique
Behaviour is irrational
People must be studied as a
whole

Emphasis is on what a person can

be.
Behaviour can never be
completely understood.

THEORIES OF CONSUMER
BEHAVIOUR

The Engel-Kollat-Blackwell
(EKB) model.
Howard & Sheth model
Maslows Hierarchy model

The Engel-Kollat-Blackwell (EKB) model.

First developed in 1968.
A key feature of the EKB model is the
differences between high and low
involvement as part of the buying
process.
High involvement is present in the high
risk purchase
Low involvement is present in the low risk
purchase.

Models of Consumer Behaviour

The Engel-Kollat-Blackwell (EKB) model
Consumers are seen as active agents
following rules of behaviour, fairly easy
to follow and implement because they
require only a limited amount of
information and capability of
elaboration
For instance, a consumer, being aware
of a certain need and believing a certain
good category satisfies it, might fix a
maximum price he/she can afford and
search for the best good available under
such a constraint.

Howard & Sheth model

The model claims that a persons purchase
decision is often influenced by more than one
individuals.
A family buying decision involves multiple
influences from its members.
This theory shows the concept of role structure,
that is individuals members of the family takes
on roles such as collecting information, deciding
on the information budget, etc.
The theory also states that retailers /businesses
are not only dealing with a homogeneous unit
but a collection of individuals with different
goals, needs, motives and interests.

Models of Consumer Behaviour

Howard & Sheth model

Acoording to the model, the 'inputs' (stimuli)

that the consumer receives from his or her
environment are:
1. significative - the 'real' (physical) aspects of
the product or service (which the co make use
of)
2. symbolic - the ideas or images attached by the
supplier (for example by advertising)
3. social - the ideas or images attached to the
product or service by 'society' (for example, by
reference groups)

Models of Consumer Behaviour

-Howard & Sheth model
The 'outputs' are what happens, the consumer's
actions, as observable results of the input
stimuli.
Between the inputs and outputs are the
'constructs', the processes which the consumer
goes through to decide upon his or her actions.
Howard and Sheth group these into two areas:
1.perceptual - those concerned with obtaining and
handling information about the product or
service
2.learning - the processes of learning that lead to
the decision itself

MASLOWS HIERARCHY
MODEL
Theory of motivation developed by
Abraham Maslow(1943)
Illlustrated into low needs to high needs.
Comprises of physiological, safety,
belongingness, esteem and self
actualization.
Can be applied by retailers to understand
a targeted segments needs and wants
and offer the right product at the right
price, promotion and place.

Maslows Hierarchy of Needs

(Fig. 2.5)
Self
Actualization

(Self-development)

Esteem Needs
(self-esteem)
Social Needs
(sense of belonging,
love)

Safety Needs

(security, protection)

Physiological Needs
(hunger, thirst)

The milk
moustache
campaign
changed
attitudes
toward milk.

Buyer Decision Process for New

Products

New Products
Good, service or
idea that is
perceived by
customers as new.

6 - 117

Buyer Decision Process for New

Products

Stages in the Adoption

Process
Marketers should help
consumers move from
awareness to adoption.

6 - 118

Buyer Decision Process

for New Products

Stages in the Adoption Process

Awareness
Interest

Evaluation
Trial

Adoption
6 - 119

Buyer Decision Process for New

Products
Individual Differences
in Innovativeness
Consumers can be
classified into five
adopter categories,
each of which behaves
differently toward new
products.
6 - 120

Figure 6-7:

Adopter Categories Based

on Relative Time of
Adoption

Buyer Decision Process for New

Products

Product
Characteristics and
Adoption
Five product
characteristics
influence the
adoption rate.
6 - 122

Buyer Decision Process

for New Products

Product Characteristics
Relative Advantage
Compatibility
Complexity
Divisibility
Communicability
6 - 123

Factors That Affect the Type of Decision

Making Process Used

Importance of the decision

Extent of previous experience
Existence of well-established
decision criteria
Amount of information at hand
about each alternative
The number of alternatives
available
Model of consumption being
followed
14-124

14-125

Factors that Increase the Level of Prepurchase Search

Product Factors: Higher search

when
It is a long-lasting or infrequently
used product
There are frequent changes in
product styling
Large volume is purchased
The price is high
There are many alternative brands
There is much
variation in
14-126

Factors that Increase the Level of Prepurchase Search

Situational Factors: Higher

search when:
Experience is lower
Previous experience was
unsatisfactory

Social Acceptability: Higher

search when:
Purchase is a gift
Product is socially visible in use
14-127

Factors that Increase the Level of Prepurchase Search

Value-Related Factors: Higher

search when:
Purchase is discretionary
All alternatives have both positive
and negative qualities
No agreement among users exists
Conflicting information is available
Other considerations exist
continued
14-128

Factors that Increase the Level of Prepurchase Search

Consumer Factors: Higher

search when:
Consumers are well-educated,
have higher income levels and are
younger
Consumers are low in dogmatism
and risk perception
Level of involvement is high
Shopping is seen as an enjoyable
activity
14-129
continued

CONSUMER BEHAVIOR IN
RURAL MARKET

RURAL CONSUMER BEHAVIOR

The consumer market in this case is Rural India.
About 70% of Indias population lives in rural
areas. There are more than 600,000 villages in
the country as against about 300 cities and
4600 towns.
Consumers in this huge segment have
displayed vast differences in their purchase
decisions and the product use.
Villagers react differently to different products,
colours, sizes, etc. in different parts of India.

FACTORS INFLUENCING BUYING

BEHAVIOR
The various factors that affect buying
behavior of in rural India are:
1)
2)
3)
4)
5)
6)

Environmental of the consumer

Geographic influences
Family
Economic factors
Place of purchase
Creative use of product

Cultural factors influencing consumer behaviour

1) Product (colour, size, design, and

shape):
2) Social practices
3) Decisionmaking by male head
4) Changes in saving and investment
patterns

Factors affecting consumer behavior

Rural Taste

Bold and Primary

Colors
Cinema, Nautanki,
Dangals, Melas
Synthetics, Colourful

Red Happiness,
Auspicious. Green Prosperity

Subject

Colors Liked

Urban Taste

Shades of Colors,
Light Hues

Entertainment

Theme Parks,
Internet, Travel

Clothes

Denim, Cottons,
Designer

Color Relevance

Red Danger
Green - Safety

Social factors
Touching feet
Hair should not be left open after washing.
Housing in rural areas based on caste and in
urban areas based on Socio economic class.
Influenced by NGOs, Opinion Leaders,
Aanganwadi workers.
Joint Family in rural areas and Nuclear Family in
urban areas.
Role and Status of Sarpanch, retired military
personnel, priests, teachers, medical
practitioners.
Product choice features
Very Social in Rural Areas

Products and Status

Symbols
Rural

Urban

Social/Political status

Educational Degree

Tractor/Jeep/Car

Car

Large Pucca House with

courtyard

House Locality

Childrens city education / jobs Childrens school / college

Land

Airconditioning

Telephone

Club membership

Pilgrimage

Holiday Abroad

Technological Factors
Rural India is beginning to experience the impact of
technology, leading to major changes that are
transforming the countryside. Opportunities, products,
services, knowledge, information are all exploding.
Introduced with the purpose and need to create an
instant network for good governance,
telecommunications has transformed rural India in so
many other ways that is of interest to marketers. STD
booths and PCOs have emerged as the new community
centre in the villages for the exchange of news and views
for every age group and therefore an important place for
marketers to display brand communication messages.

Economic Factors
The entire economic environment of rural
India shows a much improved prosperity
due to repeated benevolent monsoons,
new and improved techniques, higher
quality of inputs and increasing
awareness and education on agriculture.
Banking is reaching out to the doorstep of
more and more farmers. Finance is now
more readily available and so is credit.

Political Factors
Schemes launched by Government has led to the
development of rural areas.
The Government of India is empowering the
Panchayati Raj and other village institutions by
making available developmental funds. This has
resulted in major purchases of equipment and
materials needed for infrastructure development.
30% compulsory representation of women in
local bodies is leading to their empowerment,
encouraging women in rural India to explore
income generation and entrepreneurial activities.

Fundamentals of rural consumer

behavior
Demonstrations, Targeting Opinion
Leaders, Employing Trained Sales
Persons
Lack of Strong Brand Consciousness
Generally ask for the product and not
the brand.
Indian consumers, on an average, try
about six brands of same package
goods product in one year, compared
to two for Americans.

Lifestyle of rural consumer

Rural Consumer is very religious Dabur
developed a religious calendars and gave
Hanuman Chalisa along with their products.
Ganga made of milk and holy water of Ganga.
Govinda as a Brand Ambassador.
Rural Consumers prefer to work Hard themselves
Machines to be sold on the basis of benefits
offered and not on the basis of comfort and
convenience.
Strong Family ties and respect for Family Values
Likes to play Cards and Hangs out at Choupal.

Rural Shopping Habits : Consumer

Insights
Preference for small or medium
Package Britannias Tiger Biscuits,
Cavinkares Chik Shampoo, and small
Coke for Rs. 5.
Role of Retailer
Role of Opinion Leaders for durables
Opinion Leaders like Sarpanch,
village elders and educated Youth of
the village.

Consumption by Age and Stages of the life cycle

Age

Life-Cycle stage Urban

Rural

Below 12

Child

Video games,
Toys, ice candy,
Chocolates, beverages, daliya
health drinks

13-19

Teenage

Cell phones, motor

cycles, Internet

Bicycle,
television,
cinema

20-40

Young

Car, Personal
Computer, branded
clothing, alcohol,
stores/malls

Motorcycle,
telephone, LPG,
tailored/unbrand
ed clothes, local
liquor, haat

40-60

Middle Aged

Luxury Car, Credit

Tractors, Kissan
Cards, House, health
Credit Card,
insurance, holiday trips postal savings,
mela

Above 60

Old

Clubs, theatre, parks

Chaupal, Playing
Cards,
pilgrimage.

Occupation and Income

In the rural sector, a range of goods
and services beyond the very basic
ones are bought by a consumer,
influenced by the occupation and
income of the individual. Fishermen
buy a boat and large nets, whereas a
farmer opts first for a tractor and
pump set.

Lifestyle Comparison of rural and

urban Lifestyle
Dimension Urban
s

Rural

Demograph Convent Educated,

ics
salary earner, small
nuclear family, large
dense population,
apartments

Govt school, selfemployed, large family,

small/scattered
population, ordinary
spacious houses

Activities

Office jobs, internet

surfing. Health club,
shopping, clubs and
party

Agriculture, physical
sports, gossip, playing
cards, cinema, religious
congregation.

Interests

Chinese, Continental
foods, designer
clothes, beauty
salons, holiday trips

Desi food, milk, bright

colored clothes, jewellery,
visiting towns,
markets/melas

Information Search and prepurchase evaluation

The rural consumer primary seeks and gets his information
from opinion leaders and influencers, rather than the
media. However, this information search is fuelled by
exhibitions and road shows, because of the opportunity of
personal interaction and leisurely pace of absorbing and
understanding the information and its relevance.
In the case of high involvement products, this information
search needs to be supplemented by an out of village visit
to a company outlet with an opportunity for personal
interaction. The need to demonstrate individual
accessories of the product and their performance also
becomes critical.
The ultimate clincher is always the touch and feel
experience. Anything less will not lead to a purchase.

Urban

Buying Process Rural

High-involvement product,
comfort, status, drive,
consumers recognition for
need

Need
Recognition

High involvement product productivity drives

consumers recognition for
need.

First hand information

Information
from TV, Internet,
search
Newspaper Ads/ Consults a
fellow owner before dealer
visit

First hand information from

a fellow owner and nearby
dealer at district town.

Educated/aware
understands, analyses
technical specifications. At
most looks for test drive

Evaluation of
alternatives

Lower education and

awareness. More
importance to fellow owner
and illustration of dealer.
Consults opinion leader like
progressive farmers. Live
field demonstration.

Normally buyer makes

final decision. Family
influences color and
looks,. Drives new car
home with family.

Purchase
decision

Collective decision by
buyer, adult son, mechanic
and progressive village
farmer.

Contd.
Higher satisfaction
or dissonance
because of greater
risk factor.
Higher risk taking
ability, because of
wanting
experimentation.
After sales service
no issue

Post-purchase
behavior

Higher satisfaction,
lower dissonance.
Because risk-taking
is lower and
expectation level is
low. Low risktaking ability
because lifeattached product,
lack of technical
know how, low
confidence on after
sales service.

Organizational Buying
Behavior

Organizational Buyers
Types
Industrial
Reseller
Government and
non-profit
organizations

Purchase types
Straight rebuy
Limited decision
making
Extended decision
making

Characteristics
Greater
involvement
Bureaucracy
Long term
relationships
Price is important
but may not be the
most important
factor

1. Problem
Recognition

4. Supplier
Search

6. Supplier
Selection

2. General
Description
of Need

Organization
al Buying
Process
7. Selection
of
Order Routine

3. Product
Specifications

5. Acquisition
and Analysis
of Proposals

8. Performance
Review

Three Buying Situations

1. New task
2. Modified rebuy
3. Straight rebuy

Three Buying Situations

1. New Task

New taskthe problem or need is

totally different from previous
experiences.
Significant amount of information is
required.
Buyers operate in the extensive
problem solving stage.

Buyers lack well defined criteria.

Lack strong predispositions toward a
solution.

Three Buying Situations

2. Modified Rebuy

Modified rebuydecision makers

feel there are benefits to be derived
by reevaluating alternatives.
Most likely to occur when displeased
with the performance of current
supplier.
Buyers operate in the limited problem
solving stage.

Buyers have well defined criteria.

Three Buying Situations

3. Straight rebuy

Straight rebuythe problem or

need is a recurring or continuing
situation.
Buyers have experience in the area in
question.
Require little or no new information.
Buyers operate in the routine problem
solving stage.

Forces Influencing Organizational Buying

Behavior
A projected change
in business
conditions can
drastically alter
buying plan.

Organizational
Buying
Behavior

Environmental
Forces

Economic Outlook:
Domestic & Global
Pace of Technological
Change
Global Trade Relations

Organizational
Forces

Goals, Objectives, and

Strategies
Organizational Position
of Purchasing

Group
Forces

Roles, relative
influence, and patterns
of interaction of buying
decision participants

Individual
Forces

Job function, past

experience, and buying
motives of individual
decision participants

Forces on Organizational
Buying
Environmental Forces
Economic influences
economy=

Technological influences
Foresee changes

Forces on Organizational
Buying
Organizational Forces
Role of purchasing agents
Should it be centralized?
Benefits

Better integrate purchasing

Cut costs
Favorable terms
Work better with engineers
Specialization

When to centralize or decentralize?

Forces on Organizational
Buying
Group Forces
Buying Center
Different people play different roles
New task
Straight rebuy/modified rebuy

Predicting Composition
Why?

Forces on Organizational
Buying
Group Forces (contd)

Buying center influences

Users
Gatekeepers
Influencers
Deciders
Buyers

Identifying patterns of behavior

Isolate personal stakeholders

Follow flow of information
Identify experts
Trace connections to the top
Understand purchasings role

Questions for the Industrial Salesperson

1. Which member takes part in the buying

process?
2. What is each members relative influence
in the decision?
3. What criteria is important to members in
the evaluation process?

Members of the buying center assume different

roles throughout the procurement process.

Clues for
Identifyi
ng
Powerful
Buying
Center
Members