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MBA-III- Consumer Behavior [16 Mbamm 301]- Notes
Business Administration (16MBA)
Visvesvaraya Technological University
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Subject Code : 16MBAMM301 IA Marks : 20 Number of Lecture Hours/Week: 03 Exam Hours: 03 Number of Lecture Hours : 56 Exam Marks: 80 Practical Component : 02 Hours/ Week
Unit 1: (5 Hours) Introduction to the study of Consumer Behaviour: Meaning & Definition of CB, Difference between consumer & Customer, Nature & characteristics of Indian Consumers, Consumer Movement in India, Rights & Responsibilities of consumers in India, Benefits of consumerism. Unit 2: (9 Hours) Role of Research in understanding consumer behaviour: Consumer Research: Consumer Research Paradigms (Qualitative & Quantitative Research Methods) Developing research objectives, collecting secondary data, designing primary research, data analysis and reporting research findings. Models of Consumer Behaviour: Input-Process-Output Model, Nicosia Model, Howard Sheth Model, Engel-Kollat-Blackwell Models of Consumer Behaviour, Internal Influences: Motivation, Personality, Perception, Learning, Attitude, Communications, External Influences: Social Class, Culture, REFERENCE Groups, Family members. Levels of Consumer Decision Making – Consumer Buying Decision Process, Complex Decision Making or Extensive Problem Solving Model, Low Involvement Decision Making or Limited Problem Solving Model, Routinised Response Behaviour, Four views of consumer decision making. On-line Decision Making: Meaning & Process/Stages Situational Influences- Nature of Situational Influence (The communication Situation, The Purchase Situation, The usage situation, The disposition situation) Situational Characteristics and consumption behaviour (Physical features, Social Surroundings, Temporal Perspectives, Task Definition, Antecedent States.) Unit 3: (10 Hours) Individual Influences on Consumer Behaviour and CRM: Part 1 Motivation: Basics of Motivation, Needs, Goals, Positive & Negative Motivation, Rational Vs Emotional motives, Motivation Process, Arousal of motives, Selection of goals.
Motivation Theories and Marketing Strategy - Maslow’s Hierarchy of Needs, McGuire’s Psychological Motives (Cognitive Preservation Motives, Cognitive Growth Motives, Affective Preservation Motives, Affective Growth Motives). B) Personality: Basics of Personality, Theories of Personality and Marketing Strategy(Freudian Theory, Neo-Freudian Theory, Trait Theory), Applications of Personality concepts in Marketing, Personality and understanding consumer diversity (Consumer Innovativeness and related personality traits, Cognitive personality factors, Consumer Materialism, Consumer Ethnocentrisms), Brand Personality (Brand Personification, Gender, Geography, Colour), Self and Self-Image (One or Multiple selves, The extended self, Altering the self) C) Perception: Basics of Perception & Marketing implications, Elements of Perception(Sensation, Absolute Threshold, Differential Threshold, Subliminal Perception), Dynamics of Perception (Perceptual Selection, Perceptual Interpretation, Perceptual Organization ,perceived price, perceived quality, price/quality relationship, Perceived Risk, Types of risk, How consumers’ handle risk. Customer Relationship Management Meaning & Significance of CRM, Types of CRM (Operational, Collaborative, Analytical), Strategies for building relationship marketing, e-CRM, Meaning, Importance of e-CRM, Difference Between CRM & e-CRM Unit 4: (08 Hours) Individual Influences on Consumer Behaviour: Part 2 A) Learning: Elements of Consumer Learning, Motivation, Cues, Response, Reinforcement, Marketing Applications of Behavioural Learning Theories, Classical Conditioning Pavlovian Model, Neo-Pavlovian Model), Instrumental Conditioning, Elaboration Likelihood Model. B) Attitude: Basics of attitude, the nature of attitude, Models of Attitude and Marketing Implication, (Tri-component Model of attitude, Multi attribute attitude models. C) Persuasive Communication: Communications strategy, Target Audience, Media Strategy, Message strategies, Message structure and presentation. Unit 5: (12 Hours) External Influences on Consumer Behaviour
Post Purchase Processes: Post Purchase Processes, Customer Satisfaction, and customer commitment: Post purchase dissonance, Product use and non-use, Disposition, Product disposition. Case studies in Indian context only (04 Hours)
Index
Sl Unit Page No. 1 Introduction to the study of Consumer Behaviour 6- 2 Role of Research in understanding consumer behaviour 12- 3 Individual Influences on Consumer Behaviour and CRM: Part 1
41-
4 Individual Influences on Consumer Behaviour: Part 2 85- 5 External Influences on Consumer Behaviour 103- 6 Consumer Influence and Diffusion of Innovations 132-
Nature & Characteristics of Indian Consumer The Indian consumers are noted for the high degree of value orientation. Such orientation to value has labeled Indians as one of the most discerning consumers in the world. Even, luxury brands have to design a unique pricing strategy in order to get a foothold in the Indian market. Indian consumers have a high degree of family orientation. This orientation in fact, extends to the extended family and friends as well. Brands with identities that support family values tend to be popular and accepted easily in the Indian market. Indian consumers are also associated with values of nurturing, care and affection. These values are far more dominant that values of ambition and achievement. Product which communicate feelings and emotions gel with the Indian consumers. Apart from psychology and economics, the role of history and tradition in shaping the Indian consumer behavior is quite unique. Perhaps, only in India, one sees traditional products alongside modern products. For example, hair oils and tooth powder existing with shampoos and toothpaste. The characteristics of modern Indian families now closely correspond with the concept of liberalization, individualism, tolerance of new roles, behavior and attitudes, with a newly seen empowerment of the individual and openness to new people and experiences. Consumer movement in India Consumer movement is also referred as consumerism. Consumerism is an organized movement of citizens and government to impose the rights and powers of the buyers in relation to sellers. Consumer movement in the present form came into being only in the 1930's in the West and only in the 60's in India. The basic objectives of consumer movement worldwide are as follows: To provide opportunity to the consumers to buy intelligently J - Recognition of reasonable consumer requests 6 Protection against fraud, misrepresentation, unsanitary and unjust products Participation of consumer representatives in management of aspects affecting consumers promoting consumer’s interests. The basic reason for the development of consumer movement in India are different from those in the West. In western countries, consumer movement was the result of post-industrialization affluence-for more information about the merits of competing products and to influence producers especially for new and more sophisticated products. In India, the basic reasons for the consumer’s movement have been:
Shortage of consumer products; inflation of early 1970's Adulteration and the Black Market. Lack of product choices due to lack of development in technology Thrust of consumer movement in India has been on availability, purity and prices The factors which stimulated the consumer movement in recent years are: Increasing consumer awareness Declining quality of goods and services Increasing consumer, expectations because of consumer education Influence of the pioneers and leaders of the consumer movement Organized effort through consumer societies Stages of Development of the Consumer Movement The Consumer Movement today is undergoing a silent revolution. The movement is bringing qualitative and quantitative changes in the lives of people enabling them to organize themselves as an effective force to reckon with. But the path to reach this stage has not been easy. It has been a struggle against bad business which always put profit before fairness in transactions. The first stage of movement was more representational in nature, i., to make consumers aware of their rights through speeches and articles in newspapers and magazines and holding exhibitions. The second stage was direct action based on boycotting of goods, picketing and demonstration. However, direct action had its own limitations that led to the third stage of professionally managed consumer organizations. From educational activities and handling complaints, it ventured into areas involving lobbying, litigation and laboratory testing. This gave good results. Thus, for instance business sector has started taking notice and co-operating with the movement. It has played a role in hastening the process of passing the Consumer Protection Act, 1986 which has led to the fourth stage. The Act enshrines the consumer rights and provides for setting up of quasi-judicial authorities for redressal of consumer deputes. This act takes justice in the socio- economic sphere a step closer to the common man. Rights and responsibilities of consumers in India Rights of Consumers The various rights of consumers that are recognized by Government of India.
complaints will receive due attention. This right also provides for due compensation to consumers if they have suffered a loss or are put to inconvenience due to the fault of the supplier or manufacturer. (vi) Right to consumer education: To prevent market malpractices and exploitation of consumers, consumer awareness and education are essentially required. For this purpose, consumer associations, educational institutions and Government policy makers are expected to enable consumers to be informed and educated about (a) the relevant laws which are aimed at preventing unfair trade practice; (b) the ways in which dishonest traders and producers may try to manipulate market practices to deceive consumers; (c) how consumers can protect their own interest; and (d) the procedure to be adopted by consumers while making complaints. Steps have been already taken by many consumer bodies to educate consumers through pamphlets, journals and posters. TV programmes have also come to play an effective role in this connection. Responsibilities of Consumers There is a well-known saying that ‘there cannot be rights without responsibilities’. Having examined the consumer rights and the purpose served by them, it is necessary to consider whether consumers should also be responsible enough to be entitled to exercise their rights. For instance, to be able to exercise their right to be heard, consumers should avail of the opportunities to know and keep informed about consumer problems. To exercise their right to seek redressal of complaints, consumers must take all precautions to choose the right goods at the right price and learn how to use the products to prevent injury or loss. Specifically, the responsibilities of consumers may include the followings: (i) Responsibility of self-help It is always desirable that a consumer should not depend on the seller for information and choice as far as possible. As a consumer, you are expected to act in a responsible manner to protect yourself from being deceived. An informed consumer can always take care of his/her interest more than anyone else. Also, it is always better to be forewarned and forearmed rather than getting remedies after suffering a loss or injury. (ii) Proof of Transactions: The second responsibility of every consumer is that the proof of purchase and documents relating to purchase of durable goods should be invariable obtained and preserved. For example, it is important to get a cash memo on purchase of goods you should remember that in case you have to make any complaint about defects in goods, the proof of
purchase will enable you to establish your claim for repair or replacement of the goods. Similarly, durable consumer goods like TV, refrigerator, etc. carry warranty /guarantee cards issued by the dealers. The cards entitle you to get the service for repairs and replacement of parts free of cost during a certain period after purchase. (iii) Proper claim: Another responsibility that consumers are expected to bear in mind is that while making complaints and claiming compensation for loss or injury, they should not make unreasonably large claims. Very often, consumers have to exercise their right to seek redressal in a court. There have been cases in which consumers claimed huge compensation for no apparent reason. This is regarded as an irresponsible act which should be avoided. (iv) Proper use of Product/services: Some consumers, especially during the guarantee period, make rough use of the product, thinking that it will be replaced during the guarantee period. This is not fair on their part. They should always use the products properly. Besides the above responsibilities, consumers should be conscious of some other responsibilities. They should stick to the agreement made with manufacturers, traders and service providers. They should make timely payment in case of credit purchases. They should not tamper with the media of services, like electric and water meters, bus and train seats, etc. They should remember that they can exercise their rights only when they are willing to fulfill their responsibilities. Benefits of Consumerism 1. The consumer chooses his/her lifestyle – what goods are necessary and what luxuries can be afforded. 2. The opportunity to enjoy this world (food, drink, entertainment) in various quantities. 3. Economic advantages to a large segment of the population (middle- and upper-class). 4. The opportunity and motivation to improve your social standing by working hard.
used by the interpretivists while studying consumer behavior. However, as mentioned above, the qualitative techniques are also used by “dialectics”. Combining Qualitative and Quantitative Research Today, the two approaches are used in combination to study consumer behavior. Qualitative research is very often a prelude to quantitative research; the findings from qualitative research are used to prepare scales for surveys and experiments some cases quantitative research may also act as a precursor to qualitative research; the findings from quantitative research are corroborated through case studies and other qualitative measures. Consumer research process: The important steps in the consumer research process are
- Defining the objectives of the research
- Collecting and evaluating secondary data
- Designing a primary research study
- Collecting primary data
- Analyzing the data
- Preparing the report on findings Developing the research objectives: It is first and the most difficult step in research process hare the questions like is it to segment the market for plasma television sets? To find out consumer attitude about the experience with online shopping?. And it is always important for the marketing manager to agree at the out set on the purposes and the objectives of the study to ensure that Collecting secondary data Secondary data includes both internal and external data it is collected or generated for some purposes other than the present research objectives. Internal secondary data such information as data generated in house for earlier studies for earlier studies as well as analisis of customer files, such as past customer transactions etc. Designing primary research: IT IS basically designed on the basis of the purposes of the study. If the descriptive study is needed then the quantitative study is likely to be under taken. If the purpose is of the new ideas then we can go for the qualitative research.
Quantitative research design A quantitative research study consists of research design, the data collection methods and instruments to be used, and the sample design. Three basic designs are used in quantitative research are: observation, experimentation, or survey. Observational research Here in this method the people or customers are observed when they are purchasing the product or using the product Mechanical observation Uses a mechanical or electronic device to record customer behavior or responses to a particular marketing stimulus. Experimentation It is possible to test the relative sales appeal of many types of variables, such as package designs, prices promotional offers, or copy themes through experiments designed to identify cause and effect. Surveys There are various survey methods are there they are,
- Personal interview survey
- Telephone survey
- Mail surveys
- Online surveys Quantitative research data collection instruments The data collection instruments are developed to as part of a study’s total research design systematizing the collection of data and to ensure that all respondents are asked the same questions in the same order. Questionnaire For quantitative research the primary data collection instrument is questionnaire Attitude scales The instruments most frequently used to capture this evaluative data is called attitude scales the most frequently attitude scales are likert scales, semantic differential scale, behavior intension scale, and rank order scale.
This is designed to tap the underlying motives of individuals despite their unconscious rationalizations or efforts at conscious concealment. Metaphor analysis: in the 1990, a stream of consumer research emerged suggesting the most communication is nonverbal and that people do not think in words but in images. Data analysis and reporting research findings In qualitative research, the moderator usually analyses the responses received. In quantitative research, the research supervises the analysis open ended questions are first coded and classified then all of the responses are tabulated and analyzed. Using sophisticated analytical programs that correlate the data by selecting variables and cluster the data by selected demographic characteristics. Models of consumer behavior The consumer market is defined as end user markets. Also called Business to Consumer markets, or B2C markets, the product and service offering is bought by the consumer for his personal use. The decision making process in consumer markets is different from the one that takes place in business or industrial markets. Input-Process-Output model 1. Nicosia Model: The model proposed by Francesco Nicosia in the 1970s, was one of the first models of consumer behavior to explain the complex decision process that consumers engage in during purchase of new products. Instead of following a traditional approach where the focus lay on the act of purchase, Nicosia tried to explain the dynamics involved in decision making. Presenting his model as a flow-chart, he illustrated the decision making steps that the consumers adopt before buying goods or services; decision aiming was presented as a series of decisions, which follow one another. The various components of the model are seen as interacting with each other, with none being essentially dependent or independent; they are all connected through direct loops as well as feedback loops. Thus, the model describes a flow of influences where each component acts as an input to the next. The consumer decision process focuses on the relationship between the marketing organization and its consumers; the marketing organization through its
marketing program affects its customers; the customers through their response to the marketer’s action, affects the subsequent decisions of the marketer; the cycle continues. The various components that are further distinguished into main fields and subfields of the model are marketer's communication affecting consumer’s attitude, consumer's search and evaluation, purchase action, consumption experience and feedback. The first field ranges from the marketer (source of message) to the consumer (attitude); the second from the search for to the evaluation of means/end(s) relation(s) which forms the reaction field; the third field relates to the act of purchase; and the fourth to feedback. The output from one field acts as the input for the next. These are explained as follows:
- Marketer's communication affecting consumers’ attitude: This comprises Field 1 (i. “from the source of a message to the consumers’ attitude”). The consumer is exposed to the firm’s attributes through the marketing communication; this marketing communication could take place impersonally via mass media (TV, newspaper, websites, etc) as well as personally. The information could relate to the firm attributes as well as the product, price and distribution. This message relating to the firm’s attributes affects the consumers’ perception, predisposition and attitude toward the firm and its offering. Of course, the impact on perception and attitude is also dependent upon the consumer’s personal characteristics, values, experiences, culture, social influences etc. Thus, the marketer’s communication affects the consumers’ attitude.
- Consumer's search and evaluation: After an attitude is formed, the consumer moves to Field 2 of the model, i. the consumer’s search for and evaluation of means/end(s) relation(s) which forms the preaction field. The consumer searches for information about the product category and the varying alternatives, and thereafter evaluates the various brands on criteria like attributes, benefits, features etc. These criteria could be based on his learning and past experiences as well as the marketer's inputs. This step creates a motive in the mind of the consumer to purchase the product.
- Purchase action: The motivated state leads to Field 3 of the model, i. the decision making on the part of the consumer and the act of purchase. The consumer finally gets into action and buys the product from a chosen retailer.
- Consumption experience and feedback: The purchase action leads a consumer to Field 4 of the model which is consumption experience and feedback. After purchasing the product, and the
However, the model suffers from limitations in the sense that the model proposes assumptions, boundaries and constraints that need not be realistic. It has been argued that attitude, motivation and experience may not occur in the same sequence. Variables in the model have not been clearly defined. Factors internal to the consumer have not been defined and dealt with completely. The mathematical testing of the model and its validity are questionable.
- Howard Sheth Model Howard and Sheth used the term buying behavior and not consumer behavior as the industrial buyers and consumers are similar in most aspects. While the model was proposed in the 1960s, for industrial buying, the term “buyer” is used to connote both industrial consumers and personal consumers. Through the model, Howard and Sheth, tried to explain buyer rationality while making purchase decisions even in conditions of incomplete information. While they differentiated between three levels of decision making, EPS, LPS and RPS, the model focuses on repeat buying/purchase. The model has four major components, viz., stimulus inputs (input variables), hypothetical constructs, response outputs (output variables), and, exogenous variables. a) Stimulus inputs (Input variables): The input variables refer to the stimuli in the environment; they take the form of informative cues about the product/service offering; these information cues could relate to quality, price, distinctiveness, service and availability.
The informational cues could be Significative, Symbolic, (both of which are commercial and can be controlled by the marketer) and Social (non-commercial and uncontrollable by the marketer; family, reference groups and social class). All these three types of stimuli provide inputs concerning the product/brand to a consumer.
- Significative stimuli: The product/brand information that the marketer provides, comprises the significative component; it deals essentially with the brand characteristics.
- Symbolic stimuli: this is the psychological form with which a buyer perceives the product and service offering (brand); it is figurative (verbal and visual product characteristics) and perceptual and depends on how the offering has been positioned; it emanates from advertising and promotion efforts. -Social stimuli: this is the information about the product or service offering that comes from the social environment viz. family, groups, society and culture at large. b) Hypothetical constructs: Howard and Sheth classified the hypothetical constructs into two major groups, viz., perceptual constructs and learning constructs. These constitute the central part of the model and deal with the psychological variables which operate when the consumer is undergoing the decision making process.
- Perceptual constructs: The perceptual constructs deal with how a consumer obtains and processes information received from the input variables. Once the buyer is exposed to any information, there is an attention; this attention towards the stimuli depends on the buyers’ sensitivity to information in terms of his urge and receptivity towards such information. Not all information would be processed and the intake of information is subject to perceived uncertainty and lack of meaningfulness of information; this is referred to as stimulus ambiguity. This reflects the degree to which the buyer regulates the stimulus information flow. Stimulus ambiguity occurs when a consumer does not understand the message from the environment; it could trigger off a need for a specific and active search for information and thus lead to an overt search for information. The information that is gathered and processed may suffer from perceptual bias if the consumer distorts the information received so as to fit his/her established needs/beliefs/values/experiences etc.
- Learning constructs: The learning constructs relate to buyer learning, formation of attitudes and opinions, and the final decision. The learning constructs are seven in number, and range from a
MBA-III- Consumer Behavior [16 Mbamm 301]- Notes
Course: Business Administration (16MBA)
University: Visvesvaraya Technological University
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