Consumer Behavior
Unit - 2

Discussion Questions
1. How do consumer characteristics influence
buying behavior?
2. What major psychological processes influence
consumer responses to the marketing
program?
3. How do consumers make purchasing
decisions?
4. In what ways do consumers stray from a
deliberative, rational decision process?

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

Consumer Behavior
The study of how individuals, groups, and organizations
select, buy, use, and dispose of goods, services, ideas, or
experiences to satisfy their needs or wants.
Consumer behaviour refers to the mental
and emotional processes and the
observable behaviour of consumers
during searching, purchasing, and post
consumption of a product or service.”

TYPES OF CONSUMER BUYING BEHAVIOR
Routine Response/Programmed Behavior
Limited Decision Making
Extensive Decision Making
Impulse Buying

ROUTINE RESPONSE / PROGRAMMED
BEHAVIOR
 Frequently purchased low cost items.
 Low involvement required.
 Little search and decision effort
 Purchased almost automatically.
Examples

LIMITED DECISION MAKING
 Occasional buying.
 When information is needed for a
unfamiliar brand in a familiar product
category.
 Requires a moderate amount of time for
information gathering.
 Loyalty to a brand
Example

EXTENSIVE DECISION MAKING
 Complex process- requires high involvement
 unfamiliar, expensive, infrequently bought
products.
 High degree of economic / performance /
psychological risk.
 Lot of time spent seeking information and
deciding.
Examples

IMPULSE BUYING
 Basis - purchase of the same product does not always
elicit the same Buying Behavior.
 Reason determines the extent of decision-making.
THIS or THIS ??
going for the dinner- reason can be an anniversary
celebration, or a meal with a couple of friends.
Examples

FACTORS INFLUENCING CONSUMER
BEHAVIOR
Social Factors
Culture and Subculture Roles
and Family Social Class
Reference Groups
Psychological Factors
Motivation Perception
Learning Attitudes
Personality
Personal
Factors
Demographic Factors
Lifestyle Situational factors
Involvement Level
Problem
Recognition
Information
Search
Alternatives’
Evaluation
Purchase
Action
Post purchase
Actions
Consumer Decision-Making Process

Factors influencing consumer
Behavior
Cultural Factors
Social Factors
Personal Factors

Cultural Factors
Culture
Subculture
Culture is the fundamental determinant of a
person’s wants and behavior.
Marketers must closely attend to cultural
values in every country to understand
how to best market their existing products

Cultural Factors
• Culture influences consumers through the
norms and values established by the society in
which they live.
• The sum total of knowledge, beliefs, art, morals,
laws, customs, and any other capabilities and
habits required by humans as members of
society.
• Perceptions, wants & behavior learnt by an
individual, influence his buying behavior.
• Culture reflects what to eat, what we wear, the
code of conduct, buying habits
• E.g., Kellogg’s

Sub- Culture
• Subcultures exist within a given dominant culture.
• The group have similar habits, behavior patterns, shared
value system, buying behavior on basis of
– Nationality
– Religion
– Region
– Ethnicity
– Age
– Gender
– …and many more.
• Advertisement strategies of a firm are also affected by
subculture differences

Social Factors
Reference
Groups
Family
Role and Status
Social factors refer to forces that other people exert and
which affect consumers’ purchase behaviour

Reference Groups
• Groups are many like clubs, friends, schools colleges which influences
consumer socialization& learning
• Two types of reference groups
• Primary reference Groups
– Membership reference – club – regular & informal contact
– Aspiration reference group – copy the attitude & behaviour
– Disclaimant reference group – holds membership but does not belong &
opposed to group
– Avoidance group – reset the values & beliefs
• Secondary Reference Groups
– Religious group, professional & trade unions
– Opinion leaders are perceived as people with skills, knowledge

Roles and Status
• Groups often are an important source of information and
help to define norms for behavior.
• A role consists of the activities a person is expected to
perform.
• Each role in turn connotes a status.
• People choose products that reflect and communicate
their role and their actual or desired status in society.
• Marketers must be aware of the
status-symbol potential of products
and brands.

Joint Decision Making process
Initiator Influencer Gatekeeper
Decision-
maker Buyer User
two or more persons related by
blood, marriage or adoption and
reside together

Social Class
• ‘Social class defines the ranking of people in a society into
a hierarchy of distinct status classes;
• Upper, upper-middle, middle and lower classes, so that the
members of each class have relatively the same status
based on their power and prestige.’
• Socio economic factor – social class – Unique behaviors
• The things what consumers buying become symbols which
tell others who they are

Personal Factors
Age
Life Cycle Stage
Personality
Personal factors include those aspects that are unique to a person and
influence purchase behaviour.
These include demographic factors, lifestyle, and situational factors.

Personal Factors
Values
Occupation
Economic situation
lifestyle

Psychological factors
• Psychological factors are internal to an individual
and generate forces within that influence her/his
purchase behaviour.
• The major forces include
– Motives ,
– Perception ,
– Learning ,
– Attitude , and
– Personality.

MOTIVATION
This refers to driving forces within an individual produced by a state of
tension caused by unfulfilled needs, wants, and desires.
Motivation Process
Learning
Unfulfilled
Needs, Wants
and Desires
Felt
Tension
Drive
Appropriate
Behaviour
Goal or Need
Fulfillment
Cognitive
Processes
Tension
Reduction

MOTIVATION
Freud
Maslow
Herzberg
peoples behavior are unconscious
driven by different needs at
different times
dissatisfiers from satisfiers

Abraham Maslow (1943) Need Theory

MOTIVATION RESEARCH
 Some of the methods used to probe the subconscious mind include:
 In-depth interviews
– Talk freely by asking questions
 Association tests
– With a stimulus such as word, picture to check the first thing
comes to their mind
 Projective techniques
– Pictures & designs are used
 Focus group
– Small group brought together

PERCEPTION
Selective Distortion
Selective Retention
Selective Attention
Subliminal Perception
Perception is the process by which an individual selects, organizes, and
interprets stimuli into a meaningful and coherent picture of the world.
People tend to remember
information that supports our
attitudes and beliefs
allocation of
processing capacity
to some stimulus
tendency to interpret
information in a way that
fits our preconceptions
are not consciously
aware of them

LEARNING
Driver
Cues
Discrimination
Learning is viewed as a relatively permanent change in behaviour
occurring as a result information or experience, both direct and indirect.
strong internal stimulus
how a person responds
adjust our responses accordingly

LEARNING
• There are two basic approaches to learning:
(1) Behavioral approach
• Stimulus – response
• Classical conditioning (Respondent conditioning)
• Favorable association with product or service
• Operant conditioning (instrumental conditioning)
• Positive or negative reinforcement
• If positive use to purchase regular, negative results in decrease
(2) Cognitive learning approach.
• Learning takes place as a result of consumer thinking & problem solving
• Consumers need to exercise some control over environment

ATTITUDES
“An attitude is an enduring organization of motivational, emotional,
perceptual, and cognitive processes with respect to some aspect of
our environment.”
• Feeling, action & beliefs
• Research will be conducted to study consumer attitudes

MEMORY
Brand Associations
Mental Maps
Memory Processes
Encoding Retrieval
Brand
Association
Association
Association
Association
Association

HYPOTHETICAL MENTAL MAP –
LIFE INSURANCE

Buying Decision Process
Planned & unplanned problems
Personal, commercial, public
Brand A or Brand B

The Buying Decision Process
Problem or need
recognition
information
search
alternatives
evaluation
purchase
decision
post-purchase
evaluation

PROBLEM RECOGNITION
Stimulus
• Internal - is triggered by
a person’s normal needs
• External - seeing a
commercial for a vacation
“I’m Hungry”

INFORMATION SEARCH
Personal
Commercial Public
Experiential
looking for reading material, phoning friends, going online, and visiting stores to
learn about the product

SUCCESSIVE SETS INVOLVED
IN CONSUMER DECISION
MAKING

EVALUATION OF ALTERNATIVES
Attitudes
Beliefs
No single process is used by all consumers
trying to satisfy a need.
looking for certain benefits
product as a bundle of attributes
with varying abilities
that a person holds about
something
person’s enduring favorable, emotional feelings

Attribute
Memory
Capacity
Graphics
Capacity
Size and
Weight
Price
Model Weight: 40% Weight: 30% Weight: 20% Weight: 10%
A 8 9 6 9
B 7 7 7 7
C 10 4 3 2
D 5 3 8 5
EXPECTANCY-VALUE MODEL
Model A = 0.4 (8) + 0.3(9) + 0.2(6) + 0.1(9) = 8.0
Model B = 0.4 (7) + 0.3(7) + 0.2(7) + 0.1(7) = 7.0
Model C = 0.4(10) + 0.3(4) + 0.2(3) + 0.1(2) = 6.0
Model D = 0.4 (5) + 0.3(3) + 0.2(8) + 0.1(5) = 5.0
by combining their brand beliefs — the positives and negatives —
according to importance

PURCHASE DECISION
Brand
Dealer
Quantity
Timing
Payment method
Purchase sub
decisions
sets a minimum acceptable cutoff level for each attribute
chooses the best brand on the basis of its perceived

POST-PURCHASE BEHAVIOR
Post-purchase Satisfaction
Post-purchase Actions
Defect
Loyal
Dissatisfied
Satisfied
Delighted
Stay or Go
public action by complaining to the company,
going to a lawyer, stop buying the product
closeness between expectations and the
product’s perceived performance

How Customers
Use or Dispose of Products
consumption rate—the more quickly buyers consume a product,
the sooner they may be back in the market to repurchase it.

Moderating Effects
Low-involvement consumer
Variety seeking consumer
consumer involvement

Types of Decision Situations
New Task
Item purchased for 1st time
Straight Re-buy
Inventory reaches par level
Modified Re-buy
Repurchase with some minor
modifications

MARKET RESEARCH
Unit – 2 Contd…

Discussion Questions
1. What constitutes good marketing research?
2. Use of marketing research
3. What are the best metrics for measuring
marketing productivity?
4. How can marketers access their return on
investment of marketing expenditures?

MARKETING RESEARCH SYSTEM
Insight
Market Research
to help them better understand the customers and markets
how’s and why’s certain things happen in the market

Marketing Research
It is the process of finding a solution to a
problem or a answer to question
through the use of scientific tools &
techniques
The systematic design, collection, analysis,
and reporting of data and findings
relevant to a specific marketing
situation facing the company.

Creative Research Means
Rivals
Marketing partners
Student projects
Internet sources
Check out rivals

BUSINESS RESEARCH
 Three major forms of business research are
 Market research
– Understanding & examining the marketplace in which company
operates
– Helps to device effective business policies & strategies
 Operations research
– Use of mathematical. Logical & analytical methods to find optimal
solutions to business problems
– Used for forecasting demand, optimizing production & investment
plans etc.,
 Motivational research
– Analyzing the reasons & motives behind people’s behavior
– Used to understand consumer behavior

Marketing Research process
Identifying & defining problem / opportunity
Planning the research design
Selecting a research method
Selecting a sampling procedure
Data collection
Evaluating the data
Preparing & presenting the research design

DEFINE THE MARKETING PROBLEM & SET OBJECTIVE
 Problem definition
– The statement clearly defines the specific & measurable problem
that the research project has to address
– This will facilitate the company to develop appropriate marketing
plan
 Research objectives
– Who are our customers?
– Who are the customers of competing brands
– What do these customers like & dislike
– How are we currently perceived among customers
– What must we do clarify & improve the customers existing
perceptions
Focused inquiry

CATEGORIES OF RESEARCH
 Exploratory research
– Carried out to make problem suited to more precise investigation or to frame a
working hypothesis
– It is not used in cases where a definite result is desired
– Rely upon secondary data’s
 Descriptive studies
– Comes under formal research where objectives are clearly defines
– May range general survey of consumers age, education, market potential etc.,
 Casual Research (Experimental)
– To establish cause & effect relationship between different variables
– Possible relationship can arise may be – symmetrical (Fluctuate each other),
reciprocal (mutually influence each other) & Asymmetrical (changes in one variable
are responsible for changes in another variable)
 Discotheques & parties is depend on lifestyle, Ads vs. sales, & price increases sale
increase

DEVELOP THE RESEARCH PLAN
Sampling plan
Contact method
Data Sources
• Secondary data
• Primary data
Research Approaches
• Observation
• Focus groups
• Surveys
• Behavioral data
• Experiments
Research instrument
• Questionnaires
• Qualitative measures
• Technological devices

SAMPLING DESIGN
 Who is to surveyed (Sampling Unit)
 Define the target population (universe)
 How many to survey (Sampling Size)
 The needed amount of data
 How should the respondents be chosen (Sampling procedure)

DEFINITION
 Sample
 Is a part of total population
 It can be an individual or groups of elements
 Sample size is represented by “n”
 Sampling
 Process of selecting a sample from a
population using special techniques

SAMPLING APPROACH
 Probability Sampling
If the purpose of a research is to arrive at conclusion or make
predictions affecting the population as a whole
 Non – Probability Sampling
Research purpose is directed towards evaluating how a small
representative group, is doing for purposes of illustration or
explanation

PROBABILITY SAMPLING
 Simple random sampling
 Each element in the target population has an equal chance of inclusion in the sample
 Randomly generated or picked out of a box
 Systematic sampling
 Selection of every kth element from a sampling
 Population size / Sample size
 Stratified random sampling
 Process of grouping members of the population into relatively homogeneous subgroups
like age, gender & samples are selected randomly
 Multistage cluster sampling
 Grouping the elements in a population into various clusters & then selecting a few
clusters randomly like cities, villages etc.,

Simple random sampling
Systematic sampling
Stratified random sampling Multistage cluster sampling

NON – PROBABILITY SAMPLING
 Convenience Sampling
 Based on their easy availability & accessibility of the researcher
 Quota Sampling
 The entire population is segmented into mutually exclusive groups or categories
 The number of respondents to be drawn from each categories is specified in
advance
 15 males & 15 females
 Judgment sampling
 Selection of unit on judgment of an experienced researcher. Mumbai
 Snowball sampling
 Involve the selection of additional respondents based on referrals of initial
respondents
 Chain system may be used when samples are not available

COLLECT THE INFORMATION
Online surveys
Telephone surveys
Interviews In-home surveys
Most expensive step
Most prone to errors

DATA COLLECTION INSTRUMENT
 Depends on type of research
 Mainly they use questionnaire for
quantitative study
 Questionnaire
 Set of questions to be asked from respondents
with appropriate instructions indicating which
questions to be asked

Tips to prepare Effective questionnaire
 Clear objectives
 Should be short to maintain interest
 Should be clear & understanding
 Opening statement should be minimized
 Structure questions logically like general first & important
followed by
 No suggestive type of questions
 Questions which Cross checks previous answer
 Pretest the questionnaire & then sharpen it & polish it

 Nominal scale
– Uses numbers or letters to identify different objects
– 1) 5-10, 2)11-15, 3) 16-20, 4) 21-25 etc.,
 Ordinal scale
– Used to arrange objects to some particular order
– Airtel ____ Hutch____ Idea____ BSNL____ Reliance____
 Interval scale
– Similar to ordinal but they also arrange objects in a particular objects
– Between the points on the scales are equal
– 10_____ 9______ 8_______ 7____ 6_____ 5______.......... So on
– The value of difference can be identified
 Ratio scale
– Fixed zero point & have equal intervals
– Used to calculate yards, meters, height, weight, money
Types of Measurement Scales

Attitude Measurement scales
 Open ended
 The respondents is free to express
 Dichotomous (Closed ended)
 Choose only one from yes or no
 Multiple item scale
 The respondent can make two or more choices
 Semantic Differential scales
 The respondent can rate on the scale divided between 1 & n
where “n” be the excellent & “1” poor

Other Measurement Scales
 Comparative scales
 Between X & Y product
 Pictorial scales
 Constant sum scales
 Respondents are asked to divide the given numbers
among various attributes
 Likert scale
 Series of statements where the respondents provide
answer in the form of degree of agreement or
disagreement

ANALYZE THE INFORMATION
Develop summary measures
Compute averages

Analyze the information
 Raw data does not serve the purpose of research
 Data need to be analyzed based on requirement to extract the data
satisfying objectives
 Stages of data analysis
– Validation
• Helps to confirm if the interview was really conducted
– Editing
• Checking for mistakes by respondent & interviewer
– Coding
• Assigning numbers or other symbols to answers in order to group
– Data entry
• Consistency checks & treatment of missing response
– Tabulation & analysis
• One-Way frequency tabulation & cross tabulation

PRESENT THE FINDINGS

Present the Findings
 Prefatory Information
– Letter of transmittal
– Title page
– Authorization statement
– Executive summary
– Table of contents
 Introduction
– Problem statement
– Research objectives
 Methodology
– Sampling design
– Research design
– Data collection
– Data analysis
– Limitations
 Findings
 Conclusions & recommendations
 Appendices
 Bibliography
Components of research findings

Types of presentation
 Written presentation
 Oral Presentation
– Initial planning
– Preparation
– Making The Presentation
– Delivery
• Vocal problems
• Physical behaviour
• Handling Questions
 Visual Aids
– Tables
• Title & number
• Foot notes
• Source
– Charts & graphs
• Line graphs
• Pie charts
• Bar charts

MAKE THE DECISION
Research Decisions
Research should guide decisions, not be used
to support decisions already made.

MARKETING INFORMATION SYSTEM (MKIS)

Discussion Questions
1. What are the components of a modern marketing information
system?
2. What are useful internal records for such a system?
3. What makes up a marketing intelligence system?
4. What are some influential macroeconomic developments?
5. How can companies accurately measure and forecast
demand?

Introduction
 What is MKIS?
 ‘MKIS (MIS) is a set of procedures and methods for the regular, planned
collection, analysis and presentation of information for use in marketing decisions
 Information about Factors that affect marketing
 Changing marketing environments
 Expanding business boundaries
 Shifts in income,
 Changing lifestyles
 By the use of technology also companies fail to gain the information that
required

Collecting Information
Customers
Competitors
External Factors

Marketing Information System -
consists of
People
Equipment
Procedures
to gather, sort, analyze,
evaluate, and distribute
information that is
needed, timely and
accurate.

Insight
Marketing Information System –
From Where
Marketing Research
Marketing Intelligence
Internal Records

provide managers with up-to-date information
on the current sales
Internal Records
Order-to-Payment Cycle
Databases / Data Mining
Sales Information Systems
the process that orders go through once
Includes invoices and shipping documents
such as purchase history,
product preferences

Marketing Intelligence
News and Trade Publications
Meet with customers,
suppliers, distributors,
and other managersMonitor social
media sites
a set of procedures and sources that managers
use to obtain everyday information about
developments in the marketing environment

Improving Marketing Intelligence
Sales Force
External Experts
Establish industry network
Customer Advisory Panel

Marketing Intelligence & the Internet
Independent Online Forums
Distributor or sales agents feedback sites
Customer review and expert opinion sites
Customer complaint sites

Using Marketing Intelligence
Share Information
Quickly
should be gathered and shared with decision
makers quickly in order to effectively use the
information.

Analyzing the Macro Environment
Elements that can
impact a company,
but cannot be
controlled

Major Environmental Forces
Economic
Sociocultural
Natural
Technological
Political-Legal
Demographics

Attributes of good
marketing information
 Relevance to decision
making
 Confidentiality
 Cost reasonable
 Reliability
 Clarity
 Timeliness
 Objectivity (unbiased)
 Completeness
 Accuracy
 Strategic value

Needs and Trends
Fad
Megatrend
Trend
Unpredictable, short-lived, and
without social, economic, and
political significance
Offer a view of the future due to their
momentum and durability
Changes that are slow to
form but once established
last for 7 – 10 years

Estimating Future Demand
Sales Force Opinions
Forecasting
Past Sales Analysis
Buyer’s Intentions
Expert Opinions