Friday, July 5, 2013

Consumer Behaviour -1

Q 2. Consumer Research is central to the success of a marketing strategy. Critically examine the above statement in the light of the present business environment in India.

A. Consumer Research
Consumer Research is the systematic collection and analysis of consumer information for the purpose of important decision making in marketing.

Consumer Research plays an important role in marketing process, helps in consumer measurement, market potential, sales forecast, each element like product mix distribution mix, price effectiveness of an advertisement campaign, consumer acceptance of a product. In the fiercely competitive situation, it is extremely critical for an organization to monitor the customer satisfaction on a regular basis.

Consumer Research is primarily used for two applications. These are :

Routine problems analysis i.e., product potential, sales forecasting etc
Non-routine problems analysis i.e. new product launch, success of promotional schemes.

Relevance of consumer Research

Consumer Research has become extremely relevant especially in the present business scenario and the reasons can be stated as under:

1) To day’s business decisions are extremely complex and a large number of variables are involved.

2) Globalization and liberalization has intensified competition and survival of an organization is at stake.

3) Optimization at all levels to reduce costs. An organization need to know the areas, which offer cost reduc5tions without affecting the consumer expectations.

4) Employees and shareholders are becoming increasingly aware of their rights to participate in decision-making process.

5) The tools used for research has increased and organizations are increasingly participating data mining.

Consumer Research and Analysis
Consumer Behaviour Environment
Marketing Strategy Development

Marketing Strategy Implementation

Consumer Research and Analysis

Need for Consumer Research

Marketers are often interested in knowing the feedback of consumers. As it has been discussed earlier the study of Consumer Research is extremely important for the formulation of marketing strategies. A marketer would be interested in knowing the answers to following questions:

How do consumers interpret information about marketing stimuli such as products, stores and advertising?

How do consumers choose from among alternative product classes, products and brands?

How do consumers form evaluations for products and brands?

How do consumers interpret the benefits of marketing offerings?

How do behaviour and environment affect consumer beliefs and attitudes?

Why are consumers more interested or involved in some products or brands than others?

How do marketing strategies influence consumer’s beliefs and attitudes?

Q.6. Define and explain the meaning of ‘Attitude”. Explain in brief the factors affecting the relationship between Attitude, Belief, and Behaviour. Explain the two theories of Attitude.

A. A learned orientation or disposition, toward an object or situation, which provides a tendency to respond favourably or unfavourably to the object or situation.

Attitudes are likes and dislikes.

Attitude is a combination of beliefs of consumers about the product attributes and the evaluation of these attributes as being beneficial or not.

Factors affecting relationships between attitude, Beliefs and Behaviour

Lack of involvement
If the involvement of an individual in a particular issue is low, then the relationship between attitudes and behaviour is also low.

Lack of purchase feasibility
An individual may be highly enthusiastic about the cars. He may collect as much information on cars as possible. He may get totally attracted to the new ad of Toyota after seeing the ad and getting more information about Corolla. He may form strong beliefs about the brand but such a belief may not lead to buy basically because the person may not have the buying capacity. Thus a positive attitude may not necessarily lead to the act of purchase.

Poor attitude accessibility
Consumers retain brand beliefs in memory as scheme representing their associations with the brand. For these beliefs to affect brand evaluations they must be accessible from memory.

Changing market conditions
One might have a very positive attitude towards a brand. He may have continued buying it for a long time. But if the prices are suddenly increased beyond his acceptable level or if the brand vanishes from the market then he will have no option but to go in for a different brand.

Lack of relation between values and beliefs:
An individual may well be aware of the risks of smoking the values an individual has towards smoking can be negative yet the risks of smoking. The values an individual has towards smoking can be negative yet the believes the he does not want to live longer than there will be no association between values and beliefs.

Theories of attitude

Congruity Theory
This theory was developed by C.E. Osgood and P.H. Tannenbaum, is build on the notion of positive and negative attitudes and adds the concept of attitude strength. Congruity exists when a source and concept are positively associated have exactly the same evaluations.

This theory helps to rate attitude on a quantitative scale from – 3 (highly unfavourable to + 3 (Highly favourable) with a middle zero point. In order to obtain congruity one should take into account the direction as well as the strength.

Illustrate this theory with our earlier example of a salesman of microwave oven. Suppose that we are convinced that the microwave is good and will meet our needs well, a rate of +3 may be given. However, if we develop a slight unfavourable for the salesman, a rating of –1 will be given. According to the congruity theory, the final attitude towards the oven is the differences between the two ratings, which in this case will be +1, the mid point between –1 and +3.

Final Rating of Oven


+2 +3

Sales Man
Microwave oven

Helder’s Balance Theory:
It maintains that people seek to achieve balance between their thoughts (Beliefs) and feelings (Evaluations). It is mainly concerned with the transfer of information between people. There are three elements in attitude formation

The person
Other person and

There are two generic types of relationships that exist between the elements. They are (1) linking or sentiment relations and (2) unit relations.

Both the relations can be positive or negative. In a three-element system, balance will exist if all three relations are positive or if two are negative and one is positive. Conversely, imbalance exists if all three are negative or if two relations are positive and one is negative people have a tendency to perceive others and objects linked to them such that the system is balanced. This theory is useful to marketers to find ways to communicate better.

Balanced situations

- -

+ +

Object Object

(Person) (Person)
a salesman of a microwave oven has approached you for selling it to you. The process will have three stages, which are as under:

Stage – I
In the first stage the salesman show you the leaflets and understands you needs. He then matches the benefits of the product with your needs, which leads to a positive attitude build by the trust you place on him.

Stage – II
After the sales talk you may either form a positive or negative opinion about the salesman. If you are favourable towards the salesman to achieve stability you will also form a positive opinion about the oven. If you are unfavourable towards the sales man you will also be unfavourable towards the oven.

Q. 10. Explain the characteristics of Organizational Buyers, State the factors affecting organizational buying behaviour and clearly differentiate between organizational buying and individual consumer buying behaviours.

A. Organizational Buying differs largely from consumers buying. One of the salient features of organizational buying is that it is basically a rational buying process. This means that organizational buying is based purely on utilitarian concept. There is nothing called hedonic buying. By principle, organizational buyers do not bring in emotions in their buying process and as such emotional appeals do not make any impact on their buying process.

Factors affecting organizational buyer behaviour

Environmental factors

Physical: climate, Geographical location.
Technological: Procurement related to inventory.
Economic: Price Credit, cost, inventory etc.
Political: Tariff barriers, Defense spending, lobbying
Legal: Local, State, Central regulations

Organizational Factors

Tasks: Buying task performed to achieve corporate goals

Interpersonal factors

The buying Center: Comprises of those people who interact during the buying process (Decision makers)

Buying center roles i.e. initiators, influences, buyers, deciders, gatekeepers.

Power Relationships: Invisible nature of power wielded by individual in an organization
Individual factors

Motivation of buying personnel
It is well-known fact that the buyer’s overall responsibility is to buy efficiently and at the best possible terms and conditions so as to reduce overall costs of purchase. The purchase department has targets set for them at the beginning of every year.

Perceptions of buying personnel
It is to be clearly understood that although the personnel involved in the buying professional are rational, being human beings, they have their own perceptions. Sellers need to work around their perceptions to effectively achieve their goals. It is known fact that sellers try to collect as much information about the buyers so that they are in better position.

Learning of buying personnel
Organizations take special efforts to train their personnel in improving their buying skill sets. Often, such personnel are not for advanced training programs to sharpen their skills.

Organizational V/s consumer Buying

Geographical concentration
Organizational buyers are concentrated in specific locations. Such concentration can be due to number of reasons like infrastructure availability, nearness to port, and closeness to raw material supply points.

Fewer, larger buyers
Organizational buyers are considerably fewer in number then the individual consumers but at the same time, these are very high volumes. Companies like Bajaj Auto, Telco, Maruti etc are huge buyers having purchase running in hundreds of crores.

Vertical or horizontal markets
When the product of the seller is such that it has a universal application, then it can cater to a large number of buyers in diverse industries. Computers are used in automotive, chemical, pharmaceutical, textile and other industries. Similar is the case with seller of generating sets, transformers, stapler pins and so on. There is the case with sellers of generating sets, transformers etc are referred to as horizontal markets. Sellers who cater to the needs of buyers in one particular industry will have vertical markets.

Fluctuating demand
Organizational buyers do not have uniform demand. This is because the demands are directly related to consumer demands. In India for example the industrial demand goes up just before the festival season.

Q.12. Define consumer learning Explain the various components of learning process.
A. Consumer learning: Learning is defined as a permanent change in the behavior of consumer as a result of past experience.

Learning involves change in behaviour. It is a process it can occur by increase in knowledge through reading of books, articles, observation, and thinking and through discussions.

Components of learning process

Everyday an individual receives a variety of stimulus inputs. When a specific stimulus becomes associated with a specific response in a sufficiently permanent manner then the occurrences of the stimulus tends to bring a particular responses. The components are as under:

Drive is said to be a strong stimuli that forces action. The drive arouses in an individual an urge to respond to the stimuli and thus forms the basis of motivation. One needs to differentiate motive from a drive.

A cue is an object existing in the environment, as perceived by the individual cues give direction to the motives. Hence marketers need to determine the conditions that a cue will increase the probability of getting a specific response.

A stimulus leads to responses. It is the reaction of an individual to a stimulus. Such a response may be in the physical form or maybe in terms of complex phenomena such as attitudes, perceptions etc. psychologists have the opinion that responses must be operationally defined and physically observable.

Reinforcement is a very basic condition of learning. Without it we cannot observe any measurable modification of behaviour. Reinforcement is closely associated to the psychological process of motivation. Reinforcement refers to those environmental events.

The stability of learned behaviour maintained by the individual over a period of time is called retention. Under repeated conditions of positive reinforcement, there is a tendency for the condition response to continue for a long period of time.

Q. 14. Explain the various Attitude measurement techniques. It is possible to change the attitude of consumers towards products and brands?

Attitude Measurement Techniques

Thurston Scale:

This scale also known as thrustone and clave scale is one of the best technique of measuring attitude with the help of equal appearing intervals. In this large number of statements are collected regarding a subject. This can be done through past experience, brain storming, expert opinions etc Thurstone and Clave had collected 130 statements regarding the attitude of the respondents towards church. Respondents were asked to sort these statements into 11 piles evenly divided into those having extremely favourable to extremely unfavourable attitude.

Summated Rating Scale

Ø The methodology used in development of this scale for the purpose of attitude measurement is as under:

Ø Researcher collects a large number of statements and eliminates those, which are ambiguous, irrelevant or deficient.

The remaining statements are administered to one or more respondents for there reaction using a five point rating system i.e. strongly approve, approve, undecided, disapprove and strongly disapprove.

Scalogram Analysis
Guttman proposed this attitudinal scale. This method of scaling is based on the assumption that, an individual with a more favourable attitude score than another must be just as favourable or more favourable in his response to every statement.

Semantic Differential
This technique involves three dominant factors viz. evaluation potency and activity factor. It is a bi-polar scale confirming to the basis concept of motivation, attraction or repulsion from an object. Here respondents are asked to give their opinion on the several point scale.

Attitude Change

Beliefs are easier to change than desired benefits
Desired benefits are more enduring, ingrained, and internalized than beliefs as they are more closely linked to consumer values. A manufacturer of pain relievers produces a brand that consumers regard as significantly stronger and as providing more immediate relief. But however may consumers put more value on the benefits of a mild safe brand that doctors recommend.

Brand beliefs are easier to change than brand attitudes
Cognitions are easier to change than affect. A change in beliefs precedes a change in brand attitudes. When consumers are involved. Changing their beliefs is easier than changing brand attitudes.

For hedonic products, attitudes are a more relevant, vehicle for change than beliefs
When consumers buy a product based on emotion or fantasy, they are relying on affect rather than cognitions. Hence attitudes are more relevant strategic vehicle for change.

Attitudes are easier to change when there is a low lever of involvement
Consumer attitudes are easier to change if there is little self-identification with the product, little emotional attachment to it and no badge value associated with it.

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