-- Daivata Chavan-Patil

1. Consumer Behavior -- DaivataChavan-Patil

2. Model of Consumer Behavior Marketing and other stimuli Buyer’s black box Buyer’s responses Product Economic Product choice Price Technological Brand choice Place Political Dealer choice Promotion Cultural Buying Purchase timing Buyer decision Purchase amount Characteristics process $

3. Factors Influencing Consumer Behavior Cultural Culture Subculture Social class Social Reference groups Family Roles and Status Personal Age & lifecycle stage Occupation Economic situation Lifestyle Personality and self-concept Psychological Motivation Perception Learning Beliefs & attitudes Buyer

4. Cultural Factors • It exert a broad and deep influence on consumer behavior. • Culture – the set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions. • Marketers are always trying to spot cultural shifts in order to discover new products that might be wanted. • Each culture contains smaller subcultures, or groups of people with shared value systems based on common life experiences and situations. • Subcultures includes nationalities, religions, racial groups, and geographic regions.

5. Social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests, and behavior. • Social class is not determined by a single factor, such as income, but is measured as a combination of occupation, income, education, wealth, and other variables. • In some social systems, member of different classes are reared for certain roles and cannot change their social positions. • Marketers are interested in social class because people within a given social class tend to exhibit similar buying behavior. • Seven major American social classes: Upper uppers, Lower uppers, Upper middles, Middle class, Working class, Upper lowers, Lower lowers.

6. Social Factors • Group – two or more people who interact to accomplish individual or mutual goals. • Membership groups – groups that have a direct influence and to which a person belongs. • Reference groups – serve as direct (face-to-face) or indirect points of comparison or reference in forming a person’s attitudes or behavior. • People often are influenced by reference groups to which they do not belong. For example, an aspirational group is one to which the individual wishes to belong. • Opinion leaders – people within a reference group, who, because of special skills, knowledge, personality, or other characteristics, exert influence on others.

7. Family members can strongly influence buyer behavior. • Marketers are interested in the roles and influences of the husband, wife, and children on the purchase of different products and services. • Husband–wife involvement varies widely by product categories and by stage in the buying process. • A person belongs to many groups–family, clubs, organizations. The person’s position in each group can be defined in terms of both role and status. • A role consists of the activities people are expected to perform according to the persons around them. • Each role carries a status reflecting the general esteem given to it by society.

8. Personal Factors • Tastes in food, clothes, furniture, and recreation are often age related. • Buying is also shaped by the stage of the family life cycle – the stages through which families might pass as they mature over time. • Traditional family life-cycle stages include young singles and married couples with children. • Marketers try to identify the occupational groups that have an above-average interest in their products and services. • Computer software companies will design different products for brand managers, accountants, engineers, lawyers and doc.

9. A person’s economic situation will effect product choice. • Marketers of income-sensitive goods watch trends in personal income, savings, and interest rates. • People coming from the same subculture, social class, and occupation may have quite different lifestyles. • Lifestyle is a person’s pattern of living as expressed in his or her psychographics. • It involves measuring consumers’ major AIO dimensions – activities (work, hobbies, shopping, sports, social events), interests (food, fashion, family, recreation), and opinions (about themselves, social issues, business, products).

10. Several research firms have developed lifestyle classifications. The most widely used is SRI Consulting’s Values and Lifestyles (VALS) typology. • VALS classifies people according to how they spend their time and money. It divides consumers into eight groups based on two major dimensions: self-orientation and resources. • Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment. • Personality is usually described in terms of traits such as self-confidence, dominance, sociability, autonomy, defensiveness, adaptability, and aggressiveness. e.g. coffee & sociability. • The basic self-concept premise is that people’s possessions contribute to and reflect their identities; that is, “we are what we have.”

11. Psychological Factors • A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction. • Sigmund Freud assumed that people are largely unconscious about the real psychological forces shaping their behavior. • He saw the person as growing up and repressing many urges. These urges are never eliminated or under perfect control, they emerge inn dreams, in slips of the tongue, in neurotic and obsessive behavior, or ultimately in psychoses. • Thus, Freud suggested that a person does not fully understand his or her motivation.

12. Self- actualization needs Self development and realization Esteem needs Self-esteem, recognition, status Social needs Sense of belonging, love Safety needs Security, protection Physiological needs Hunger, thirst Maslow’s hierarchy of needs

13. Marketing implications of Maslow • For a brand to be considered it must satisfy some need • Hierarchical: lower needs met before upper needs • Countries, cultures, segments can differ in focus on needs

14. Marketing implications of Maslow’s hierarchy(text: Table 8.1) PHYSIOLOGICAL NEEDS Products Vitamins, herbal supplements, medicines, low-fat foods, exercise equipment, fitness clubs Marketing approaches Quaker Oatmeal--”Oh, what those oats can do!” Boost nutritional drink--”Your body will thank you.” Kaiser-Permanente--”More people turn to us for good health.” Ginkoba ginseng--”The thinking person’s supplement.” Advil--”Advanced medicine for pain.”

15. SAFETY NEEDS Products Car accessories, burglar alarm systems, retirement investments, insurance, smoke and carbon monoxide detectors Marketing approaches Allstate Insurance--”You’re in good hands with Allstate.” Ford Motor Company--”Only your mother is more obsessed with your safety.” Lysol Basin Tub & Tile Cleaner--”This is no place for germs.” Merrill Lynch--”A tradition of trust.”

16. BELONGINGNESS NEEDS Products Beauty aids, entertainment, clothing Marketing approaches Carnival Cruise Lines--”The most popular cruise line in the world.” Sears Mainframe Junior Dept.--”Got to have the clothes.” Lady Foot Locker--”One store. Every woman.”

17. ESTEEM NEEDS Products Clothing, cars, jewelry, liquors, hobbies, beauty spa services Marketing approaches Jeep--”There’s only one.” Movado Museum Watch--”The making of a legendary classic.” Bombay Sapphire Dry Gin--”Pour something priceless.” BMW--”The ultimate driving machine.”

18. SELF-ACTUALIZATION NEEDS Products Education, cultural events, sports, hobbies Marketing approaches Nike--”If you let me play, I will like myself more.” Outward Bound Schools--”The adventure lasts a lifetime.” Danskin--”Not just for dancing.”

19. A motivated person is ready to act. How the person acts is influenced by his or her own perception of the situation. • All of us learn by the flow of information through our five senses: sight, hearing, smell, touch, and taste. • Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world. • People can form different perceptions of the same stimulus because of three perceptual processes: selective attention, selective distortion, and selective retention. • Selective attention – the tendency for people to screen out most of the information to which they are exposed – means that marketers have to work especially hard to attract the consumer's attention. • Selective distortion – the tendency of people to interpret information in a way that will support what they already believe. • Selective retention – people tend to retain information that supports their attitudes and beliefs.

20. Learning describes changes in an individual’s behavior arising from experience. • Learning occurs through the interplay of drives, stimuli, cue, responses, and reinforcement. • A drive is strong internal stimulus that calls for action. Drive becomes a motive when it is directed toward a particular stimulus object. • Cues are minor stimuli that determine when, where, and how the person responds. • After buying if the experience is rewarding than consumer response to the selected good will be reinforced.

21. Through doing and learning, people acquire beliefs and attitudes. • A belief is a descriptive thought that a person has about something. • Beliefs may be based on real knowledge, opinion, or faith, and may or may not carry an emotional charge. • Marketers are interested in the beliefs that people formulate about specific products and services, because these beliefs make up product and brand images that affect buying behavior. • Attitude describes a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea. • Attitude are difficult to change. A person’s attitudes fit into a pattern, and to change one attitude may require difficult adjustments in many others.

22. Buyer Decision Process Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior

23. Need Recognition & Information Search • The need can be triggered by internal stimuli when one of the person’s normal needs – hunger, thirst, sex – rises to a level high enough to become a drive. • A need can also be triggered by external stimuli. e.g. word-of-mouth, advertisements. • The consumer can obtain information from any of several sources. These include personal sources, commercial sources, public sources and experiential sources. • Commercial sources normally inform the buyer, but personal sources legitimize or evaluate products for the buyer.

24. Evaluation of Alternatives & Purchase Decision • The consumer arrives at attitudes toward different brands through some evaluation procedure. • How consumer go about evaluating purchase alternatives depends on the individual consumer and the specific buying situation. • In some cases, consumers use careful calculations and logical thinking. • At other times, the same consumers do little or no evaluating; instead they buy on impulse and rely on intuition. • Two factors that affects the consumer’s purchase decision. • Attitudes of others. • Unexpected situational factors.

25. Postpurchase Behavior • The answer to whether the buyer is satisfied or dissatisfied with a purchase lies in the relationship between the consumer’s expectations and the product’s perceived performance. • Almost all major purchases result in cognitive dissonance, or discomfort caused by postpurchase conflict. • Company’s sales come from two basic groups – new customers and retained customers. • A satisfied customer tell 3 people about a good product experience, a dissatisfied customer gripes to 11 people. • Some 96 percent of unhappy customers never tell the company about their problem.

26. The Buyer Decision Process For New Products • A good, service or idea that is perceived by some potential customers as new. • Adoption process – the mental process through which an individual passes from first hearing about an innovation to final adoption. • Consumers go through five stages in the process of adopting a new product: • Awareness • Interest • Evaluation • Trial • Adoption

27. Individual Differences in Innovativeness 34% Late majority 34% Early majority 2.5% Innovators 13.5% Early adopters 16% Laggards X – 2a X – a X X + 2a Time of adoption of innovation

28. Influence of Product Characteristics on Rate of Adoption • Five characteristics are especially important in influencing an innovation’s rate of adoption. • For example, consider the characteristics of HDTV (High-definition television) in relation to the rate of adoption. • Relative advantage (superior to existing products) • Compatibility (fits the values and experiences of potential customers) • Complexity (difficult to understand or use) • Divisibility (tried on a limited basis but still very expensive) • Communicability (results of using can be observed or described to others)

29. Business Markets • The business market is huge. • Many sets of business purchases were made for only one set of consumer purchases. • The main differences between business markets and consumer markets are following. • Market structure and demand (derived demand) Far fewer but far larger buyers; more geographically concentrated • Nature of the buying unit More decision participants; more professional purchasing effort • Types of decisions and the decision process More complex; more formalized; more dependent.

30. Business Buyer Behavior

31. Major Types of Buying Situation • Straight rebuy – a business buying situation in which the buyer routinely reorders something without any modifications. • Modified rebuy – a business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers. • New task – a business buying situation in which the buyer purchases a product or service for the first time.

32. Stages of the Business Buying Process Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order-routine specification Performance review

33. Awareness Stages in the Adoption Process Interest Evaluation Trial Adoption

34. Adoption of Innovations Early Majority Late Majority Percentage of Adopters Early Adopters Laggards Innovators 34% 34% 16% 13.5% Time of Adoption 2.5% Late Early

35. Influences on the Rate of Adoptionof New Products Relative Advantage Is the innovation superior to existing products? Communicability Can results be easily observed or described to others? Product Characteristics Compatibility Does the innovation fit the values and experience of the target market? Divisibility Can the innovation be used on a trial basis? Complexity Is the innovation difficult to understand or use?

36. Albert Bandura’s Social Cognitive Theory (SCT): His Agentic Perspective

37. Intellectual Developments • The point: humans can learn by observing and modeling others, especially those that they identify with. • His most famous experimental research studies at the time were his “Bobo doll” studies which showed observational learning and the impact it can have on violent behavior in children.

38. Bandura’s Theory • Human beings have specific abilities related to learning that sets them apart from other species. • Social cognitive theory states that there are three characteristics that are unique to humans: • Vicarious consequences (Model and imitate others) • Self–efficacy (self reflection) • Performance standards and moral conduct (Ability to regulate one’s own behavior) (Albert Bandura: Biographical Sketch, n.d.) (Isom, 1998)

39. Bandura’s Theory (cont) • Bandura believed that a person’s level of motivation is an affective state and actions are based more on what they believe. Bandura believed that motives included: • past reinforcement or more traditional behaviorism • the promise of reinforcement or incentives • and also vicarious reinforcement or modeling. • These beliefs define what is learned. • According to Bandura, in order to learn, one must • pay attention • be able to retain or remember • have the ability to reproduce the behavior. (Albert Bandura, Francis Marion University, n.d.)

40. Bobo doll experiment • During the 1960s and 1970s, Bandura called his theory observational learning or social learning theory.

41. The Bobo Doll Study • Albert Bandura’s Bobo doll study in 1961 was a classic study that demonstrates the social learning theory. The study showed that after viewing adults strike and kick a Bobo doll, children would imitate the behavior in another environment. This was important, as it suggests that the violence could be imitated by viewers. • Results showed 88% of the children imitated aggressive behavior following the viewing of the tape of adults acting aggressively toward the doll. • 8 months later 40% of the same children reproduced the violent behavior observed in the Bobo doll experiment. (Peebles, 2003)

42. The Bobo Doll Study (cont.) • The children were shown three different endings to the video. The video first showed that the adults were praised for their aggressive behavior. The second group the adult was told to sit in a corner. The third group showed the adult walk out of the room. While controversial, Bandura maintained that his experiment demonstrated that children are influenced by witnessing or modeling of aggression in others. (Albert Bandura: Biographical Sketch, n.d.)

43. Beliefs • Bandura believed that psychological research should be conducted in a laboratory to control factors that determined behavior. (Isom, 1998)

44. Beliefs (cont.) • Albert Bandura believed that aggression reinforced by family members was the most prominent source of behavior modeling. He reports that children use the same aggressive tactics that their parents illustrate when dealing with others. In order to control aggression, Bandura stated that the problem should be diagnosed and treated during one’s childhood. Children learn to act aggressive when they model their behavior after violent acts of adults, especially family members. (Isom, 1998)

45. Beliefs (cont.) • There are four component processes influenced by the observer’s behavior following exposure to models. These components include: attention; retention; motor reproduction; and motivation. • He believes that people acquire behaviors through the observation of others, then imitate what they have observed. Several studies involving television commercials and videos containing violent scenes have supported this theory of modeling. • Albert Bandura believed television was a source of behavior modeling. (Isom, 1998)

46. Observational Learning Bandura’s earlier work on observational learning set the stage for his work in social cognition. Observational (or social) learning proposed two primary modes of learning: • Modeling • Imitation

47. Observational Learning Bandura hypothesized a four-step pattern that combined a cognitive and operant view of learning. Attention notices something in the environment Retention remembers what was noticed produces an action that is a copy of what was noticed Motor Reproduction consequence changes the probability the behavior will be emitted again Motivation

48. Four key processes or steps to observational learning: • Attention • Symbolic representation and retention • Transformation to action or production • Motivation

49. Four core features of human agency: • Intentionality. • Forethought. • Self-Reactiveness. • Self-Reflectiveness.

50. Observational Learning In a set of well-known experiments, called the "Bobo doll" studies, Bandura showed that children (ages 3 to 6) would change their behavior by simply watching others. He observed three different groups of children: • One group of children saw the child praised for aggressive behavior