Individual Influences on Consumer Behavior 1. Motivation 2. Personality 3. Perception Motivation Basics of Motivation: • Motivation is the driving force within individuals that impels them to action. • This driving force is produced by a state of tension, which exists as the result of an unfulfilled need. • Individuals strive both consciously and subconsciously to reduce this tension through behavior that they anticipate will fulfill their needs and this relieve them of the stress they feel. Defn One of the most important factors that lead one to their goals is the drive. This drive is known as motivation. It is a enthusiasm and determination with a kind of excitement that leads one to persevere to reach greater heights, in no matter what avenue of their life; be it – personal or professional. The drive may come from an internal or external source. The individual determines this. Needs & Goals Needs: Every Individual has needs. 1. Innate(natural) Needs: These are Physiological. These are primary biogenic needs. i.e. food, water, clothing, shelter etc. 2. Acquired Needs: These are the needs that we learn in response to our culture or environment. These are basically psychological (psychogenic)/Secondary Need. i.e. selfesteem, prestige, affection, power, & learning. Goals: Goals are the sought-after results of motivated behavior. 1. 2 Generic Goal: They are the general classes or categories of goals that consumers see a means to fulfill their needs. Ex: If a students tells his parents that he wants to become an engineer, is a generic goal. Product-specific goal: These specifically branded products/services that consumers select for goal fulfillment. Positive & Negative Motivation Motivation can be positive or negative in direction. Needs, wants, or desires may lead to goals that can be positive or negative. • Positive Goal: It is the one toward which behavior is directed. Thus it is often referred to as an approach object. • Negative Goal: A negative goal is one from which behavior is directed away and is the results of motivated behavior. Rational Vs Emotional Motives Some consumer behaviorists distinguish between socalled rational & emotional motives. 1. 2 Rational Motives: This term is used in the traditional economic sense, which assumes that consumers behave rationally by carefully considering all alternatives and choosing those which give them greatest utility. In Marketing context- consumers select goals based on criteria, such as size, weight, price, or km per litre etc. Emotional Motives: These imply the selection of goals according to personal or subjective criteria. Ex: Pride, Fear, Affection, or Status. Arousal(stimulation) of Motives The arousal of any particular set of needs at a specific moment in time may be caused by internal stimuli found in individual’s physiological condition, by emotional or cognitive processes, or by stimuli in the outside environment. • • • • Physiological arousal (Bodily needs) Emotional arousal Cognitive arousal (Calculated need) Environmental (or situational arousal) (need of food may be aroused by specific cues from environment- the sight or smell of bakery goods, fast-food commercials on television) Selection of Goals For any given need, there are many different and appropriate goals. The goals selected by individuals depend on their personal experiences, physical capacity, prevailing cultural norms and values, and the goal’s accessibility in the physical and social environment. 1. 2. Personal Goal Orientation distinguished two types of people: Promotion Focus: Growth & Development oriented, have more hopes & aspiration and favor positive outcomes. Prevention Focus: Safety & Security oriented, concerned more about duty & obligations and favor absence of negative outcomes. Selection of Goals Another study distinguished between two types of goals: 1. 2. Ideals: These represent hopes, wishes, and aspirations. These people are relied more on feelings while evaluating advertisements. Thoughts: These represent duties, obligations, and responsibilities. These people are relied more heavily on the substantive and factual contents of advertisements. Model of Motivation Process Previous Learning Unfulfilled Needs, Wants and Desires Tension Drive Behavior Cognitive Processes Tension Reduction Goal or Need Fulfillment Motivation Theories & Marketing Strategies Maslow’s Hierarchy of Needs • In 1943, Dr. Abraham Maslow 's article "A Theory of Human Motivation " . In this article, Abraham H. Maslow attempted to formulate a needs-based framework of human motivation and based upon his clinical experiences with people. • From this theory of motivation, modern leaders and executive managers find means of motivation for the purposes of employee and workforce management. Abraham Maslow's book Motivation and Personality (1954), formally introduced the Hierarchy of Needs. Cont… The basis of Maslow's motivation theory is that human beings are motivated by unsatisfied needs, and that certain lower factors need to be satisfied before higher needs can be satisfied. According to Maslow, there are general types of needs (physiological, survival, safety, social, and esteem) that must be satisfied before a person can act unselfishly. He called these needs "deficiency needs." As long as we are motivated to satisfy these cravings, we are moving towards growth, toward self-actualization. Satisfying needs is healthy, while preventing gratification makes us sick or act evilly. • Physiological Needs These include the most basic needs that are vital to survival, such as the need for water, air, food and sleep. Maslow believed that these needs are the most basic and instinctive needs in the hierarchy because all needs become secondary until these physiological needs are met. • Security Needs These include needs for safety and security. Security needs are important for survival, but they are not as demanding as the physiological needs. Examples of security needs include a desire for steady employment, health insurance, safe neighborhoods and shelter from the environment. Living in a safe area Medical insurance Job security Financial reserves •Social Needs These include needs for belonging, love and affection. • Need for friends • Need for belonging • Need to give and receive love •Relationships such as friendships ,families help fulfill this need for companionship and acceptance, as does involvement in social, community or religious groups. • Esteem Needs Self-respect • Achievement • Attention • Recognition • Reputation •These include the need for things that reflect on self-esteem, personal worth, social recognition and accomplishment. •Self-actualizing Needs This is the highest level of Maslow’s hierarchy of needs. Selfactualizing people are self-aware, concerned with personal growth, less concerned with the opinions of others and interested fulfilling their potential. Critical Evaluation of Marketing Hierarchy & Marketing Applications. • • • 1. 2. As per the Maslow’s theory, higher-order needs become the driving force behind human behavior as lower-level needs are satisfied. This theory offers highly useful framework for marketers trying to develop appropriate advertising appeals for their products. It is adaptable to marketing in two ways: First, it enables marketers to focus their advertising appeals on a need level that is likely to be shared by a large segment of the target audience. Second, It facilitates product positioning or repositioning. Critical Evaluation of Marketing Hierarchy & Marketing Applications. • Maslow’s need hierarchy theory is readily adaptable to market segmentation and positioning of products. • There are consumer goods designed to satisfy each of the need levels and most needs are shared by large segments of consumers. • For example: Individuals buy health foods, medicines to satisfy Physiological needs. Similarly, insurance, preventive medical services, home security systems for Security needs. All personal care & grooming things like (cosmetics, mouthwash shaving creams) are bought to satisfy Social needs. High Tech Products like (Blazers, big cars, expensive watches) are often bought to fulfill Esteem needs. Postgraduate college education, hobby-related products, exotic & physically challenging adventure trips are sold as ways of achieving Selffulfillment. Critical Evaluation of Marketing Hierarchy & Marketing Applications. • Advertisers may use the need hierarchy for positioning products- i.e. deciding how the product should be perceived by prospective consumers. • The key to positioning is to find a niche- an unsatisfied needthat is not occupied by a competing product or brand. • The need hierarchy is a very versatile tool for developing positioning strategies because different appeals for the same product can be based on different needs included in this frame work. • For example: many ads for soft drinks stress social appeal by showing a group of young people enjoying; other stress refreshment (a physiological need); still others may focus on low caloric content (thus indirectly appealing to the ego/esteem need) Trio of Needs Some psychologists believe in the existence of a trio of basic needs: the needs for Power, for Affiliation, and for Achievement. • Power: The power need relates to an individual’s desire to control his or her environment. This is closely related to the ego need, in that many individuals experience increased selfesteem when they exercise power over objects or people. • Affiliation: The affiliation need suggests that behavior is strongly influenced by the desire for friendship, for acceptance, for belonging. Ex: Teens who hang out at malls. • Achievement: Individuals with a strong need for achievement often regard personal accomplishment as an end in itself. This is closely related to egoistic need. Discovering Purchase Motives • • • • 1. 2. Suppose a marketing researcher asked a consumer why he wears Nike clothes (or owns a mountain bike, or uses cologne, or whatever). For these Adds consumer tell several reasons such as, “They are in style”, “My friends wear them”, “I like the way they fit”, or “they look good on me”. However, there may be other reasons that the consumer is reluctant to admit or perhaps is not even aware of: “They show that I have money”, “they make me look good looks”, or “they show I’m still young”. There are 2 group of motives: Manifest motives- which consumers admit Latent motives- which consumers don’t know or don’t tell. Discovering Purchase Motives 1. • • 2. • • 3. • • • The techniques used for discovering purchase motives are: Association techniques: Word association (i.e. first word comes to mind) Successive word association (i.e. series of words) Completion techniques: Sentence completion (ex: People who buy 800______) Story completion (i.e. consumers complete partial story) Construction techniques: Cartoon techniques (i.e. drawing analysis) Third-person techniques (ex: consumers say why “most doctors” purchase certain products etc..) Picture response (i.e. tell a story) Marketing Strategies Based on Multiple Motives • Managers, after learning combination of motives, the next task is to design marketing strategy around appropriate set of motives. • This involves everything from product design to marketing communications (advertising). • First, the product must provide more than one benefit (motive) and the advertising for the product must communicate these multiple benefits. • Communicating manifest benefits is relatively easy than latent ones. • Any given ad might focus on only one or few purchasing motives, but the campaign needs to cover all the important purchase motives of the target market. • In essence, the overall campaign attempts to position the product in the graphic (chart) memory of the target market to induce purchasing of product. Most Ads appeal to Multiple Motives Motivational Conflict • People are motivated to decide between choices by two general factors to approach which means that they are motivated by positive reinforcement. The other source of motivation is to avoid negative situations which is called avoidance. Purchase decisions can be made through a combination of the two. There are 3 types of motivational conflicts. Marketing Strategies Based on Motivational Conflict • • • 1. 2. 3. With many motives consumers have, there are frequent conflicts between motives. The resolution of a motivational conflict often affects consumption patterns. Marketers analyze situations that are likely to result in motivational conflict, to provide a solution to the conflict, and attract the patronage of those consumers. There are 3 types of motivational conflicts: Approach-Approach Motivational Conflict Approach-Avoidance Motivational Conflict Avoidance-Avoidance Motivational Conflict Marketing Strategies Based on Motivational Conflict 1. Approach-Approach Motivational Conflict: A consumer who must choose between 2 attractive alternatives face this conflict. Example: A person gets cash gift for graduation: He thinks whether to go for trip to Goa or to purchase a brand new mobile. Marketers can try on price modification, such as “buy now, pay later” etc.. • An approach-approach conflict is when a person has to decide between two positive choices. An example of this is choosing between ice cream flavors, cookie dough is good but so is mint chip. Both choices are good and there for a bad decision cannot be made the issue arises when decided which one is the best. Often these decisions are rationalized afterwards by coming up with more reasons to support why you made that decision such as "I am glad I chose the mint chip because it is the house specialty" or pointing out other reasons why the product you didn't pick was inferior "It didn't even look like very many chunks of cookie dough in the ice cream." Approach-Avoidance Motivational Conflict: A consumer facing a purchase choice with both positive & negative consequences confronts this conflict. Ex: A person wants to eat Sweets & Chips but scared of putting on weight. Marketers can design sugarless sweets & fatless chips. “Diet Pepsi” An approach-avoidance conflict is when a person is torn between buying an item because of two conflicting feelings. An example would be McDonald's you may love the double Big Mac with fries because it is delicious fast and easy but then you know that you shouldn't eat one because they are high in calories and generally bad for you. So companies like McDonalds run ads to overcome your guilt like showing all of the salads that they offer even though when you go to McDonalds the last thing that you order is a salad. 3. Avoidance-Avoidance Motivational Conflict: When a consumer’s old washing machine fails, this conflict arises. He may not want to spend money on a new one or pay to have the old one repaired. The availability of credit is one way of reducing this motivational conflict. An avoidance-avoidance conflict is when a person has to decide between two less than desirable options. An example of this is when a person has to choose between working at a job they hate and being unemployed. On one hand you may severely dislike your job and going is stressful, but you do get paid and therefore are able to do the other things you like. On the other hand if you quit your job you would have a lot more time on your hands, but no money. Frustration • • • • Failure to achieve a goal often results in feeling of frustration. At one time or another, everyone has experienced the frustration that comes from the inability to attain a goal. Regardless of the cause, individuals react differently to frustrating situations. Frustrated people adopt many strategies to overcome frustration. The strategies are also called Defense Mechanisms. Strategies / Defense Mechanisms to Overcome Frustration 1. 2. 3. 4. 5. 6. 7. 8. Aggression (a cricket players slams his bat to the ground) Rationalization (giving rational reasons- not had enough time to study) Regression (Reacting with childish or immature way) With Drawl (Resolving by withdrawing & re-investing the same time somewhere else) Projection (By projecting the blame on others) Daydreaming (Imaginary gratification of unfulfilled need) Identification (If in the ads the same failure situation is shown and a solution is proposed to buy the product advertised, it is likely that the viewer purchases the same product) Repression (Another way is to repress the unsatisfied need. But these needs manifest themselves indirectly) Personality Basics of Personality • Personality can be defined as those inner psychological characteristics that both determine and reflect how a person responds to his or her environment. • Personality is made up of the characteristic patterns of thoughts, feelings and behaviors that make a person unique. In addition to this, personality arises from within the individual and remains fairly consistent throughout life. • The study of personality, has been approached by theorists in a variety of ways. • Some believe that personality is created by heredity & early childhood experiences. • Some other say that personality is built by social & environmental influences and it develops continuously with time. Personality Marketing Significance of Personality: • The personality of people are likely to influence the individual’s product choices. • Personality affects the way consumers respond to marketer’s promotional efforts, and when, where and how consumers consume particular products or services. • Therefore, the identification of specific personality characteristics associated with consumer behavior has proven to be highly useful in the development of a firm’s market segmentation strategies. Nature of Personality The study of personality has 3 distinct properties of central importance: • Personality reflects individuals differences: No two individuals are exactly alike. All have different traits and based on these common traits consumers can be segmented by the marketers. • Personality is consistent and enduring An individual’s personality tends to be both consistent and enduring. Marketers can attempt to appeal to the relevant traits inherent in their target group of consumers. • Personality can change Under certain circumstances personalities change. Major events change the personalities or some psychological, socio-cultural environment, and situational factors sometimes change the personality. Theories of Personality • Freudian Theory • Neo-Freudian Theory • Trait Theory Freudian Theory • Sigmund Freud’s Psychoanalytic Theory of personality is a cornerstone of modern psychology. • This theory was built on the premise that unconscious needs or drives, especially biological drives, are at the heart of human motivation & personality. • Freud proposed that the human personality consists of three interacting systems: the Inner drive, the Superego, and the ego. • Inner drive: Inner drive was conceptualized as a “warehouse” of primitive & impulsive drives- basic physiological needs such as thirst, hunger. • Superego: Superego is conceptualized as the individual’s internal expression of society’s moral & ethical codes of conduct. It’s role is to see that the individual satisfies needs in a socially acceptable fashion. It acts as “brake” for Inner drive needs. • Ego: Finally, ego is the individual’s conscious control. It attempts to balance the Id & Super-ego. Marketing Strategies for Freudian Theory • Researcher’s who apply Freud’s psychoanalytic theory to the study of consumer personality believe that human drives are largely unconscious & that consumers are primarily unaware of their true reasons for buying what they buy. • These researchers tend to see consumer purchases and/or consumption situations as a reflection and an extension of the consumer’s own personality. • They consider the consumer’s appearance and possessions- grooming, clothing, jewelry, & so forth – as reflections of the individual’s personality. • Example: People who eat Potato chips (Personality traits- Ambitious, successful etc); who eat Nuts (Easy going), Neo-Freudian Theory • Neo-Freudians disagreed with Freudian theory and they believed that social relationships are fundamental to the formation & development of personality. • A neo-Freudian called Horney, proposed that individuals be classified into 3 personality groups called CAD – Complaint, Aggressive, & Detached. • Compliant: These individuals move towards others (they desired to be loved, wanted, & appreciated) • Aggressive: These individuals move against others (they desire to excel & win admiration) • Detached: These individuals move away from others (they desire independence, self-reliance, self-sufficiency, & freedom from responsibility) Marketing Strategies for Neo-Freudian Theory • A personality test based on CAD has been developed and tested within the context of consumer behavior. • This research uncovered that number of tentative relationships between college student’s scores & their product & brand usage patterns. • For example: Highly complaint students were found to prefer having Hero Honda bikes; highly aggressive students were found to prefer TVS Apache (because of its masculine look); highly detached students were found to prefer (Bicycles) no such brands & they were found to be heavy tea drinkers. The detached students showed very less likely to be brand loyal & were more likely to try different brands. • Many markets use this theory for positioning their products. Example: Samsung Smart Phones with social hub networking (this captures the positive image of Complaint individuals) Trait Theory • The orientation of Trait Theory is primarily quantitative. The Freudian & Neo-Freudian theory are qualitative in nature. • The Trait Theory measures include: personal observations, self-reported experiences, dream analysis, projective technique etc.. • It focuses on measurement of personality in terms of specific psychological characteristics, called Traits. • A Trait is defined as “ any distinguishing, relatively enduring way in which one individual differs from another.” • Trait theory is concerned with the construction of personality tests that enable to pinpoint individual differences in terms of specific traits. • Selected single-trait personality tests (which measure just one trait, such as self-confidence) Marketing Strategies for Trait Theory • The tailor made trait personality tests measure such traits as Consumer Innovativeness, Consumer Materialism, and Consumer Ethnocentrism. • Trait researcher believe that personality is linked to how consumers make their choices & to the purchase or consumption of a broad product category rather than a specific brand. • For example: Most of the Mahindra Scorpio owners show a similar trait that they are ‘self-confident & aggressive’. Personality & Understanding Consumer Diversity 1. Consumer Innovativeness & Related Personality Traits 2. Cognitive Personality Factors 3. Consumer Materialism 4. Consumer Ethnocentrisms 1. Consumer Innovativeness & Related Personality Traits Consumer innovativeness is how receptive a person is to new experiences. Marketing practitioners try to learn all they can about Consumer Innovators. These are people who are open to new ideas & to be among the first to try new products & services. product. 1. 2. 3. 4. 5. 6. 7. These people act as references to indicate success or failure of a Consumer Innovativeness Dogmatism: (degree of rigidity shown towards unfamiliar products) Social character: Inner-directedness (innovators) Other-directedness (less likely to be innovators) Need for uniqueness: (NFU) Optimum stimulation level: (High OSLs mean high risk takers & innovators and low on OSLs mean non-innovators) Sensation seeking: (need for varies, complex sensations & risks. Ex: Teenagers-heavy metal music etc) Variety-novelty seeking: exploratory purchase behavior, vicarious exploration (securing information) & use innovativeness. 2. Cognitive Personality Factors 1. 2. Consumer researchers have been increasingly interested in how cognitive personality factors influence various aspects of consumer behavior. The two cognitive personality traits are: Need for Cognition: It measures a person’s carving for thinking. These people enjoy “thinking”. People high in NC like product-related information in the ads & people low in NC get attracted to the background, looks, well-known celebrity etc in an ad. Visualizers versus Verbalizers: Visualizers are consumer who prefer visual information and verbalizers are consumer who prefer written or verbal information of products. 3. Consumer Materialism 1. 2. 3. Consumer Materialism is the degree of the consumer’s attachment to “Worldly Possessions” Consumer researchers have become increasingly interested in exploring various consumption & possession traits. These traits range from consumer materialism to fixated consumption to consumer compulsive behavior. Consumer materialism: These individuals regard possessions as essential to their identities & their lives. These people showoff a lot, selfish, & they desire lot of things in life. Fixated consumption behavior: These individuals are passionate, interested in particular object or product category, & they are willing to go considerable lengths to secure additional examples of the object or the product category. Ex: Collectors of coins, stamps, antiques, vintage cars etc.. Compulsive consumption behavior: This behavior is a kind of abnormal behavior. Consumers who are compulsive have an addiction. Example: Uncontrollable shopping, gambling, drug addiction. 4. Consumer Ethnocentrisms • The consumer ethnocentrism is the consumer’s likelihood to accept or reject foreign-made products. • Consumers who are highly ethnocentric are likely to feel that it is inappropriate or wrong to purchase foreign-made products because of the resulting economic impact on the domestic economy. • Whereas non ethnocentric consumers who would score low on an ethnocentric scale are actually likely to be quite receptive to products made in foreign countries. • Marketers successfully target ethnocentric consumers in any national market by stressing a nationalistic theme in their promotional appeals. • Example: BATA. Shell Petroleum’s Indian welcome in Shell petrol bunks. Brand Personality • • • 1. 2. 3. 4. Consumers attribute various descriptive personality-like traits or characteristics to different brands in a wide variety of product categories which is known as Brand Personality. Example: Pulsar’s brand personality is positioned as Definitely Male. Here consumers perceive that Pulsar as a Male bike. This is Brand Personality building. There are different creations for Brand Personality. Brand Personification Gender Geography Color Brand Personality 1. 2. 3. 4. Brand Personification: It tries to recast consumer’s perception for the attributes of a product or service into a human-like character. Ex: Recent ad of Yamaha Frazer with John Abraham. Product personality & gender: A product personality, or persona, frequently denote the product or brand with a gender. Ex: Nirma detergent powder, Sabina washing powder. Product personality & geography: Some product pose strong geographical association in the minds of consumers. Ex: DharwadMishra pedha, Davangere Benne Dosa, SWISS GHEE, german engineering. Personality & Color: Consumers some time tend to associate personality factors with specific colors. Ex: Coca-Cola is associated with red, which means excitement. Pink color for affection on cosmetics, soaps…. Self & Self Image • • • • • 1. 2. 3. Consumers have a variety of enduring images of themselves. These self-images, or perceptions of self, are very closely associated with personality which tends to influence in buying products & services. Consumers try those brands/products which have image or personality which relate in some meaningful way to their own selfimage. They also tend to approach those products with images that could enhance their self-concept. The different issues in self image are: One or Multiple Selves The Extended Self Altering the Self Self & Self Image 1. 2. 3. One or Multiple Selves: A single consumer is likely to act quite differently with different people and in different situations. A person behaves different with parents, at school, at work etc. Here marketers design products to suite multiple self. i.e. Different product for different selves. The Extended Self: Here consumers can be seen to confirm or extend their self-images. A MBA student will feel more of an MBA student by purchasing a Laptop. Altering the Self: Sometimes consumers wish to change themselves to become a different or improved self. Clothing, grooming aids or cosmetics, and all kinds of accessories (such as glasses, jewelry, tattoos, oreven colored contact lenses by teenagers). These things offer consumers an opportunity to modify their appearances there by altering their self-image. Perception • Basics of Perception • Perception is defined as the process by which an individual selects, organized, and interprets stimuli into a meaningful and coherent picture of the world. • Two individuals may be exposed to the same stimuli under the same apparent conditions, but how each person recognizes, selects, organizes, & interprets these stimuli is highly different. • Every individuals has his own needs, values, & expectations based on which his perception towards any marketing stimulus changes. Marketing Implications of Perception • Perception has strategy implications for marketers because consumers make decisions based on what they perceive rather than on the basis of objective reality. • Consumer make decisions and take actions based on what they perceive to be reality and not on the basis on objective reality (what is actually true). • Thus, to the marketers, consumer’s perceptions are much more important than their knowledge of objective reality (what is actually true). Sensory Dynamics of Perception • Sensation: Sensation is the immediate and direct response to the sensory organs to stimuli. A stimuli include (i.e Sensory inputs)- products, packages, brand names, advertisements, and commercials. Sensory receptors are human organs (the eyes, ears, nose, mouth, and skin) that receive sensory inputs. • Absolute Threshold: The lowest level at which an individual can experience a sensation is called the absolute threshold. This is the point at which a person can detect a difference between “something” and “nothing”. Sensory adaptation is a problem where consumer “get used to” the marketer’s stimuli. • Differential Threshold: The minimal difference that can be detected between two similar stimuli is called the Differential Threshold, or the just noticeable difference ( the j.n.d.). ` • Subliminal Threshold: Perception stimuli that are below the level of conscious awareness technically is called Subliminal perception. Example: Silent ads on TV. The contrary to this is called Supraliminal Threshold. Elements of Perception • • • Individuals are very selective as to which stimuli they “recognize”; they subconsciously organize the stimuli they do recognize according to widely held psychological accordance with their personal needs, expectations, and experiences. The dynamics of perception is based on 3 things: Perceptual Selection Perceptual Organization Perceptual Interpretation 1. Perceptual Selection a. b. c. An individual may look at some things, ignore other, and turn away from still others. Selection of stimuli depends upon two different things: (1). Nature of the stimulus (2). Consumer’s previous experience & expectations (3). their motives (needs desires, interest, & so on). Nature of the stimulus : i.e. Product design, attributes, brand etc. Expectations: These are based on familiarity, previous experience. Motives: i.e. Based on need or want. Selective Perception: a. b. c. d. Selective Exposure: Selectively expose to the ads, which they want. Selective Attention: They pay more attention to those product who give them more satisfaction. i.e. product price or product features etc. Perceptual Defense: They subconsciously screen out stimuli that they find psychologically threatening, even though after exposure. Perceptual Blocking: They protect themselves from being bombarded with stimuli by simply turning out. Ex: Change channels. 2. Perceptual Organization a. b. c. People do not experience the numerous stimuli they select from the environment as separate and discrete sensation: rather, they tend to organize them into groups and perceive them as unified wholes. Three basic principles of perceptual organization are: Figure and ground: i.e. Figure (the product) over ground (back ground) Grouping: i.e. an ad for tea can be shown with a young man & women sipping tea in a nice place. So that consumer can associate the drinking tea with romance, fine living etc. Usually consumer can easily remember the products in groups. Closure: Individuals have a need for closure. Incomplete messages or tasks as better remembered than completed ones. Example: Thunda Mutlab _________________ ? 3. Perceptual Interpretation • a. b. c. d. e. An individual’s interpretations & its closeness to reality, depends on the clarity of the stimulus, the past experiences of the perceiver, and his or her motives and interests at the time of perception. Perceptual Distortion: Number of influences that tend to distort their perceptions such as: Physical Appearances: i.e. Good looking product but no quality Stereotypes: i.e. American products are always costly. Chineese products are always of low quality. First Impressions Jumping to conclusions: Jumping to conclusions without understanding the complete product. Halo effect: Ex: Believing that man is trustworthy & noble because he looks you in the eye when he speaks. Consumer Imagery • Consumers have a number of enduring perception, or images, that are particularly relevant to the study of consumer behavior. • Consumer’s perceived images of products, brands, services, prices, product quality, retail stores, and manufacturers. Product Positioning & Repositioning Product Positioning • • a. b. c. d. e. Product Positioning: The essence of successful marketing is the image that a product has in the mind of the consumer. Positioning conveys the concept, or meaning, of the product or service in terms of how it fulfills a consumer need. Positioning Strategies: Umbrella positioning: To create an overall image of the company. Ex: McDonald’s- “You deserve a break today at McDonald’s”, “Nobody can do it like McDonald’s can”, and “ Good times, great taste”. Positioning against the competition: Positioning based on a specific benefit: Finding an “unowned” position: Finding & targeting a niche Filling several positions: Ex: Tooth paste- Whitening & cavity protection. Product Positioning & Repositioning Repositioning • Regardless of how well positioned a product appears to be, the marketer may be forced to reposition it in response to market events, such as a competition entering the brand’s market share or too many competitors stressing the same attribute. • Another reason to reposition a product or service is to satisfy changing consumer preferences. • Perpetual Mapping: This technique helps marketers to determine just how their products or services appear to consumers in relation to competitive brands on one or more relevant characteristics. Company’s Brand High Price More Teeth Whitening Less Teeth Whitening Low Price Positioning of Services • • • 1. 2. 3. 4. 5. Compared with manufacturing firms, service marketers face several unique problems in positioning & promoting their offerings. Because services are intangible, image becomes a key factor in differentiating a service from its competition. Several positioning strategies for services include: Perceived Price Perceived Quality Price/Quality Relationship Retail Store Image Manufacturer’s Image These strategies hold good even for products. Perceived Risk • Perceived risk is defined as the uncertainty that consumers face when they cannot foresee the consequences of their purchase decisions. • It is stressed that consumers are influenced by risks that they perceive, whether such risks actually exists or not. • If the risk that is not perceived – no matter how real or how dangerous – will not influence consumer behavior. Types of Perceived Risk • Functional risk: i.e. Can a new mobile operate full week without charging? • Physical risk: i.e. Is a cell phone really safe, or does it emit harmful rays? • Financial risk: i.e. Will a new & cheaper model of LCD TV become available in six months from now? • Social risk: i.e. Will my friends laugh at my new yellow pants? • Psychological risk: i.e. Will my old mobile phone hurt my ego? • Time risk: i.e. If this product does not work properly, then will I have to spend same amount of time again to search a good product? How Consumers Handle Risk Consumers develop their own strategies for reducing perceived risks which enable them in gaining more confidence while making product decisions. Some of the consumer risk handling strategies are: 1. 2. 3. 4. 5. 6. Consumer seek information Consumers are brand loyal Consumers select by brand image Consumers rely on store image Consumers buy the most expensive model Consumers seek reassurance CRM & Online Decision Making A. B. Customer Relationship Management Online Decision Making A. Customer Relationship Managment • Meaning & significance of CRM • Today, marketers consider retaining customers as a much more challenging job than acquiring customer in the context of growing competitive forces. • Traditional transactional approach of marketing became insufficient to achieve the marketing goals. • Relationship marketing considers customers as insiders to the business & aims to build a long-term and never-ending relationship with them. • The focus of relationship marketing approach centers around developing hard core loyal customers with the idea of retaining them forever. • Through CRM a high degree of customer contact, commitment & services are maintained. CRM Definitions • CRM is a business strategy that aims to understand/appreciate, manage and personalize the needs of an organization’s current & potential customers. • CRM is defined as a business strategy designed to optimize profitably, revenue, & customer satisfaction. Types of CRM 1. Operational 2. Collaborative 3. Analytical Types of CRM 1. Operational • • • • The consumer approaches the business in far too many ways than in the past (direct customer contact) Contact either Face to Face (sales/service/channel/events/stores/promotions) or Database Driven Touch Points (Telephone/e-mail /post/sms /ATMs) or Mass Media (advertising/website) At all these contacts different transactions takes place such as financial transaction, sale, payment, return of sale, information, requests, complaints, suggestions. In all these transactions customer communications takes place and company tries to plan & priorities all these communications while balancing the organization’s capacity to deliver & the likelihood that customers will respond. Types of CRM 2. Collaborative • • • Collaborative CRM is a specific functionality that enables a two way dialog between company & its customers through a variety of channels to facilitate & improve the quality of customer interactions. The mandate of Collaborative CRM is to manage various partners of the company be it business partners, agents, brokers, intermediaries like distributors, dealers, resellers, & retailers. By managing all these partners it tries to in-turn facilitate the integration of various activities like Marketing, Sales, Service/Support, & quality which will collaboratively help maintaining relationships with customers. Types of CRM 3. Analytical • • • • Analytical CRM is also known as back-office or strategic CRM. It involves understanding the customer activities that occurred in the front office. It involves in analyzing large amounts of cross-functional data using data mining & other methods & feeding the result back to operational CRM. It also studies consumer behavior patterns that helps to know what products to position for cross-selling/up-selling & the level & kind of service to deliver to meet customer demand. Strategic ways for Building Relationship Marketing • • • • • • • The strategies depends on nature of business, its size, its market share, nature of product types, volume of sales, geographic concentration, socio-economic status & life style of the customers concerned, competitors strenght & so on. People: People in organization can coordinate integrated activity towards customer satisfaction. Process: Process involves a logical sequence of activities right from the need identification to need fulfillment of customers. Product: Product offered must constantly provide value addition. Ex: Not offers only clothes but attractive looks. Organization: The responsive & learning nature of the organization must build confidence & long term relationship. Setting Satisfactory Service Standard: Not only quality products but also quality service. i.e. presales, during sales, & post sales. Concentration on Competitors: Should always focus attention on the competitors performance, strategies, style of operations to compare with its own. Strategies for Building Relationship Marketing • • • • • • • • • • • • • • • • • Cost Analysis: Attention on cost of product or service Concentration on the paying ability of Customers: Knowledge of Purchase Behavior Pattern: Focus on Reducing Dissatisfaction: Differentiation in Process & Quality Standard: Attention on Changing Requirement of Customers: Training Supply Chain Employees Empowerment to Service Providers Incentivizing Service Providers Augmenting Intangible Benefits Visit to the Point of Usage of the Product: Ex: Rin Develop Partnership with Customers: Organizing Customer Clubs: Ex: Bullet Clubs, Harley-Davidson Identifying with Social Events & concern for Societal Problems: Customer Complaint Monitoring Cell: Customer care centers Concentration on Customer Satisfaction Research: Building Switch Barriers: Ex: Telephone companies. CRM Process-Benefits • Ability to retain loyal & profitable customers & channels for rapid growth of the business project. • Acquiring the right customers, based on known characteristics, which drives growth & increased profit margins. • Increasing individuals customer margins, while offering the right product at the right time. CRM Process for Marketing Organizations Director-Marketing Marketing Analyst Manager Segment Campaign Manager Channel Manager Relationship Manager CRM Project Manager CRM Technical Consultant CRM Process for Marketing Organizations • Director-Marketing: The role of marketing director is to coordinate the entire process measured on customer-holding, purchase, & profitability. – Skills Requirement: Marketing experience, IT knowledge, Internet technology concepts, Data mining technique, Customer linking trend, EChannels, Statistics. • Marketing Analyst: The analyst is expected to have a sound business knowledge, industry knowledge, & market knowledge that would help in the development relating to customers identification & segmentation. He would take care of analysis, reporting, & predictive modeling. – Skills Requirement: Statistical Modeling (QA statistics, mathematics), Data mining: Use of SAP, or other detailed knowledge discovery tools. • Manager-Segments: The segment managers are the glue of the team & form the king player for the CRM process. He handles all customers. He has ultimate say in campaigns & the customer. CRM Process for Marketing Organizations • Campaign Manager: Having identified the opportunities, the campaign manager then creates the right offer that will ultimately be made to the right customer. The right offers include offers, strategy, timing, printed matter, product management, advertising, public relations messaging, interactions, plans, & measurements. – Skills requirement: Marketing automation tools, marketing experience, knowledge of campaign management tools & databases, vendor management. • Channel Managers: Coordinates communication across all the contact channels, presents “Single-company image” to customers, managersCall centers, internet team sales force, customer services, resellers to coordinate “touch points” & total customer communication. – Skills requirement: Web implementation, Integration of channels, Operational call centers, Internet Experience, Analysis & research, & Negotiating Skills. CRM Process for Marketing Organizations • Relationship Manager: This person is important player who handles business opportunities such as- Customer retention, Customer purchase (acquisition) & Customer Profitability. – Skill requirement: Relationship techniques (Data mining, hypothesis development, & communication techniques). • CRM Project Manager: CRM project manager will lead & mentor the project team in delivery of SDLC (Software Development Life Cycle), CRM project manager will lead & mentor the project team in delivery of SDLC (Software Development Life Cycle), system integration, and packaged software configuration projects for CRM & e-CRM business applications. – Skills requirement: Project management experience, software development, & software configuration & implementation. • CRM Technical Consultant: Works with project management team to develop, document, & mentor project implementation’s best practices. Works with sales staff, professional services to both plan & implement e-CRM projects. Brand Switching Behavior • • 1. 2. 3. 4. 5. 6. 7. Brand Switching is the behavioral action of the customers with reference to their choice of brand. A number of factor are responsible in initiating the brand switching behavior. These include: Dissatisfaction with present brand Change in fashion Promises made by competitors Change in the perceived benefits Personal characteristics of the customer concerned Pressure of salespersons & so on Personal reasons Every organization aiming to build customer loyalty must concentrate on the pattern of brand switching & safeguard them with suitable marketing strategies. e-CRM • E-CRM Meaning: e-CRM provides to companies a means to conduct interactive, personalized, & relevant communication with customers across both electronic & traditional channels. • Importance of e-CRM • • • • • • • • Increasing number of people shopping via internet. Helps improve global forecast & pipeline management Improve win probability Reduce cost of sales Increase sales executives productivity Better information for better management Expand marketing channels through the web Service increases profitability Difference between CRM & e-CRM • CRM is an older concept than e-CRM & CRM has given basis to develop e-CRM. • E-CRM is required for those customer who regularly use internet for product information & those who would like to be contacted by internet regularly. • There is also a shift in consumers from physical purchase to online purchase, which is leading a way for developing e-CRM. • E-CRM is sometimes a part of total CRM activity undertaken by a company. • E-CRM should be implemented by all companies who want to grow their business. • The accountability & measurability is more in e-CRM than CRM. B. On-line Decision Making • Meaning & Steps • Online decision making is not so dynamic when compared to normal decision making. • The purchase decision is made based on the amount of information available about the product or service online. • The given information is analyzed completely before a purchase decision is made. • The mode of payment also plays an important role in these decisions as people only who trust online payment will be ready for purchase. • Most of the online buyers are Market Mavens, & those people who would like to try new things & take little risk.