Consumer Behavior - Unit -3

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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
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One of the most important factors that lead one to their
goals is the drive. This drive is known as motivation.
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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.
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The drive may come from an internal or external source.
The individual determines this.
Needs & Goals
Needs: Every Individual has needs.
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Innate(natural) Needs: These are Physiological. These are primary biogenic needs. i.e.
food, water, clothing, shelter etc.
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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.
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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.
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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.
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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.
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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:
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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.
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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
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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
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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
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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
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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:
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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.
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