CB: Session 1 Introduction to Consumer Behaviour

Youth is crazy about denims!! Aren't they? They like them brand new, they wear them rugged, they like them faded and what not. All jeans companies are targeting youth and the advertisement show young, vibrant, liberated youth. However, over the years, there has been a significant change in the product line of well know jeans brand. Pepe, Levis, wrangler, and most of others have started including semi formals and formals in their product line. Why? Answer is simple, they studied their consumers well. There is a lot of demand for semi-formal and formal outfit these day as young generation is working as soon as they complete their graduation. There are also internships in between. Casual wear is restricted to Fridays, Saturdays and Sundays. These companies realised that denim market is not growing much. Hence, to sustain in the changing environment they had to come up with the products that suit current demand.

For the Formal wear markets also the trend is changing. A recent report in Economic Times, highlighted that the fact that many companies are ok with the formal and the semi-formal culture when it comes to dressing in office. Dressing to work

People as consumers are not very consistent in their buying behaviour. They also behave differently from each other. As individual they have different income, tastes, preferences, needs, situations, cultures and beliefs. Like Pepe, Levis, for others also, it is imperative to study consumer behaviour as they offer product and services to these individuals. Over the period of the time, the same individual may change in terms of his/her needs. A person may prefer more casual and less of formals when in college and may prefer more formals when he starts working in corporate. A girl may go to a different family after marriage and hence may change her belief about certain products!

Times have also changed. This is an era which is highly technology driven and consumers are highly affected and influenced due to the information boom. Use of internet and e-commerce has completely changed the outlook towards markets and marketers. Today’s consumers are more knowledgeable, demanding and vulnerable at the same time.

Defining Consumer Behaviour

According to Schiffman and Kaunk, “Consumer behaviour is defined as the behaviour that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs”

As per American Marketing Association, “Consumer Behaviour is the dynamic interaction of affect and cognition, behaviour, and the environment by which human beings conduct the exchange aspect of their lives"

While the definitions are given to define consumer behaviour, it is largely understood as the mental and emotional process, that consumers go through when they spend their limited hard earn resources to purchase product and services that can satisfy some predetermine goals. It is a process rather than phenomena. It involves analysis, deliberations, pre and post behaviour learnings and functional and emotional appeal attached to the product or service.

Internet has enabled consumer to look for number of options from where they can buy products and services and it is also a strong medium to inform consumers about product and services. As per the research reports, the number of online shoppers are increasing very rapidly in Indian cities. 

Scope and Applications

Consumer Behaviour is a relatively new field of study. It has emerged as a result of researches in the field of human psychology, sociology, cultural anthropology, economics and management. Hence the scope involves all the above and the most important to us, marketing field. Study of consumer behaviour is adopted by many companies to understand consumer needs and wants.

Consumer Behaviour is applied in all the areas of marketing defined by AIMs

A	Assessing Value Proposition	Assessment of marketing opportunity by understanding consumer perception of value proposition.	Practo.com
I	Identification of Marketing Strategy	Selecting and targeting consumer segments with effective differentiation and positioning strategies.	Scooty – a college bike!
M	Managing Marketing Mix	Consumer oriented product offerings, pricing, promotion and distribution strategies.	No Frills flights
S	Social and Ethical Marketing	Designing socially responsible marketing strategies.	Ching’s Hunger ki bajao campaign

Why Study Consumer Behaviour

Study of consumer behaviour intents to read people’s mind! In the past, researchers in the field of human psychology and individual behaviour have attempted to identify typical behavioural trends. These studies substantiate the study of consumer behaviour. While successful companies attribute their success to the understanding of consumer behaviour, newer companies are thriving very hard to get consumer data right. According to Joan Schneider and Julie Hall, most revolutionary products fail in their first year due to the intransigence of consumer shopping habits. Why Most Product Launches Fail

Therefore, it is really important to know your consumer. In the context of marketing studies, understanding of consumer behaviour involves a larger frame. According to Phillip Kotler, “Marketing is about identifying and meeting human and social needs”. The internet revolution and online shopping, has changed the way the consumer decide on buying products and brands. The latest report in Financial Express indicates that the consumer has now more excess to information and at the same time the marketers can also provide plenty of useful information.

With the study of consumer behaviour, marketers’ aims at analysing important factors related to buying behaviour. These factors can be understood as SPECIAL for different segments:

Consumers are SPECIAL
S	Sources of Information and Buying	Consumers have an access to an abundance of information about products and services these days. The choice of dealer (or may be e-tailer), frequency of purchase and quantity per purchase are also important parameters.
P	Perception	Consumers assume a product is good or bad by the manufacturer label. These perceptions are associated with country of origin also.
E	Economic status	Consumers are rational by default. Yet, various economic classes are targeted with different appeals.
C	Consumption Habits	A two-way process of marketing the product as per the consumers’ consumption habits and educating the consumers for new uses.
I	Influences	Consumers get influenced by lot of personal and non-personal factors in the process of deciding for products and services
A	Adaptation	New revolutionary products may be good but many a times the consumer is not willing to adapt to new technology or it may require a huge investment.
L	Levels of Needs and Satisfaction	Consumer willingness to purchase is related to utility aspect and the satisfaction is related to the customer value of the product.

Evolution of Consumer Behaviour

Study of consumer behaviour is evolved from the theory of human behaviour. Anthropology is a field of study deals with human origin and current cultural trends and psychology studies their typical behaviour. Researchers identified that the human behave typically as consumers. They have different needs and hence their outlook towards marketing offers is completely different from one another. They tend to display all the theories of culture, psychology and sociology when deciding for the purchases.

In order to analyse this behaviour, researchers have developed theories related to this buying behaviour, study of which is now known as Consumer behaviour. Consumer Behaviour as a discipline is classified into individual consumer behaviour and organizational consumer behaviour.

Consumer behaviour study is interdisciplinary in nature. Think about your last purchase! On one hand, your own thinking process made you evaluate the alternatives; at the same time you might have discussed with others and also you would have thought about your pocket !

Hence consumer behaviour involves the knowledge of human studies such as, psychology and anthropology, social studies such as sociology and social psychology and environment such as economics. 

Consumer Behaviour and Marketing Management

Study of consumer behaviour provides an excellent base for segmentation, which is an important aspect of marketing strategy. Marketers aim at researching needs of the consumer to build product or service around it. When they realise that there are variety of needs and not one product can satisfy that, they think of segmenting the market and target them accordingly. Study of consumer behaviour also helps them identify the right strategy to position their product. They communicate their offerings to the right market through a right channel carrying the right message.

Like consumers, consumer behaviour is ever evolving field of study. With the advent of internet and mobile technology, the consumer behaviour studies have also gone to a new paradigm shift. For marketers, it is now very easy to be in touch with the consumers to understand their needs and wants. Consumers, on the other hand, are getting product and services from all around the world and became a lot demanding and powerful.

A Forbes study gives following prediction for 2015. Meet your consumer in 2015

Extended Multi-attribute Attitude Model

An Example of the Extended Attitude Model (The-Theory-of-Reasoned-Action)

The Extended Model is:

Let’s assume we are interested in evaluating consumer’s attitudes about laptops.  We determine that the relevant factors that influence purchase are Provides Good Support, Screen Size, Weight, Battery Life, and Price.

Keeping in mind the rationale behind the Extended Model, we ask the consumer to think about purchasing a laptop. The attitude is calculated using following steps.

Step 1: Establishing the E_I scores:

Consumers are asked to evaluate each of the following consequences of buying a laptop on a scale of 1 to 10.

Step 2: Determining the B_O scores on a scale of 1 to 10.

Buying the _____________ laptop will:

Step 3: Calculating A_IO

Step 4: Determining Social Influence on Purchase

Next, we want to determine the social influences on the purchase.  We would need to know who the consumer would likely be influenced by in order to ask these questions. 

Use this scale to indicate how each person feels about you taking each Laptop:

Buying the following brand of laptop:

The above scores are the NBs (the Normative Beliefs)

Now, we see how “motivated to comply” they are with each person……

How much do you want to do what each person thinks you should do?

Step 5: Putting weights

Finally, we need to obtain an indication of how much weight to put on each factor.  In a research study, these would be “beta weights” from a regression analysis.  For this example, we ask the following question:

When people purchase laptop, there are two important influences on their decision about what laptop to buy.  What they personal think about each laptop, and what people who are important to them think.  Please divide 100 points between these two factors to indicate their importance in your decision about what trip to buy (e.g., 80-20, 35-65, 50-50, etc.)

    My own beliefs _____      Other peoples' beliefs _____

For this example, let’s assume that person responds .8 for their own beliefs and .2 for other people’s.

Step 6: Calculating Behavioural Intentions

Step 7: Calculating B.I. Scores

Mathematical Model of Multi-Attribute Attitude Model

Let us identify the attitude for Online Travel Portals. The consumers are asked to evaluate the following attributes for online travel portals for holiday planning; holiday options, fares and taxes, website, hidden costs, customer communications, local support, payment options, working flexibility and product delivery and grievance handling

Let us rate these attributes on a scale of 1 to 10 for evaluation of the attribute being good or bad i.e. E_I 

 My ratings are:

The next task is to rate three brands of interest to determine whether the consumer believes each brand possesses each attribute (the B_O).

 To calculate the attitude about each brand of Online Travel Portal, multiply the attribute evaluations time the brand’s rating and sum for each brand:

I got the following Attitude scores:

Makemytrip = 681

Cox & Kings = 658               

Kesari = 626

what about you?

Next: Extended Multi-Attribute Model

Mutli-Attribute Attitude Models

Multi-attribute attitude models portray consumers’ attitudes with regard to an attitude object as a function of consumers’ perception and assessment of the key attributes or beliefs held with regard to the particular attitude object. There are many variations of the attitude model, three to consider are: attitude-toward-object model, attitude-toward-behavior model, and the theory-of-reasoned-action model.

Attitude-towards-object Model

This model is especially suited for measuring attitudes toward a product category or specific brands. According to this model, the consumer’s attitude toward a product or specific brands of a product is a function of the presence (or absence) and evaluation of certain product-specific beliefs and/or attributes. Consumers generally have a favorable attitude toward those brands they believe have an adequate level of attributes that they evaluate as positive, and they have unfavorable attitudes toward those brands they feel do not have an adequate level of desired attributes or have too many negative or undesired attributes. 

This can be explained in the car purchase example, where an individual is evaluating features of petrol and diesel cars.. The features can be evaluated into two categories as favourable and unfavourable.

The Attitude-Toward-Behavior Model

This model is designed to capture the individual’s attitude toward behaving or acting with respect to an object, rather than the attitude toward the object itself.

The appeal of this model is that it seems to correspond somewhat more closely to actual behavior than does the attitude-toward-object model. 

We have already discussed the relationship between attitude and behaviour. Having a positive or favourable attitude does not always result in buying behaviour. For example, an individual has a positive attitude towards BMW, but may not purchase a BMW because of financial constraints.

Attitude-towards-Behaviour Model aims at judging the relative importance of the features as per the benefits it offers as consumers majorly decide on the basis of functional benefits. 

Theory-of-Reasoned-Action Model

This model represents a comprehensive integration of attitude components into a structure that is designed to help knowing what and why of behaviour. It gives better explanation and predictions of behavior. The theory-of-reasoned-action aims at analyzing intentions vis-a-vis motivations for a purchase behaviour.

Like the basic tri-component model, theory of reasoned action also based on learn, feel and do components, however, they are arranged in a different pattern as:

The individual's attitude is measured as a sum of objective norm and subjective norm. Objective norms is measured as individual's belief for certain outcomes after a purchase and the importance of those outcomes.

Mathematically,

In accordance with this extended model, to understand intention we also need to measure the subjective norms that influence an individual’s intention to act. This can be assessed measuring a consumer’s feelings as to what means to the others (family, relatives, friends, co-workers). Here, the learning will basically measure emotional functions that may be accomplished through purchase. 

The individual’s motivation to comply with this normative belief is measured on the degree to which he is attributing his purchase to the others (family, relatives, friends, co-workers). This attribution different from person to person. The individual may feel more for the objects that has more value to the person most important for him for a particular purchase. 

Reference; Consumer Behaviour by Schiffman, Kaunk and Kumar and Consumer Behaviour by Solom

Mathematical approach to Multi-attribute attitude model with an illustration.

Extended Multi-attribute Attitude Model

CB: Session 5A Consumer Involvement

For consumers like us, not all product purchase decisions are alike. Some products are of more importance to us some are less. Some products are of less value some are more. Some we can buy on impulse some requires a lot of thinking and research. Some we use as ritual some on special occasions. Some we purchase for ourselves and some for others. Also there are product purchases with which we have a lot of emotional attachments. In other words we have different connections with the products we buy. These connections are termed as involvements.

The involvement with the product purchase can be understood with the FIRST principle. Where;

F: perceived Financial Risk attached with the purchase or the overall financial obligation

I: Importance is related to person for whom the product is purchased

R: Relevance and utility at the given point in time

S: Status that comes along with purchase

T: Thinking and information processing requirements

If any of them is high, the product purchase is categorised as high involvement product. In such cases, very few brands are acceptable to the consumer. If none of them can be associated with the purchase, the product is termed as low involvement product. Number of options is available for such consumers.

Let us understand with this comparative analysis

Principle	High Involvement	Low Involvement
Financial Risk	If the financial obligation is high, consumer would assess all the perceived risks and evaluate consequences before the product purchase. He would not trust many brands and would select from very few. Some examples in this category are house, car, electronics and so on.	If financial obligation is low, consumer will seek variety are would like to try newer brands. Many brands are sold in FMCG category as consumers are not very involved in the purchase. Sales promotion and heuristics works best. Here, consumers are also likely to buy unbranded and counterfeit items. Such buying behaviour is termed as Variety Seeking Buying Behaviour.
Importance	In cases where the product is purchased for self or for someone very near and dear. For example, personal care products like shampoo face cream and perfumes. Most of the consumers are very particular on the brand they use.	In case where the product is just a routine purchase Here also any brand would do. For example household products like grocery and vegetables. Such buying behaviour is termed as Habitual Buying Behaviour.
Relevance	When the purchase is very relevant at that time. In this case, the consumer strives to get the product and not very much concerned about the brand. Later on if he finds any problem he/she tries to resolve it. Such behaviour is known as Dissonance Reducing Behaviour. For example, a student buying a printer to complete his assignments on time.	If the purchase is not very relevant, the consumer tries to postpone the purchase. Otherwise, he would ask anyone to buy for him/her.
Status	Products that boost the status calls for more involvement. In this case, purchases are mostly psychological than need based. Surge for branded cloths and apparels is one example. Since there are number of options available the buying behaviour displayed is called as Complex Buying Behaviour.	Products that don’t add to status are bought as routine purchase. For example, grocery items.
Thinking	When there is a lot of thinking involved. Consumer has to choose between umpteen numbers of alternative brands. For example, consumer durables.	Where not much of information processing is required. For example, batteries and bulbs.

Session6 Motivational Research

Why do people buy?

The important studies in the field of human psychology have researched using projective techniques to identify and study the basic motive behind human purchases. The techniques are called projective as they are constructs and may project the actual behaviour. The intentions are measured using various factors by inviting responses using questionnaires or surveys' data. However, it is not very accurate as human motives cannot be quantified. 

Motivational Research

The word motivational research was first used by Dr. Ernest Dicher in 1950s. Motivational research aims at identifying and measuring the real reasons behind purchase intention. It attempts to discover underlying, feelings, attitudes, and emotions concerning product, service, or brand use. 

Broadly classified, there are two reasons for most of the purchases:

1. Utility Orientation: This is the motivation that prefers the product and services that delivers most utility. The functional benefits associated with the product motivates consumer for the purchase.

2. Status Orientation: Consumers prefers many products that add to the status. Here, the purchases are more psychological than functional. This orientation motivates consumer to buy products with many cosmetic features. They don’t mind paying additional price as it adds to their status. 

However, utility and status are subjective terms and very ambiguously defined. At times situational requirement may leads to a person preferring cosmetic features. It will not be appropriate to call this types of purchase should not be classified as status orientation. Motivational research aims at identifying underlying motivation vis-à-vis expected outcome after purchase behaviour. 

Motivational research is very useful tool in marketing. It can be applied in the field of new product development, banding and positioning and marketing communications.

Types and Systems of Need

You will agree to the statement that need is a very subjective term. For some, needs may be very basic but for some others, it is not. Actually speaking needs follow a system and have types. Many authors and writers have worked on this and have identified several such systems.

Some of the very early work in identification of needs emerged in 1938 when Henry Murray identified first systematic list of twenty eight non biological needs. These needs were termed as Psychogenic Needs. These basic needs include many motives that are assumed to play an important role in consumer behaviour, such as acquisition, achievement, recognition, exhibition, aggression and affiliation.

The most significant however, was Dr. Abraham Maslow’s Theory of Hierarchy of Needs (www.maslow.com). According to Maslow’s theory, needs are hierarchal. The lower level needs are basic and upper level needs are psychogenic. Once lower level need is satisfied, upper level need surfaces. You must be thinking why it is a pyramid? It is so because most of the people are at the bottom of pyramid as everyone has physiological need such as food, water and shelter. A very few people reach to the last level i.e. self-actualization.

This video compiles the advertisements targeting system of need hierarchy.

McClelland’s system of needs is an extension of Maslow’s theory. His Trio of Needs are not hierarchal though. According to him, this trio exists irrespective of each one is satisfied or not. Power refers to the individual’s desire to control other people and objects – it is tied to a type of ego needs. Affiliation is similar to Maslow’s social need and suggests that behaviour is influenced by the desire for social ties. Finally, the need for achievement, like the other needs, will vary from individual to individual. 

Session4 Need Recognition

We buy products and services to satisfy our needs. Alright! But does it stops here? Why do we buy them again? Or why do we buy three when we need just one? What makes us motivated again and again? 

They say that motivation is a very dynamic construct. Simply because it keeps on changing and it is very subjective. We have already discussed that need is the origin of motivation. Here,let me remind you that need may also change depending upon its interaction with the environment. Think about your career goal, for example, after enrolling to a premier college (if you get through!) the next goal is already decided – to get placed in a good company! It means, as old needs are satisfied, new needs emerge and we get motivated again. If they are not satisfied, we look for new goals or substitute goal. Like those who settle for next best college if can’t qualify for the best college. 


At this point, let us discuss about the sources of motivation. 

Consumers will have some or the other needs, constantly changing and motivating them to buy. Marketers see this opportunity to market their products and services. Some of such situations are: 

Out of Stock: Nothing beats that! Many dealers take advantage of out of stock situation to sell less popular brands. The companies try to lure consumer with lesser cost and extra benefits. Consumers may not have any other option but to buy! Think about a situation when you have to purchase some other brand because your favourite brand was out of stock! 

Some companies however, view this situation differently. They purposely limit the stock in order to create a buzz in market! A risky preposition though! Remember Mahindra XUV500 limited bookings in 2012? 

Dissatisfaction: “Are you unhappy?”, “Are you using the same old product? We come across such ads often. The idea is to motivate the consumer to try a new product if he is dissatisfied with his/her current state of affairs. 

New Needs or Wants: You all agree that, human needs changes with the changes in life. An arrival of a new born in a family brings out new set of needs and motivation to buy new products. Purchase of a new house leads to purchase of new home furnishing products and so on. 

Related Product Purchase: At times, with the purchase of one product, there are several accessories required to be purchased, like, with a new camera, one can purchase extra lenses, a tripod, various cables and memory cards. 

Market Induced Needs: Marketers promote new product features and attributes to stimulate need for an existing user by clubbing an exchange offer (or buy one get one free!). 

New Product: For a very new or revolutionary product, marketers induce need through promotional efforts. For example, Apple Inc marketed IPod very successfully though it was a completely new product. All well know companies have their R&D that work on bringing up new innovative and competitive products in the market. Latest in the series is Googles Glass.

Here is a video with examples:

Happy Reading!!

CB: Session5 Motivation as a Psychological Process

Why do we buy?

Need is the important core concept of marketing. In 1943, Abraham Maslow has given a theory called as “Need Hierarchy Theory”. He has identified five levels of needs. Lower level needs are more generic, whereas upper level needs are more psychological. The theory also supports that only if the lower level need is satisfied, upper level needs will arise. 

There are many other classifications of need. Innate needs are generic and acquired needs are generated needs. Like craving for food when hungry is innate need, but longing to buy a car is acquired need.

Need once generated acts as psychological drive towards its fulfilment. Here it is very important to discuss the role of marketers. Marketers can act as a force to make individuals realise a particular need and also helps them with a solution to satisfy that.

Companies put in a lot of effort in understanding consumer needs through motivational research. On the other hand, some companies believe that instead of satisfying needs, they should create needs. There are some successful examples like Apple’s Ipad.

Think of some product and services for innate needs vs acquired need.

How does it work?

As need is generated, individuals strives to fulfil that need. The need then translates into goals. Human mind is in a state of tension until he attains that goal. Motivation can be described as the driving force within individuals that impels them to action. 

The Goals

The goals are sought after result of motivated behaviour. Depending upon individuals, goals can be generic, as can be fulfilled by any purchase, like eating whatever is available when hungry. But some goals are product specific, i.e. only a particular brand or category can fulfill them. For example, you want to eat in Mcdonald's or Subway and plan according. Goal fulfil also largely depends upon individual personality and situational factors.

The goal can be towards approach object, i.e. the positive goal toward which behavior is directed. Sometime when the goal is move away from a condition or object it is referred to as an avoidance object. Because both approach and avoidance goals are the results of motivated behavior, most researchers refer to both simply as goals.












Dr Batra's marketing strategy reflect both objects. Approach objects are their hair care products like shampoo and conditioners and avoidance object is the treatment to hair loss condition.

The Dynamics of Motivation 

Motivation is a highly dynamic construct. Consumer motivation constantly change in reaction to life experiences. These life experiences also results in needs and goals are constantly growing and changing.  As individuals attain their goals, they develop new ones. If they do not attain their goals, they continue to strive for old goals or they develop substitute goals. 

Needs Are Never Fully Satisfied

Most human needs are never fully or permanently satisfied. Temporary goal achievement does not adequately satisfy the need. That is the excellent opportunity to marketers. They keep on changing designs and features to influence consumers. The new entrants also emphasis on becoming a change agent.

New Needs Emerge as Old Needs Are Satisfied

Some motivational theorists believe that a hierarchy of needs exists and that new, higher-order needs emerge as lower-order needs are fulfilled. This phenomenon is explained by Abraham Maslow in his Need Hierarchy theory. Second home marketers in India, are motivating consumers to own a holiday home is an example of such stimulating new needs.

Success and failure influence goals

Researchers have concluded that individuals who successfully achieve their goals usually set new and higher goals for themselves. Individuals raise their levels of aspiration. The effects of success or failure on goal selection have implications for marketers. To begin with consumers prefer goals should be reasonably attainable.Marketers should show ads than should not promise more than the product can deliver.

The basic product category, for example, a camera for immature focus on the basic characteristics of camera and the ease to use. Marketer should under promise and over deliver so that it result in successful purchase and delight to use.

Substitute Goals

It is very common that a consumer may not attain a goal.  This may be due to a lack of money, ability, desire, or accessibility.  In this instance, the consumer often substitutes a different goal to reduce the tension created from the existence of this need.  In time, this substitute goal might replace the initial goal.  For instance,diet conscious individuals substituting diet  regular food over  diet versions, like low fat curd,  diet chocolate, diet aerated drinks and soft drinks are very popular and some some people they have become the primary goal.

Frustration

Failure to achieve a goal often results in feelings of frustration. Individuals react differently to frustrating situations. Some people are adaptive and manage to cope by finding their way around the obstacle or, if that fails, by selecting a substitute goal. Some people are less adaptive and may regard their inability to achieve a goal as a personal failure and experience feelings of anxiety. Products may represent creative responses to the concept of frustration. For example, Zipouch makes vacuum sealing bags that can enable consumers to store so many things for longer duration.

Defense Mechanisms

People who cannot cope with frustration often mentally redefine the frustrating situation in order to protect their self-image and defend their self-esteem. People sometimes adopt defense mechanisms to protect their egos from feelings of failure when they do not attain their goals. Reaction to the frustration of not being able to reach goal attainment can take many forms, such as aggression, rationalization, regression, withdrawal, projection, daydreaming, identification, and repression. Marketers often consider the protection of self-esteem by consumers when selecting advertising appeals. The ads (appeals) often portray a person resolving a particular frustration through the use of the advertised product.

Types and Systems of needs

Reference: Schiffman & Kanuk