Consumer Behaviour, with online trends PDF

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Preface I oten ask my students what they think consumer behaviour and what goes on in their minds when they buy products and brands. It should not be a diicult question since they have been consumers from the time they were born. With more than twenty years of consuming experience, they should be a...

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Preface I often ask my students what they think consumer behaviour and what goes on in their minds when they buy products and brands. It should not be a difficult question since they have been consumers from the time they were born. With more than twenty years of consuming experience, they should be able to answer the question well enough. However, more often than not, they struggle for an answer. ‘What do you mean what goes on in our minds when we buy Coke or coffee? Nothing goes on in there—we just buy it when we feel like it’, they say. However that’s not true; many thoughts come into consumers’ mind as they go about choosing and buying stuff. Very often we are unaware of why we begin to desire objects, and we can barely answer the question what makes us visit a shop and select one brand out of the many that are displayed on a retailer’s shelf. Indeed, that is what makes the study of consumer behaviour so difficult yet exciting. The study of consumer behaviour involves understanding the thinking of people to determine the thrill of discovering new products or a discount coupon, the joy of going out and shopping with friends, the satisfaction of owning and displaying new things. This path takes us to study not only psychology but also a variety of other subjects such as economics, society, family, culture, communication theories, ethics, and even anthropology. Anthropology? Yes, indeed. A case study in the book shows how a study of anthropology helped Intel design a school computer! With such a vast canvas, consumer behaviour is like a widescreen movie in which many activities or events are going on at the same time. This book is a result of observing people buying a variety of products for years and questioning them about them.

ABOUT THE BOOK Though there are a number of books available on the subject of consumer behaviour, this book has been written considering the many new developments in this exciting field. The era of the connected consumer has brought in tremendous change in human behaviour, and the data analysis provides unimagined tools to companies to analyse this behaviour with remarkable accuracy. In every chapter, these find a mention through numerous examples or exhibits. While Chapter 3, Consumer Decision-making models, for instance, covers the online model consisting of consumer decision journey (CDJ), modern consumer behavior has been described in detail in Chapter 16 on Online Buying Behaviour. This book is a leap forward from the existing books available on the subject in many ways. First, it takes into account the latest research on the subject—topics such as online consumer behaviour and use of data analytics are arguably the future of this subject. Secondly, theory can be taught better if supported with adequate exhibits and case studies. In every chapter, a large number of examples have been used to help build readers’ interest. Third, the book is written from an Indian perspective. A detailed discussion on Indian market segmentation and Indian culture describes Indian traditions providing an insight into the mind of an Indian consumer as opposed to other books that may have American and European cases and examples.

PEDAGOGICAL FEATURES Several pedagogical innovations have been used in the book. It would be correct to assume that students like to discuss cases and examples of brands that they know of as opposed to the ones with hypothetical situations. Therefore, reallife brands have been used and the questions are designed on them to interest and engage students. The large number of cases and examples will make the book invaluable for classroom teaching. The key features of this book are as follows: Readable, authoritative, and comprehensive text The book has a style that is authoritative and easy to read. Concepts have been explained point-wise and they are supported with numerous examples, which makes it more comprehensible for students to understand.

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Indian and global perspective Though the book is written in the Indian context, examples and case studies from other countries have also been included in the right measure, which add a global perspective to the book. Theory and practical applications Much of consumer behaviour is theory, but care has been taken to add practical orientations through real-life case studies. Readers will therefore be able to relate to the theories with actual happenings in the world. References from the respected journals Large number of papers and books has been cited while explaining concepts for drawing on references. This is for students to get inspired to read more text on consumer behaviour. Case studies The book encompasses 36 opening and closing case studies, discussing real-life examples. The applications have been developed for the specific purpose of illustrating concepts. Teachers are suggested to use them to enhance the learning process of the students. Situations from real life ‘CB in Action’ boxes included in all chapters are mini research situations from real life with a ‘What would you do?’ question. Instructors can use these exercises in class and involve students in fun learning activities. These will stimulate students to think of solutions to real-life problems. Insight boxes Apart from these, chapters also encompass insight boxes, which provide global, research, and ethical issues. These can be used as discussion points in the class while offering students ideas for undertaking research. Chapter-end exercises Concept-review questions, critical thinking questions, and a suggestive list of projects and assignments have been included to help in classroom teaching. These exercises would encourage students to discuss and review concepts and, undertake projects that will help them understand various consumer behaviour situations.

ONLINE RESOURCES The following resources are available to support the faculty and students using this text: For Faculty • Instructor’s manual • PowerPoint slides For Students • Flash cards

COVERAGE AND STRUCTURE Though the book has been specifically developed from an Indian perspective, it also provides a global outlook of consumer behaviour. Cases from India as well as other countries have been included to support the various concepts in all the chapters. For instance, the chapter-end case study on Grameen Bank of Bangladesh in Chapter 12 on Consumer Influence and Diffusion of Innovation provides a remarkable study on the way innovations spread through social movements. Similarly, Celtel’s spread in Zambia; the chapter-end case study of Chapter 17 on Consumer Engagement and Equity provides an idea to the reader about ways to create value in a competitive market through loyalty and engagement. The book has been divided into six parts. Part I, Overview of Consumer Behaviour provides an outline of the subject including evolution of consumers, consumer decision-making models, and how it is used in consumer analysis, segmentation, and strategy. A discussion on study of the Indian population and market segments is a unique feature of this section. This part explains in detail nature of business-to-business (B2B) buying behaviour and its difference with consumer retail buying. This is supported with a case study on Rolls Royce highlighting B2B relationships and how sensors in machines provide continuous data to manufacturers to help provide service before a fault is reported and another showing the dark side of B2B selling behavior where pharmaceutical companies influence doctors to prescribe their medicines, often unnecessary, just to increase their sales.

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Part II, Consumer as an Individual is devoted to understanding the effect of personality, motivation, perception, and attitude on the buying behaviour. It provides explanation on how brands impart personality to appeal to the target audience and use a particular marketing approach to motivate consumers to purchase a certain product. This section uses examples on the approach used by the liquor brands such as Absolut, Smirnoff, and Bacardi to give a personality to their brands and match it with their target market to make it easier for students to understand the concepts. It includes perception and neuroscience, which show that the human brain forms impressions even before a person is aware of them. This section further explains how people learn to use products, efforts made by companies to teach people to consume and understand their attitudes towards buying a product. Part III, Influences on Consumer Behaviour offers insights into the influence of families, class, and culture on the consumption behavior or purchase decisions of customers. It explains concepts using examples of Indian family, class, and culture. Part IV, Modifying Consumer Behaviour, discusses innovations and innovative ideas/approaches companies use in manufacturing, co-creation of new ideas and products by consumers and producers. It further discusses strategies for designing marketing communications and messages to persuade consumers to try and purchase products. The text supports these strategies with examples such as innovation strategy of P&G and creation of brand Benetton with some of the most compelling images in advertising history. Part V, Measuring and Analysing Consumer Behaviour elaborates discussion on the consumer research process and approaches used by companies to build long-term loyalties with customers. It includes a case study on how Tommy Hilfiger was able to improve its sales through market research. Part VI, Modern Consumer explains online consumer behaviour and consumer engagement in times of exploding social media usage in which the power of brands is shifting from companies to consumers. It covers in detail online consumer behavior along with the future of shopping and omni-channel marketing. Though ethical insights form parts of various chapters, a chapter on ethics and social responsibility looks at these issues in detail. I hope the book engages readers in the same way that it engaged me while writing it. Like my earlier book, Marketing Channels (OUP, 2012), I have kept the style readable and light. I hope you enjoy reading this book as well. Any book can be improved through interaction with users. I therefore, eagerly look forward to receiving your comments and suggestions at [email protected] for which I will be extremely grateful. Dinesh Kumar

Acknowledgements Many people have helped me in writing this book and I would like to thank all of them. I would like to thank Dr H. Chaturvedi, Director, Birla Institute of Management Technology (BIMTECH), Greater Noida who encouraged and supported me when I started writing my books. It was at BIMTECH where I worked as Associate Professor in 2009 that I started writing my first book, Marketing Channels (OUP, 2012). My special thanks are due to Prof. N. N. Sharma, Associate Professor, India Centre for Public Policy (ICPP), BIMTECH who encouraged me at every step. Since I had to shift to Chandigarh after a stint at BIMTECH, I miss the discussions I had with him and my other colleagues. I am grateful to all my colleagues who always had a word of encouragement for me. Special thanks are due to the Dr Babita Dosajh, Associate Professor, Amity Global Business School, Chandigarh, a trusted friend and colleague, who has always encouraged me in my work. I would also like to thank to Mr Anmol Dar, Managing Director, Superbrands, for allowing us to reproduce ads and visuals in our book. I am extremely grateful to my family, Punam and Karan, who have been pillars of support in all my endeavours. Dinesh Kumar

Brief Contents Preface iii Detailed Contents ix List of Exhibits and Case Studies xv Features of the Book xviii PART I: OVERVIEW OF CONSUMER BEHAVIOUR 1. 2. 3. 4.

Introduction to Consumer Behaviour Consumer Analysis, Segmentation, and Strategy Consumer Decision-making Models Business-to-business Buying Behaviour

PART II: CONSUMER AS AN INDIVIDUAL 5. 6. 7. 8. 9.

Personality and the Consumer Consumer Motivation Consumer Perception Consumer Learning Consumer Attitudes and Change

1 3 27 63 95 133 135 178 211 261 300

PART III: INFLUENCES ON CONSUMER BEHAVIOUR

339

10. Family and Social Class 11. Culture and Consumer Behaviour

341 375

PART IV: MODIFYING CONSUMER BEHAVIOUR

419

12. Consumer Influence and Diffusion of Innovation 13. Communications and Consumer Behaviour

421 465

PART V: MEASURING AND ANALYSING CONSUMER BEHAVIOUR

513

14. Consumer Research Process 15. Consumption and Post-purchase Behaviour

515 560

PART VI: MODERN CONSUMER

599

16. Online Buying Behaviour 17. Consumer Engagement and Equity 18. Ethics and Social Responsibility

601 643 674

Index 703 About the author 707

Detailed Contents Preface iii Brief Contents vii List of Exhibits and Case Studies xv Features of the Book xviii PART I: OVERVIEW OF CONSUMER BEHAVIOUR 1. Introduction to Consumer Behaviour Introduction Ubiquitous Consumer Culture 5 Consumer Behaviour 6 Emergence of Marketing Concept 8 Consumers and Society McDonaldization of Society 10 Aesthetic Attitude 11 Individualization and Self-expression 12 Enjoyable and Pleasurable 14 Customer Value and Satisfaction 15 Consumption as a Basis of Existence 16 Study of Irrational Behaviour 16 Limitations of Consumer Psychology 17 Consumer Behaviour in Economic Uncertainty 18 Consumer Behaviour in the Future

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2. Consumer Analysis, Segmentation, and Strategy 27 Introduction 29 De-massifying Markets 30 Market Segmentation 30 Need for Segmentation 33 Bases of Segmentation 34 Geographic Segmentation 35 Demographic Segmentation 36 Sociocultural Segmentation 37 Psychographic or Lifestyle Segmentation 38 Benefit Segmentation 40 Psychological Segmentation 41 Use-related Segmentation 42 Hybrid Segmentation 42 Clustering Techniques 44 Indian Market Segmentation 48 Criticism of Segmentation 51 Counter-segmentation 52 Using Segmentation Effectively 53

Microtargeting 55 Mass Customization 55 Towards a New Era

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3. Consumer Decision-making Models Introduction Levels of Consumer Decision-making Human Mind—A Black Box Economic Man 68 Consumer Decision-making Process 68 Critique of the Economic Man 72 Analytical Models of Consumer Behaviour Nicosia Model 73 Howard–Sheth Model 76 Engel–Blackwell–Miniard Model 79 Evaluation of Models 82 Consumer Decision Journey Prescriptive Cognitive Models Theory of Reasoned Action 85 Theory of Planned Behaviour 86 Humanistic Models Theory of Trying 88 Goal-directed Behaviour 89

63 65 65 66

4. Business-to-business Buying Behaviour Introduction Players in Business Market Supply Chain Market 98 Business User Markets 98 Characteristics of B2B Markets Differences Between B2B and B2C Understanding B2B Transactions B2B Buying Drivers 103 Types of B2B Products 105 B2B Services 107 B2B Purchase Process B2B Segments Demographics 109

95 97 98

72

84 85

87

99 101 103

107 108

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Detailed Contents

Operating Variables 109 Purchasing Approaches 110 Situational Factors 110 Buyers’ Personal Characteristics 111 Understanding B2B Buying Behaviour Individual Determinants 112 Organizational Determinants 113 Institutional Buying 115

112

Buying Situations and Buying Behaviour 116 Buying Situations 116 Buying Centre 117 Role of B2B Brands 118 Customer Satisfaction in B2B Markets 121 B2B E-Marketplace 122 B2B Relationships 122 Managing B2B Relationships 124

PART II: CONSUMER AS AN INDIVIDUAL 5. Personality and the Consumer Introduction Nature of Personality 137 Theories of Personality Freudian Theory of Personality 138 Neo-Freudian Theory 140 Trait Theory 143 Personality and Consumer Behaviour Consumer Personality and Brand Personality 146 Consumer Innovativeness 146 Consumer Dogmatism 147 Social Character 148 Cognitive Personality Factors Materialism 150 Fixation, Impulsive, and Compulsive Consumption 151 Consumer Ethnocentrism 152 Cosmopolitanism 153 Brand Personality Brand Personification 154 Advertising Elements 157 Anthropomorphism 158 Product Personality and Gender 159 Product Personality and Geography 162 Personality and Colour 163 Colour Differentiation 163 Self and Self-Image One or Multiple Selves 166 Extended Self 167 Altering the Self 167 Virtual Personality 169

135 136

6. Consumer Motivation Introduction Consumer Motivation 181 Needs, Goals, and Motives

178 180

137

145

150

154

164

182

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Nature and Function of Goals 184 Characteristics of Needs 184 Success and Failure Influence Goals 185 Maslow’s Hierarchy of Needs 185 Marketing Applications of Need Hierarchy 186 Product Design and Need Hierarchy 188 Self-Determination Theory 191 Motives 192 Arousal of Motives 193 Components of Motivation 194 Discovering Motives 196 Motivational Dimensions 196 Motivation Research 196 Analytic Hierarchy Process 198 Zaltman Metaphor Elicitation Technique 199 Avatar-based Marketing 200 Maximum Difference Scaling 203 7. Consumer Perception Introduction Perception Perception and Marketing 215 Advertising and Perception 215 Hedonic Consumption Imagery in Marketing 217 Sensory Marketing Vision 220 Smell 221 Touch 222 Taste 222 Sound 223 Stages of Perception Exposure 224 Methods to Increase Exposure 226 Attention 227 Perceptual Interpretation 228

211 213 214

216 220

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Detailed Contents

Perceptual Inference Semiotics 230 Perceptual Distortion 231 Perceptual Categorization 232 Retention Perception Levels Weber’s Law 236 Subliminal Perception 236 Brain Scanning 237 Measuring Brain Activity 237 Mirror Neurons 240 How Customers Think Perceptual Organization 241 Gestalt Psychology 241 Experiential Marketing 244 Individual Characteristics 244 Situational Characteristics 245 Altering Perceptions Customer-perceived Value 246 Customer Perception and Product Strategy Perceptual Mapping Benefits of Perceptual Mapping 249 Perceptual Mapping Methods 251 Measuring Brand Image

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234 236

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245 247 249

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8. Consumer Learning 261 Introduction 263 Consumer Learning 264 Nature of Learning 264 Learning Process 265 Elements of Consumer Learning 266 Getting Consumers Involved 267 From Passive to Active Learning 268 Central and Peripheral Routes 270 Behavioural Learning 272 Classical Conditioning 272 Instrumental or Operant Conditioning 274 Observational or Vicarious Learning 276 Cognitive Learning—Information Processing 278

Memory Stages 281 Sensory Store 281 Storage, Retention, and Retrieval 282 Cognitive Processes 283 Marketing Implications of Behavioural Learning Shaping 285 Habits 285 Repetition 286 Dangers of Repetition 286 Stimulus Generalization 288 Stimulus Discrimination 291 Measuring Learning Brand Loyalty 9. Consumer Attitudes and Change Introduction Defining Attitude Nature of Attitude 304 Functions of Attitudes 304 Applications in Marketing 305 Models of Consumer Attitudes Tri-component Model of Attitudes 307 Multi-attribute Attitude Model 308 Theory of Reasoned Action 309 Attitude towards the Ad 310 Attitude towards the Store 312 Theory of Trying to Consume 314 Theory of Planned Behaviour 314 Attitude Formation Role of Experience 315 Role of Personality 315 Role of Society 315 Attitude and Behaviour Changing Attitudes Resolving Conflicting Attitudes 326 Altering Attitude Components 327 Changing Consumer Beliefs about Competitors 328

PART III: INFLUENCES ON CONSUMER BEHAVIOUR 10. Family and Social Class Introduction 342 Role of Family 343 Functions of Family 344 Indian Family Structures 344 Changing Indian Family 345 Family Buying Behaviour in India

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