MBA-III- Consumer Behavior [16 Mbamm 301]- Notes PDF

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Consumer Behaviour

16MBAMM301

Subject Code : 16MBAMM301

IA Marks : 20

Number of Lecture Hours/Week: 03

Exam Hours: 03

Number of Lecture Hours : 56

Exam Marks: 80

Practical Component : 02 Hours/ Week

Unit 1: (5 Hours) Introduction to the study of Consumer Behaviour: Meaning & Definition of CB, Difference between consumer & Customer, Nature & characteristics of Indian Consumers, Consumer Movement in India, Rights & Responsibilities of consumers in India, Benefits of consumerism. Unit 2: (9 Hours) Role of Research in understanding consumer behaviour: Consumer Research: Consumer Research Paradigms (Qualitative & Quantitative Research Methods) Developing research objectives, collecting secondary data, designing primary research, data analysis and reporting research findings. Models of Consumer Behaviour: Input-Process-Output Model, Nicosia Model, Howard Sheth Model, Engel-Kollat-Blackwell Models of Consumer Behaviour, Internal Influences: Motivation, Personality, Perception, Learning, Attitude, Communications, External Influences: Social Class, Culture, REFERENCE Groups, Family members. Levels of Consumer Decision Making – Consumer Buying Decision Process, Complex Decision Making or Extensive Problem Solving Model, Low Involvement Decision Making or Limited Problem Solving Model, Routinised Response Behaviour, Four views of consumer decision making. On-line Decision Making: Meaning & Process/Stages Situational Influences- Nature of Situational Influence (The communication Situation, The Purchase Situation, The usage situation, The disposition situation) Situational Characteristics and consumption behaviour (Physical features, Social Surroundings, Temporal Perspectives, Task Definition, Antecedent States.) Unit 3: (10 Hours) Individual Influences on Consumer Behaviour and CRM: Part 1 Motivation: Basics of Motivation, Needs, Goals, Positive & Negative Motivation, Rational Vs Emotional motives, Motivation Process, Arousal of motives, Selection of goals. Department of MBA, SJBIT

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Motivation Theories and Marketing Strategy - Maslow’s Hierarchy of Needs, McGuire’s Psychological Motives (Cognitive Preservation Motives, Cognitive Growth Motives, Affective Preservation Motives, Affective Growth Motives). B) Personality: Basics of Personality, Theories of Personality and Marketing Strategy(Freudian Theory, Neo-Freudian Theory, Trait Theory), Applications of Personality concepts in Marketing, Personality and understanding consumer diversity (Consumer Innovativeness and related personality

traits,

Cognitive

personality

factors,

Consumer

Materialism,

Consumer

Ethnocentrisms), Brand Personality (Brand Personification, Gender, Geography, Colour), Self and Self-Image (One or Multiple selves, The extended self, Altering the self) C)

Perception:

Basics

of

Perception

&

Marketing

implications,

Elements

of

Perception(Sensation, Absolute Threshold, Differential Threshold, Subliminal Perception), Dynamics

of

Perception

(Perceptual

Selection,

Perceptual

Interpretation,

Perceptual

Organization ,perceived price, perceived quality, price/quality relationship, Perceived Risk, Types of risk, How consumers’ handle risk. Customer Relationship Management Meaning & Significance of CRM, Types of CRM (Operational, Collaborative, Analytical), Strategies for building relationship marketing, e-CRM, Meaning, Importance of e-CRM, Difference Between CRM & e-CRM Unit 4: (08 Hours) Individual Influences on Consumer Behaviour: Part 2 A) Learning: Elements of Consumer Learning, Motivation, Cues, Response, Reinforcement, Marketing Applications of Behavioural Learning Theories, Classical Conditioning Pavlovian Model, Neo-Pavlovian Model), Instrumental Conditioning, Elaboration Likelihood Model. B) Attitude: Basics of attitude, the nature of attitude, Models of Attitude and Marketing Implication, (Tri-component Model of attitude, Multi attribute attitude models. C) Persuasive Communication: Communications strategy, Target Audience, Media Strategy, Message strategies, Message structure and presentation. Unit 5: (12 Hours) External Influences on Consumer Behaviour

Department of MBA, SJBIT

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Social Class: Social Class Basics, What is Social Class? (Social class & Social status, the dynamics of status consumption, Features of Social Class, Five Social-Class Categories in India Culture and Subculture - Major Focus on Indian Perspective Culture: Basics, Meaning, Characteristics, Factors affecting culture, Role of customs, values and beliefs in Consumer Behaviour. Subculture: Meaning, Subculture division and consumption pattern in India, Types of subcultures (Nationality subcultures, Religious subcultures, Geographic and regional subcultures, racial subcultures, age subcultures, sex as a subculture) Cross-cultural consumer analysis: Similarities and differences among people, the growing global middle class; Acculturation is a needed marketing viewpoint, applying research techniques Cross-cultural marketing strategy: Cross-cultural marketing problems in India, Strategies to overcome cross-cultural problems. Groups: Meaning and Nature of Groups, Types Family: The changing structure of family, Family decision making and consumption related roles, Key family consumption roles, Dynamics of husband-wife decision making, The expanding role of children in family decision making, The family life cycle & marketing strategy, Traditional family life cycle & marketing implications Reference Groups: Understanding the power & benefits of reference groups, A broadened perspective on reference groups, Factors that affect reference group influence, Types of reference groups, Friendship groups, Shopping groups, Work groups, Virtual groups, Consumer-action groups, reference group appeals, Celebrities. Unit 6: (08 Hours) Consumer Influence and Diffusion of Innovations Opinion Leadership: Dynamics of opinion leadership process, Measurement of opinion leadership, Market Mavens, Opinion Leadership & Marketing Strategy, Creation of Opinion Leaders. Diffusion of Innovations: Diffusion Process (Innovation, Communication channels, Social System, Time) Adoption Process: Stages, categories of adopters

Department of MBA, SJBIT

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Post Purchase Processes: Post Purchase Processes, Customer Satisfaction, and customer commitment: Post purchase dissonance, Product use and non-use, Disposition, Product disposition. Case studies in Indian context only (04 Hours)

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Index Sl.No

Unit

Page No.

1

Introduction to the study of Consumer Behaviour

6-11

2

Role of Research in understanding consumer behaviour

12-40

3

Individual Influences on Consumer Behaviour and CRM: 41-84 Part 1

4

Individual Influences on Consumer Behaviour: Part 2

85-102

5

External Influences on Consumer Behaviour

103-131

6

Consumer Influence and Diffusion of Innovations

132-144

Department of MBA, SJBIT

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Unit 1 Introduction to the study of consumer behavior Meaning: The field of consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. Definition: Consumer behavior refers to the actions and decision processes of people who purchase goods and services for personal consumption. Difference between consumer and customer Sl.No Consumer

Customer

1

The one who buys is a customer

The one who uses the product is the consumer.

2

They are the ones who consume the These are people or organizations who products or services they have bought frequently visit the store, they purchase from or were bought for them.

3

you and no one else.

They use these products based on what The owner or storekeeper also makes sure that they have heard or seen and apply all his/her customers are satisfied. the information when deciding whether they need the product or not.

4

Consumers either buy or does not buy Customers are people who buy goods and the products that they necessarily use

services, but may not use the merchandise themselves.

5

Consumers have goals and purpose Customers buy these products and may not use while buying items

them personally, they either buy them to resell or buy for those who want them.

6

Consumers

pertain

mostly

individual or family 7

to

an customers can be an individual, organization or another seller

Consumers play a role in the demand Customers can simply decide if this will go or of products in the economy

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not.

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Nature & Characteristics of Indian Consumer The In dian consumer s are noted for the high degree of value orientation . Such orien tation to value has labeled Indians as one of the most discerning consumers in the world. Even, luxury brands have to design a unique pricing strategy in order to get a foothold in the Indian market. Indian consumers have a high degree of family orientation. This orientation in fact, extends to the extended family and friends as well. Brands with identities that support family values tend to be popular and accepted easily in the Indian market. Indian consumers are also associated with values of nurturing, care and affection. These values are far more dominant that values of ambition and achievement. Product which communicate feelings and emotions gel with the Indian consumers. Apart from psychology and economics, the role of history and tradition in shaping the Indian consumer behavior is quite unique. Perhaps, only in India, one sees traditional products alongside modern products. For example, hair oils and tooth powder existing with shampoos and toothpaste. The characteristics of modern Indian families now closely correspond with the concept of liberalization, individualism, tolerance of new roles, behavior and attitudes, with a newly seen empowerment of the individual and openness to new people and experiences. Consumer movement in India Consumer movement is also referred as consumerism. Consumerism is an organized movement of citizens and government to impose the rights and powers of the buyers in relation to sellers. Consumer movement in the present form came into being only in the 1930's in the West and only in the 60's in India. The basic objectives of consumer movement worldwide are as follows: To provide opportunity to the consumers to buy intelligently J - Recognition of reasonable consumer requests 6 Protection against fraud, misrepresentation, unsanitary and unjust products Participation of consumer representatives in management of aspects affecting consumers promoting consumer’s interests. The basic reason for the development of consumer movement in India are different from those in the West. In western countries, consumer movement was the result of post-industrialization affluence-for more information about the merits of competing products and to influence producers especially for new and more sophisticated products.  In India, the basic reasons for the consumer’s movement have been: Department of MBA, SJBIT

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

Shortage of consumer products; inflation of early 1970's



Adulteration and the Black Market.



Lack of product choices due to lack of development in technology



Thrust of consumer movement in India has been on availability, purity and prices

 The factors which stimulated the consumer movement in recent years are: 

Increasing consumer awareness



Declining quality of goods and services



Increasing consumer,

expectations because of consumer education Influence of the

pioneers and leaders of the consumer movement 

Organized effort through consumer societies

 Stages of Development of the Consumer Movement The Consumer Movement today is undergoing a silent revolution. The movement is bringing qualitative and quantitative changes in the lives of people enabling them to organize themselves as an effective force to reckon with. But the path to reach this stage has not been easy. It has been a struggle against bad business which always put profit before fairness in transactions. The first stage of movement was more representational in nature, i.e., to make consumers aware of their rights through speeches and articles in newspapers and magazines and holding exhibitions. The second stage was direct action based on boycotting of goods, picketing and demonstration. However, direct action had its own limitations that led to the third stage of professionally managed consumer organizations. From educational activities and handling complaints, it ventured into areas involving lobbying, litigation and laboratory testing. This gave good results. Thus, for instance business sector has started taking notice and co-operating with the movement. It has played a role in hastening the process of passing the Consumer Protection Act, 1986 which has led to the fourth stage. The Act enshrines the consumer rights and provides for setting up of quasi-judicial authorities for redressal of consumer deputes. This act takes justice in the socioeconomic sphere a step closer to the common man. Rights and responsibilities of consumers in India  Rights of Consumers The various rights of consumers that are recognized by Government of India. Department of MBA, SJBIT

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(i) Right to safety: Consumers have a right to be protected against marketing of goods which are injurious to health and life. As a consumer if you are conscious of this right, you can take precautions to prevent the injury or if injury is caused in spite of precaution, you have a right to complain against the dealer and even claim compensation. For example, if you buy any medicine, the pharmacy selling it can be held responsible if the medicine proves harmful. Again if gas cylinder is used for cooking, you have to check that it does not leak when it is supplied to you. If it starts leaking afterwards, the supplier will be liable to pay compensation if the leakage of gas leads to fire and causes injury or death to anyone. (ii) Right to be informed: Consumers also have the right to be informed about the quantity, quality, purity, standard or grade and price of the goods available so that they can make proper choice before buying any product or service. Also, where necessary, the consumer must be informed about the safety precautions to be taken while using the product to avoid loss or injury. Taking the example of gas cylinder again, the supplier must inform the user to stop the flow of gas with the help of the regulator when it is not in use. (iii) Right to choose: Every consumer has the right to choose the goods needed from a wide variety of similar goods. Very often dealers and traders try to use pressure tactics to sell goods of poor quality. Sometimes, consumers are also carried away by advertisements on the TV. These possibilities can be avoided if consumers are conscious of this right. (iv) Right to be heard: This right has three interpretations. Broadly speaking, this right means that consumers have a right to be consulted by Government and public bodies when decisions and policies are made affecting consumer interests. Also, consumers have a right to be heard by manufactures, dealers and advertisers about their opinion on production and marketing decisions. Thirdly, consumers have the right to be heard in legal proceedings in law courts dealing with consumer complaints. (v) Right to seek redressal: If and when any consumer has a complaint or grievance due to unfair trade practices like charging higher price, selling of poor quality or unsafe products, lack of regularity in supply of services etc. or if he has suffered loss or injury due to defective or adulterated products, he has the right to seek remedies. He has a right to get the defective goods replaced or money refunded by the seller or dealer. He also has the right to seek legal remedies in the appropriate courts of law. Through this right the consumers are assured that their Department of MBA, SJBIT

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complaints will receive due attention. This right also provides for due compensation to consumers if they have suffered a loss or are put to inconvenience due to the fault of the supplier or manufacturer. (vi) Right to consumer education: To prevent market malpractices and exploitation of consumers, consumer awareness and education are essentially required. For this purpose, consumer associations, educational institutions and Government policy makers are expected to enable consumers to be informed and educated about (a) the relevant laws which are aimed at preventing unfair trade practice; (b) the ways in which dishonest traders and producers may try to manipulate market practices to deceive consumers; (c) how consumers can protect their own interest; and (d) the procedure to be adopted by consumers while making complaints. Steps have been already taken by many consumer bodies to educate consumers through pamphlets, journals and posters. TV programmes have also come to play an effective role in this connection. Responsibilities of Consumers There is a well-known saying that ‘there cannot be rights without responsibilities’. Having examined the consumer rights and the purpose served by them, it is necessary to consider whether consumers should also be responsible enough to be entitled to exercise their rights. For instance, to be able to exercise their right to be heard, consumers should avail of the opportunities to know and keep informed about consumer problems. To exercise their right to seek redressal of complaints, consumers must take all precautions to choose the right goods at the right price and learn how to use the products to prevent injury or loss. Specifically, the responsibilities of consumers may include the followings: (i) Responsibility of self-help It is always desirable that a consumer should not depend on the seller for information and choice as far as possible. As a consumer, you are expected to act in a responsible manner to protect yourself from being deceived. An informed consumer can always take care of his/her interest more than anyone else. Also, it is always better to be forewarned and forearmed rather than getting remedies after suffering a loss or injury. (ii) Proof of Transactions: The second responsibility of every consumer is that the proof of purchase and documents relating to purchase of durable goods should be invariable obtained and preserved. For example, it is important to get a cash memo on purchase of goods you should reme...