Definition of Consumer Behavior - Assignment Point
Definition of Consumer Behavior
Subject: Marketing | Topics:

Consumer behavior: The Concept

Customer:

The term customer is typically used to refer to someone who regularly purchase from a particular store or company. Thus a person who shops at particular stores or who uses a particular product is viewed as a customer of that firm or product.

 Consumer:

In the traditional viewpoint, consumers are potential purchasers of products & services offered for sale. This view has been broadened now monetary exchange is not essential to the definition to consumer.  Modern definition is-“ the people who consume is called consumer.”

A consumer can consume anything such as monetary goods or services, free goods or services, philosophies, or ideas.

Definition of consumer behavior:

Consumer behavior may be defined as the decision process and some physical activity individuals engage in when evaluating acquiring, using or disposing of goods & services – Loudon.

It is the study of decision-making units & the process involved in acquiring, consuming & disposing of gods & services experience & ideas.

Why study consumer behavior / importance of studying consumer behavior:

Marketer deals with consumer. So it is badly need to know the behavior of consumer. There are a number of reasons to study consumer behavior.

1.Significance in Daily lives:

In a general sense, the most important reason for studying consumer behavior is the significant role it plays in our lives.

Much of our time is spent directly in the market place, shopping or engaging in other activities. A large amount of traditional time is spent thinking about product and services, talking to friends about them and seeing or hearing advertisements about them. In addition the goods we purchase and the manner in which we use them significantly influence how we live our daily lives. These general concerns alone are enough to justify our study.

2. Application to Decision Making:

Consumers are often studied because certain decisions are significantly affected by their behavior or expected actions. For this reason, consumer behavior is said to be in applied discipline.

At the time of decision making the study of consumer behavior is essential. There may we two kinds of decision-making. Such as – I. micro perspective & II macro perspective.

I. Micro Perspective decision:

The micro perspective seeks application of this knowledge of problems faced by the individual firm or organization. The micro perspective involves understanding consumers for the purpose of helping a firm or organization accomplish its objectives.

Advertising managers, product designers and many others in profit-oriented business are interested in understanding consumers in order to be more effective at their tasks. Under the micro perspective decision the following things are available –

a.         Forecasting new demands.

b.         Market segmentation

c.         Strategy Development.

II. Macro Perspective Decision:

Application knowledge of consumers to aggregate level problems faced by large groups by society as a whole. In market systems based on individual choice, consumers strongly influence what will be produced, for whom it will be produced and what resources will be used to produce it, this understanding may suggest ways to increase the efficiency of the market system and improve the well-being of people in society.

The following things have to be considered in the macro perspective decision. Such as

a. Public policy decision.

b. Behavioral science.

Consumer Decision Process:

Role of consumer in different situation: –

1. Initiator:

Starting something to buy. The individual who determines that some need or want is initiate by them.

2. Influencer:

Who encourage to buy some things. The person who influence to purchase some tings.

3. Buyer:

The individual who actually makes the purchase transaction.

4. User:

The person most directly involved in the consumption or use of the purchase.

A subset of human behavior:

1. Psychology:

Study of the behaviour and mental process of individuals.

2. Sociology:

Study of the collective behavior of people in groups.

3. Social psychology:

Study of how individuals influence and are influenced by groups.

4. Economics:

Study of peoples, production, exchange and consumption of goods & services.

5. Anthropology:

Study of people in relation to their culture.

Application of C.B. Knowledge:

The following selections have been made from a variety of practical applications in the field of consumer behavior.

1. Consumer Behaviour & Marketing Management:

Effective business managers realize the importance of marketing to the success of their firm. To manage the activities of marketing it is essential to know the consumer behavior.

2. Marketing Concept:

The essence of the marketing concept is captured in three interrelated orientations-

a. Consumer’s wants & needs.

b. Company objectives.

c. Integrated Strategy.

3. Marketing activities:

Several major activities can be undertaken by an organization that is marketing oriented. These includes:

a. Market opportunity analysis.

b. Target market selection &

c. Marketing mix determination, which includes decision on the proper combination of marketing variables to offer consumers.

Consumer Behavior & Nonprofit and Social Marketing:

Various social & non profit organization include government agencies, religious orders, university and charitable institutions are available in a society after these groups must also appeal to the public for support in addition to attempting to satisfy some want or need in society.

Consumer Behavior & Governmental Decision-making:

In recent years the relevance of consumer behavior principle to governmental decision-making has become quite evident. Two major areas of activity have been affected:

I. Government policies that provide services to the public or result in decision that influence consumer behavior and

II. The design of legislation to protect consumers or to assist them in evaluating products & services.

Consumer Behavior & Consumer Education:

Consumers also stand to benefit directly from orderly investigations of their own behavior. This can occur on an individual basis or as part of more formal educational programs. As we study what has been discover about the behavior of others we can gain insight into our interaction with the market place. In general as we discover the many variables that can influence consumer purchase. We have the opportunity to understand better how they affect our own behavior.

Framework of consumer Decision process.

Model of consumer behaviour.

Fig: A simplified decision process from work for studying consumer behaviour.

The diagram is an organize picture of the factors that have been identified as the most important general influences on consumer behaviour. It has three major sections:

1) External environmental variables influencing behaviour

2) Individual determinants of behaviour

3) Consumer decision process

External environmental variables: The external environment depicted in the outer circle is made up of six specific influences and one catch-all grouping for all other factors. The six specific influences are culture, subculture, social class, social group, family and personal influences. The open partitions (dotted line) denote the influence of these variables on individual determinants and on each other.

i) Culture: The concept of culture has been characterized as “that complex hole that includes knowledge, belief, art, morals, law, custom & any other capabilities and habits acquired by man as a member of society.” So it provides a basis for many of our values beliefs and action as customer.

ii) Subculture: Subculture means peoples have values, customs & tradition and other ways of behaving that are peculiar to a particular group within a culture. This means that there are subculture of students, professors, professional football player, rock musicians, marketers & other groups. Moreover individuals may be members of more than one subculture at the same time. Thus it is imperative that marketers understand who constitute the most relevant subculture for their particular product or service. Consumer behaves within two broad subculture categories ethnic & age.

iv) Social class: The term “social stratification” refers to the process by which people in a society rank one another into different social positions. The result is a hierarchy often referred to as a set of social classes. People within a given social class tend to share beliefs, values and methods of behaving.

v) Social group: A social group can be viewed as a collection op people who have a sense of relatedness resulting from some form of interaction with one another. These groups can have many functions.

vi) Family: The family is special form of social group that is distinguished at least in part by numerous and strong face-to-face interactions among its members. The influence of different family members on purchase decisions is one area of interest in the field of consumer behaviour.

vi) Personal influence: The process of personal influence, which can be described as the effects on an individual resulting from communications with others, has long been of interest to marketers. Interest in this subject is strong because personal influence has an important effect on the amount and type of information that consumers obtain about products.

vii) Other influences: The last category of environmental influences is labeled as other influences. This general category includes the influence on consumers that are not specifically treated in the other topics that are just reviewed. An example might be the effect of media that are not incorporated into one of the above topics. Except media influence it includes physical surroundings, interpersonal settings, natural events and the consumer available cash. The influence of these variables is treated by the term situational variables.

Individual determinants of behavior: Major individual determinants of consumer behavior are portrayed in the inner ring of the figure. These variables influences how the consumer proceeds through a decision process regarding product & services. It includes-

i) Information processing: The term information processing refers to the activities that consumers engage in when acquiring, integrating & evaluating information. More specifically five of the major wage in which consumers use information derived from their environment are:

 a) To understand and evaluate products and services.

b) To attempt to justify previous product choices.

 c) To resolve the conflict between buying or postponing purchases.

d) To satisfy a need for being informed about products and services in the marketplace.

e) To serve as a reminder to purchase products that must be regularly replenished (Soap, beverages and the like).

ii) Learning & memory: Learning can be viewed as a relatively permanent change in behavior occurring as a result of experience. And memory concerned with the storage and retrieval of information after it has been acquired. The procedure about what consumers learn, how they learn & what factors govern the retention of learn material in memory are all issues of considerable importance for understanding consumers. Not only do consumers acquire and remember product names and characteristics, but they also learn standards for judging products, places to shop problem solving abilities, behavior pattern and testes. Such learn materials stored in memory significantly influences how consumers react to each situation that they confront.

iii) Attitudes: Attitudes guide our basic orientation toward objects, people, events and our activities. As such attitudes strongly influence how consumers will act and react to product and services and how they will respond to communications that marketers develop to convince them to purchase their products.

iv) Motivation & involvement: Many factors can influence the marketer choice among various alternatives. One fundamental consideration should be the degree of involvement that consumers are experiencing with the product.

Consumer decision process: The inner portion of figure details the consumer decision process regarding products and services. The major steps in this process are shown as problem recognition, information search and evaluation, purchasing processes and post purchase behavior.

i) Problem recognition: Problem recognition results when a consumer recognizes a difference of sufficient magnitude between what is perceived as the desired state of affairs and what is actual state of affairs, enough to arouse and activate the decision process. The “actual state” refers to the way in which a need is already being met and the “desired state” is the way a person would like for the need to be satisfied.

ii) Search & evaluation: It is important to producers and retailers to understand how consumers search for and evaluate information on possible purchases. This usually starts with internal search-a quick and largely unconscious review of memory for stored information and experiences regarding the problem. If an internal search does not provide sufficient information about products, or how to evaluate them, the consumer continues with a more involved external search for information. This results in exposure to numerous informational inputs called stimuli, which can arise from a variety of sources, including advertisements, printed product review, and comments from friends.

iii) Purchasing Processes: Purchasing processes involve not only the purchase decision, but also activities directly associated with the purchase. The purchase decision stage itself involves selecting a course of action based on the preceding evaluation process. Some of the elements of the purchasing process stage, such as choosing a store, may actually be viewed as part of search and evaluation activities.

iv) Post purchasing behavior: Marketers must recognize that consumer decisions do not end with the act of purchase but continue as the consumer uses the products and evaluates his or her purchase decision and experience with the item, and may take related purchases. Actually post purchase experiences result in feedback to the problem recognition stage.

Understanding consumers and market segments

Views of the market and alternative marketing strategies

Market Aggregation

A market aggregation strategy means, in effect, that little if any subdivision of the market is applied. With this approach, a firm would produce a single product and offer it to all consumers with a single marketing program. Although the marketer recognizes that not everyone will buy the product, a number sufficient for profitable operations are expected to be attracted.

Market Segmentation

Market segmentation is the process of partitioning the heterogeneous market into segments. The various segments identified should be homogeneous within themselves but heterogeneous without. The goal is to facilitate development of uni8que marketing programs that will be most effective for these specific segments.

A. Market criteria for effective segmentation

A decision to use a market segmentation strategy should rest on consideration of four important criteria that affect its profitability. In order for segmentation to be viable, the market must be

(i)                 Identifiable and measurable

(ii)               Accessible

(iii)             Substantial

(iv)             Responsive

B. Performing market segmentation

This section reviews the steps involved in a typical market segmentation study in order to illustrate a successful approach that may often be taken. The eight steps involved in the process are as follows:

(i)                 Define the problem or determine the use to be made of the research

(ii)               Select a segmentation basis

(iii)             Choose a set of descriptors that defines, characterizes or relates to the segmentation basis

(iv)             Select a sample of consumers that is representative of the larger population of interest

(v)               Collect data on segment descriptors from the sample of consumers.

(vi)             Form segments based on chosen consumer descriptors

(vii)                       Establish profiles of segments

(viii)Translate the results into marketing strategy

C. Demographic characteristics and market segmentation

Demography is the study of human population statistics, including size, age, sex, race, location, occupation, income and other characteristics. It is essential for us to review these general patterns of the American consumer market and of some of its major segments. Only with a clear understanding of major consumer characteristics can begin to appreciate the implication of environmental and individual determinants of consumer behaviour.

It is often said that a market consists of people with purchasing power and the willingness to buy. That is:

Market = People X Purchasing Power X Willingness to buy

Limitation of demographics in predicting consumer beahaviour

One potential limitation of demographics in explaining consumer behaviour is based on the claim that while demographic factors may have been very relevant in the past, they are now obsolete because of the narrowing differences in income, education and occupational status. Nevertheless, there is much evidence showing that group differences among categories of income, education and occupation are large and statistically significant in spite of a large number of within group differences. It should also be noted that demographic factors include numerous other variables that are much less subject to influence from environmental change.  For example, older people tend not to listen to rock music, per-capita consumption of liquor is three times higher among blacks than whites and Catholics still tend to use contraceptives much less than the rest of the population.

A second and more basic argument against using demographics is that they have generally failed to explain and predict consumption behaviour. However, although demographics have failed to explain brand-choice behaviour, they seem to succeed in explaining buying behaviour at the broad product-class level of such items as durable appliances, automobiles and housing.

Lifestyle and psychographic segmentation

One of the newest, most exciting and promising approaches to selecting target markets is lifestyle and psychographic segmentation. Although the concepts of lifestyle and psychographics are often used interchangeably, they are not equivalent but are complementary.

The term ‘lifestyle’ is now new, but its application to marketing has been rather recent. Lifestyle can be viewed as a unique pattern of living which influences and is reflected by one’s consumption behaviour. Many products today are a ‘lifestyle’ product that is they portray a style of life sought by potential users.

Psychographics is the systematic use of relevant activity, interest and opinion constructs to quantitatively explore and explain the communicating, purchasing and consuming behaviours of persons for brands, products and clusters of products.

Psychographics may be views as the method of defining lifestyle in measurable terms. The basic premise underlying lifestyle research is that the more marketers understand their customers, the more effectively they can communicate and market to them. In many cases the primary targets of such marketing efforts are heavy users. Heavy users have traditionally been looked at demographically but by incorporating lifestyle characteristics the marketer obtains a better, more true-to-life picture of such customers.

The technique of lifestyle segmentation

Lifestyle-segmentation research measures (1) how people spend their time engaging in activities, (2) what is of most interest or importance to them in their immediate surroundings and (3) their opinions and views about themselves and the world around them. Together, these three areas are generally referred to as activities, interest and opinions or simply AIOs.

Application of lifestyle segmentation

Lifestyle may be used as a basis for segmentation in several ways. In one approach the marketer seeks to classify the consumer population into groups based on generally lifestyle characteristics so those consumers within the group have similar lifestyles. Using the research approach described above, a representative sample of consumers responds to a questionnaire containing AIOs, product usage, media consumption and demographic items. Through statistical routines the marketer attempts to find out if people can be grouped together into distinct groups. Each group represents a different pattern of needs of and consumption of products and services. Once these groups are identified the marketer is able to direct his product to appeal to one or several segments.

Usage segmentation

Another segmentation approach often used by marketers is based on product or brand usage by consumers. Usage segmentation can take a number of directions. For example the marketer may wants to identify various segments of users for particular product category or users of the company’s brand. In other cases, one may want to segment users into those who buy frequently versus those who only buy occasionally or into those users who usually purchase just one brand versus those who switch from brand to brand. Any usage segmentation approach needs to specify the relevant dimensions of interest.

Volume segmentation

Volume segmentation attempts to identify frequent users of a product category or brand. Marketers often refer to the “20-80” thesis, that is, that 20 percent of the market accounts for 80 percent of sales of their product.

 Brand user segmentation

The marketer is generally most interested in determining whether those who purchase the company’s brand are different, either demographically or psychographically, from those buying competitor’s brands. If characteristics can be distinguished, then marketing programs can perhaps be developed to attract more buyers who resemble the preferred buyer.

Product-user segmentation

Although buyers of different brands may not be found to have different characteristics, the marketer nevertheless will be interested in segmenting product users on the basis of any such distinguishing demographic or psychographic characteristics in order to reach them effectively. Within a product category such as soft drinks, for example, it may be found that those who consumer low-calorie drinks differ demographically and psychographically from regular soft-drink users.

 Loyalty segmentation

Marketers are often interesting in attracting not just brand users, but perhaps more importantly, those who consistently purchase the company’s brand. When these brand-loyal buyers are identified, appropriate marketing strategies may be developed to attract competitors’ buyers who have similar characteristics or to increase the loyalty rate among current less-loyal buyers, loyalty segmentation can also be successfully applied to retail store customers.

Situation segmentation

Marketers often become complacent after identifying their market by demographics and psychographics and may go no further to understand how the product is used and enjoyed whether the consumer is at work, play or home. Actually, a manufacturer’s or retailer’s product line can be seen as a range of items appealing to the needs of diverse person-situation market segments. This segmentation approach divides the market by groups of consumers within usage situations. The consumers often select products on the basis of which usage situations they expect to encounter.

Benefit Segmentation

The technique of benefit segmentation

The technique of benefit segmentation typically involves a three step process:

  1. Exploratory research to develop a complete listing of benefits of possible value in segmenting the relevant market.
  2. Development of sensitive and reliable scales to measure major attitude dimensions.
  3. Quantitative measurement of the market, usually involving a national sample, resulting in clustering of respondents by their attitudes. Individual clusters are described in terms of their behaviour, lifestyles, demographics and other relevant characteristics. Segments, therefore, are discriminated by their attitudes and differences in their behaviour are analyzed through cross tabulations.

Product Positioning

Effective product positioning is a key ingredient of successful marketing today. This section discusses the importance of positioning as it relates to the segmentation process and discusses several approaches to the process.

The interrelationship of market segmentation and product positioning

Market segmentation is both the process of defining the characteristics of various segments in the marketplace and the allocation of marketing resources among these segments. Product positioning is closely linked with market segmentation. A product’s position is the place that it occupies relative to competitors in a given market as perceived by the relevant group of customers, that is, by the target-market segment. Positioning involves determining how consumers perceive the marketer’s product and also developing and implementing marketing strategies to achieve the desired position in the market. Product, price, distribution and promotional ingredients should all be viewed as potential tools for positioning a company and its offerings. Positioning has no value in itself, only in its effect on the target=market segment. Marketers must look at segmentation and positioning in tandem. The process may start either by selecting a target=market segment and then trying to develop a suitable position, or by selecting an attractive product position and then identifying an appropriate market segment.

Strategies to position products

Many ways exist for positioning a product or service. The following are some of these approaches. It should be noted that combinations of these approaches are also possible.

(a)    Position on product features

(b)   Position on benefits

(c)    Position on usage

(d)   Position on user

(e)    Position against competition

Position analysis

The marketer may user several techniques for determining the appropriate positioning for a brand. Whether the brand is new or old, focus groups and depth interviews may be helpful in providing insights from consumers. In addition, survey and experimental research approaches may provide useful positioning data. Lifestyle information and a technique known as perceptual mapping can also be helpful in positioning decisions.

ENVIRONMENTAL INFLUENCES ON CONSUMER BEHAVIOUR

Culture

Culture is that complex whole that includes knowledge, belief, art, morals, law, custom and any other capabilities and habits acquired by man as a member of society.

Culture is the distinctive way of life of a group of people, their complete design for livings.

The characteristics of culture

Many characteristics of culture may be cited to illustrate its nature, but most social scientists agree that the following features are essential.

(i)                 Culture is invented: Culture does not simply “exist” somewhere waiting to be discovered. People invent their culture. This invention consists of three interdependent systems or elements. (a) an ideological system, that consists of the ideas, beliefs, values and ways of reasoning that human beings learn to accept in defining what is desirable and undesirable; (b) a technological system, that consists of the skills, crafts and arts that enable humans to produce material goods derived from the natural environment; and (c) an organizational system that makes it possible for humans to coordinate their behaviour effectively with the actions of others.

(ii)               Culture is learned: Culture is not innate or instinctive, but is learned beginning early in life and is charged with a good deal of emotion.

(iii)             Culture is socially shared: Culture is a group phenomenon, shared by human beings living in organized societies and kept relatively uniform by social pressure. The group that is involved in this sharing may range from a whole society to a smaller unit such as family.

(iv)             Cultures are similar but different: All cultures exhibit certain similarities. There is, however, great variation from society to society in the nature of each of these elements, which may result in important consumer-behaviour differences around the world.

(v)               Culture is gratifying and persistent: Culture satisfies basic biological needs as well as learned needs. It consists of habits that will be maintained and reinforced as long as those who practice them are gratified. Because of this gratification, cultural elements are handed down from generation to generation.

(vi)             Culture is adaptive: In spite of our resistance to change, cultures are gradually and continuously changing. Some societies are quite static, with a very slow rate of change, while others are more dynamic, with very rapid changes taking place.

(vii)            Culture is organized and integrated: A culture “hangs together”; that is, its parts fit together. Although every culture has some inconsistent elements, it tends to form a consistent and integrated whole.

(viii)         Culture is prescriptive: Culture involves ideal standards or patterns of behaviour so that members of society have a common understanding of the right and proper way to think, feel and act. Norms are society’s rules or guidelines’ specifying what behaviour is appropriate or inappropriate in given situations. Sanctions are pressures brought to bear on deviant individuals so that they conform their behaviour to what society expects. Mores are norms that are vital to society’s survival and well-being, prohibiting such things as murder, robbery and treason. Violations of mores are often sanctioned severely, such as punishment by death or imprisonment. Fashions are folkways that are widely accepted within society and last for only a short time. Fads are folkways that are even shorter-lived and accepted by only a narrow segment of the culture. Sometimes fads may become crazes, when individuals allow themselves to be preoccupied by them.

SUBCUTURES

The nature of subculture

The Black Subculture

Demographic characteristics

Blacks may be described as disadvantaged compared with whites, in terms of education and occupational attainment. They are also more likely than whites to live in the crowded, poorer neighborhood of large cities.

Size

The black market amounts to approximately 30 million people or about 12 percent of the total U.S. market. The market size is increasing almost three times as fast as the white population.

Location

Although the percentage of blacks in the total U.S. population has remained rather constant since 1900, their geographic distribution has changed significantly during the last few decades.

Income & employment

Black buying power stands at approximately $150 billion. The proportion of blacks in each occupational category is beginning to approximate more closely their share of the total labour force. Thus, more members of this group have moved into skilled, better paying jobs.

Education

Blacks have steadily improved their educational position.

Family and Age

One of the most striking patterns of the black family is its tendency toward matrilinealism. Almost 50 percent of blacks live in families headed by a female with no husband present.

Consumer behaviour and marketing implications

While marketers and consumer behaviour researchers generally agree that the consumer behaviour of blacks differs from that of whites, there appears to be no consensus on the causes of the differences. One study suggests that black/ white variations in consumer behaviour may be attributable to socialization processes that operate differently among the two subcultures.

The Asian Subculture

Demographic Characteristics

Size

The Asian population in the United States is almost 8 million or about 3 percent of the total population and largely because of immigration, it is the fastest growing of minority in the nation.

Location

Fifty-six percent of all Asians live in the West, compared to just 21 percent of all Americans. Twelve states have over 100,000 Asian American.

Income and employment

Although their average personal incomes are lower than whites, Asian- American households have a higher median income than any other ethnic group, including whites.

Education

Asian-American high schoolers are more likely than other students to enroll in college preparatory programs.

Family and age

The population segment is a youthful group, having an average age of 30 compared to 36 for whites. The average number of people per household is 3.2.

Consumer behaviour and marketing implications

Asian households are younger, better educated and more moneyed than the average American household. Such characteristics have important influences on their consumer behaviour patterns.

The Hispanic Subculture

Demographic Characteristics

The Hispanic market differs from other ethnic segments and mainstream American in that it is continually infused with new immigrants from the Spanish-speaking world. Many Hispanics, although they like the idea of living in America, want to keep their culture and language.

Size

This market consists of approximately 20 million people or 8 percent of the population. The U.S. Hispanic population is largely of Mexican origin, with Puerto Ricans and Cubans comprising the other significant categories of origin.

Location

The Spanish subculture is largely an urban population segment and it concentrated heavily in comparatively few metropolitan areas such as Los Angles, New York and Miami.

Income and employment

Hispanic buying power approaches $170 billion, but the income level of Hispanics is significantly lower than for non-Hispanic.

Occupations of men of Hispanic origin are predominantly blue-collar in nature.

Education

Hispanics generally attain a slightly lower level of education than do blacks and other non-Hispanics. Among Hispanic people 25 to 29 years of age, approximately 57 percent have completed high school as compared to more than 87 percent of persons of non-Hispanic origin.

Family and age

Hispanic families are larger than non-Hispanic families, with the mean number of persons in the Spanish-origin family. The family unit also appears to be stronger than does the family unit for non-Hispanics.

The Hispanic market is a much younger market than is the non-Hispanic market. The median age for Hispanics is 23.

Consumer behaviour and marketing implications

More and more companies are recognizing the importance of the Hispanic-American market. In this section, several of the marketing-mix variables will be examined to understand the major implications of Spanish-American consumer behaviour on these decision areas.

The Youth Subculture

The youth market is a significant subculture for the marketer. Youth are often considered to be those between the ages of 14 and 24. The youth market is important to marketers not only because it is lucrative but also because many consumption patterns held throughout life is formed at this time and also because of the public policy implications of marketers’ activities directed at younger people during their formative years.

Demographic characteristics

There are many important characteristics of the youth market with which marketers should be familiar. The following is a summary of these factors.

Size

The number of persons between the ages of 13 and 19 has been shrinking in recent years. The teenage group bottomed out at 23 million in 1991 but is expected to increase to 27 million by 2000.

Income and spending

There is no market without income and the youth segment qualifies on this important dimension. Because many jobs are available in fast-food restaurants and other businesses that need young people for labour, over 30 percent of high school senior boys and nearly 25 percent of senior girls say they average over 20 hours of week during the school year.

Youths have such a strong consumption orientation. According to one researcher, three significant forces have molded their attitudes and consumer behaviour. First, the experience of growing up in a period of almost unbroken prosperity has produced a widely shared feeling of economic optimism. A second factor is permissive child rearing, which has been linked by researchers to a reduced capacity for initiative and independence. Third, the new generation has a higher educational level and heavier exposure to the mass media.

Psychographic characteristics

Teenagers are no more alike than are adults. Teen consumers can be segmented into four attitudinal groups.

(i)                 Socially driven

(ii)               Diversely motivated

(iii)             Socioeconomically introverted

(iv)              Sports-oriented

The older subculture

Although business people have painted a glowing picture of the opportunities in the youth market, the opposite end of the age spectrum has been largely neglected by marketers and frequently by society itself. Many marketers consider the youth market to be glamorous and exciting, whereas older consumers are thought to be dowdy and uninspiring. Although this situation may be understandable psychologically, it may make poor economic sense, because middle-aged consumers hold considerably more promise for a wide range of consumer goods and services than do the young.

Demographic characteristics

This section summarized several important demographic characteristics of older consumers, concentrating on those over age 65. This is actually only one segment of the so-called mature market. Those 55 to 64 are called the “older” population; those 65 to 74 are “elderly”, those aged 75 to 84 are called the “aged” and those 85 and over are the “very old”.

Size

In 1990, 32 million people in 20 million households in the United States were 65 years of age or older or almost 13 percent of our total population. Each census during this century has found the elderly to make up an increasingly larger share of the total population generally and if present trends continue, those 65 and over are expected to account for 22 percent of the population by 2030.

Location

The largest group of elderly consumer lives in the central cities of metropolitan areas. This characteristic differs from the population as a whole, in which suburbanites outnumber residents of central cities.

States with the largest population also have the largest numbers of senior citizens. For example, New York, California, Pennsylvania and Illinois account for nearly one-third of the elderly.

Marital and family status

A large majority of the elderly are women most of whom are widowed and many of whom live by themselves. However, most elderly men are married and live with their wives. Household size of older prospects is much smaller than for other groups in the population because their children have grown up and moved away and because many of them are widowed.

Income

People over 50 comprise a market worth almost $900 billion. An economic profile of the mature market is presented in

Psychographic Characteristics

The segment aged 55 and over has in many cases a different set of activities, interests and opinions from those of younger groups. However, older consumers do not all share the same attributes or patterns. Some of their patterns may involve a tendency toward seasonal migration to warm climates, earlier bed-times, less physical activity, more leisure-time activities and positive identification with their age, shunning the public’s sometimes negative stereotype.

 Consumer behaviour and marketing implications

The lack of attention by marketers to the senior market shows in the dearth of research findings on this group’s behaviour as consumers.

SOCIAL CLASS

The nature of social class

The term “social class” has been defined as a group consisting of number of people who have approximately equal positions in a society. These positions may be achieved rather than ascribed, with some opportunity existing for upward or downward movement to other classes. The following are six characteristics of social class.

(i)                 Social classes exhibit status

(ii)               Social classes are multidimensional

(iii)              Social classes are hierarchical

(iv)              Social classes restrict behaviour

(v)               Social classes are homogenous

(vi)              Social classes are dynamic

Social-class lifestyles

The significance of social stratification for the marketer is that there are differences in values, attitudes and behaviour of each of the classes. These differences provide a basis on which to segment markets and obtain an enhanced understanding of the behaviour of consumers.

Upper Americans

The lifestyles of this group have changed more over the last twenty years than have those of people I the classes below them. This group is an interesting mix of many lifestyles: post preppy, luxurious, countercultural, conventional, intellectual, political and the like. They account for 14 percent of the market and are the segment of our society who most value quality merchandise, pay special attention to prestige brands, and believe it is important to spend with good taste.

Middle Americans

This group accounts for seven out ten Americans and represents a large segment of the American mainstream. Here, the middle class and working class are worth separate attention by marketers because there are significant differences in values and lifestyles between these groups even though there is considerable overlap in income levels.

Lower Americans

This group contains 16 percent of the population and is generally referred to as “disadvantaged” and outside the mainstream. It is composed of mostly unskilled workers, unassimilated ethnics and those who are sporadically employed. They may be subdivided into two groups: those who are working and those who are on welfare.

Social class and consumer behaviour

This section examines the most significant findings concerning various classes’ behaviour  with regard to the products they buy, the places they shop and the promotions and prices they respond to.

Product and services consumed

Product choice and usage differ among the social classes. There are items that bought mainly by the upper classes, such as roller derby tickets and cheap wine. Not only are there between-class purchasing differences but also within-class variations. Each class level has its conspicuous consumers and its more conservative buyers- that is, it’s over privileged and its under privileged members.

Shopping Behaviour

Shopping behaviour also varies by social class. For example, a very close relation between store choice and social-class membership has been found, indicating that it is wrong to assume that all consumer want to shop at glamorous, high-status stores. Instead, people realistically match their values and expectations with a store’s status and don’t shop in stores where they feel out of place.

Promotional Response Patterns

Important class differences exist with regard to promotional response. The social classes have differing media choice and usage patterns. The social classes also have different perceptions and responses to advertising and other promotional messages, responses which are significant in the development of proper marketing strategies. The basis of advertising differences directed at the various classes should be founded on the differing communications skills and interests of these groups.

Price related behaviour

Lower-class consumers are more poorly informed about price and product alternatives. They are also more likely to buy products on sale or priced lower. Regarding price perceptions among the middle and working classes, a shopping simulation showed that working-class homemakers have a greater reliance on the general belief that there is a price/quality association; that is, the higher the price of a product is, the higher the quality. Although the better-educated homemakers in both classes had stronger beliefs that price and quality are related, they preferred lower-priced product alternatives. They apparently felt capable of judging the product alternatives on their own merits rather than having to rely on general beliefs in price/quality to make a decision.

SOCIAL GROUPS

What is Group?

Not every collections o individuals is a group, as the term is used by sociologists. Actually, we can distinguish three different collections of people: aggregations, categories and groups. An aggregation is any number of people who are in close proximity to one another at a given time. A category is any number of people who have some particular attributes in common. A group consists of people who have sense of relatedness as a result of interaction with each other.

Classification of groups

Groups may be classified according to a number of dimensions, including function, degree of personal involvement and degree of organization.

Content or function

Most of us view the content of groups in terms of their function. For example, we categorize them along such lines as students, factory workers, church members and so on. Actually, these are subtypes of the major kinds of groups that we encounter in a complex society, which could generally be categorized along such lines as family, ethnic, age, sex, political, religious, residential, occupational, educational and so forth.

Degree of personal involvement

By using the criterion, we can identify two different types of groups: primary and secondary. The hallmark of a primary group is that interpersonal relationships take place usually on a face-to-face basis, with great frequency and on an intimate level. Secondary group are those in which the relationship among members is relatively impersonal and formalized. This amounts to residual category that includes all groups that are not primary, such as political parties, unions, occasional sports groups and the American Marketing Association.

Degree of organization

Groups range from those that are relatively unorganized to highly structured forms. We usually simplify this continuum into two types: formal and informal. Formal groups are those with a definite structure. They are likely to be secondary groups designed to accomplish specific goals, whether economic, social, political or altruistic. Informal groups are typically primary groups, characterized by a relatively loose structure, a lack of clearly defined goals or objectives, unstructured interaction and unwritten rules.

Family

Significance of the Family in Consumer Behavior:

Family is not just as a small group, but one that often predominant in its influence over consumer behavior. The family is both a primary group (face-to-face interaction) and a reference group (with members referring to certain values, norms, and standards in their behavior). These two factors are not the sole reason for accounting for the strength of the family’s influence. Rather, it is first, the fact that the bonds within the family are likely to be much more powerful than those in other small groups. Second, contrary to most other groups to which the consumer belongs, the family functions directly in the role of ultimate consumption.

Thus, the family operates as an economic unit, earning and spending money. In doing this, family members must establish individual and collective consumption priorities, decide on products and brands that fulfill their needs and also decide where these items are to be bought and how they are to be used in furthering family members’ goals. Also consumers’ attitudes toward spending and saving and even the brands and products purchased have been affected. Thus marketers need to understand the nature of the family’s influence on its members and the way in which purchase decisions are made by members so that they may effectively program their marketing mix.

Differences Between Families and Other Groups:

Family: (i) Formation by marriage or birth. Other Groups: (i) Formation by job or task. Family: (ii) More permanent relationship. Other Groups: (ii) More contractual relationship. Family: (iii) More interpersonal relations-oriented. Other Groups: (iii) More goal-oriented. Family: (iv) More intrinsic value seeking. Other Groups: (iv) More rational-oriented ties. Family: (v) Group-oriented (cooperative). Other Groups: (v) Self-oriented (competitive).

Families and Households:

It is important to understand the difference between various terms that are frequently encountered when discussing the concept of family. First, we should distinguish between the terms family and household, since market statistics may be gathered on either of these bases. A household includes the related family members and all the unrelated persons who occupy a housing unit (whether house, apartment, group of rooms, or other).

Thus households may be two main types: family and non-families. Those who do not live in group quarters such as military barracks, prisons, nursing homes, and college dormitories are households. Family is more limited and refers to a group of two or more persons related by blood, marriage, or adoption and residing together as a household.

It should be noted that marketers are interested not only in the concept of families but also of households, since both may form the basis of framework of much consumer decision-making and buying behavior. The marketer will use the concept that seems most relevant for segmenting markets.

For example, manufacturers of refrigerators, dishwashers, ranges and other kitchen appliances would probably fine households to be most relevant dimension in estimating market size since purchase and replace of these appliances would depend more on household formation than family formation. On the other hand, sellers of children’s clothing and toys would probably be more interested in data on families.

Family Life Cycle:

The concept of family or household life cycle has proven very valuable for marketer, especially for segmentation activities. The term life cycle refers to the progression of stages through which individuals and families proceed over time.

(a) Traditional life-cycle stage: In the United States of America, the following stages are typical of the family life cycle progression:

(i) The bachelor stage: young, single people. At this stage, earnings are relatively low, this group is generally recreation oriented and high on fashion opinion leaders.

(ii) Newly married couples: young no children. Financially better, family have highest purchase rate and highest purchase durables and specially furniture and appliances.

(iii) Full nest I: young married couples with youngest child under 6 years of age. First children born, wives have traditionally stopped working, reduction of family income. New demands for baby food, clothes, toys and medicines and expenses increases.

(iv) Full nest II: young married couples with youngest child 6 years or over of age. Family financial position improves, wife returns to work, cleaning material, bicycles and musical instruments are needed for the kids.

(v) Full nest III: older married couples with dependent children. Family income continues to rise and even children may be employed. More tasteful furniture needed to replace the older items. They spend more on traveling, buying automobiles etc.

(vi) Empty nest I: older married couples with no children living with them and household head in labor force. Family is more satisfied with its financial position and savings accumulation. They show interest on travel, recreation, and self-education.

(vii) Empty nest II: older married couples with no children living with them and household head retired. Medical appliances, and products that aid their health, sleep and digestion are in their routine and their income drastically cut.

(viii) Solitary survivor: older single people in labor force. Income is likely to be good; money spent in recreation and health oriented items.

(ix) Solitary survivor II: older retired single people. Drastic income cut, medical products are needed, they need for attention, affection, and security.

(b) A modernized family life cycle: During recent years, many changes in the family have occurred, particularly in smaller family size, postponement of marriage, and rising divorce rates. (i) Bachelor I: head is 18-34, single (never married, divorced, separated, widowed), no dependent children. (ii) Young couple: female head 18-34, couple (married or unmarried), no children. (iii) Full nest I: female head is 18-34, couple (married or unmarried), youngest child under 6. (iv) Full nest II: female head is 18-34, couple (married or unmarried), youngest child 6 or over. (v) Single parent I: head is 18-34, single (never married, divorced, separated, widowed), youngest child under 6. (vi) Single parent II: head is 18-34, single (never married, divorced, separated, widowed), youngest child 6 or over. (vii) Bachelor II: head 35-64, single, (never married, divorced, separated, widowed), no dependent children. (viii) Childless couple: female head is 35-64, (married or unmarried), no dependent children. (ix) Delayed full nest: female head 35-64, couple, (married or unmarried), youngest child under 6. (x) Full nest III: female head is 35-64, couple, (married or unmarried), youngest child 6 or over. (xi) Single parent III: head is 35-64, youngest child 6 or over. (xii) Bachelor III: head is 65 or older, single (never married, divorced, separated, widowed), no dependent children. (xiii) Older couple (empty nest): female head 65 or older, couple (married, unmarried), no dependent children.

For most products, however, lifecycle analysis allows the marketer to achieve a richer understanding of the market. The family is a primary socialization agent for each new generation. The transmission of attitudes, values, and behaviors from parents to children is termed as intergenerational transfer. The relevant question for the marketer is the extent to which this family influence carries over our consumer behavior as adults.

Family Purchasing Decision:

It is very important that the marketer understand who influences whom, and how, in the family buying process, so that the proper marketing strategy may be developed.

(i) Role structure: In the family each members are playing his or her role at different ways. Gender role preferences reflect culturally determined attitudes toward the role of wife/husband and mother/father in the household. (a) Instrumental and expressive roles: Husband is more likely to provide material support and primary leadership authority within the family, and the wife is more likely to provide affection and moral support. (b) Purchase process roles: There are several ways of viewing family members role as they relate to the purchase decision and consumption process. First: one or another family members may be the initiator. Second: someone in the family may be the influencer; he may also be the opinion leader. Third: one or more member of the family may gather information as information gatherer. Fourth: some one in the family may be the decision-maker having the authority to make the buying decision. Fifth: someone may act as a purchaser. Sixth: User may be the same of different persons from the above. For the marketer, it is important to distinguish each family member’s role in order to develop an optimum marketing strategy. (c) Role Load: role load is the continuum of demand on a spouse’s time, energy, and other resources. One or both may be under loaded or overloaded in their household roles.

(ii) Power structure: The fact that which family member is dominant or considered to be the family’s head. A family may be patriarchal (father), matriarchal (mother) or equalitarian (both) dominates the decision-making. (a) Purchase influence patterns: autonomic, husband dominant, wife dominant, and joint decisions may be made in the family. (b) Alternative family decision-making role structure: the decision-making can fit one of the four basic structure: parallel – two or more family members makes the decision; hierarchical – two or more family members are ranked in terms of their decision making; ring – members that comprises the ring are judged to have similar decision making; and star- one member is assigned to coordinate the effort of all other members in the family.

Strategies to resolve conflict: Family purchase decisions are often characterized by conflict over parties on several factors. Several strategies may be adopted to resolve the conflict: Expert – a spouse might attempt to influence other spouse by using their superior information; legitimate – influence other spouse based on their position in the households; bargaining – gain influence now and offer influence later on; reward – by offering reward; emotional – using emotional reaction; and impression management – using persuation.

(iii) Family-specific characteristics: There are number of factors influences the nature of family purchase decision e.g., culture, subculture, social class, reference groups, stages of life cycle, mobility, geographical location, children, marriage etc.

The Changing Family: As everything changes day after day, role of family also changes. It is important to understand what the major changes are. Changing female roles, traditionalists and feminists. Working wives are playing a different role in family decision-making. Stages in the family purchase decision, family specific characteristics (culture, social class, reference group influence, mobility). Marketers need to understand the changing roles of male and female consumers and design their marketing programs to meet the changing needs

PERSONAL INFLUENCE AND DIFFUSION OF INNOVATIONS

The nature and significance of personal influence

Personal influence is best described as the effect or change in a person’s attitudes or behaviour as a result of communication with others. It can occur in a number of ways. The following distinctions can be made to indicate the multidimensional nature of this communication phenomenon:

  1. Communication leading to influence may be source-initiated or recipient-initiated.
  2. Communication may result in one-way or two-way influence. That is, the individual may influence while being influenced.
  3. Communication resulting in influence may be verbal or visual.

 Opinion leadership in marketing

Opinion leaders are defined as those people who are able, in a given situation, to exert personal influence. They are the ones to whom others look for advice and information.

The term “opinion leader” is perhaps unfortunate because it tends to connote people of high status who make major decisions for the rest of us. In the marketing context, such a designation is unfortunate because it erroneously suggests an absolute leader whom others seek to follow. In effect, opinion leadership is a relative concept and the opinion leader may not be much more influential than his followers.

Who are opinion leaders?

Because personal influence of opinion leaders is quite significant, marketers are obviously interested in trying to reach such influential. To do so, however, requires that they first be identified and segmented. Perhaps they may then be reached with promotional messages and may then participate in additional communication and influence with their fellow group members.

Characteristics

(i)     Opinion leaders have approximately the same social-class position as non-leaders, although they may have higher social status within the class.

(ii)   Opinion leaders have greater exposure to mass media that are relevant to their area of interest.

(iii) Opinion leaders have greater interest and knowledge of the areas of influence than do nonleaders.

(iv) Opinion leaders are more gregarious than nonleaders are.

(v)   Opinion leaders have more innovativeness than do nonleaders.

(vi) Opinion leaders are also more familiar with and loyal to group standards and values than are nonleaders.

(vii)           Opinions leaders also appear to exhibit the personality trait of public individuation which is a state in which they feel differentiated to some degree from other people and choose to act differently from them.

Why opinion leaders attempt to influence others

Consumers do not speak about product or services unless they expect to derive some kind of satisfaction from the activity. We can categorize four reasons that opinion leaders engage in word-of-mouth communication about products or services.

a)      Product-involvement

b)      Self-involvement

c)      Other-involvement

d)     Message-involvement

Why followers accept personal influence

The marketer would certainly want o know the situational attributes under which opinion leadership will most likely occur so that he or she could actively cultivate the process. There are numerous products, individual and group characteristics that can be expected to influence the acceptance of opinion leadership by followers.

The market maven

The term “maven” is Yiddish and connotes a neighborhood expert who has information ranging over several topics. “Market Mavens”, therefore, are defined as individuals having information about many kinds of products, places to shop and other facets of markets, who initiate discussions with consumers and respond to their requests for market information.

MOTIVATIONS AND INVOLVEMENT

The nature and role of motives

The nature of motives

Motive is an inner state that mobilizes bodily energy and directs it in selective fashion toward goals usually located in the external environment. This definition implies that motives involve two major components.

  1. A mechanism to arouse bodily energy
  2. A force that provides direction to that bodily energy.

The role of motives

The role of motives is to arouse and direct the behaviour of consumers. The arousal component activates bodily energy so that it can be sued for mental and physical activity. In their directive role, motives have several important functions for guiding behaviour. They are:

(a)    Defining basic strivings

(b)   Identifying goal objects

(c)    Influencing choice criteria

(d)   Directing other influences

Classifying motives

Since the early 1900s many thousands of motive concepts have been suggested to account for the great diversi8ty of human behaviour. The need to group so many suggestions into a more manageable set of general categories soon became apparent. A variety of classification schemes ranging from the simplified to the complex have been proposed.

Simplified Schemes

A number of classification methods are simplified so that they group motives on the basis of one unique characteristic of interest. Several of particular relevance to understanding consumers are highlighted as follows.

(1)   Physiological versus psychogenic

(2)   Conscious versus unconscious

(3)   Positive versus negative

A comprehensive scheme

Although the above distinctions provide useful perspective, they are limited because only one characteristic serves as the basis of classification.  A more comprehensive method using four two-pole motive tendencies has been suggested by McGuire. The relevant distinctions are cognitive/ affective (mental deliberation versus emotional reactions), preservation/ growth (maintenance of equilibrium versus self-development), active/passive (self-initiated action versus reactive tendencies) and internal/ external (achievement of new internal states versus new relationships with environment). These four means of classification are not intended to be mutually exclusive. In fact, when used together they provide an interesting basis for appreciating sixteen major motivational influences on consumer behaviour.

Motive Structuring

Motives do not act on consumers in an arbitrary manner. They fit together in a unified pattern. This suggests the existence of a priority scheme or structuring mechanism. The structuring of motives also provides a central theme or organization for the consistence of influence over time.

Motive Hierarchy

The concept of a hierarchy underlines many schemes offered to explain the structuring of motive influences. The most influential motive is seen as enjoying the most dominant position in the hierarchy; the second most influential holds the second most dominant position and so on through the entire list. To be useful, the hierarchy concept must also help explain what factors influence the relative ordering of motives.

Maslow’s hierarchy perhaps the most widely known hierarchy was proposed by A. H. Maslow. His schemes classified motives into five groupings and suggested the degree to which each would influence behaviour. Maslow proposed that motives could be classified into five basic categories: physiological, safety, belongingness and love, esteem and self-actualization. He also suggested that these groupings are arranged in ascending order with physiological motives occupying the first position on the hierarchy and self-actualization occupying the last step.

Motive combination

It is convenient to discuss motives separately, as if they influence consumers independently and one at a time. Actually, they often interact, leading to a combined influence or to situations in which they conflict and exert opposing influences on behaviour.

Motive linking

Because motives can differ in how specific they are, it is possible for a linking to occur at various levels of generality. Therefore, achievement of a specific motive can be a means of approaching a more general motive which is viewed as the goal.

Motive building

It is very important to realize that a given product can satisfy various motives at the same approximate level of specific influence. This results in the bundling or combining of influences on consumers’ decisions.

Motive conflict

Motives can also conflict with each other to affect how consumers interact with the marketplace. A major contributor to the topic of motive conflict is Kurt Lewin. He viewed motives as influencing the attracting or repelling forces of goals in the individual’s environment.

In Lewin’s view, conflict is most likely when motives are of approximately equal strength. Three principal cases are possible: approach-approach, avoidance-avoidance and approach-avoidance conflict. Actually, these terms refer to psychological tendencies for attraction or repulsion, not necessarily actual physical movement.

Motivation Research

The concept of motivation research has been offered as a means of identifying consumers’ true, underlying purchase motives. The term is typically not used to describe just any type of research on motivational issues. It refers to certain research techniques and to some extent ways of interpreting information about motivation generated by these techniques. Briefly stated, the methods involve disguised and indirect techniques in an attempt to probe consumers’ inner motives without arousing defense mechanisms which can generate misleading results.

In practice, motivation research has yielded provocative and sometimes strange conclusions.

LEARNING AND MEMORY

Learning defined

Learning can be viewed as a relatively permanent change in behavior occurring as a result of experience. In that definition the important term “Behavior” refers to non-observable cognitive activities as well as to overt actions.

Types of learned behaviour

Change in consumer attitudes resulting from exposure to new information about a brand demonstrates this point. Learning results in regularly permanent change in behavior. Types of behavior are more important in the context of the definition of learning like:

  1. Physical behaviour: All healthy human learn to walk, talk, and interact with others
  2. Symbolic learning and problem solving: People learn symbolic meanings that enable highly efficient communication.
  3. Affective learning: This means that consumers learn many of their wants, goals, and motives as well as what products satisfy their needs.

 Principal of learning

Consumer learns in several basic ways. However four elements seen to be fundamental to the vast majority of situation: motive, cues, response, reinforcement.

Motive: Motive arouses individuals, thereby increasing their readiness to respond. This arousal function is essential, since it acti8vates the energy needed to engage in learning activity.

Cues: A cue may be viewed as weak stimulus not strong enough to arouse consumers but capable to providing direction to motivated activity.

Response: A respond may be viewed as mental or physical activity the consumers make in reaction to a stimulus situation.

Reinforcement: Reinforcement is anything that follows response and increasing the tendency for the response to reoccur in a similar situation.

10.5 Classifying learning

Learning connections: Learning involves the development of connection between a stimulus and some response to it. That is, the association of a response and a stimulus is the connection that is learned.

1. Classical conditioning: Classical conditioning (sometime called responded conditioning) pairs one stimulus with another that already elicits a given response. Over repeated trials, the new stimulus will also begin to elicit the same or a very similar response.

2. Instrumental conditioning: The method of instrumental conditioning involves developing confectioning between stimuli and response but the process involved differs from classical conditioning in several important respects. Although classical relies on an already established stimuli-response connection instrumental conditioning requires to learner to discover an appropriate or “correct” response – one that will reinforced.

Instead of viewing as the development of connections between stimuli and responses, cognitive theorists stress the importance of perception, problem solving and insight. This viewpoint contends that much learning occurs not as a result of trial and error or practice but through discovering meaningful patterns which enable us to solve problems. These meaningful patterns are termed gestalts and cognitive theories of learning rely heavily on the process of insight to explain the development of gestalts.

Memory

Memory processes are of considerable importance to the understanding of consumers. Basically, consumers act on the basis of their cognitions, or their knowledge or beliefs about the world. These cognitions are stored in memory and they influence how incoming stimuli are interpreted. They also form the basis for attitudes, behavioural intentions and brand choice.

Memory system refers to the multiple store approach views memory as being composed of three distinctive storage resisters. i.e. sensory, short-term and long-term which differ in capacity, storage duration and functioning.

Classification of memory

  1. Sensory memory: Information is first received by sensory memory. Inputs in the form of sensation that have been produced by the sensory receptors. Memory registers exits for sensation being produced through the visual, auditory and other sense organs. The capacity of these registers is very large – capable of strong all that the sensory receptors transmit.
  1. Short term memory: Short-term memory can be viewed as the workplace for information processing. That is a portion of the memory activated to the temporarily store and process information in order to interpret it and comprehends its meaning.
  2. Long-term memory: This memory can be thought of as the relatively permanent storehouse for information that has under gone sufficient processing. The material can be maintained in long term memory for as little as a few minutes to as long many years.

Characteristic of memory system

Point

Sensor memory

Short-term memory

Long-term memory

DurationFraction of a secondLess than one minuteUp to many years
CapacityAll that perceptual sensors can deliverApproximately seven itemsAlmost unlimited
Types of codingQuite of coding representation of realityIndirect chunkingIndirect clustering via meaningfulness
Major forgetting mechanismDecayDecayinterference

 Advertising application

Numerous memory concepts have significant implications for the field of advertising. The following conclusions represent only a sampling of the useful guidelines.

  1. Advertising message with unique aspects has greater potential for being remembered.
  2. The order in which material is presented seems to influence how well it will be retained, with the middle portion being most easily forgotten.
  3. Message that encourage immediate rehearsal of material stimulate its retentions.
  4. More information can be processed and retained if it is chucked
  5. The amount of information that can be transferred to long-term memory is function of the time available for processing.
  6. Memory is cue dependent and presentation of relevant cues will stimulate recall.

ATTITUDE
Definition of attitude

Attitude is an enduring organization motivation, emotional, perceptual, and cognitive process with respect to some aspect of the individual words”. This definition included some components.

  1. The cognitive or knowledge
  2. The affective or emotional
  3. Behavioral tendency.

Characteristics of attitude

  1. Attitude have an object
  2. Attitude have a direction
  3. Attitude have a intensity
  4. Attitude have a degree
  5. Attitude are learned

Functions of attitudes

There are four types of function of attitude

  1. Adjustment function: Adjustment function derives people toward pleasurable or rewarding object and away from unpleasant, undesirable wants. It serves the utilitarian concept of maximizing reward and minimizing punishment.
  2. Ego defensive function: Attitude formed to protect the ego- or self image from threats help fulfill the defensive function. Actually many outward expressions of such attitudes reelected the opposite of what the person perceives himself to be.
  3. Value Expressive function: Whereas ego-defensive attitudes are formed to protect a person’s self-image, value expressive attitudes enable the expression of the person’s centrally held values. Therefore, consumers adopt certain attitudes in an effort to translate their values into something more tangible and easily expressed.
  4. Knowledge function: Humans have a need for a structured and orderly world, and therefore, they seek consistency, stability, definition and understanding. Out of this need develops attitudes toward acquiring knowledge. In addition, the need to know tends to be specific. Thus, out of our need to know come attitudes about what we believe we need or do not need to understand.

 CONSUMER DECISION PROCESS

Types of consumer decision

The basic decisions of the consumers are classified in to five categories like:

  1. What to buy?
  2. How much to buy?
  3. Where to buy?
  4. When to buy?
  5. How to buy?

Problem recognition

Problem recognition results when a consumer recognized a difference of sufficient magnitude between what is perceived as the desired state of affairs and what is the actual state of affairs, enough to arouse and activate the decision process. The “actual state” refers to the way in which a need is already begin met and the “desire state” is the way a person would like for the need to be satisfied.

The consumer problem recognition process

Situation leading to problem recognition

There are numerous situations that may cause consumer problem recognition to occur. Although discussion of all of the potential sources is impossible, we can present the most significant reasons and explain briefly how each one might arise.

(i)                 Depleted or inadequate stock of goods

(ii)               Discontentment with the stock of goods

(iii)              Changing environmental circumstances

(iv)              Changing financial circumstances

(v)               Marketing activities

Results of problem recognition

Once the consumer becomes aware of a problem, two basic outcomes are possible. One result is for the consumer, in effect, not to pursue any further problem-solving behaviour, which might occur if the difference between the consumer’s perceived desired and actual states is not great enough to cause him to act to resolve the difference.

Another situation in which problem recognition may not lead to further stages of consumer decision making occurs when certain environmental elements prelude it.

Problem recognition under low-involvement condition

Problem recognition under low-involvement conditions is thought to be different from that under high-involvement conditions. Rather than being anything dramatic and highly goal-oriented, it is characterized more by point-of-purchase triggering or stimulation of problem recognition based on familiarity with the brand developed through repetitive advertising. Problem recognition, therefore, occurs in this case not as a result of first-time exposure to promotion but perhaps because of a low level of appeal in which the consumer may develop a mild interest in checking out the product’s suitability at some point in the future.

SEARCH AND EVALUATION

The information-search process

Types of consumer search activities

The term “search” refers to mental as well as physical information-seeking and processing activities which one engages in to facilitate decision making regarding some goal-object in the market place. Consequently, search may be under taken in order to find out about products, prices, stores and so on, related to the product. Search may be categorized as pre-purchase or ongoing and as internal or external.

(i)                 Pre-purchase search: This is the typical form of search we associate within the purchasing context. If the consumer has recognized a problem, then pre-purchase search would be engaged in.

(ii)               Ongoing search: This is characterized as search activities independent of specific needs or decisions, that is, it does not occur in order to solve a recognized and immediate purchase problem Thus if a consumer were searching with an interest in a product but with no demand for the product, the search would be ongoing rather than pre-purchase,

(iii)              Internal search: This is the first stage to occur after the consumer experiences problem recognition. It is a mental process of recalling and reviewing information stored in memory that may relate to the purchase situation.

(iv)              External search: This refers to the process of obtain information from other sources in addition to that which can be recall from memory.

Types and source of information

A great variety of information of potential interest to consumers exists in the external environment. Three general categories are –

(1)   Information about the existence and availability of various product and service offerings

(2)   Information useful in forming evaluative criteria- the standards which are employed to evaluate alternatives

(3)   Information on the properties and characteristics of alternatives.

In addition to the direct experience of using product themselves, consumers gain information from three major areas:

(1)   Marketer-dominated sources

(2)   Consumer sources

(3)   Neutral sources

Cognitive and personal biases in decision making

It is generally agreed that biases can creep into our decision making processes, calling into question the correctness of a decision. Below is a list of some of the more common cognitive biases.

  • Selective search for evidence – We tend to be willing to gather facts that support certain conclusions but disregard other facts that support different conclusions.
  • Premature termination of search for evidence – We tend to accept the first alternative that looks like it might work.
  • Conservatism and inertia – Unwillingness to change thought patterns that we have used in the past in the face of new circumstances.
  • Experiential limitations – Unwillingness or inability to look beyond the scope of our past experiences; rejection of the unfamiliar.
  • Selective perception – We actively screen-out information that we do not think is salient.
  • Wishful thinking or optimism – We tend to want to see things in a positive light and this can distort our perception and thinking.
  • Recency – We tend to place more attention on more recent information and either ignore or forget more distant information.
  • Repetition bias – A willingness to believe what we have been told most often and by the greatest number of different of sources.
  • Anchoring – Decisions are unduly influenced by initial information that shapes our view of subsequent information.
  • Group think – Peer pressure to conform to the opinions held by the group.
  • Source credibility bias – We reject something if we have a bias against the person, organization, or group to which the person belongs: We are inclined to accept a statement by someone we like.
  • Incremental decision making and escalating commitment – We look at a decision as a small step in a process and this tends to perpetuate a series of similar decisions. This can be contrasted with zero-based decision making.
  • Inconsistency – The unwillingness to apply the same decision criteria in similar situations.
  • Attribution asymmetry – We tend to attribute our success to our abilities and talents, but we attribute our failures to bad luck and external factors. We attribute other’s success to good luck, and their failures to their mistakes.
  • Role fulfillment – We conform to the decision making expectations that others have of someone in our position.
  • Underestimating uncertainty and the illusion of control – We tend to underestimate future uncertainty because we tend to believe we have more control over events than we really do.
  • Faulty generalizations – In order to simplify an extremely complex world, we tend to group things and people. These simplifying generalizations can bias decision making processes.
  • Ascription of causality – We tend to ascribe causation even when the evidence only suggests correlation. Just because birds fly to the equatorial regions when the trees lose their leaves, does not mean that the birds migrate because the trees lose their leaves.

Other Modern Topics Based On Consumer Behavior:

 Customer analytics

Customer analytics is a process by which data from customer behavior is used to help make key business decisions via market segmentation and predictive analytics. This information is used by businesses for direct marketing, site selection, and customer relationship management.

Uses of Customer Analytics

Retail
Gathering customer data and implementing it into some type of application that can enhance insight and the decision making process is a common application of customer analytics used by retailers.

Community

Municipalities utilize customer analytics in an effort to lure retailers to their cities. Using psychographic variables, communities can be segmented based on attributes like personality, values, interests, and lifestyle. Using this information, communities can approach retailers that match their community’s profile.

Customer Relationship Management

Analytical Customer Relationship Management, commonly abbreviated as CRM, enables measurement of and prediction from customer data to provide a 360° view of the client.

Predicting Customer Behavior

Forecasting buying habits and lifestyle preferences is a process of data mining and analysis. This information consists of many aspects like credit card purchases, magazine subscriptions, loyalty card membership, surveys, and voter registration. Using these categories profiles can be created for any organization’s most profitable customers. When many of these potential customers are aggregated in a single area it indicates a fertile location for the business to situate. Using a drive time analysis, it is also possible to predict how far a given customer will drive to a particular location. Combining these sources of information, a dollar value can be placed on each household within a trade area detailing the likelihood that household will be worth to a company. Through customer analytics, companies can make decisions with confidence because every decision is based on facts and objective data.

Data Mining

There are two types of categories of data mining. Predictive models use previous customer interactions to predict future events while segmentation techniques are used to place customers with similar behaviors and attributes into distinct groups. This grouping can help marketers to optimize their campaign management and targeting processes.

The Future of Customer Analytics

By continuing to improve customer prediction techniques it will become a necessity rather than a convenient commodity for businesses to use customer analytics. With this valuable information there is an opportunity to fine-tune retail operations and store manager decisions. Rapid decision making will increase in speed and effectiveness in the future as tools and information become more easily accessible. The possibilities are still emerging, but applications in political races, jury selection, and developing clinical trail communities are areas that customer analytics could be used in the future. The Future of Customer Analytics

Consumer revolution

The term consumer revolution refers to the period from the late sixteenth century to the nineteenth century in which there was a marked increase in consumption of various goods and products by individuals from different economic and social backgrounds. The consumer revolution allowed a diverse group of individuals to purchase similar items, that previously may have only been available to those of middle to upper classes. This revolution allowed individuals who were not necessarily wealthy to indulge, and consume products that were necessity as well as those that were not. This was a period of transition in terms of how individuals were spending money and what they were spending money on. The consumer revolution blossomed in early modern Europe, or what would be commonly identified as Europe (countries such as Britain, France, and Spain) and the Mediterranean (Italy and the regions that consisted of the Ottoman Empire), and eventually spread throughout the world. The consumer revolution marks a departure from a traditional mode of life that was dominated by frugality or scarcity to that of mass consumption by numerous individuals.

Background

There were a number of contributing factors, which helped to create the consumer revolution. The Industrial Revolution was a major contributor to the consumer revolution. A great quantity of goods were being produced, for fairly cheap price points, which allowed consumers of all economic backgrounds to partake in buying a greater array of goods than ever before.

Moreover, the expansion of trade and markets also contributed to the burgeoning consumer revolution. As individuals were constantly going to different locations, they brought with them items from home, as well as acquired new goods from the regions they were frequenting. For instance, ‘English’ merchants brought into Ottoman ports tobacco they had obtained from the Atlantic trade.

Therefore, with the constant migration and movement of individuals, goods spread throughout early modern Europe, in a variety of ways. With goods becoming cheaper, and more abundant because of the production that the industrial revolution created, as well as through the influx and importation of goods to and from different locations, the consumer revolution was conceived.

Types of Products Consumed

Individuals were able to consume a number of items, some which were necessity, and other considered to be of a desirous or luxurious nature. Regardless, consumers were able to purchase more goods, for cheaper prices than ever before. Some of the more popular items that were consumed in early modern Europe and the Ottoman Empire were tobacco, coffee, and clothing. These types of items all contributed to and fueled the ever-changing consumer market of supply and demand.

Tobacco

Tobacco was one of the key items in the consumer revolution. There was a rise in the popularity of tobacco in regions that constituted the Ottoman Empire for instance, towards the end of the sixteenth century and into the seventeenth century. As individuals became increasingly exposed to tobacco through its importation for instance, issues of morality and legality erupted. Many opposed the consumption of tobacco, while others embraced smoking for various reasons (a new pastime, a social practice, etc). The consumption of tobacco spurned individuals to spend money on tobacco itself, but also on items that were associated with it. For instance, pipes made of different materials, as well as the water pipe or the hookah became part of the tobacco market.[5] This is relevant to the consumer revolution in the sense that regardless of the controversy that accompanied tobacco, individuals were still willing to buy this item, and goods associated with it. Tobacco was not necessarily an item that was vital for survival, but individuals were able to consume it because as the number of smokers increased, and the demand for tobacco increased, a market for this product was born. Merchants within the Ottoman empire realized the lucrative nature of tobacco, and began to produce much of this product in regions closer to the Empire, which meant that the price for tobacco would drop making it more affordable for a mass market.

It is important to examine the range of goods that individuals were interested in, and what was popular at the time and why it helped to change the market and the way that individuals spent their money.

Cultural and Societal Significance

Coffee was also an item that came into high demand during the consumer revolution. In fact, there was a huge debate over the consumption of coffee as well, but as in the case with tobacco, coffee became a product of high demand, and ultimately proved superior to those trying to suppress its consumption. The impact of coffee upon culture and society was that it created a communal environment. That is, coffeehouses began to emerge to not only meet the demand for the actual beverage, but also as a place of business, and ultimately, a place where individuals from different rungs of the social hierarchy could interact with one another over their common enjoyment of the beverage. It is apparent that coffee was not the enemy; rather, many individuals were intimidated by the fact that items which could be consumed by a number of peoples, and were no longer exclusive. Coffeehouses created a mutual environment or a level playing field amongst individuals of all economic and social backgrounds. It was almost as though coffee or a product like tobacco blurred cultural and societal restrictions because they could now be, due to the consumer revolution (hat is their availability and price) be enjoyed by a more diverse demographic and were no longer exclusive.

It is also important to note that this purchasing ability gave minority members a visible presence. For instance, women had been the predominant agents of purchases, but the market expanded because of their presence. That is to say that the consumer revolution created a market in which women had more opportunities than ever before. There was a wider market, from street corners, to the actual market place, to the later development of department stores, the power that accompanied a woman due to her purchasing ability that had come about in part because of the consumer revolution gave women a new sense of power in terms of how they spent their money, but also in terms of how businesses would expand the market to appeal to women.

Different goods impacted the way that individuals conducted themselves and treated others (when goods were consumed). That is to say that, coffee for instance had individuals who were staunchly opposed to its consumption and those who thoroughly enjoyed the beverage and atmosphere that it created. What the consumer revolution brought about was a mixing of peoples from different rungs of society through their mutual affection for products that many individuals, no longer just those from the upper rungs of society could enjoy. A new type of culture or society emerged because of the consumer revolution. One in which many individuals had more than ever before, and consuming products became a practice that was beyond survival. A culture of consumption was created.

 Political Significance

Products that were consumed also had political significance. Coffee and tobacco proved to be two items that were controversial. Some individuals believed that these types of products were dangerous to the moral fiber of the individual consuming them as well as the moral fiber of society. Therefore, products that were being consumed at a more rapid rate that ever before were often a source of tension within society, for the population was often split on their views of the various goods.

Disunity was created in the sense that those opposed to it were in conflict with those individuals who were choosing to partake in their newfound purchasing power or ability to acquire a variety of goods with those who believed that such goods (as tobacco and coffee) were harmful. But in the wider scheme of things, it was not necessarily the products alone that created this disunity. Rather, it was the fact that individuals were making choices that were outside of rules of the particular society, which often worried many in power because this type of independence invoked a certain fear because people now had more choice and ability. Moreover, the participation of individuals from different backgrounds in the market meant that those who were wealthier or represented a certain prestiege were now being put upon the same level as those they had considered their social inferiors which meant that the political, social and cultural influence that the wealthy had was now being deduced because middle and lower class individuals now had a purchasing power which they had previously been denied.

Women are an example of the political paranoia that did ensue because of the consumer revolution. There was a sense of independence associated with the increased consumption of goods. Women were often in charge of the domestic spending, not only in terms of survival, but also in regards to how their home looked and how their family looked. Granted, individuals were each on a different economic scale, but the fear that grew from the purchasing power of women was that if women were given this power, then it could potentially overlap into the political realm, and chaos would ensue because ultimately, women were just not capable.[10] Although this was quite ironic, given that women were in charge of so much, this view which really stemmed from the latter portion of the consumer revolution (the nineteenth century), the fact of the matter was that individuals were fear stricken when it came to the fact that individuals such as women were exposed to increasing independence because of spending ability.

Politically, the consumer revolution created a sense of unity within various communities in the sense that a greater number of individuals could buy similar items and enjoy similar goods in a way that had not previously existed. This section is meant to further expand on how products could create or be the source of political unity, or the source of disunity in the community.

Moreover, politics is related to the consumer revolution in the sense that it fostered trading relationships and relationships between various regions, so the political economy that occurred is important to understanding how this revolution helped to alter society.

Finally:

The consumer revolution meant that a vast number of individuals had the greater ability to purchase wider array of goods than ever before. Some of these items were indulged in, not because they were necessity but because they became a part of social climate. At the same time, political, social and cultural fear arose because of the consumer revolution because individuals now had more choice, and an increasing independence, which meant there was a loss of power for those who were classified as higher upon the social hierarchy. The consumer revolution had both positive as well as negative attributes politically, socially and culturally.

The consumer revolution spanned much of early modern Europe, with goods such as tobacco, coffee, clothing, as well as furnishings (more so in the nineteenth century) becoming more readily available to a wider demographic.

Consumerism

Consumerism is the equating of personal happiness with the purchasing of material possessions and consumption. The term is often associated with criticisms of consumption starting with Karl Marx and Thorstein Veblen.

Veblen’s subject of examination, the newly emergent middle class arising at the turn of the twentieth century, comes to full fruition by the end of the twentieth century through the process of globalization.

In economics, consumerism refers to economic policies placing emphasis on consumption. In an abstract sense, it is the belief that the free choice of consumers should dictate the economic structure of a society (cf. Producerism, especially in the British sense of the term)

History

Consumerism has strong links with the Western world, but actually is multi-cultural and non-geographical. People purchasing goods and consuming materials in excess of their basic needs is as old as the first civilizations (see Ancient Egypt, Babylon and Ancient Rome, for example). Since consumerism began, various individuals and groups have consciously sought an alternative lifestyle through simple living.

The older term and concept of “conspicuous consumption” originated at the turn of the 20th century in the writings of sociologist and economist, Thorstein Veblen. The term describes an apparently irrational and confounding form of economic behaviour. Veblen’s scathing proposal that this unnecessary consumption is a form of status display is made in darkly humorous observations like the following:

“It is true of dress in even a higher degree than of most other items of consumption, that people will undergo a very considerable degree of privation in the comforts or the necessaries of life in order to afford what is considered a decent amount of wasteful consumption; so that it is by no means an uncommon occurrence, in an inclement climate, for people to go ill clad in order to appear well dressed.” (The Theory of the Leisure Class, 1899).

The term “conspicuous consumption” spread to describe consumerism in the United States in the 1960s, but was soon linked to debates about media theory, culture jamming, and its corollary productivism.

While consumerism is not a new phenomenon, it has become widespread over the course of the 20th century, and particularly in recent decades. The influence of neoliberal capitalism has made the citizens of capitalist countries extraordinarily wealthy compared to those living under other economic systems.

Usage

Webster’s dictionary defines Consumerism as “the promotion of the consumer’s interests” or alternately “the theory that an increasing consumption of goods is economically desirable”. It is thus the opposite of anti-consumerism or of producerism.

  • Anti-consumerism is the socio-political movement against consumerism. In this meaning, consumerism is the equating of personal happiness with the purchasing material possessions and consumption.
  • In relation to producerism, it is the belief that the free choice of consumers should dictate the economic structure of a society, rather than the interests of producers. It can also refer to economic policies that place an emphasis on consumption.

Criticism

In many critical contexts, consumerism is used to describe the tendency of people to identify strongly with products or services they consume, especially those with commercial brand names and obvious status-enhancing appeal, e.g. a luxury automobile, designer clothing, or expensive jewelry. A culture that is permeated by consumerism can be referred to as a consumer culture.

Impulse buyers are quite different from shopaholics, who cannot resist spending money.

Opponents of consumerism argue many luxuries and unnecessary consumer products are social signals allowing people to identify like-minded individuals through the display of similar products. Some believe relationships with a product or brand name are substitutes for healthy human relationships lacking in societies and along with consumerism are part of the general process of social control and cultural hegemony in modern society. Critics of consumerism are quick to point out that consumerist societies are more prone to damage the environment, contribute to climate change and use up resources at a higher rate than other societies.

It is in the interest of product advertisers and marketers that the consumer’s needs and desires never be completely or permanently fulfilled. It is smarter for the marketer to sell the consumer a flashy trinket that will wear out and break quickly. It is even better for the product to be part of a continuously changing fashion market, where items in a nearly-new and good condition must be replaced to stay current with the latest trend. In this way steady profits are assured, but consumers are not comfortable or satisfied for very long with what they have.

Modern Consumerism in the 21st century

Beginning in the 1990’s the most frequent reason given for attending college had changed to making a lot of money, outranking reasons such as becoming an authority in a field or helping others in difficulty. This statement directly correlates with the rise of materialism, specifically the technological aspect. At this time compact disc players, digital media, personal computers, and cellular phones, all began to integrate into the affluent American’s everyday lifestyle. A large change in American culture has subsequently occurred – “a shift away from values of community, spirituality, and integrity, and toward competition, materialism and disconnection.”

Companies and corporations have realized that rich consumers are the most attractive targets for marketing their products. The upper class’ tastes, lifestyles, and preferences, trickle down to become the standard which all consumers seek to emulate. The not so well off consumers can “purchase something new that will speak of their place in the tradition of affluence”. A consumer can have the instant gratification of purchasing a high-ticket item that will help improve their social status.

Emulation is also a core component of 21st century consumerism. As a general trend, regular consumers seek to emulate those who are above them on the social hierarchy. The poor strive to imitate the rich and the rich imitate celebrities and other icons. One needs to look no further than the celebrity endorsement of products to dissuade the notion that the American population makes its own decisions and models itself as a group of individualists.

Counter arguments

There has always been strong criticism of the anti-consumerist movement. Most of this comes from libertarian thought.[6]

Libertarian criticisms of the anti-consumerist movement are largely based on the perception that it leads to elitism. Namely, libertarians believe that no person has the right to decide for others what goods are necessary for living and which aren’t, or that luxuries are necessarily wasteful, and thus argue that anti-consumerism is a precursor to central planning or a totalitarian society. Twitchell, in his book Living It Up, sarcastically remarked that the logical outcome of the anti-consumerism movement would be a return to the sumptuary laws that existed in ancient Rome and during the Middle Ages, historical periods prior to the era of Karl Marx in the 19th century.

Customer retention

Customer Retention is the activity that the selling organization undertakes to reduce customer account defections. The success of this activity is when the customer account places an additional order before a 12-month period has expired. Note that ideally these orders will need to contribute similar financial amounts to the previous 12 months.

It can also be described as a series of actions that the selling organization undertakes to reduce defections. This is the selling organization’s perspective of what they have to implement after the agreement in principle stage of the buying cycle.

The success of the customer retention process is measured when the customer places an additional order before a 12-month period has expired.

Retention Rate is the percentage of the total number of customers who have repeatedly placed an order (or made a transaction) during a twelve month period measured over a number of years, compared to the total number of customers in the same period.

Customer satisfaction

Customer satisfaction, a business term, is a measure of how products and services supplied by a company meet or surpass customer expectation. It is seen as a key performance indicator within business and is part of the four perspectives of a Balanced Scorecard.

In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy.

There is a substantial body of empirical literature that establishes the benefits of customer satisfaction for firms

Measuring customer satisfaction

Organizations are increasingly interested in retaining existing customers while targeting non-customers; measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace.

Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service. The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction can also vary depending on other options the customer may have and other products against which the customer can compare the organization’s products.

Because satisfaction is basically a psychological state, care should be taken in the effort of quantitative measurement, although a large quantity of research in this area has recently been developed. Work done by Berry, Brodeur between 1990 and 1998[3] defined ten ‘Quality Values’ which influence satisfaction behavior, further expanded by Berry in 2002 and known as the ten domains of satisfaction. These ten domains of satisfaction include: Quality, Value, Timeliness, Efficiency, Ease of Access, Environment, Inter-departmental Teamwork, Front line Service Behaviors, Commitment to the Customer and Innovation. These factors are emphasized for continuous improvement and organizational change measurement and are most often utilized to develop the architecture for satisfaction measurement as an integrated model. Work done by Parasuraman, Zeithaml and Berry between 1985 and 1988 provides the basis for the measurement of customer satisfaction with a service by using the gap between the customer’s expectation of performance and their perceived experience of performance. This provides the measurer with a satisfaction “gap” which is objective and quantitative in nature. Work done by Cronin and Taylor propose the “confirmation/disconfirmation” theory of combining the “gap” described by Parasuraman, Zeithaml and Berry as two different measures (perception and expectation of performance) into a single measurement of performance according to expectation. According to Garbrand, customer satisfaction equals perception of performance divided by expectation of performance.

The usual measures of customer satisfaction involve a survey with a set of statements using a Likert Technique or scale. The customer is asked to evaluate each statement and in term of their perception and expectation of performance of the organization being measured.

Ethical consumerism

Ethical consumerism is buying things that are made ethically. Generally, this means without harm to or exploitation of humans, animals or the natural environment. This can take on the following forms:

  • Positive buying — favoring ethical products, and businesses that operate on principles based primarily on benefit for the greater good rather than self-interest, allowing for business self-interest only for the perpetuation of doing general good outside of self.
  • Moral boycott — negative purchasing and company-based purchasing.

Alternative terms are ethical consumption, ethical purchasing, moral purchasing, ethical sourcing or ethical shopping

Basis

Global morality

In “The Global Markets As An Ethical System”, John McMurtry argues that there is no purchasing decision that does not itself imply some moral choice, and that there is no purchasing that is not ultimately moral in nature. This mirrors older arguments, especially by the Anabaptists, e.g. Mennonites, Amish, that one must accept all personal moral and spiritual liability of all harms done at any distance in space or time to anyone by one’s own choices. Judeo/Christian scriptures further direct good stewardship of the Earth which God has created and given man charge over. Accordingly, sustainability is required and purchasing for vanity or status is abhorred and shunned. This theory is echoed in some modern eco-villages who adopt very similar stances, effectively blocking all goods that do not satisfy their moral criteria at the village gate, and relying on internally produced food and tools as much as possible.

Spending as morality

Certain trust criteria, e.g. creditworthiness or implied warranty, are considered to be part of any purchasing or sourcing decision. However, these terms refer to broader systems of guidance that would, ideally, cause any purchasing decision to disqualify offered products or services based on non-price criteria that do not affect the functional, but rather moral, liabilities of the entire production process. Paul Hawken, a proponent of Natural Capitalism, refers to “comprehensive outcomes” of production services as opposed to the “culminative outcomes” of using the product of such services. Often, moral criteria are part of a much broader shift away from commodity markets towards a deeper service economy where all activities, from growing to harvesting to processing to delivery, are considered part of the value chain and for which consumers are “responsible”.

Some argue that “Shopping is more important than voting”, and that the disposition of money is the most basic role we play in any system of economics. Some theorists believe that it is the clearest way that we express our actual moral choices, i.e., if we say we care about something but continue to buy from parties that have a high probability of risk of harm or destruction of that thing, we don’t really care about it, we are practicing a form of simple hypocrisy.

Criticism

Critics argue that the ability to effect structural change is limited in ethical consumerism. Some cite the preponderance of niche markets as the actual effect of ethical consumerism, while others argue that information is limited regarding the outcomes of a given purchase, preventing consumers from making informed ethical choices. Critics have also argued that the uneven distribution of wealth prevents consumerism, ethical or otherwise, from fulfilling its democratic potential

Conclusion

Overall when it comes to analyze consumer behavior, general views of people about consumer promotion and price perceptions have a great impact on consumer decision-making. But When it comes other factors like culture, subculture, social class, social group, family, personal influence, motivation, learning, attitude play an important role in addition to general views on consumer promotion and price perception. So all such factors or elements that could have an impact on the consumer behavior should be considered very important.

References

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  • LLLLLLLLLLLLLL
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·  The Theory of Buyer Behavior ‘ (Wiley, 1969)

·  Engel, J., Kollatt, D. and Blackwell, R. ‘Consumer Behavior ‘ (Dryden Press, 1978)

·  D. Mercer, ‘Marketing’ (Blackwell, 1996)

·  ‘Behaviour of Buyer'(T.Ocean 1998)

  • ·  Belch, G. E., & Belch, M. A. Advertising and Promotion: An Integrated Marketing Communications Perspective,(6 th: New York: NY: McGraw-Hill. 2004)
  • http://www.headstrong.com/story.cfm?id=1-224
  • http://www.dmreview.com/article_sub.cfm?articleId=1003979
  • http://www.ismretail.com/index.php?option=com_jambozine&layout=article&view=page&aid=7183
  • http://www.crmbuyer.com/story/49917.html

Consumer Behavior

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