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1 Defining Consumer Behavior :

Consumer Behavior may be defined as the interplay of forces that takes place during a consumption process, within a consumers self and his environment.

this interaction takes place between three elements viz. knowledge, affect and behavior; it continues through pre-purchase activity to the post purchase experience; it includes the stages of evaluating, acquiring, using and disposing of goods and services.

The consumer includes both personal consumers and business/industrial/organizational consumers. Consumer behavior explains the reasons and logic that underlie purchasing decisions and consumption patterns; it explains the processes through which buyers make decisions. The study includes within its purview, the interplay between cognition, affect and behavior that goes on within a consumer during the consumption process: selecting, using and disposing off goods and services.

i. Cognition:

This includes within its ambit the knowledge, information processing and thinking part; It includes the mental processesc involved in processing of information, thinking and interpretation of stimuli (people, objects, things, places and events). In our case, stimuli would be product or service offering; it could be a brand or even anything to do with the 4Ps.

ii. Affect:

This is the feelings part. It includes the favorable or unfavorable feelings and corresponding emotions towards a stimuli (eg. towards a product or service offering or a brand). These vary in direction, intensity and persistence.

iii. Behavior:

This is the visible part. In our case, this could be the purchase activity: to buy or not a buy (again specific to a product or service offering, a brand or even related to any of the 4 Ps).

The interaction is reciprocal between each of the three towards each other and with the environment.

Other Definitions :
The behavior that consumers display in searching for, purchasing, using, evalauting and disposing of products and services that they expect will satisfy their needs.

- Schiffman and Kanuk

..the decision process and physical activity engaged in when evaluating, acquiring, using or disposing of goods and services."

- Loudon and Bitta

 The study of consumers as they exchange something of value for a product or service that satisfies their needs

- Wells and Prensky

Those actions directly involved in obtaining, consuming and disposing of products and services including the decision processes that precede and follow these actions.

-Engel, Blackwell, Miniard

the dynamic interaction of effect and cognition, behavior and the environment by which human beings conduct the exchange aspects of their lives

-American Marketing Association 1.2 Nature and Scope of Consumer Behavior :

1.2.1 Nature of Consumer Behavior:
i. The subject deals with issues related to cognition, affect and behavior in consumption behaviors, against the backdrop of individual and environmental determinants. The individual determinants pertain to an individuals internal self and include psychological components like personal motivation and involvement, perception, learning and memory, attitudes, self-concept and personality, and, decision making. The environmental determinants pertain to external influences surrounding an individual and include sociological, anthropological and economic components like the family, social groups, reference groups, social class, culture, sub-culture, cross-culture, and national and regional influences. The subject can be studied at micro or macro levels depending upon whether it is analyzed at the individual level or at the group level. The subject is interdisciplinary. It has borrowed heavily from psychology (the study of the individual: individual determinants in buying behavior), sociology (the study of groups: group dynamics in buying behavior), social psychology (the study of how an individual operates in group/groups and its effects on buying behavior), anthropology (the influence of society on the individual: cultural and cross-cultural issues in buying behavior), and economics (income and purchasing power). Consumer behavior is dynamic and interacting in nature. The three components of cognition, affect and behavior of individuals alone or in groups keeps on changing; so does the environment. There is a continuous interplay or interaction between the three components themselves and with the environment. This impacts consumption pattern and behavior and it keeps on evolving and it is highly dynamic. Consumer behavior involves the process of exchange between the buyer and the seller, mutually beneficial for both. As a field of study it is descriptive and also analytical/ interpretive. It is descriptive as it explains consumer decision making and behavior in the context of individual determinants and environmental influences. It is analytical/ interpretive, as against a backdrop of theories borrowed from psychology, sociology, social psychology, anthropology and economics, the study analyzes consumption behavior of individuals alone and in groups. It makes use of qualitative and quantitative tools and techniques for research and analysis, with the objective is to understand and predict consumption behavior.

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It is a science as well as an art. It uses both, theories borrowed from social sciences to understand consumption behavior, and quantitative and qualitative tools and techniques to predict consumer behavior.

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1.2.2

Scope of Consumer Behavior:

The study of consumer behavior deals with understanding consumption patterns and behavior. It includes within its ambit the answers to the following: - What the consumers buy: goods and services - Why they buy it: need and want - When do they buy it: time: day, week, month, year, occasions etc. - Where they buy it: place - How often they buy it: time interval

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- How often they use it: frequency of use The scope of consumer behavior includes not only the actual buyer but also the various roles played by him/ different individuals.

Basic Components:

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i) Decision making (Cognitive and Affect):

-this includes the stages of decision making: Need recognition, Information search, Evaluation of alternatives, Purchase activity, Post purchase behavior.

ii) Actual purchase (Behavior):

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-this includes the visible physical activity of buying of goods and/or service. It is the result of the interplay of many individual and environmental determinants which are invisible. iii) Individual determinants and environmental influences: The environmental factors affect the decision process indirectly, through way of affecting individual determinants. iv) Buying roles: Actual Buyer vis a vis other users. There are five buying roles, viz., Initiator, Influencer, Decider, User, Buyer. The initiator is the person who identifies that there exists a need or want; the influencer is the one who influences the purchase decision, the actual purchase activity and/or the use of the product or service; the decider is the one who decides whether to buy, what to buy, when to buy, from where to buy, and how to buy; the buyer is theone who makes the actual purchase; and, theuser is the person (s) who use the product or service. These five roles may be played by one person or by different persons. A person may assume one or more of these roles. This would depend on the product or service in question.

Examples: Let us take two examples.

Example 1:
A child goes to a kindergarten school. She comes back home and asks her parents to buy her a set of color pencils and crayons. Now the roles played are: 1. Initiator: the child in nursery school

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2. Influencer: a fellow classmate 3. Decider: the father or the mother 4. Buyer: the father or the mother 5. User: the child

Example 2:
The lady of a house who is a housewife and spends her day at home doing household chores watches TV in her free time. That is her only source of entertainment. The TV at home is giving problem. She desires a new TV set, and says that she wants an LCD plasma TV. Now the roles played are:

1. Initiator: the housewife (mother) 2. Influencer: a friend / neighbour 3. Decider: the husband or the son 4. Buyer: the husband or the son 5. User: the family Consumer behavior focuses specifically on the Buyer and often User. But also analyzes impact of other roles.

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v) Buyers and Sellers: They are the key elements in consumer behavior. They have needs and
wants and go through a complex buying process, so as to be able to satisfy the need through purchase of the good or service offering. They enter into an exchange process with the seller, which leaves both the parties (buyer and seller) better off than before. In fact the exchange process is value enhancing in nature, leading to satisfaction of both the parties.

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1.3 Application of Consumer Behavior :

An understanding of consumer behavior is necessary for long term success and survival of a firm. It is viewed as the edifice of the marketing concept, an important orientation in marketing management. According to the marketing concept, the marketer should be able to determine needs and wants of the target segment and provide product and service offerings more effectively and efficiently than competitors. It is essentially a customer-centered philosophy, which aims at understanding customer needs and wants, providing the right product and service, and deriving customer satisfaction; make what you can sell rather than sell what you make. An understanding of the study of consumer behavior helps formulate appropriate marketing strategies for a firm keeping in view the consumer and his environment. It has a number of applications; the main application bases are as follows:

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1. Analyze the environment:

The knowledge of consumer behavior can be applied to help identify opportunities and fight threats. Theopportunities could be in terms of newer customers, newer markets, unfulfilled needs and wants (through a study of consumer individual determinants and other environmental influences). The threats could be fought by developing and implementing appropriate marketing strategies to best fit the environment. The marketing strategies need to be dynamic and constantly evolving keeping in view the uncertainty in the environment; Environmental uncertainty is a function of complexity and dynamism. Complexity is defined in terms of the number, strength and interrelatedness of the various factors in the environment that a firm has to deal with. Dynamism relates to how quickly the changes take place in the environment.

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2. Segmentation, targeting and positioning:

The study of consumer behavior may be applied to segment the market, select the target market and position the product or service offering. Identifying the target segment, understanding their needs, providing the right product and service offering and communicating about the offering all of these help a marketer succeed in the long term and ensure his survival and success in a changing environment.

a) Segment the market: The marketer needs to identify distinct customer groups with needs
and wants, classify them on basis of descriptive characteristics and behavioral dimensions. The descriptive characteristics may take forms of age, gender, income, occupation, education, family size, family life cycle, gender, lifestyle, personality, religion, generation, geography, nationality, and social class. The behavioral dimensions take forms of benefits, uses, use occasion, usage rates, and loyalty status.

b) Select target market: The marketer then selects one or more markets to enter. The
segment(s) that should be targeted should be viable; there should be a fit between the market attractiveness and the companys objectives and resources. The marketer would be able to assess the viability of a segment on the basis of the following criteria, viz., measurability, substantialability, accessibility, differentiability, and actionability.

c) Position the product offering in the mind of the customers: The marketers should be able to
communicate the distinct and/or unique product characteristics.

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3. Designing the Marketing Strategy:

There exists interrelatedness between the Consumer, the Environment and the Marketing strategy.

a) Consumer: The consumer has his needs and wants as well as product preferences; Thus,
there exists an interplay of Cognition (knowledge about products and alternatives), Affect (feelings of favorableness and unfavorableness) and Behavior (action: buy or not to buy).

b) Environment: This refers to forces in the environment, which make the environment complex
and dynamic.

c) Marketing strategies: This implies setting up of goals and then achieving them through the
design of an appropriate marketing mix. The Marketing Strategy should be designed to influence consumers (Cognition, Affect and Behavior) and be influenced by them. It should beflexible and ever evolving with changes in the customer needs and wants; as well as, changes in the environment in which it operates. The knowledge of consumer behavior can be applied to develop a best fit between consumer needs and wants, the environment in which the firm operates; and, the firms goals and objectives.

4. Designing the Marketing Mix:

4 Ps The study of consumer behavior may be applied to design the 4 Ps.

a) Product: The term product includes both tangible products and intangible services. The issues to
address consist of name (brand), size, shape, features, labeling, packaging, accessories and supplementary products, terms of sale and services, after sales etc.

b) Price: This includes the pricing of the product offering. The major components include, form of payment,
terms and conditions of payment, discounts, price sensitivity, differential prices and customer reaction, imagery (price increase and customer reaction, price decrease and customer reaction).

c) Place and Distribution: This includes the marketing channel, and comprises decisions regarding
choice of channel (direct or indirect), location, accessibility and availability of product offering, wholesaling, retailing, logistics etc.

d) Promotion: This includes marketing communication, and the major issues comprise decisions on
communication/promotion mix, the message and media strategy (the content, appeal and context).

5. Application in Governmental and Non-profit Organizations and Social Marketing:

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The knowledge of consumer behavior finds relevance even in Governmental and Non-profit Organizations and Social Marketing. Governmental and Non-profit Organizations have the society as its customers and need to understand them so as to be able to serve them better. Social marketing involves propagation of ideas; attempts at such circulation and spread of ideas for moral and social upliftment can be more successful if there is a proper understanding of the these consumers (i.e., the public and society)

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1.4 Why Study Consumer Behavior ?

-The subject of Consumer Behavior is viewed as the edifice of the marketing concept, an important orientation in marketing management. The knowledge of Consumer Behavior helps the marketer understand and predict the consumption patterns and consumption behaviors of people. It helps

them gain insights as to why a consumer behaves differently to another consumer; as well as, why a consumer behaves differently in different times and buying situations. The study helps them understand the internal (individual determinants) and external (environmental factors) forces that impel people to act out different consumption patterns and behaviors. The study helps the marketer in: a) b) c) d) e) Analyzing the environment: identifying opportunities and fighting threats. Segmenting, targeting and positioning. Designing the marketing-mix. Designing the marketing strategy. Governmental and Non-profit Organization and Social Marketing.

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1.5 Evolution of Consumer Behavior as a Field of Study and Its Relationship with Marketing Behavioral Dimension :
The discipline finds its roots in the marketing concept and has been essentially interdisciplinary in nature. As a subject it emerged as a separate field of study in the 1960s. Initially the focus lay in the marketers attempts to study the causes of consumer behavior; the assumption was that if they could identify the reasons behind consumption behavior, they would be able to predict it; and if they could predict consumer behavior, they could influence it. So the emphasis was topredict consumer behavior; the approach came to be known as positivism. Gradually, the focus of the study changed; the marketers wanted to understand the customer better, and this approach came to be known as interpretivism.

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1.6 The Interdisciplinary Nature of Consumer Behavior :

An interdisciplinary area of study, the subject borrows heavily from psychology, sociology; social psychology; anthropology and, economics.

1. psychology: This includes the study of the individual as well as the individual determinants in
buying behavior, viz., consumer perception, learning and memory, attitude, self-concept and personality, motivation and involvement, attitudes and attitudinal change and, decision making.

2. sociology: This includes the study of groups as well as the group dynamics in buying behavior,
viz., family influences, lifestyles and values, and social group influences.

3. social psychology: This includes the study of how an individual operates in group/groups and
its effects on buying behavior viz, reference groups and social class influences.

4. anthropology: This is the influence of society on the individual viz., cultural and cross-cultural
issues in buying behavior, national and regional cultures etc.

5. economics: This is the study of income and purchasing power, and its impact on consumer
behavior. The underlying premise is that consumers make rational choices while making purchase decisions. While resourcse are limited and needs and wants many, consumers collect information, and evaluate the various alternatives to finally make a rational decision.

2.1 Relevance of Market Research with Consumer Behavior :

xiv. Each individual is unique in himself/herself and, needs and wants vary from person to person; thus, consumers are different and heterogeneous. However, like-minded clusters of customers do exist; they are homogenous within such clusters and heterogeneous outside; these are referred to as segments. Marketers identify segments and target one or few of these segments, and thereby fulfil the qualifications of the marketing concept; first, marketers identify customer needs and wants; and then, deliver product and service offerings so as to satisfy the customers more efficiently and effectively than the competitors.In order to understand and predict consumption patterns and behaviors within segment (s), market research becomes essential.

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Market research may be defined as: - an organized effort to gather information about the market and the customers. - systematic collection, analysis and interpretation of data related to the market and the surrounding environment.

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The environment surrounding a Company may be grouped as the micro-environment and the macro environment. The micro-environment comprises forces in the environment that are close to the company and affect the company directly; for example, the companys internal environment, the founder/leader and his vision and mission, the customers, competitors, suppliers, and channel intermediaries. Themacro- environment on the other hand,comprises forces in the environment that first affect the micro environment and through that they affect the company; in other words they affect the company indirectly; examples are the demographic factors, socio-economic factors, political factors, technological factors, cultural factors, natural factors etc. The forces in the macro environment affect all the companies operating in a same industry in a similar manner. The micro-environment is studied in terms of strengths (S) and weaknesses (W), while the macroenvironment is studied in terms of opportunities (O) and threats(T). The analysis of both of these put together comprises the SWOT analysis. Table 1: Relationship between Marketing Research and Consumer Research

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Marketing research Consumer Research (From Market Research, evolved the subset Marketing research Objective - To study the marketing environment and the customers who are a part of it. Focus - To establish trends, and identify opportunities and threats in the environment.- To study the market and forecast potential- To predict buying patterns based on modeling and simulation End result -Customer connect with company - Individual marketing and customization Consumer Research) Consumer Research Objective - To study consumers as individuals or as groups Focus - To understand consumption behavior and consumption patterns End result -Customer connect with company - Individual marketing and customization

2.2 Approaches to Consumer Behavior Research :

Broadly speaking there are two approaches towards consumer behavior research. These are (a)Traditional approach (b) Current approach. These can be further divided into sub approaches. (a) Traditional approach: This is further divided into two approaches, Positivist and Interpretivist. i) Positivist approach: This approach also referred to as modernism, is the earliest approach to studying consumer behavior and treats the study as an applied science; the paradigm lays emphasis on science as a means of explaining behavior. It lays emphasis on the causes of consumer behavior and as per its proponents, these causes are directly related to effects. Thus, it treats consumers as rational human beings, who make purchase decisions after collecting information and weighing all alternatives. The process of consumer decision making is looked upon as one of rationality. Rational decision making and problem solving is the key.

The approach is based on certain assumptions viz.,

-consumer actions based on cause and effect relationship can be generalized; they can be objectively measured and empirically tested; - if a marketer/researcher could identify the reasons behind consumption behavior; he would be able to predict it; and if they could predict consumer behavior, they could influence it. The focus lies on prediction of consumer behavior. The methodology is essentially quantitative, with techniques including surveys, observations, and, experiments. It aims at drawing conclusions on large samples. ii) Interpretivist approach: This approach is also referred to as post-modernism or experientalist. Gradually there was a shift in the approach towards the study of consumer behavior and the positivist approach gave way to a new approach that came to be called post-modernism. The approach lays emphasis on understanding the customer better. It treats consumer decision making process as one which is subjective. Thus while the approach is essentially subjective, the researchers following this approach try to identify common patterns.

This approach is also based on certain assumptions viz.:

- consumer actions are unique and different both, between two consumers, and/or within the same consumer at different times and situations. - a cause and effect relationship cannot be generalized; consumption patterns and behaviors are unique; these are unpredictable. - they cannot be objectively measured, empirically tested and generalized. The focus lies on the act of consumption rather than the act of purchase. The methodology is essentially qualitative, with techniques including in depth interviews, focus group techniques, projective techniques. It aims at drawing conclusions on small samples. Table 2: The Positivist and Interpretivist Approach POSITIVIST INTERPRETIVIST A cause and effect relationship cannot be Consumer actions based on cause and effect generalized; consumption patterns and relationship can be generalized behaviors are unique; these are unpredictable. Consumer actions are unique and different Consumer actions can be objectively both, between two consumers, and/or within measured and empirically tested the same consumer at different times and

Focus: to predict consumer behavior Methodology: Quantitative Large samples

situations. Cannot be objectively measured, empirically tested and generalized. Focus: the act of understanding the consumption rather than predicting the act of purchase Methodology: Qualitative Small samples

(b) Current approach: Dialectical: The term dialectics considers all forms of human behavior; thus the current approach to the study of consumer behavior research is broader in scope. This is further divided into four approaches, Materialism, Change, Totality and Contradiction. i) Materialism: This approachimplies that consumer behavior is shaped by the material environment eg. money, possessions etc. ii) Change: Consumer behavior is dynamic in nature; it is always in a process of continuous motion, transformation and change. iii) Totality: Consumption behavior is interconnected with other forms of human behavior, like personal self and the surrounding environment. iv) Contradiction: Views changes in consumer behavior as arising from their internal contradictions, like moods, emotions etc. The approach studies the consumer as a complex total whole and views consumer purchase as well as consumption processes. The current approach to studying Consumer Behavior uses both the quantitative as well as qualitative approaches.

2.3 Research Perspectives on Consumer Behavior :

There are three broad research perspectives in consumer behavior. They are as follows: the Decision-Making perspective, the Experiential perspective, and Behavioral-Influence perspective. The Decision-Making Perspective: According to the decision making perspective, the buying process is a sequential in nature, with the consumer perceiving that there exists a problem and then moving across a series of logical and rational steps to solve the problem; stages being problem recognition, information search, evaluation of alternatives, purchase decision, and post purchase behavior. This perspective emphasizes the rational, logical and cognitive approach to consumer decision making and purchase process. The Experiential Perspective: The experiential perspective believes that not all buying may be rational and logical; in some cases, buying results from a consumers desire for fun and fantasy, hedonic pleasures, emotions and moods. The perspective emphasizes that consumers are feelers as well as thinkers. The Behavioral Influence Perspective: This perspective holds that forces in the environment stimulate a consumer to make purchases without developing beliefs and attitudes about the product.

2.4 Research Paradigms in Consumer Behavior :

The research paradigm in the study of consumer behavior focuses on two approachesviz.,Quantitative research, used by the positivists and, Qualitative research: used by theinterpretivists. The positivists and interpretivists as two schools of thought have already been discussed in the previous lesson. The current approach or the dialectic approach to studying Consumer Behavior makes use both the approaches. a) Quantitative Research in Consumer Behavior: As the name suggests, the approach makes application of quantitative research techniques to the study of Consumer Behavior. It comprises (i) research techniques that are used to gather quantitative data over large samples randomly, and (ii) statistical tools and techniques, inclusive of survey techniques, observation and experiments. This type of research is descriptive and empirical in nature. It is primarily used by the positivists while studying consumer behavior, with a focus on prediction of consumer behavior. The findings can be generalized to marketing situations. As mentioned above, the quantitative techniques are also used by dialectics. b) Qualitative Research in Consumer Behavior: This approach makes application of qualitative research techniques to the study of Consumer Behavior. It comprises (i) research techniques that are used to gather qualitative data over small samples randomly and, (ii) non-statistical tools and techniques, inclusive of depth interviews, focus group, projective techniques and even observation. The type of study is subjective and non-empirical in nature. It lays emphasis on the holistic what, where, when, why and how of human behavior. The focus is on understanding consumption behavior and consumption patterns. The objective is to gain an understanding of consumer behavior and the underlying causes that govern such behavior. The approach assumes that all marketing situations are unique; and, hence the findings cannot be generalized to marketing situations. This approach is primarily used by the interpretivists while studying consumer behavior. However, as mentioned above, the qualitative techniques are also used by dialectics. c)Combining the two approaches: Today, the two approaches are used in combination to study consumer behavior. Qualitative research is very often a prelude to quantitative research; the findings from qualitative research are used to prepare scales for surveys and experiments. In some cases quantitative research may also act as a precursor to qualitative research; the findings from quantitative research are corroborated through case studies and other qualitative measures.

2.5 Consumer Research Process :

Marketers need to have knowledge about the environment in which they operate. The environment could be both at a micro level and at a macro level. Market research focuses on study of the consumer and the environment. Consumer research focuses on the consumer and his consumption behavior. Companies could either conduct consumer research through services of their in house marketing information systems or out source the activity to marketing research consultants. The consumer research process can be studied as a 5 staged procedure. The various stages are not mutually exclusive; neither are these essentially sequential. However, for purposes of ease, such a procedure exists. The various stages of the research process are as follows:

a)

Defining the problem or the research objectives. b) Developing the research plan. c) Collecting data, both primary and secondary. d) Analyzing the data.

e) Preparing a report and presenting the findings.

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a) Defining the problem and state the research objectives:

First, the marketer has to define the research problem. The pproblem definition entails questions like What is the problem?, What are the various issues?, What information is needed? etc. Research may be conducted to solve problems or fight threats once the problem has arisen. This is termed as an Actual State Type or AS Type of problem solving. The approach is essentially towards being active ; i.e. engaging oneself in solving the problem that has already arisen and, acting after the problem has occurred. Research may also be conducted to identify opportunities or fight threats that are foreseen. This is termed as a Desired State Type or DS Type of problem solving. Here the researcher is being pro-active; i.e. engaging oneself in solving the problem in anticipation, much before the problem occurs.

Example:
Let us discuss how the two approaches are different to each other using an example. Assume you are the Vice President (Marketing and Sales). Your company produces paper products and stationery and has been a market leader since a long time. Of late there have been concerns about environmental protection and recycling. The market is sensitive towards environmental issues and people are getting conscious. -Actual State Type Problem Solving: Action: You fail to read the pulse of the market. Another company enters the scene with recyclable paper and stationery products. Effect: You begin to lose sales, and thereby market share to this entrant who is selling recyclable paper. Now, you feel that a problem has occurred and you need to act now (reactive) xx. Thus you go in for consumer research. -Desired State Type Problem Solving: Action: You realize that you need to adhere to regulatory norms. Effect: So you prepare to introduce recycled paper products. You go for consumer research to understand the probable consumer reaction to such products. You are being proactive. Second, the research problem should be conceptualized and the objectives should be defined; the reasons as to why the research is being undertaken should be defined. The objectives should be defined neither too narrowly nor too broadly. The objectives can be any one or more of the following: explanation, prediction, insight generation and discovery, hypothesis testing, monitoring of environment etc. Each of these are discussed below with examples.

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i) Explanation: to explain events and identify reasons of occurrence.

- Example: Sudden fall in the sales of gold jewellery at Tanishq especially when the prices of gold have been stable in the world market.

ii) Prediction: to predict occurrence of events in future.

- Example: Sales forecast of a new flavor of Amul chocolates

iii) Insight generation and discovery: to gain newer insights

-Example: Study aimed to look out for new segments/markets for current product; i.e. market development.

iv) Testing of Hypothesis: to test relationship between variables or set of variables.

- Example: Test relationship between price of a Sony Plasma and consumer perception of the brand or quality. xxii.

v) Monitoring of marketing environment:

to identify opportunities and threats; assess performance of self; self monitoring. - Example: Study aimed at self assessment of performance; or customer awareness and attitude towards your product; or scope for newer segments. Depending upon the research objectives, the researcher may go for a Quantitative Study or a Qualitative Study. Third, the researcher also needs to identify the type of study that needs to be undertaken depending upon the research problem and the objectives. Research studies are of various types, viz., Descriptive, Exploratory, Causal, Correlation and experimental. The first three types are the more commonly used techniques. Each of these is discussed below.

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i) Descriptive: This is the most commonly used type of research study. It seeks to ascertain the
degree, extent or magnitude of occurring events or phenomenon and variables under study; It also seeks to identify the causes of such occurrence. Such a research study helps describe the characteristics of the variables under study and is also used in testing of hypothesis. The research design is structured and formatted unlike exploratory studies. The methodology includes surveys, interviews and observations. Example: Study of market potential of notebooks (laptops).

ii)Exploratory:Theobjective of such a study is to gain insight and deeper understanding of the

object of study, the person, object, situation etc. Its is aimed at earthening deeper to find out the nature of the problem and suggest possible solutions. The approach helps formulate problems and generate hypothesis. In this way, this type of research design may act as a prelude to more elaborate and extensive study. The research design is flexible and dynamic and is developed as one progresses through the research study. The methodology includes surveys, interviews, observation, focus groups, and case studies. Example: Study of consumers likes, preferences and attitudes towards electronic goods.

iii)Causal:The purpose of such a study is to test a cause-and-effect relationship between two

variables, independent and dependent (Cause: Independent variable), (Effect: Dependent variable). It is used for testing of hypothesis. The methodology includes surveys. Example: Study of impact of different advertising appeals on sales of a product.

iv)Correlation:The purpose is to analyze as to whether a relationship exists between two

variables and if so, to what degree. The relationship may not always be a causal one, i.e., correlation may not always imply causation. Such a study is used for testing of hypothesis. The methodology includes surveys. Example: Study of relationship between change of season and sale of products.

v) Experimental: The experimental study is similar to causal research in terms of establishing a

cause-effect relationship among the groups of subjects; But the cause (independent variable) is under the control of the researcher. This type of research study is used where there is time priority i.e. cause leads to effect; there is a causal relationship i.e. the cause will always lead to the same effect; and, the degree of the correlation is great. It is used for testing of hypothesis. The methodology includes surveys, interviews, observation. Example: Study of consumers reactions to four different varieties of breakfast cereal. The decision to choose a particular type depends on the research problem and the research objective. Sometimes for different phases of the same research project, the researcher may need to adopt different types. b) Developing the research plan: Once the problem has been conceptualized, the researcher has to develop the research plan. The

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research plan contains details on the data sources, research tools and techniques, sampling plan and, contact methods for data collection.

i) Data Sources:
There are two data sources: primary and secondary. The researcher can gather either or both of these. Generally, the researcher starts a study with secondary data sources, and then moves on to primary sources; secondary data provides a starting point for research. -Primary sources: This is data which is freshly collected for a specific research study. It is collected through research instruments, tools and techniques specifically designed for the research problem; they can take the form of questionnaires, interviews and observation. The advantage is that such data is more pertinent to the research problem. The disadvantage is that it is costly in terms of money and time. -Secondary sources: Secondary data is data which exists already; paper sources (books, journals, reports etc.) as well as electronic sources (CD-ROMS, online databases, internet). Such data is collected by studies conducted earlier and is not gathered for purposes of current research. It could be obtained through published data and reports. The advantage is that such data is easy to gather and is readily available; longitudinal studies can also be possible. published reports and data possess credibility. The disadvantage is that validity may be questioned, and the sources need to be legitimate. xxvii.

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ii) Research tools and techniques:

In case of primary data, the major tools and techniques are surveys (questionnaires and interviews), focus groups, observation, behavioral measures and experiments. These methods would use questionnaires, which may be structured or unstructured. -Survey Research: Surveys are the most popular of all techniques for data collection as far as the field of marketing is concerned. They are conducted over a sample to learn about customers awareness, liking and preferences for an offering or a brand. They may also be undertaken to measure customer satisfaction. The findings from such surveys are then generalized to the entire population (in our case, the market). Hence, the sample should be chosen with care; it should be adequate, appropriate and representative. The sample may be chosen randomly or purposively. The major instrument used for surveys is through administration of the questionnaire; interview technique may also be used. The questions framed may be structured and formatted or may even be unstructured. They may be open-ended, closed ended, dichotomous, multiple choice, rating scales, ranking scales etc. Questionnaires may be administered personally or by postal mail, electronic mail or even on telephone. Surveys are used in quantitative research. Example: Conducting a survey to test customer awareness and reaction about a new advertisement campaign. - Focus Group Research: As the name suggest, this kind of research is conducted over a group of people through a moderator. The moderator focuses on the group of people, numbering 6-10, who are carefully selected purposively based on demographic, psychographic and/or behavioral considerations. The group members are asked questions about a product and the 4 Ps and they are even involved in discussions related to the research problem/issue. Through discussions, the moderator is able to gain insight into the group members emotions and feelings, attitudes, underlying motivations and interests etc. These sessions are recorded for further analysis. The technique is used commonly during pre-testing of product in the market before it is launched; provides insight into product acceptance in the market. Focus group research is used in qualitative research. Example: Why do customers prefer a higher priced branded electronic good as compared to a lower priced local one? -Observational Research: As the name suggests, this research technique is based on observing people, and drawing conclusions. The technique helps gain an insight and an in-depth understanding as to how people

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behave in the marketplace by carefully watching them buying and use products and services. These customers could be current customers or potential customers; they are observed in the marketplace while they are involved in the buying activity. The consumption pattern is observed. The technique could also be applied to test customer verbal and non-verbal reactions to product offerings (features and benefits, quality, aesthetics etc), price (increase/decrease, discounts and allowances, exchange, warranties and guarantees), distribution (stores, layout, ambience, attitude of staff etc) an, promotion (advertising, sales promotion etc). The observations may be overtly or cohertly; in the case of overt observations, the participant is aware of the objectives of the study and knows that he is being observed; in the case of cohert observations, the person is unaware that he is being observed and that his actions are being recorded by the researcher personally or through hidden cameras and recorders (mechanical and electronic devices: videos, closed circuit TVs; technological devices: credit cards, shopping cards, online shopping and automated phone systems).Observational Research is used in qualitative research. Example: xxxi. Why do they ask for the competitors brand rather than your brand? - Behavioral Measures: The customer reactions in terms of their behavior are interpreted through customer databases and the store scanning data. Customers actual responses in terms of purchase are recorded and analyzed; the assumption is that there is a difference between customers intention to buy and actual purchase. So actual behavior is recorded and analyzed. This is regarded as more reliable than questionnaire surveys and is used in both quantitative and qualitative research. - Experimental Research: This type of research technique is the most time consuming, but most scientifically valid and reliable approach towards conducting research studies and solving problems. It studies the cause-and-effect relationships between independent (cause) and dependent (effect) variables; the researcher alters/manipulates one or more variables, and controls and measures any change in other variables. In controlled settings, where the sample is treated as a test group, the variables under study are altered/manipulated and the reactions of the sample are recorded; thereafter these findings are generalized. This i used in quantitative research. The technique is commonly used in test marketing for pre-testing of the product before launch. Example: Study consumer reaction (in terms of impact on sales) due to changes made in product features, price, or advertisement appeal or store layout etc. In case of secondary data, the researcher could access: company reports (published and unpublished), industry reports, trade journals, government reports, research articles and journals, magazines, books etc; also CD-ROMS, Internet, Online databases. Primarily, quantitative studies include questionnaires and experimentation as tools for study while qualitative studies use questionnaires, case studies, as well as observation. Questionnaire: A questionnaire is a research instrument with a set of questions that is administered to the respondents. The questions are framed keeping in mind the research problem; the questionnaire is pre tested for reliability and validity before it is finally administered. Depending upon the nature of research, quantitative or qualitative, various kinds of questionnaires are prepared; they may be structured or unstructured; and they may use varying scales. - Structured questionnaires: A list of questions that are to be asked are prepared, well structured and formatted into a questionnaire. These questions are capable of quantification. The same questionnaire is administered to the entire sample, and after it is filled up by the respondent, the researcher collects them and analyzes the responses. - Unstructured questionnaires: The questionnaires are unstructured; While a few questions are listed and given to the respondents, many questions/issues emerge as the respondent is filling up his responses. Thus, the questionnaire

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takes the form of a schedule. It is much more flexible and idea generating than the structured questionnaire. The questionnaires should not be too long. The questions should be clear, precise, simple to understand and free from ambiguities. The questionnaire may contain open-ended questions or closed-ended questions or both; They may also use various kinds of scales: Rating scales, Likert scale, Semantic differential, Dichotomous, Multiple choice, Word association, Sentence completion, Story completion, Projective techniques, Metaphor Analysis. Quantitative research makes use of questions that use Rating scales, Likert scale, etc and may be Dichotomous or Multiple choice types. Qualitative research uses forms like Semantic differential types, Dichotomous types, Multiple choice types, Word association types, Sentence completion types, Story completion types, Projective techniques, and, Metaphor Analysis. xxxv.

iii) Sampling plan:

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Keeping in mind the research objectives, the researcher needs to prepare the sampling plan. A sample is a part of the population or the universe that is chosen to represent the whole. Sampling is the process by which a sample is chosen. The sampling plan consists of three main constituents: - Sampling unit: A sampling unit is the element (s) that could be considered to be chosen in a sample; it is a basic unit of study. The issues for consideration is in consumer research is the target population, i.e., who is to be surveyed? Example: A research study to test the causal relationship between tooth decay in children and the use of Colgate toothpaste. Now, school going children aged 4-12 years would be the population or the universe; If we restrict the study to the city of Delhi, then school going children aged 4-12 years in the city of Delhi would be the target population. Any child from a school in Delhi between the age of 4-12 years, could be the sampling unit. - Sample size: The size of the sample affects the reliability and validity of the results and so sample size should be carefully decided upon. Also the sample must be representative of the universe so as to obtain reliable and valid results and be able to draw generalizations. The issue for consideration is the number of people to be surveyed. - Sampling procedure: The issue for consideration here is that how should the sample be chosen, whether through a randomized probability sampling or through a non-probability sampling procedure. Probability sampling is a sampling procedure where every unit in the universe/population has an equal chance of being chosen in the sample. The various types of probability sampling are simple random sampling, systematic random or interval random, stratified random sampling, and cluster sampling. Non-probability sampling is a sampling procedure where every unit in the universe/population does not have an equal chance of being chosen in the sample. The various types of non-probability sampling are convenience sampling, judgmental sampling, purposive sampling, quota sampling, and snowballing.

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iv) Contact methods for data collection:

The respondents may be contacted personally or on telephone, postal mail and email. - Personal: Interviews, Schedules: The researcher may contact the respondent personally and interview him. He may also provide the respondent with the questionnaire and assist him filling it. This is called a schedule which is a more versatile method. The interview may be structured (questions are predetermined) or may be unstructured (issues come up for discussion as the interview progresses). The advantages of interviews and schedules is that this tool is very versatile; it is flexible, and takes the form of two way communication. It allows more detailed questions to be asked. The researcher asks questions from the respondent and records the answers. If the respondent has any doubts or queries, the researcher can help the ambiguities. Incomplete responses and questionnaires can be followed up. Infact, may a times, the researcher is able to again a lot of insight on personal feelings, perception and additional knowledge through observation and non-verbal communication. The response rate is higher than the mailed questionnaires. This techniques is also called mall intercept, if conducted in a

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market place. The disadvantages of such a technique are that it is time consuming and expensive and it could suffer from bias and distortion. -Telephonic Interviews: These aresimilar to personal interviews but here the respondent is interviewed on telephone. Advantagesare that this tool is flexible and versatile like personal interviews; it allows more detailed questions to be asked. It is possible to cover large samples across large geographical territories. Respondents can be reached in a short period of time. Data can be collected quickly. The researcher asks questions from the respondent and records the answers. If the respondent has any doubts or queries, the researcher can help the ambiguities. Incomplete responses and questionnaires can be followed up. The response rate is higher than the mailed questionnaires. The disadvantages of such a technique are that it has to be planned in a manner that the length of the call is short. Sometimes, the respondent refuses to comment and hang up. He may also give responses that need not be true and correct. - Questionnaire by Post: The researcher mails the questionnaire by post. Along with the questionnaire, he encloses a forwarded letter (stating the purpose) and a self-addressed stamped envelope so as to increase response rate. Theadvantages of such a technique is that the questionnaire is highly structured and standardized, and thus, the responses can be easily measured and scaled. They are free of bias and distortion. They can spread over large geographical areas and large samples, making the sample representative. However, thee technique suffers from disadvantages also. The technique is expensive in terms of time and money. The response rate is slow and time taking. Rate of nonresponse is also very high. There is no control as to who completes the questionnaire. Unlike interviews, it is not possible for the researcher to be face to face with the respondent and clear off ambiguities. So the researcher has to be careful while framing questionnaires: they should be simple, easy to understand and free from ambiguities. If not, the participants could misinterpret the questions and answer wrongly. Questionnaire by Email: The conduct of surveys online through the internet has come into use increasingly by researchers. The questionnaire can be posted online by the market researcher or the company on the company website or on frequently accessed websites. The researcher may also mail the questionnaire electronically, with a request to the respondent to fill up the questionnaire and send it back the email. The advantages are that the questionnaire is highly structured and standardized. Because the questionnaire is standardized, the responses can be easily measured and scaled. They are free of bias and distortion. An online survey is easy to administer and saves on time and money. It can spread over large geographical areas and large samples, making the sample representative. The disadvantages of such a technique are that the response rate is slow and time taking. Rate of non-response is also very high. There is no control as to who completes the questionnaire. Unlike interviews, it is not possible for the researcher to be face to face with the respondent and clear off ambiguities. So the researcher has to be careful while framing questionnaires: they should be simple, easy to understand and free from ambiguities. If not, the participants could misinterpret the questions and answer wrongly. c) Collecting data, both primary and secondary: After the objectives of the study and the research plan are laid out, themarket researcher goes on to collect data. The data is collected from primary and secondary sources. To start with, the researcher accesses secondary data and then moves on to collect primary data. He may use any of the tools and techniques depending upon the research plan. This is a time consuming stage of research. With advancement of technology, data collecting methods are improving day by day. d) Analyzing the data: After the data is collected, it is analyzed and interpreted. The major question is What conclusions can be drawn? Both statistical and non-statistical tools are used for analysis. For descriptive data analyses, the following tools are used: - Parametric analysis: Central tendency (mean, median, mode), Dispersion (Standard deviation, variance, Range, Shape of curve: Skewness, Kurtosis) - Graphical method: Bar chart, Histogram, Line graphs, Pie chart -Tabular method: Frequency distribution tables

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In case of inferential data analyses, which requires testing of hypothesis, the researcher needs to make an assessment of the kind of data collected. Data collected on interval/ratio scale, qualifies for parametric tests, while that collected on nominal/ordinal scale qualifies for non-parametric tests. Parametric analysis includes t test, z test, paired sample t test, independent sample t test; Nonparametric tests include Chi-square, Mann-Whitney U, Kolmogorov-Smirnov etc. Mathematical models, decision models and simulation techniques, may be applied to obtain results and propose frameworks. Case studies may also be developed. e) Preparing a report and presenting the findings: Lastly, the report is prepared and the findings are presented to the marketing department. The report should comprise (i) summary/ abstract (ii) research problem (iii) objectives (iv) methodology (v) findings (vi) conclusions (vii) recommendations (viii) limitations. The report should be short; it should be precise and related to the research problem only; Unnecessary details should be avoided. The research problem should be addressed with the solution. Limitations of the study if any should spelled out. Recommendations should be clearly delineated. If required along with the written report, an oral presentation may also be made.

3.1 Aggregate Marketing and Market Segmentation :

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The marketer could either opt for aggregate marketing wherein he could treat the entire population as a single segment, or he could go in for a market segmentation wherein he would identify groups of like minded customers who were similar on one or more base(s) and cater to one or more of such segment(s). a) Aggregate Marketing: Earlier the assumption was that customers have similar needs and wants and can be satisfied with a standardized product/service offering. Thus, a standardized product was produced and distributed with a single marketing program or the same marketing mix. This led to a focus on mass production and distribution, which resulted in lower costs; finally resulting in lower prices and higher margins. Aggregate marketing is also termed as mass marketing and undifferentiated marketing. b) Market Segmentation: The assumption underlying market segmentation is that customers are unique. They have different needs, wants and preferences. There do exist diverse customer groups homogenous on certain bases within, but heterogeneous among each other. So, instead of a single standardized product offering, the product and service offerings need to be designed according to the needs and wants of the segment so as to satisfy them better. The marketers assumption is that because of the homogeneity that exists within the members of the group, they would react similarly towards a product and service offering and behave likewise to a corresponding marketing program.

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3.2 Target Marketing :

The traditional way of doing business was Market Aggregation or Mass Marketing. This meant offering a standardized product to all the consumers or the entire market. However, it was realized that customers are unique, with different needs, wants and preferences across people as well as across situations. Marketers understood that they cannot satisfy the customers with the same product and service offering. Market aggregation gave way to Target marketing and finally Target marketing is giving way to Customization. The benefits of Target Marketing were understood by the marketers as they realized that it is not possible to cater to the needs, wants and preferences of the entire market. So the marketer would target a segment or a few segments, design the marketing mix accordingly and serves the segment(s) efficiently and effectively. In this way he could meet customer needs in a better way. Target marketing or STP i.e., Segmentation, Targeting and Positioning involves a major exercise for a marketer to start with. Segmentation involves Identifying distinct groups of buyers who are

homogenous within but heterogeneous between each other; Targeting involves evaluating the viability of each segment, and then selecting one or few market segment (s) to serve better and in a superior way. Positioning involves creating an image in the minds of the target market about the product and service offering; this image should relate to the need/want as well as portray uniqueness and/or superiority than other competitive offerings.

3.3 Market Segment/Segmentation :

Segments pre-exist a marketer; they already exist. The marketers task is to identify the most lucrative and profitable one (s) and target them. He has to then create a unique marketing program that would be most effective for that particular segment. A market segment may be defined as a group of customers who are similar to each other on certain bases; they are expected to behave in a similar manner towards a product and service offering and towards a single marketing program. Market segmentation is the process of identifying distinct groups and or sub groups of customers in the market, who have distinct needs, characteristics, preferences and/or behaviours, and require separate product and service offerings and corresponding marketing mixes. The marketer experiences a heterogeneous market, with varying customers with diverse needs, preferences and behaviours. However, a certain degree of homogeneity within groups and/or sub groups of customers on certain bases and dimensions may be identified. This leads to the identification of a segment. A market segment exhibits homogeneity within the group and heterogeneity outside. Further, each of the segments can be effectively served with a different marketing mix.

OTHER DEFINITIONS: A market segment consists of a group of customers who share a similar set of needs and wants. -Kotler Market segmentation can be defined as the process of dividing a market into distinct subsets of consumers with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix. - Schiffman and Kanuk

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Segmentation could take place for both Consumer markets as well as for Business markets. A Consumer Markets is defined as an end user market; the product and service offering is bought by the consumer for his personal use. This is also called Business to Consumer market, or B2C market. Examples: i) Bread is bought for end consumption and usage. (ii) Ceiling fan. A Business Markets is defined as a market that buys, transforms/processes and sells further, either for further transformation/processing or, for consumer use. This is also called a Business to Business market, or B2B market. Examples: i) Wheat is bought by a baker from the farmer (B2B). He transforms it into bread. ii) Copper wires are bought by an electronic company which uses these in the manufacture of ceiling fans.

3.4 Alterative Levels/Types available for Segmentation :

Segmentation can take place at various levels; Depending upon the company policy and the segment attractiveness in terms of growth and profitability, a marketer could choose out of a variety of options. The various levels/types include single segmentation, differentiated segment marketing, concentrated marketing and micro marketing. Each of this is explained as follows:

a) Single Segmentation: This form comprises one segment only. The marketer caters to the entire
market with a single offering and the same marketing mix. This is similar to mass marketing or undifferentiated marketing. All the consumers are treated the same. Examples: products like salt, sugar and staples.

b) Differentiated segment marketing: This implies selection of two or more segments.

Themarketer approaches these segments with differentiated offerings and corresponding marketing mixes and programs. Examples: Shampoos and other toiletries.

c) Concentrated marketing: The marketer caters to just one segment although the product could appeal
to others. This is generally a sub-group within the whole segment. The process includes targeting a small segment with a specialized mix meant only for that segment. This form of segmentation is also called focused or niche marketing. Examples: Sports channels on TV, Religious channels on TV etc.

d) Micro-marketing: This could assume two forms, viz., local marketing and individual marketing.
- Local marketing: The marketer caters to local customer groups. Example: movies dubbed in vernaculars or local languages. - Individual marketing: The marketers caters to the customer individual and personalizes the marketing mix. So the segment comprises one individual and it is individual to individual marketing. This is also called customization. Example: Holiday packages designed by travel agents. Table 1: Alternatives available for Segmentation No. 1 Type Segments Meaning Large groups of people similar to each other on (Differentiated certain criterion segments) Concentrated Very narrow in marketing nature (Niches) Examples - Tata group of hotels: - Taj Hotels vs. Ginger (Premium vs. Economy)j - Astha, Sanskar TV channels cater to a group of people interested in religion and spirituality; - Fashion designers (Manish Malhotra, Rohit Bal) cater to a very small segment. -Dell, Amazon customize their offerings as per individual desires. -Fashion designers (Manish Malhotra, Rohit Bal) cater to celebrities.

Micromarketing (Individual)

One to one marketing: Customization

3.5 Basis for Segmentation : a) Segmentation of Consumer Markets: The bases for segmentation of consumer markets may be divided into two broad categories of variables, demographic variables and behavioral variables. i) Demographic variables: these comprise: demographics, geography and psychographics. ii) Behavioral variables: these comprise the day to day consumption pattern and behavioral dimensions like consumer awareness and knowledge, feelings and disposition, purchase and usage etc. of a product and service offering.

Each of these are described and examples illustrated in the following tables. Table 2: Demographic Variables
Variable Meaning Demo- graphic Identifying segments on the basis of any of the following bases Bases Examples i) age -Infants, Kids 3-5, 8-12 Teenagers, Adults (Example: Clothes, Toys) ii) gender -Men, Women (Example: Clothes, Cosmetics) iii) income - >50000, 50000-1 lac, 1-2 lac, 2-5lac, <5 lakh (Example: Cars) iv) education -High School, Intermediate, Graduation, Postgraduation v) occupation - Blue collared, White collared; Business, Professional (Example: Airline tickets: Business, Economy class) vi) family size - Single, Couple, Couple and 2 kids, < 4, < 6 (Example: Large and small packaging: Foods) vii) family life - Single, Married, Full Nest I, Full Nest II, Empty cycle Nest I, Empty Nest II, Solitary ( Example: Large and small packaging: Foods; Insurance) viii) generation - Generation X (born between 1965-76), Generation Y (born between 1983- 2003) (Example: Music and Film Cds and DVDs) ix) Social class -Upper class, Middle class, Lower class (Example: Cars, Hotels) x) religion - Hindus, Muslims, Christians, Sikhs ( Example :foods: Halal) xi) nationality - Indians, Nepalese, Sri Lankans, Pakistanis xii) culture - North Indian, South Indian xiii) sub- culture - Tamilian, Keralite, Carnatic, Telegu (Example: Food by Sagar ratna)

Table 3: Geographic Variables

Variable Meaning Geography Identifying segments on the basis of geographical or territorial units Bases Example i) Location / Local/Domestic or International Country (Example: All MNCs) ii) Region North, West, South, East iii) State Sates within country (Example: National Cooperative development Council: NCDC: All State Cooperatives: Parag: UP, Sanchi: MP, Verka: Punjab)

iv) City/Metro Urban Semi-urban, Rural density of (Example: Hospitals in Cities, Polyclinics and population dispensaries in Villages:Apollo Hospital and Pharmacies v) Climate Hot, Cold, Humid, Rainy (Example: Clothes: Woolen garments) vi) Terrain Hilly, Plain, Rocky (Example: Two wheelers and Motorbikes)
Table 4: Psychographic Variables

Variable Psychographics

Meaning Identifying segments on the basis of any of the following bases Bases Example i) Needs and Benefits sought: motivation Basic functional, Safety/security, Affection/Social need,Esteem/Status/ Sense of Self worth (Example: Flats versus Posh villas and Penthouses) ii) Low risk, Moderate risk, High risk Perception (Example: Innovators vs. laggards) Price oriented, Quality & value oriented (Example: Videocon TV vs. Sony) Aware or Unaware. Innovative (High/Low); (Example: Innovators vs late adopters vs laggards) Dogmatic (High/Low); Need for Cognition (High/Low) Extrovert/Introvert (Inner-directed, Other-directed) Ethnocentrism (High/Low); (Example: Loyal to Made in India products) Novelty seeker (Exploratory, Vicarious, Deals and Bargains) (Example: people who buy from Sales and Discounts) iv) Attitude Positive, Negative; Loyal to one or many products v) Highly involved customers, Low involved customers; Involvement Brand loyalists, Information seekers, Routine brand buyers and, Brand switchers vi) Lifestyle: AIO

iii) Personality

Activities: Interests: Opinions:

Work, Hobbies, Vacation, Shopping, Entertainment, Sports (Activity: A) Job, Home, Family, Fashion, Food and culinary, Recreation (Interests: I) Social, Political, Economy and business, Environment (Opinion: O) Examples: TV Channels (Star News, Star TV, Star Sports, Star Movies) Magazines (India Today Group: India Today, Business Today, Mens Health, Woman, Cosmopolitan)

Table 5: Behavioral Variables

Variable Behavioral

Meaning Identifying segments on the basis of any of the following bases: Bases Example i) Consumer Unaware, Aware, Informed, Interested, awareness Desiring/enthusiastic ii) Benefits Basic functional, Safety/security, Affection/Social sought/uses/ need, Esteem/Status/ Sense of Self worth needs/ motivation (Example: Cakes and pastries: Normal ones for snackers and Sugar free, for calorie conscious and diabetics; Toothpaste: Forhans for Gums; Peposodent: Fight tooth decay; Close up: Prevent bad breath) iii) Buying Morning, Night occasions/ (Example: now 24 hours) Purchase situations Weekday, Weekend (Example: Movies released on weekends) Occasions, Seasons (Examples: Greeting Cards: all occasions) Leisure, Urgency (Example: Mail post versus Courier Service) Routine, Frequent, Seldom OR Routine, Emergency (Example: Calcium Tablet versus Band Aid ) Unaware, Aware, Informed, Interested, Desiring, Intending, Demanding, Buying

iv) Buying/usage frequency v) Buying readiness

stage vi) Loyalty status vii) Usage rate

viii) Shopping orientation

Non-users, First time user, Regulars, Ex-users OR Hard-core loyals, Split loyals, Shifting loyals, Switchers Heavy half; Light half OR Heavy, Medium, Light, Non-users (Example: Joint family and nuclear family: Consumption of cooking oil) Economic, Convenience and leisure, Status (Example: Economic: Deal prone and bargains: Small shops; Convenience and leisure: Departmental stores Status: Malls and Brands

Hybrid Segmentation :
While individual bases for segmentation exist, the market is generally segmented on a combination of bases.Commonly used bases are combination of (i) psychographic/demographic (ii) geodemographics and, (iii) VALS: Values and Lifestyles.

b)Segmentation of Business Markets: Business markets are large in nature, with fewer, yet
larger buyers. Purchases are bulky and often high valued. The busying process is complex and highly professional through proposals, quotations, tenders, contracts, etc. Buying is influenced by a committee of people referred to as a buying center, which comprises people from various divisions and departments. The people comprising the buying center have diverse backgrounds which result in varied perspectives and orientation towards buying. This is because With characteristics that differentiate a business market from consumer markets, it is logical and deductive that the bases for segmentation of business markets are different from that of consumer markets. Business markets could be segmented on basis of demography, geography, purchase approach and orientation, purchasing orientation, and, personal variables. These are discussed below: i) Demographic variables: This implies the -type of industry; -the size of the company; -technology used etc. ii) Geographic variables: Location. iii) Purchasing approach and orientation: This basis includes -consumption and usage rate (i.e is the order size small or bulky); -buying situations (straight rebuy, modified rebuy, new-task); -loyalty and partnerships; -purchasing orientation (i.e. buying/transaction/price orientation; or consultative/solution orientation; or, procurement/quality orientation; or, strategic value orientation);

-purchasing criteria: Price, Quality, Service iv) Purchasing methods: The basis includes -the decision unit and/or the buying center influences: Power balance and equation of various departments in the buying center: i.e. production dominated or R&D dominated or purchase dominated? - the purchasing function: centralized or decentralized; - transactional exchanges (short term) or collaborative exchanges (long term and strategic) - purchasing policies: leasing, contracting etc. v) Personal variables: The various bases include -buyer-seller similarity in terms of vision, objectives, strategies, values, attitudes etc. -loyalty

3.6 Targeting :
After identification of segments, the marketer has to decide upon the segment (s), he would cater to and directs his market efforts. The target segment is the group(s) of customers that the marketer decides to serve. It comprises buyers who share common needs, wants and preferences, and the company decides to serve them. The marketer would choose a segment that is viable; and, that he can cater to effectively and efficiently.

3.6.1 Viability of the Segment: A segment is regarded to be viable if it is:

measurable, substantial, accessible, differentiable and, actionable. - Measurable: The segment should be measurable in term of the total size, purchasing power and, demographic, geographic and psychographic characteristics. - Substantial: It should be of sufficient size so as to generate profits; it should also have a potential for growth. - Accessible: It should be reachable and easy to enter or penetrate. The marketers must be able to deliver the product or service offering and must be able to operate therein. - Differentiable: One segment should be easily differentiated from another. Clear differences in consumer wants, needs and preferences for the product must exist across segments, and the people therein should react differently from other segments towards a marketing mix program. There should exist a homogeneity within the segment and, a heterogeneity with other segments. - Actionable: It should be possible to design a marketing program directed towards that segment and serve it effectively and efficiently. The marketer should be able to react to the need, wants and preferences of the segment with the appropriate marketing mix.

3.6.2

Evaluation and selection of Target Markets: While evaluation and selection of the Market Segments, two issues need to be addressed; one, the overall attractiveness of the segment; and two, thecompanys objectives and constraints.
i) What is the overall attractiveness of the segment? -This is explained in terms of segment size, sales, growth rate and overall profitability. Structural

attractiveness can be elaborated upon to include details on existing competition, entry/exit barriers for competition, availability of substitute products, and the backward power balance equilibrium between supplier and the buyer (i.e. marketer). ii) What are the companys objectives and constraints (physical, financial and time)? - The marketer needs to address the core competencies and competitive advantage to grow in that segment; this would include the companys hold over resources, skills and competencies and overall strengths in terms of physical and financial resources as well as time constraints.

3.6.3

Patterns of Target Market Selection: Broadly speaking there could be 5 different patterns of target market selection, viz., single-segment concentration, selective specialization or multi-segment, product specialization, market specialization and full market coverage.
a) Single-segment concentration: The marketer decides to cater to a single segment only. Also referred to as concentrated marketing, the marketer understands the needs and wants of the segment and focuses on one segment only. Example: Rolex watches.

3.7 Positioning :
As a part of STP, after deciding upon the targets to cater to, the marketer needs to position the product or service offering. Positioning is the act of designing the product and service offering of a company in the minds of the customers so that (i) the consumer can relate the product and service offering to a need or want; (ii) the marketer can create a distinctive image of himself. (iii) the consumer can perceive a brands characteristics relative to those of competitive offerings.

It is process of creating an image of the product and service offering in the minds of the consumer, trying to differentiate itself from the competitor. OTHER DEFINITIONS: - designing an offer so that it occupies a distinct and valued place in the minds of the target customer. Kotler. Positioning is not what you do to your product, but what you do to the mind of your prospective customer.-Al Ries and Jack Trout. A product or service offering is positioned on the basis of the attributes or features that the product or service offering possesses; Some examples are as follows: i) Johnson and Johnson: Baby care ii) Dove: Skin care; Soap with Moisturizer iii) Amul: the Taste of India; Cooperative Movement iv) Tata tea: Jaago re: Public Awareness The marketer should choose the positioning parameters with care; they should be important (and of value to the customers); distinctive, superior, affordable and viable. 3.7.1 ISSUES to address: a) Choosing what to position: The criteria to promote could relate to products, services, the 4Ps, company image and reputation, and the people. As a strategy, positioning can be based on: i) ii) perceived benefits, characteristics or image. competition

iii) a combination of both (i) and (ii). The product positioning may be done on specific bases/features/characteristics: i) ii) Product Attributes: Example: LG Golden Eye: Auto contrast and Brightness control. Benefits, Problem Solutions and Basic Needs: Examples: Pepsodent (decay prevention), Close-Up (Fresh breath). iii) iv) Quality: Example: Sony picture quality and sound Product User: Examples: Parker (Amitabh Bachchan), Reid and Taylor (Executive/ Lifestyle), Johnson and Johnson (Babies) v) vi) Product Usage: Example: Burnol Specific use: Example: Greeting cards for every occasion

vii) Services: Example: Maruti Service Station all over India viii) Price: Example: Subhikha: Isse sasta aur nahi??? ix) Distribution: Example: Dell (direct selling: customization)

x) Against other Products (Competitors): Example: Savlon vs Dettol; Savlon jalta nahin. b) How many criteria to use for positioning: The marketer has the option to use one or few of the criteria to position himself. When he uses just one criterion, he makes use of what is called a Unique Selling Proposition. He may also decide to position on more than one criterion and may position on a few features or attributes or benefits. c) What qualities should the criteria for positioning possess? The criteria for positioning should be: - Important: value in the eyes of the segment; eg. Sony color TVs: known for picture quality and sound effect. - Distinctive: unique. eg., Savlon antiseptic does not sting or burn when applied. - Superior: better than other available brands; eg., Cooling time for Refrigerators; Helps make Ice quicker: Videocon, LG - Communicable: the criteria should be easily communicable to the segment in a laymans language (less of technical descriptions and jargons). - Preemptive: The criteria should be such that it is not easy to copy or imitate easily. eg. Auto contrast and colour adjustment by LG Golden Eye. - Affordable: The criteria should be valuable but should not be so high priced that it is out of reach for the segment; The customer must be able and willing to pay for the feature. - Profitable: The delivery of such value should not be at the cost of earning losses for the company. It should be valuable both from a customers perspective as well as from the companys perspective.

3.7.2

Positioning Strategies :

A marketer could choose amongst two kinds of positioning strategies; he could either opt for positioning on i) Points of parity (POP) or ii) Points of difference (POD). Points of parity could be further sub-divided into Category point-of-parity associations, and Competitive point-of-parity associations. i) Points of parity (POP): Here the product in question is not unique in nature; it is shared by other competitive brands; The product or service offering is similar to that of the competitor. Example: Complan, Milo and Bournvita: Positioned as: All help children to grow. POP has two basic forms, viz., (a) Category point-of-parity b) Competitive point-of-parity. a) Category point-of-parity: The product or service offering should possess these qualities in order to qualify being a part of the product or service category. These are the bare minimum that all the brands should possess in order to qualify as a part of the product or service industry. Example: All mouthwashes contain antimicrobials; they are also minty. b) Competitive point-of-parity: These are developed to fight against and balance out with the competitors points-of-difference. Example: Listerine vs Scope: Listerine claims to leave you fresh after a rinse and prevents bad breath; Scope claims that it does the same but in a milder way. Other examples: Savlon versus Dettol: Savlon does not sting when applied on wound ii) Points of difference (POD): Here the product or service offering is unique; The positioning is based on

the USP (Unique Selling Proposition). The uniqueness should be something that the customers value, and can relate to favorably. This USP leads to differentiation and can thus, develop competitive brand positioning. The product and service offering can be differentiated on the basis of product, service, people, image and public relations etc. Example: Auto color and contrast setting: LG Golden Eye.

4.1 Decision Making :

A decision is defined as choosing an option of the few/many available. Decision making is the process ofchoosing between two or more alternatives; It is the selection of an alternative out of the few/many choices that are available. Decision making is: a) a goal oriented process. b) it is a problem solving process: helps take advantage of opportunities and fight threats. Decisions Making can be of two types, a) Programmed decision making, and, b) Non-programmed decision making.

a) Programmed decision making: This is applied for problems that are routine and regular. Such
problems are simple to deal with and guidelines to sort out such problems exist. Such decisions are made without much thought. With respect to marketing, these are decisions related to day to day purchases or convenience and shopping goods; these are generally low involvement purchases. They may also be habitual in nature, and brand loyalty could easily develop. Examples: Purchases made for staples, toiletaries etc.

b) Non-programmed decision making: This is applied for problems that arise suddenly and are unique
or novel. As the problem is sudden and novel, it is complex and requires a lot of information gathering, deliberation and thought. With respect to marketing, these are decisions related to infrequent purchases or specialty goods and emergency goods; these are high involvement purchases. Examples: Purchases made for laptops, real estate etc.

4.2 Consumer Decision Making :

A consumer purchase is actually a response to a problem. Consumer Decision Making pertains to makingdecisions regarding product and service offerings. It may be defined as a process of gathering and processing information, evaluating it and selecting the best possible option so as to solve a problem or make a buying choice. Consumer Decision Making pertains to the following decisions: a) What to buy: Products and Services (and the Brands?) b) How much to buy: Quantity c) Where to buy: Place d) When to buy: Time e) How to buy: Payment terms.

All purchase decisions are not similar. The effort put into each decision making is different.

4.3 Levels of Decision Making :

While decision making is defined as the selection of an alternative to solve a problem, the time and effort required to complete the process varies across buying situations. We may define three kinds problem solving spread over a continuum; these are referred to as the levels of consumer decision making; (i) Extensive problem solving (EPS) (ii) Limited problem solving (LPS) (iii) Routinized problem solving (RPS) or routinized response behavior. These are explained as follows: a) Extensive problem solving (EPS): In EPS, the consumer is unfamiliar with the product/service category; he is not informed of the product or service offering, and thus, the situation requires extensive information search and evaluation. The consumer is not aware: - about the various decision criteria used to evaluate the product or service offering. - of the various brands that are available and from which to evaluate. The result is that the purchase process involves significant effort on part of the consumer. He has to gather knowledge about (i) the decision criteria; (ii) the brands available; and (iii) make a choice amongst the brands. The types of products and / situations where we generally have EPS: 1. These goods are ones of high involvement; they are expensive; they are infrequently bought; there is considerable amount of risk involved. These are generally first time purchases

2.

Examples: Jewellery, electronic goods, Real estate and property etc. b) Limited problem solving (LPS): The consumer is familiar of the product or service offering; but he is unaware of the various brands. The case is one where the buyer is familiar wit the product category but unfamiliar with the brands. The consumer: - is aware of some brands and also of the various criteria used to evaluate the product or service offering. - is unaware of the new brands that have been introduced. - has not evaluated the brands amongst the awareness set and has not established preferences amongst the group of brands. The result is that the purchase process is more of a recurring purchase and it involves only a moderate effort on part of the consumer. He has to gather knowledge to add/modify the existing knowledge that he has in his memory. Thereafter he has to make a decision. The types of products and / situations where we generally have LPS: 1. 2. These goods are ones of low involvement; they are generally moderately priced; they are frequently bought; there is lesser amount of risk involved. These are generally recurring purchases.

Exceptions:

They may also be cases where an expensive product is being repurchased. Examples: A laptop replacing a desktop, a second TV for the home. c) Routinized problem solving (RPS) or routinized response behavior: The consumer is well informed and experienced with the product or service offering. The consumer is aware of both the decision criteria as well as the various brands available. Here, the goods are ones of low involvement; they are inexpensive; they are frequently bought; there is no risk involved. These are routine purchases and are a direct repetition, where the consumer may be brand loyal. The result is that the purchase process involves no effort on part of the consumer. It is simple and the process is completed quickly; purchases are routine and made out of habit. The types of products and / situations where we generally have RPS: 1. These goods are ones of low involvement; they are inexpensive; they are frequently bought; there is no risk involved. These are routine purchases and the consumer is brand loyal.

2.

Examples: Staples, Cold drinks, Stationery etc. Table 1: Comparisons between EPS, LPS and RPS EPS High High Yes Many No No LPS Medium Low to High Yes Few Yes Somewhat RPS Low Low No Few or none Yes Yes

1. Complexity of decision making 2. Time taken to make decisions 3. Information gathering 4. Information sources 5. Awareness and knowledge of: a) Decision criteria b) Alternative brands available 6. Evaluative criteria 7 Brands considered 8. Cognitive dissonance

Complex Many High

Moderate Few Rare

Simple (if at all) One (Repeat purchase) None

Table 2: Comparisons between EPS, LPS and RPS EPS 1. Consumer High Involvement 2. Problem recognition Actual state type to Desired State 3. Information search Extensive Internal and external sources Complex Gradual after a cognitive process LPS Medium Actual state type to Desired State Limited Mostly internal sources Moderate Not so gradual RPS Low Actual state type Minimum Restricted to internal sources only. Simple (if at all) Immediate

4. Evaluation of alternatives 5. Purchase

6. Post purchase processes 7. Types of goods

Cognitive dissonance is high. Brand loyalty if satisfied Specialty goods

Cognitive dissonance would be rare Mixed

Brand loyalty. Repeat purchase. Convenience

4.4 Buying Roles :

Consumer decision making is a complex process. It is an interplay of reactions amongst a consumer and his cognition, affect and behavior on the one hand, as well as the environmental forces on the other hand. The actual transaction/ exchange is preceded by considerable amount of thought processes and influences. This could be explained in terms of the five Buying Roles viz., Initiator, Influencer, Decider, Buyer and, User. The marketer needs to understand these roles so as to be able to frame suitable strategies to target them. a) Initiator: The person who identifies a need and first suggests the idea of buying a particular product or service. b) Influencer: The person(s) who influences the buyer in making his final choice of the product. c) Decider: The person who decides on the final choice: what is to be bought, when, from where and how. d) Buyer: The person who enters into the final transaction and exchange process or is involved in the physical activity of making a purchase. e) User: The person(s) who actually consumes the product or service offering. The various buying roles can be illustrated through examples: Example1: A kindergarten girl needs to buy color crayons to use in class. i) Initiator: The girl ii) Influencer: Her teacher or her classmates iii) Decider: Either of the parents iv) Buyer: Either of the parents or a sibling. v) User: The girl herself. Example 2: The mother of the house is a housewife; she loves watching TV when her husband and children go for work. She has been complaining that the present TV set at home has been giving problem. She also says that the model is now an old one and that that the family should own a new model. i) Initiator: The lady

ii) Influencer: Her neighbors and friends. iii) Decider: Joint: Her husband, she herself and the children. iv) Buyer: Husband or son or daughter or she herself. v) User: The family.

Example 3: A boy enters college and needs a laptop for doing assignments. i) Initiator: The boy himself ii) Influencer: His friends and classmates. iii) Decider: The boy himself. iv) Buyer: The boy himself. v) User: The boy himself. Note: - These five roles may be performed by one person or many persons. - A person may perform more than one role. - The role(s) that one assumes for a particular product purchase and in a particular purchase situation may differ to another product purchase and in another purchase situation. It is even more noteworthy that: As far as Buyer Behavior is concerned, the buyers role is the most important; it is he who enters into a transaction and final exchange. - actual and final decision is always made at the time of transaction by the buyer. - the decider may make a choice, but the exchange is entered into by the buyer

4.5 Consumer Decision Making Process :

Marketers are interested in consumers purchase behaviors, i.e., the decision making process. The consumers decision making is a choice amongst various alternatives that address problematic issues like: - what to buy; - where to buy; - when to buy; - how to buy; - how much to buy. Consumer decision making involves a continuous flow of interactions among environmental factors, cognitive and affective processes and behavioral actions. A consumers decisions are based on knowledge, affect and behavior related to the marketing mix. Stages in Consumer Decision Making Process: There are five stages in the consumer decision making process. These are 1. 2. 3. Need recognition/Problem recognition Pre-purchase information search Evaluation of alternatives

4. 5.

Purchase decision Post-purchase outcome and reactions

Each of these stages are explained as follows:

1. Need recognition/Problem recognition: This is a stage of perceiving a deficiency/need. A need

could be triggered off by an internal stimulus or an external stimulus. For example, a person is thirsty and feels like having a cola drink. The stimulus is internal. On the other hand, while walking across the street, he sees a hoarding which shows a person having a frosted, chilled cola, and he too desires to have the same, the need is said to have been stimulated by an external stimuli. A need or problem recognition could be Simple or Complex. a) Simple: Simple problem recognition is similar to Structured Problems; They occur frequently as a routine and can be dealt with automatically without much effort. b) Complex: A Complex problem recognition is similar to Unstructured Problems; They occur infrequently as unique and non-routine and need considerable effort to be solved. A need or problem recognition could result when: a) the Actual State changes (AS type): - the product is failing, or the consumer is running short of it; - there is a problem that exists. - consumers who react in such situations are called AS Types. Example: A product stops functioning and the customer needs a replacement; eg. A refrigerator; Samsung One door: Standard; b) the Desired State changing (DS type): - there is an imbalance between the actual state and the desired state - another product seems better and superior to the one that is being currently used; -consumers who react in such situations are called DS Types. Example: The product is functioning properly; but the consumer wants to buy an upgraded model; eg., The refrigerator is functioning properly; However, the customer wants to buy another one which has more features and is more modern; Samsung Two doors: Deluxe: Frost free; Which of the particular styles operates depends on the product or service in question as well as the situation. Whether a problem is an AS or DS Type also gets affected by an individual and his personality. Some consumers are AS Types, who realize that there is a problem after it has arisen, and so they go in for a purchase; They are reactive by nature; Eg. The consumer reacts after the refrigerator breaks down. Other consumers are the DS Types, who want to upgrade to better/newer products; They are proactive; Eg. Want to purchase a newer model of the refrigerator. A need is recognized in any of the following situations:

When a current product brand X is not performing well. When the current product brand X is nearing depletion. When another brand Y seems superior to the one currently owned, X.

b) Pre-purchase information search:

After a need is recognized, the consumer goes for an information search, so as to be able to make the right purchase decision. He gathers information about the: (i) product category and the variations (ii) various alternatives (iii) various brands. The amount of information a consumer will gather depends on the following: i) the consumer: demographics (age, gender, education), psychographics (learning, attitudes, involvement, personality type) ii) product category: differentiation and alternative brands available, risk, price, social visibility and acceptance of the product. iii) situation: time available at hand, first time purchase, quantity of information required, availability of information. Types of Search Activity: The information search activity may be of various types, viz, specific, ongoing and incidental. (i) Specific: This type of search activity is specific to the problem and/ immediate purchase; it is spurred as the need arises, and the consumer actively seeks information. Example: student enters college and needs to buy a laptop so that he can work on his assignments. (ii) Ongoing: Here the search activity is a gradual process that could span over time. Example: the same student, has been thinking of purchasing the laptop since the past five years, and over these past 5-6 years, he has been gathering information specific to the laptop as a product category and also about the various brands available. (iii) Incidental: This is a byproduct of another search activity or experiences. Consumers absorb information from their day to day routine activities and experiences. Example: the student goes to a mall; he has gone there to help his mother buy a microwave oven; there in the store, he attends a demonstration of a new laptop that is being launched. Information Sources: The information sources are of two types: i) Internal sources: This includes the consumer and his self. He recalls information that is stored in his memory (comprising information gathered and stored, as well as his experiences, direct and indirect).Internal sources seem sufficient when: - it is a routine purchase - the product is of low involvement ii) External sources: Here the consumer seeks information from the external environment. External sources of information include: -Interpersonal communication (family, friends, work peers, opinion leaders etc.) -Marketing communication or commercial information (advertisements, salespeople, company websites, magazines etc.) -Other public sources (editorials, trade magazines and reports, consumer awareness programmes on TV, Internet etc.)

External sources are resorted to in cases where: - past knowledge and experience is insufficient. - the product is of high involvement and the risk of making a wrong decision is high.

c) Evaluation of alternatives: Once the consumer has gathered information and identified the
alternatives, he compares the different alternatives available on certain criteria. This involves: i) Generation of choice alternatives; ii) Identification of evaluative criteria: Attributes and Benefits; iii) Application of Decision Rules. i) Generation of choice alternatives:While generation of alternatives, a consumer moves from an evoked set towards the choice set. -Evoked set/Consideration set: This is the set of alternatives that he actively considers while making a purchase decision; these exist either in his memory or feature prominently in the environment. The consumer perceives them to be acceptable. -Inept set: These are those alternatives from the evoked set that the consumer excludes from further consideration, as he perceives them to be inferior and unacceptable. -Inert set: These are those alternatives from the evoked set that the consumer excludes from further consideration, as he is indifferent towards them and perceives them as ones without much advantages or benefits. -Choice set: This comprises the final set of one or two brands from which he finally decides. ii) Identification of Evaluative Criteria: Attributes and Benefits: These are objective and subjective parameters of the brand that the consumer regards as important, and uses as standards to discriminate among the various alternatives. The consumer evaluates the different alternatives on one or few or many of these features and then makes a final choice.They are features that a consumer considers in choosing among alternatives; these could be functional/utilitarian in nature (benefits, attributes, features), or subjective/emotional/hedonic (emotions, prestige etc.). The major evaluative criteria are: 1. Economic: Price, Value (Product Attributes, Brand image, Evaluation of Quality, Price, & Features). Behavioral: Need/motivation, Personality, self-concept and self-image, Lifestyle etc. Social influences: Group influences, environmental issues etc.

2. 3.

iii) Application of Decision Rules to make a final choice amongst alternatives: The consumer uses certain decision rules. The decision rules help a consumer simplify the decision process; the various evaluative criteria are structured and integrated so as to simplify the evaluation process. There can be two kinds of Decision Rules, viz., Compensatory rules and Non-compensatory rules. 1. Compensatory rules: Under compensatory rules, the various evaluative criteria are listed as attributes. These attributes are scored and rated for the various alternative brands. A lower rating on an attribute may be offset by a higher rating on another; i.e. a higher rating on one attribute would compensate for a lower rating on another. Based on the final scores, the brands are ranked; the one with the highest score, being regarded as the best. The consumer would then select the brand that scores the highest among the various alternatives that have been evaluated. Compensatory rules could assume two forms: simple and weighted. - Simple summated: The attributes are rated for each brand and the scores are totaled. - Weighted: The attributes are first given weights relatively based on the level of importance; thereafter, the attributes are rated and finally scored after multiplication with the weights. The weighted scores are then totaled. 2. Non-Compensatory rules: Here, a negative evaluation of any one attribute eliminates the brand from

consideration. A lower rating on an attribute cannot be offset by a higher rating on another; i.e. a higher rating on one attribute would not compensate for a lower rating on another. The consumer would then select the brand that scores the highest among the various alternatives that have been evaluated. Noncompensatory rules could assume three forms: conjunctive, disjunctive and lexicographic. Conjunctive rule: A minimally acceptable cut off point is established for each attribute. The brands are evaluated, and, the brand that falls below the minimally acceptable limit on any of the attributes is eliminated/rejected. Disjunctive rule: a minimally acceptable cut off point is established for each attribute. The brands are evaluated, and, the brand that falls above the cut off point on any of the attributes is selected. Lexicographic rule: The various attributes are ranked in terms of perceived importance. First, the brands are evaluated on the attribute that is considered the most important. If a brand ranks considerably high than the others on this attribute, it is selected. In case the scores are competitive, the process may be repeated with the attribute considered next in importance. Sometimes the application of one rule may not be enough; And another may also be applied to reach a final decision. Table 1: Decision rules with Examples

DECISION RULE Compensatory rule:

EXAMPLE The consumer chooses that laptop which he judges as the best when he balances the good and bad ratings with each other.

Non Compensatory rules: Conjuntive rule The consumer chooses that laptop that has no bad features. The consumer chooses that laptop that has at least one good feature. The consumer chooses that laptop that is the best on the most important of all features.

Disjunctive rule

Lexicographic rule

d) Purchase decision: After the consumer has evaluated the various alternatives, he selects a particular brand. Consumer purchases may be trials/first purchases or repeat purchases. Trials/First purchase: Trials could be elicited through market testing, or through promotional tactics such as free samples, coupons, etc . Repeat purchases: If the consumer is satisfied, he would buy the brand again. Repeat purchases lead to brand loyalty. The consumer may further have to make decisions on: a) where to buy from? (Place: Real/brick and mortar or virtual/online); b) whom to buy from? (Which store: Depends on reputation of seller, past experience, etc.)

c) when to buy? (Time: Emergency or Routine; During season, off season, sale, rebate etc.) It is noteworthy that a purchase intention (desire to buy the most preferred brand) may not always result in a purchase decision in favor of the brand; it could get moderated by (i) Attitudes of others; and (2) Unexpected situational factors. e) Post-purchase outcome and reactions: The post purchase outcome and reactions contains two stages; Stage I comprises Post purchase Cognitive Dissonance, and Stage II comprises Product usage and reaction. Stage I: Post purchase Cognitive Dissonance:This is a feeling of tension and anxiety that a consumer experiences after the purchase of a product. The consumer begins to have a feeling of uncertainty with respect the performance of the product and begins to doubt his purchase decision whether the decision was the right one?. He begins to ask himself the following questions: a) Have I made the right choice? b) Have I purchased the right brand? c) Have I got value for money? The Fox and the Sour Grapes is a perfect example of Cognitive Dissonance. Cognitive dissonance generally occurs in cases where: (i) the decision making and purchase relates to a high involvement product; (ii) the purchase activity is irrevocable; (iii) the consumer cannot return the product; (iv) the various alternatives have desirable features and are all comparable; (v) the alternatives are also unique in some way or the other. Consumers try to reduce this dissonance by: (i) gaining more product information; (ii) discussing with other satisfied customers who have bought the same product/brand; (iii) going back to the dealer and asking for reassurances. Other methods that consumers employ to reduce cognitive dissonance are by: -rationalizing that the choice that they have made is the right one. -refer to data (printed/audio visual) that supports and recommends the chosen product/brand. -make others buy the same product/brand to reassure their choice. Marketers also employ strategies to reduce this dissonance by providing guarantees and warranties, membership to company consumer forums and communication and follow up with the customers. Stage II: Product usage and reaction:After the purchase, the consumer uses the product and re evaluates the chosen alternative in light of its performance viz. a viz. the expectations. This phase is significant as it (i) acts as an experience and gets stored in the memory; (ii) affects future purchase decisions; (iii) acts as a feedback. There could be three situations that can arise:

-Performance meets expectations: This leads to a neutral feeling; Customer may think of more suitable alternatives next time. -Performance exceeds expectations: The customer is satisfied and this leads to a positive feeling. He would tend to repeat purchase and it would lead to brand loyalty. He would also spread positive word of mouth. -Performance falls short of expectations: Here, the customer is dissatisfied and this leads to a negative feeling. The customer would search for other alternatives, express grievances, spread negative word of mouth and may even resort to legal action. Note: It is important to note that the five staged decision making process is not so simple; it is complex.The decision making process is an interplay of reactions amongst a consumer and his cognition, affect and behavior on the one hand, as well as the environmental forces on the other hand. Further, the proceduremay not always follow a linear order, and the decision making may not always proceed through all the five stages; it would vary across (i) the nature of the product (high and low involvement); (ii) the purchase situation (emergency or planned or routine); (iii) the personal characteristics of the consumer; and (iv) the type of problem solving (EPS, LPS and RPS).

4.6 Implications for a Marketer :

An understanding of the consumer decision making process, can help a marketer formulate appropriate marketing strategies. He can also model his marketing mix accordingly. The implications of understanding the dynamics of consumer behavior are discussed as follows: 1. Need/Problem recognition: -A marketer can create an imbalance between the actual and desired state; it would trigger of the purchase decision process. -He can launch newer models; marketing communication has a big role to play. -He can focus on both functional (utilitarian) and emotional (hedonic) benefits that the product purchase could offer. -He can activate a need through communication (advertisements, sales promotion, point-of-purchase stimuli, opinion leaders and reference groups). 2. Pre-purchase information search: -Marketing communication has an important role at this stage. -The marketer can identify the sources of information that the people generally access and use these to present information about his product and service offering. -The marketer can also identify the functional or hedonic utility and use appeals accordingly. -This would help create the right kind of cognitive and emotional touch point so as to elicit a favorable behavior (purchase). -The marketer should be able to provide the right kind of information at the right place and at the right time. -The marketer must make sure that his product and service offering forms a part of the evoked /consideration set. a) For high involvement products: the marketer should ensure that information is available.

b) For low involvement products: he should use emotional appeals, POP stimuli etc. 3. Evaluation of alternatives: -The marketer should be careful that his product is: i) positioned and promoted well; ii) is readily available and displayed well; iii) the product features prominently in the evoked/consideration set; and, iv) he highlights those attributes and benefits that are regarded as most important to the consumers, and which they are most likely to evaluate while selecting an alternative. -The marketer should inform and educate the customer about the various criteria to use for evaluation of alternatives. -While doing so an intelligent marketer should focus on those attributes, where his product is better and/superior. 4. Purchase decision: - The marketer should be careful to stock the product at the right place at the right time so that the consumer who has made a decision in favour of the brand can have access to the product; Else the consumer may have to change his decision at the last moment. - As far as trial and first time purchases are concerned, the marketer should encourage trials through market testing, or through promotional tactics such as free samples, coupons, etc. - For repeat purchases: i) the marketer should make sure that he has satisfied the customer at the first time. ii) that his offering is a part of the evoked/consideration set. He should aim towards creation of brand loyalty. 5) Post-purchase outcome and reactions: - The marketer can play an important role in reducing the dissonance that the consumer faces and reassuring him that the choice he made was the right one. i) The marketer can communicate with the customer about the various attributes/features and benefits that the product has to offer in comparison with other alternatives. ii) He can follow up with the customer and address queries and concerns if any (eg. follow up calls). iii) Marketers assurances with respect to warranties, guarantees and exchange can also pacify the cognitive dissonance state. iv) Company websites with FAQs (frequently asked questions); satisfied customers comments and blogs; and customer care information (eg. toll free numbers etc) can also prove to be helpful.

5.1 Models of Consumers :

Consumers approach the marketplaces differently; they go though the buying decision process

differently as it gets impacted by internal and external forces. Researchers have attempted to understand the dynamics of consumer decision making and they have classified four varying views and perspectives, the underlying forces operating within consumers that could be employed to approach the marketplace. These are i) Economic ii) Cognitive iii) Passive iv) Emotional. i) Economic view: According to the economic perspective of studying consumers, the consumer is regarded as being rational. The model assumes that there exists in the market a state of perfect competition; the consumer is aware of the various alternatives; he has the knowledge and ability to rank all of these; and he finally takes a rational decision. He takes a decision and makes a choice as after taking into account the cost and benefit, and the overall value in economic terms. ii) Cognitive view: The consumer is regarded as being a problem solver, who searches for products to fulfill his needs/wants. Consumer decisions are based on information gathering and processing. The consumer is believed to take decisions after a lot of thought and deliberation, so as to get maximum benefit and value. iii) Passive view: Here, the consumer is regarded as irrational and impulsive, who easily succumbs to the selling and promotional efforts of the marketer. It is assumed that the consumers are submissive to the self-serving interests of the marketer and the salespersons are powerful. iv) Emotional view: The consumer is regarded as being emotional and impulsive. who takes decisions based on moods and emotions. Marketers must put in efforts and create positive mood and emotions.

5.2 Models of Consumer Behavior : General Models:

The consumer models refer to varying orientations and perspectives with which consumers approach the marketplace and how/why they behave as they do. They refer to how the varying orientations impact the buying decision process and overall buyer behavior. Various models have been proposed by researchers; these models can be classified as (a) General models (b) Specific models. This session deals with the General Models. The Specific Models are dealt with in the next session.

General Models: There are four models that fall under this category, viz. Economic model, Psychological
model, Psychoanalytic model and Sociological model

i) The Economic model: The economic model explains buying behavior from an economic perspective; The assumption is that resources are scarce viz. a viz unlimited needs; a consumer seeks value: he wants maximum benefit at minimum cost. The economic models showed concern as to how scarce resources were allotted to satisfy the unlimited needs and wants. Economic models can be further classified into Micro economic models and Macro economic models. Micro economic models: The micro economic models focus on the act of purchasing; they focus on what an average consumer would purchase and in what quantity; they also ignore why and how the needs/wants get prioritized, and how the behavior is underpinned. According to the micro economic view, consumers are rational in nature and value utility. With resources being scarce, they would allocate money on their purchases in a way that satisfies them maximally. The consumer decisions are thus based on benefit to cost ratio; the consumer would settle on an alternative that provides the highest ratio in terms of marginal utility. The limitations of studying consumer behavior with this orientation is that consumers are not always rational, and they seek average /adequate satisfaction and not total satisfaction. Also, consumers assess the

benefit to cost ratio differently; they define the two variables cost and benefit variedly; the issue is subjective. The view is also silent about other forces that operate during the buying process. Macro economic models: The macro economic models focus on the overall trend in the economy that has an impact and is also impacted upon by buying patterns. They focus on the aggregate flows in the economy. Conclusion about consumer behavior are made after analyzing such flows. This approach could also be studied with two orientations: a) Relative income hypothesis: A persons expenses is influenced by his social surrounding and group. With his income being constant, the relative expenses and the resultant savings will not change, until and unless, there is a big change in the total income. The hypothesis holds that what and how much a consumer spends is not solely dependent on income, but is influenced by peers. b) Permanent income hypothesis: Even if the total income increases, people initially exhibit inertia towards spending as they want to accumulate wealth; so purchasing pattern does not change immediately. The limitations of studying consumer behavior with this orientation is that the view is silent about other forces that operate during the buying process. ii) The Psychological model: The psychological model, also called the Learning Model or the Pavlovian Learning Model, was proposed by classical psychologists led by Pavlov. According to this model, consumption behavior and decision making is a function of interactions between human needs and drives, stimuli and cues, responses and reinforcements. People have needs and wants; They are driven towards products and services (stimuli and cues), which they purchase (response), and they expect a satisfying experience (rewards and reinforcements); Repeat behavior would depend on reinforcement received. The model believes that behavior is deeply affected by the learning experiences of the buyers; and learning is a product of information search, information processing, reasoning and perception. Reinforcement leads to a habit formation and the decision process for an individual becomes routinized, leading to brand loyalty. Consumers also learn through trial and error and resultant experiences that get stored in our memory. The limitations of studying consumer behavior with this approach is that the model seems incomplete. Learning is not the only determinant in the buying process and the decision making. The model totally ignores the role played by (a) other individual determinants like perception, personality (the sub-conscious), attitudes; as well as (b) interpersonal and group influences. iii) Psychoanalytic model: The psychoanalytic model was proposed by Sigmund Freud. The model tries to explain consumer behavior as a resultant of forces that operate at subconscious level. The individual consumer has a set of deep seated motives which drive him towards certain buying decisions. According to the model, buyers needs and desires operate at several levels of consciousness. Not all of the behavior is understandable and explainable by the person. Also not all of human behavior is overtly visible and explainable. Sometimes, the behavior may not be realized and understood by the person himself. Such causes can be understood by drawing inferences from observation and casual probing. There have been two more contributions that have been made to the psychoanalytic approach, these area) Gestalt model b) Cognitive theory Gestalt model: The model based on Gestalt principles (meaning patterns and configuration) lays emphasis on the perceptual processes that impact buying behavior. According to this model, consumption behavior and decision making is based on how a consumer perceives a stimuli ( the product and the service offering and the 4 Ps) viz a viz. the external environment and his own prior experiences. Cognitive theory: The model proposed by Leon Festinger, views the consumer as one who faces a feeling of anxiety (dissonance), while he is making a purchase; this is because he is faced with many alternatives, all of which seem desirable. Post-purchase, this dissonance increases even further. There is an imbalance in the cognitive structure; and the consumer tries to get out of this state as soon as he can. So a buyer gathers information that supports his choice and avoids information that goes against it.

iv) Sociological model: The model is based on findings of Thorstien Veblen, and focuses on the role played by social groups and social forces. A persons consumption pattern and buying behavior is affected by social factors; his family, friends, peers, social groups, reference group and culture have a major role to play. According to the model, man is perceived as a social animal, and thus he conforms to norms of its culture, sub culture and groups amongst which he operates. Emulative factors and social influences have a big role to play in consumer decision making. Table 1: MARKETING IMPLICATIONS OF MODELS

MODEL Economic model:

IMPLICATION -Consumers are price sensitive; they look out for a value proposition and thus buy those offerings that give them more benefit vis a vis cost. -As a marketer, this implies that he should offer to customers a Value proposition. -Deals and sales promotion can also impact buying decisions to his favor. Consumer purchases are affected by fluctuations in the economy. -Consumers learn from experiences of self and others. -They would buy products and services that are rewarding and would bring positive reinforcement. -Marketers should arrange for product demonstrations. -They should also encourage trials: free samples, testing and sales promotion can help elicit trials. -If the consumer finds the product usage satisfying, he would go for a repeat purchase. -While consumers may look for functional benefits while buying a product, they are also affected by hedonic elements. The marketer also needs to understand the consumer psyche and design the 4Ps accordingly; this has implications on pricing and promotion. This has implications for brand

a) Micro economic

b) Macro economic Psychological model

Psychoanalytic model:

a) Gestalt

management; branding, brand associations and imagery. -This is related to post-purchase behavior; the marketer needs to help minimize the consumers postpurchase dissonance. - A persons purchase behavior is affected by his culture, sub culture and social group; - Opinion leadership and social group appeals.

b) Cognitive

Sociological model

5.3 Models of Consumer Behavior : Basic Models:

i) Model of Consumer Buying:
The consumer market is defined as end user markets. Also called Business to Consumer markets, or B2C markets, the product and service offering is bought by the consumer for his personal use. The decision making process in consumer markets is different from the one that takes place in business or industrial markets. According to Kotler and Armstrong, the basic model of consumer decision making process comprises three major components, viz., marketing and other stimuli (these act as influences), the buyers black box (these are related to the consumer) and the buyer responses (this is the response part). The components/processes as well as the working dynamics are explained as follows: 1. Marketing and other stimuli: A consumer is confronted with a stimulus in the environment. This stimulus could be of two kinds; a) One that is presented by the marketer through the marketing mix or the 4Ps, product, price, place and promotion; -product: attributes, features, appearance, packaging etc. -price: cost, value, esteem (prestige) -place: location and convenience, accessibility -promotion: advertising, sales promotion, personal selling, publicity, direct marketing. b) The other that is presented by the environment, and could be economic, technological, political and cultural. 2. Buyers black box: The stimuli that is presented to the consumer by the marketer and the environment is then dealt with by the buyers black box. The buyers black box, comprises two sub components, viz., the buyers characteristics and the buyer decision process. The buyers characteristics could be personal, psychological, cultural and social

Figure 1: Model of Buyer Behavior Source: Kotler, P., Marketing Management, 11th edition, Prentice-Hall India, a) Personal: -age & life-cycle stage (family life cycle: single, newly married couples, full nest I, full nest II, full nest III, empty nest I, empty nest II, solitary survivor -occupation (occupation affects consumption patterns) -economic situation -lifestyle (pattern of living as Activities, Interest, Opinions, AIOs) -personality (personality is defined in terms of traits; these are psychological characteristics which lead to relatively consistent patterns of behavior towards the environment) & self-concept (self-concept is reflective of identity; how a person perceives himself including attitudes, perceptions, beliefs etc). Products and brands also have a personality; consumers are likely to choose such brands whose personalities match their own self. b) Psychological: -motivation (motives; urge to act to fulfil a goal or satisfy a need/want) -perception (ability to sense the environment and give meaning to it through the mechanisms of selection, organization and interpretation). -learning (a relatively permanent change in behavior as a result of ones experience; relates to memory; learning could be experiential based on direct experience or conceptual based on indirect experience; consumer learning could be based on marketing communication/seller provided information, personal word of mouth and/or experiential). -beliefs (thoughts that a person holds about something; these are subjective perceptions about how a person feels towards an object/person/situation) and attitudes (a favorable or unfavorable disposition/feeling towards an object, person or a situation).

c) Cultural:
-culture (a sum total of values, knowledge, beliefs, myths, language, customs, rituals and traditions that govern a society). Culture exerts the broadest and the deepest influence; eg. Influences on our eating

patterns, clothing, day to day living etc. Cultural influences are handed down from one generation to the next and are learned and acquired). -sub-culture (subset of culture: smaller groups of people within culture with shared value systems within the group but different from other groups; identifiable through demographics). -social class: ordered and relatively permanent divisions/startifications in the society into upper, middle lower classes; members in a class share similar values, interests, lifestyles and behaviors; the division is based on combination of occupation, income, education, wealth, and other variables.

d) Social:
-family: most important influence; (there occurs in a family what is referred to as socialization; family of orientation: parents and siblings; family of procreation: spouse and children; further some decisions are husband dominated, some are wife dominated and some are joint; roles played by family members), family life cycle (stages through which a family evolves; Peoples consumption priorities change and they buy different goods and services over a lifetime). -friends and peers, colleagues. -groups: reference groups {these are people to whom an individual looks as a basis for personal standards; they are formal and informal groups that influence buying behavior; reference groups could be direct (membership groups) or indirect (aspirational groups); reference groups serve as information sources, influence perceptions, affect an individuals aspiration levels; they could stimulate or constrain a persons behavior}. - opinion leaders (they influence the opinion of others based on skills, expertise, status or personality). -roles & status: the role refers to the expected activities and status is the esteem given to role by society. Research and studies into these factors can provide a marketer with knowledge that can help him serve the consumers more effectively. These characteristics affect the buying decision process, which comprises five steps:

a) Problem recognition: This is the first stage where a person recognizes that there is a problem or a need to
fulfill. This may either be an actual state (AS Type), where a problem has arisen and needs to be sorted out; the product is failing, or the consumer is running short of it, and thus needs a replacement. A problem could also be a desired state (DS Type), where there is an imbalance between the actual state and the desired state; another product seems better and superior to the one that is being currently used, and so the consumer wants to buy it. A need could be triggered off by an internal stimulus or an external stimulus. Marketers need to identify what could trigger a particular need.

b) Information search: After a need is recognized, the consumer goes for an information search, so as to be
able to make the right purchase decision. He gathers information about the product category and the variations, various alternatives and the various brands. Such a search could be ongoing, specific or incidental. The consumer could recalls information that is stored in his memory (comprising information gathered and stored, as well as his experiences, direct and indirect). He could also seek information from the external environment. The sources of information search could be personal (family, friends, peers and colleagues), commercial(marketers communication in the form of advertising, salespersons, publicity etc), public (mass media, consumer forums, government rating agencies) and experiential (self and others experiences). Personal contacts are highly influential sources, public sources are highly credible.

c) Evaluation of alternatives: Once the consumer has gathered information and identified the
alternatives, he compares the different alternatives available on certain features. These are those features that a consumer considers in choosing among alternatives; these could be functional/utilitarian in nature (benefits, attributes, features), or subjective/emotional/hedonic (emotions, prestige etc.).The consumer also uses decision rules that help a consumer simplify the decision process. At the end of the evaluation, purchase intentions are formed.

d) Purchase decision: After the consumer has evaluated the various alternatives, he selects a particular
brand. Consumer purchases may be trials/first purchases or repeat purchases. The consumer may further have to make decisions on where to buy from, how much to buy, whom to buy from, when to buy and how to pay. It is noteworthy that a purchase intention(desire to buy the most preferred brand)may not always result in a purchase decision in favor of the brand; it could get moderated by attitudes of others and unexpected situational factors.

e) Post purchase behavior: After the purchase, the consumer uses the product and re evaluates the chosen
alternative in light of its performance viz. a viz. the expectations. He could be experience feelings of neutrality (Performance meets expectations), satisfaction (Performance exceeds expectations) or dissatisfaction (Performance falls short of expectations). This phase is significant as it (i) acts as an experience and gets stored in the memory; (ii) affects future purchase decisions; (iii) acts as a feedback. 3. Buyer responses: While in the black box, the buyer also takes a decision with respect to the product, brand, dealer, timing and amount.

ii) Model of Industrial Buying:

The business/industrial market is defined as a market that buys, transforms/processes and sells further, either for further transformation/processing or, for consumer use. The business market consists of all the organizations, that buy goods and services for further use in the production and supply of other goods and services that are sold to others. Also called Business to Business markets, or B2B markets, the product and service offering is bought by one business organization and further processed/transformed/assembled consumer for further sale either to another business consumer or a personal consumer. The business markets are very different from consumer markets; they are huge in terms of size and investment; contain fewer but larger and bulkier buyers; they are geographically concentrated; its a derived demand and there is more inelasticity; demand also fluctuates very rapidly. The buying situation that an industrial buyer faces could range between a straight rebuy, a modified-rebuy and a new-task. These situations are based on the complexity of the problem being solved, the newness of the product requirement, the risk involved, the number of people involved in the buying process, the time available in hand. With business markets being different than industrial markets, the decision making process in business/industrial markets is also different from the one that takes place in consumer markets. The buying decision is taken in a very formal and professional manner by a group of people who are referred to as the buying center. It is highly formalized, bureauctartic and very complex. The buyers and sellers work very closely and try to build long term alliances and partnerships.

Figure 2: Model of Business Buyer Behavior Source: Kotler, P. and Armstrong, G., Principles of Marketing, 9th edition, Prentice-Hall India. According to Kotler and Armstrong, the basic model of business consumer decision making process comprises three major components, viz., the environment (these act as influences), the buying organization (these are related to the buying center, the decision process and the influences) and the buyer responses (this is the response part). The components/processes as well as the working dynamics are explained as follows:

1. The Environment: The environment surrounding the business organization comprises the marketing
stimuli in terms of the marketing mix or the 4Ps, product, price, place and promotion; It also comprises the other stimuli in terms of economic, technological, political, cultural and competitive environment. They environment acts as a stimulus to act; it provides strengths and opportunities and also helps identify weaknesses and threats.

2. The Buying Organization: The buying organization comprises the buying center which goes through
the entire buying process. The buying center is the decision making unit of the buying organization; it is a formally defined unit and comprises people from various departments and functional areas; the various members of the unit, vary in personal background, interest and preferences as also their buying motives, habits and orientations. Membership, power balance and dynamics vary for different products and buying situations. In case of a new-task, when the product/service is being purchased for the first time, the engineering and the R&D personnel have a major role to play and act powerful; In cases of the straightrebuy (routine purchases; repeat orders) and modified-rebuy situations (where product specifications are modified), purchase department acts powerful.

Figure 3: Major Influences on Industrial Buying Behavior Source: Kotler, P., Marketing Management, 11th edition, Prentice-Hall India, There are various factors that influence the buying decision in industrial buying behavior, viz, environmental, organizational, interpersonal and individual.

a) Environmental:

Economic: Various stages in the business cycle (inflation, depression, recession etc) and their resultant impact on money flows in the economy, level of demand , government orientation towards economy and monetary policies (interest rates etc). Technological: Rate of technological change; Technology transfer and adoption; Technology versus environment; Kind of technology adopted. Competitive: Amount of competition (number of competitors); Nature of competition; Dynamics of competition. Political: Political stability/instability; Governmental philosophy and orientation towards investment, growth and development. Natural environment: Availability of natural resources; Impact of industry on the environment; Environmental depletion; Environmental pollution; Waste and disposal etc.

b) Organizational:

Philosophy and orientation of the founder, directors and executives. Company vision, mission and strategy. Objectives of the company. Policies and procedures for purchase (Centralized versus decentralized; Quality versus price; Short term versus long term contracts; Intranet and extranet; Supply chain management; Partnership management).

Structures, systems for purchase: Buying center constituents, power dynamics and balances.

c) Interpersonal and Individual:

The buying center comprises people from various departments and functional areas. Every constituent is an individual in himself. He is different from others in terms of demographic and psychographic backgrounds in terms of age, income, personality, risk attitude, culture etc. The buying centre is diverse in terms of varying interests and orientations towards buying, as well as varying interests, authority, status, empathy, and persuasiveness. The decision making process in industrial buying is much more elaborate and complex than consumer buying. Robinson and Associates have identified eight stages and called each of the stages as buyphases.

a) Problem recognition: The buying process begins when someone in the organization identifies a need. A
need could be triggered off by an internal stimulus or an external stimulus.

b) General need description: The product/service requirement is laid out in very broad terms. c) Product specification: Then the concerned department/person specifies the products characteristics and
requirements.

d) Supplier search: Business organizations generate for themselves a list of vendors. This list is drawn up
from trade directories, websites, trade shows etc. In case of a straight rebuy or a modified rebuy, the buyer can refer to such a database. In cases of a new-task, he would have to search for new vendors.

e) Proposal solicitation: Thereafter, the buyer would invite suppliers to submit their trade proposals; such an
invitation could be placed in the newspapers, trade journals and company websites. The vendors are asked to submit details related to the product specifications, features, price, delivery time and period etc,

f) Supplier selection: After the proposals have been submitted by the vendors, the buyer would go in for an
evaluation of the suppliers. The buying center would establish the evaluative criteria, i.e. the basis on which the vendors would be evaluated. These criteria would vary across products/services, buying situations etc. In cases of government organization, the prime consideration while evaluating suppliers is the price. The buying center needs to take decisions on: - how many suppliers to use. - whether quality is a major determinant or price is a major determinant. - total evaluation of the supplier, including his reputation.

g) Order-routine specification: Once the busying center has taken a decision on the selection of the vendor,
the formal requisition is made in terms of listing the technical specifications, quantity required, delivery terms, negotiated price, payment terms, damages, return policies etc.

h) Performance review: The buyer reviews the performance of the chosen supplier(s) on a regular basis. This
evaluation helps the buyer later in cases of straight rebuy and modified rebuy. On the basis of an evaluation, the relationship/contract with the supplier is continued or terminated.

3. Buyer responses: While in the black box, the buyer also takes a decision with respect to the
product/service choice, supplier choice, order quantity, delivery terms and times, service terms and payment.

5.4 Models of Consumer behavior : Specific Models I

The consumer models refer to varying orientations and perspectives with which consumers approach the marketplace and how/why they behave as they do. They refer to how the varying orientations impact the buying decision process and overall buyer behavior. Various models have been proposed by researchers; these models can be classified as (a) General models (b) Specific models. The previous session dealt with the General Models. This session deals with two Specific Models. The rest of the Specific Models are dealt with in the next section.

Specific Models : The models that have been explained in this session are Howard and Sheths model and
Nicosias model.

i) The Howard Sheth model (1969): Howard and Sheth used the term buying behavior and not consumer behavior as the industrial buyers and consumers are similar in most aspects. While the model was proposed in the 1960s, for industrial buying, the term buyer is used to connote both industrial consumers and personal consumers. Through the model, Howard and Sheth, tried to explain buyer rationality while making purchase decisions even in conditions of incomplete information. While they differentiated between three levels of decision making, EPS, LPS and RPS, the model focuses on repeat buying/purchase. The model has four major components,viz.,stimulus inputs (input variables), hypothetical constructs, response outputs (output variables), and, exogenous variables. a) Stimulus inputs (Input variables): The input variables refer to the stimuli in the environment; they take the form of informative cues about the product/service offering; these information cues could relate to quality, price, distinctiveness, service and availability. The informational cues could be Significative, Symbolic, (both of which are commercial and can be controlled by the marketer) and Social (non-commercial and uncontrollable by the marketer; family, reference groups and social class). All these three types of stimuli provide inputs concerning the product/brand to a consumer. - Significative stimuli: The product/brand information that the marketer provides, comprises the significative component; it deals essentially with the brand characteristics. - Symbolic stimuli: this is the psychological form with which a buyer perceives the product and service offering (brand); it is figurative (verbal and visual product characteristics) and perceptual and depends on how the offering has been positioned; it emanates from advertising and promotion efforts. -Social stimuli: this is the information about the product or service offering that comes from the social environment viz. family, groups, society and culture at large. b) Hypothetical constructs: Howard and Sheth classified the hypothetical constructs into two major groups, viz., perceptual constructs and learning constructs. These constitute the central part of the model and deal with the psychological variables which operate when the consumer is undergoing the decision making process. - Perceptual constructs: The perceptual constructs deal with how a consumer obtains and processes information received from the input variables. Once the buyer is exposed to any information, there is anattention; this attention towards the stimuli depends on the buyers sensitivity to information in terms of his urge and receptivity towards such information. Not all information would be processed and the intake of information is subject to perceived uncertainty and lack of meaningfulness of information; this is referred to as stimulus ambiguity. This reflects the degree to which the buyer regulates the stimulus information flow. Stimulus ambiguity occurs when a consumer does not understand the message from the environment; it could trigger off a need for a specific and active search for information and thus lead to an overt search for information. The information that is gathered and processed may suffer fromperceptual bias if the consumer distorts the information received so as to fit his/her established needs/beliefs/values/experiences etc. - Learning constructs: The learning constructs relate to buyer learning, formation of attitudes and opinions, and the final decision. The learning constructs are seven in number, and range from a buyers motive for a purchase to the final satisfaction from a purchase; the interplay of these constructs ultimately leads to a response output or a purchase. The motives refer to the goals that a buyer seeks to achieve through a purchase and the corresponding urge towards action or the purchase activity. Thebrand comprehension is

the knowledge and information that the buyer has about the various brands in his evoked set. The buyer forms an order of preference for the various brands; this order of preference is based on the choice criteria (decision mediators). The decision mediators are the evaluative criteria and the application of decisions rules by the buyer to the various purchase alternatives. Based on the choice criteria, the attitudes are formed for the varying brands. The attitudes reflect the predisposition of the buyer; preference toward alternative brands; and, feelings of like/dislike towards the offerings. The brand potential of the evoked set determines the buyer's perception and confidence levelof the brands that he is considering to purchase. The purchase intention is a cumulative outcome of the interaction of buyer motives, choice criteria, brand comprehension, resultant brand attitude and the confidence associated with the purchase. Satisfaction, another learning construct, involves the post purchase evaluation (whether expectation from an offering matches the performance) and resultant impact (positive/negative) on brand comprehension. c) Response outputs (output variables): The output variables refer to the buyers action or response to stimulus inputs. According to Howard and Sheth, the response outputs comprise five constituents, viz.,attention, comprehension, attitude, intention and purchase. These could be arranged in a hierarchy, starting from attention and ending up with purchase. - Attention refers to the degree or level of information that a buyer accepts when exposed to a stimulus. It reflects the magnitude of the buyer's information intake. - Comprehension is the amount of information that he actually processes and stores; here, it refers to brand comprehension which is buyers knowledge about the product/service category and brand. - The attitude is the composite of cognition, affect and behavior towards the offering; the attitude reflectshis evaluation of the brand and the like/dislike based on the brand potential. - Intention refers to the buyers intention to buy or not to buy a particular offering. - Purchase behavior refers to the actual act of buying. The purchase behavior is a cumulative result of the other four constituents. d) Exogenous variables: The Howard and Sheth model also comprises certain constant exogenous variables that influence some or all of the constructs explained above, and thereby impact the final output variables. These are explained as Inhibitors or environmental forces that restrain the purchase of a favored brand; eg., importance of the purchase, price, financial status of the buyer, time at the disposal of the buyer, personality traits, social pressures etc.

Working relationships between Constructs and the Model:

Through their model, Howard and Sheth explain the buying decision process that a buyer undergoes, and the factors that affect his choice decision towards a brand. The process starts when the buyer is exposed to a stimulus. As a result of the exposure, stimulus ambiguity occurs, which leads to an overt search for information. The information that is received is contingent upon the interplay between the attitudes and the motives. In other words, the search for information and the conclusions drawn would be filtered by perceptual bias (that would be a result of attitude, confidence, search and motives). It may alter the existing patterns of motives and choice criteria, thereby leading to a change in the attitude towards the brand, brand comprehension, motives, purchase intention and/or action. The final purchase decision is based on the interaction between brand comprehension, strength of attitudes towards the brand, confidence in the purchase decision and purchase intention. The actual purchase is influenced by the buyer's intentions and inhibitors, which he confronts. The entire process is impacted by various exogenous variables like the importance of purchase, price, time available to make the purchase, social and cultural influences etc. After the purchase, the buyer experiences satisfaction if the performance matches and exceeds expectation; this satisfaction would strengthen brand comprehension, reinforce the confidence associated with the buying situations, and strengthen the intention to repeat purchase of the brand. With a satisfying purchase decision, the buyer learns about buying in similar situations and the behavior tends to get routinized. The purchase feedback thus influences the consumers attitudes and intention.

An Assessment of the Model: The model is an integrative model that incorporates many of the aspects of consumer behavior; it links together the various constructs/variables which may influence the decision making process and explains their relationship that leads to a purchase decision. It highlights the importance of inputs to the consumer buying process. It was one of the first models to divulge as to what constitutes loyalty towards a specific product. It helped gain insights in to the processes as to how consumers process information. The model is user friendly and is one of the few models which has been used most commonly and tested in depth. However, the limitation lies in the fact that the various constructs cannot be realistically tested; some of the constructs are inadequately defined, and thus do not lend to reliable measurements.

i) Nicosias model of Consumer Decision Process (1966):

The model proposed by Francesco Nicosia in the 1970s, was one of the first models of consumer behavior to explain the complex decision process that consumers engage in during purchase of new products. Instead of following a traditional approach where the focus lay on the act of purchase, Nicosia tried to explain the dynamics involved in decision making. Presenting his model as a flow-chart, he illustrated the decision making steps that the consumers adopt before buying goods or services; decision aiming was presented as a series of decisions, which follow one another. The various components of the model are seen as interacting with each other, with none being essentially dependent or independent; they are all connected through direct loops as well as feedback loops. Thus, the model describes a flow of influences where each component acts as an input to the next. The consumer decision process focuses on the relationship between the marketing organization and its consumers; the marketing organization through its marketing program affects its customers; the customers through their response to the marketers action, affects the subsequent decisions of the marketer; the cycle continues. The various components that are further distinguished into main fields and subfields of the model aremarketer's communication affecting consumers attitude, consumer's search and evaluation, purchase action, consumption experience and feedback. The first field ranges from the marketer (source of message) to the consumer (attitude); the second from the search for to the evaluation of means/end(s) relation(s) which forms the preaction field; the third field relates to the act of purchase; and the fourth to feedback. The output from one field acts as the input for the next.These are explained as follows: 1.Marketer's communication affecting consumers attitude: This comprises Field 1 (i.e.from the source of a message to the consumers attitude).The consumer is exposed to the firms attributes through the marketing communication; this marketing communication could take place impersonally via mass media (TV, newspaper, websites, etc) as well as personally. The information could relate to the firm attributes as well as the product, price and distribution. This message relating to the firms attributes affects the consumers perception, predisposition and attitude toward the firm and its offering. Of course, the impact on perception and attitude is also dependent upon the consumers personal characteristics, values, experiences, culture, social influences etc. Thus, the marketers communication affects the consumers attitude. 2.Consumer's search and evaluation: After an attitude is formed, the consumer moves to Field 2 of the model, i.e. the consumers search for and evaluation of means/end(s) relation(s) which forms the preaction field. The consumer searches for information about the product category and the varying alternatives, and thereafter evaluates the various brands on criteria like attributes, benefits, features etc. These criteria could be based on his learning and past experiences as well as the marketer's inputs. This step creates a motive in the mind of the consumer to purchase the product. 3. Purchase action: The motivated state leads to Field 3 of the model, i.e. the decision making on the part of the consumer and the act of purchase. The consumer finally gets into action and buys the product from a chosen retailer. 4.Consumption experience and feedback: The purchase action leads a consumer to Field 4 of the model which is consumption experience and feedback. After purchasing the product, and the resultant consumption, the consumer may have two kinds of experiences. A positive experience in terms of customer satisfaction may reinforce his predisposition with the product/brand and make him loyal towards it. A negative experience on the other hand, implying consumer dissatisfaction would affect his attitude negatively, lower down evaluations about the product/brand and even block his future purchases. This Filed provides feedback to the marketer, who can modify its mix accordingly.

In the first field, the marketer communicates with the customer and promotes an unfamiliar product to him; depending upon the existing predispositions and his evaluation, the consumer develops an attitude. In the second field, the consumer searches for information and evaluates it based on his attitudes; thereafter, he develops a motivation to act. In the third field, he makes and purchase and in the fourth field, he would provide feedback and also memorize his experience and learning for future use. Thus, the firm communicates with consumers through its marketing messages and the consumers react through an act of purchase. Both the firm and the consumer influence each other. An Assessment of the Model: Nicosias model is an integrative model that tries to integrate the body of knowledge that existed at the time of its formulation in the area of consumer behavior. It was a pioneering attempt to focus on the conscious decision-making behavior of consumers, where the act of purchase was only one stage in the entire ongoing decision process of consumers. The flowcharting approach proposed by Nicosia, simplifies and systemizes the variables that affect consumer decision making. It contributes to the step by step "funnel approach" which views consumers movement from general product knowledge toward specific brand knowledge and from a passive position to an active state which is motivated toward a particular brand. However, the model suffers from limitations in the sense that the model proposes assumptions, boundaries and constraints that need not be realistic. It has been argued that attitude, motivation and experience may not occur in the same sequence. Variables in the model have not been clearly defined. Factors internal to the consumer have not been defined and dealt with completely. The mathematical testing of the model and its validity are questionable.

. Figure: Nicosia Model of Consumer Decision Proceses Source: Nicosia, Francesco M., Consumer Decision Processes, Engelwood Cliffs, N.J., Prentice Hall, 1966, 156. In Schifman, L.G. and Kanuk, L.L., Consumer Behavior, 3rd Edition, Prentice Hall

5.4 Models of Consumer Behavior : Specific Models II

The previous session dealt with two of the Specific Models. This session deals with the rest of the Specific Models. Specific Models : The models that have been explained in this session are Bettmans Model and the Engel, Blackwell and Kollats Model (Engel-Blackwell-Miniard) Model.

iii) Bettman's Information Processing Model of Consumer Choice (1979):

Bettman, in the 1970s introduced a consumer behavior model that bases itself on the information processing

that takes place within a consumer. According to him, the consumer is central to a host of information processing activities. He receives a large amount of information externally from the marketer, competitors and the environment. He also has a large store of information within him as a database that he builds over time from his learning, experiences, social influences etc. With a huge amount of information that he is exposed to, the processing becomes difficult and unmanageable. According to him, consumers possess a limited capacity for processing information. Thus Bettman concluded that consumers use certain simplifying strategies to process information. Within such decision strategies (heuristics), the consumer does not necessarily process all the information together; he could use simple decision rules for specific situations. The consumer information process is depicted through several flowcharts, which depict the various components of the model and the interrelationships between them. The main components of the model are processing capacity, motivation, attention, information acquisition and evaluation, decision process, consumption and learning processes.

Processing capacity: Bettman assumes that while the information processing capacity varies across
people, it is limited for each one of us. Every person has a limited capacity to process information; thus, consumers are not interested in extensive information processing, and select strategies that make product selection an easy process. They try to bypass their limits by being selective towards information receptivity, ignoring certain information that they consider irrelevant or in comprehendible, prioritizing information that is required and is in use etc. The marketer needs to understand the information processing capacities of individual consumers while delivering marketing information; this would provide invaluable insights to marketers for design of their marketing communication strategies.

2. Motivation: The decision making choice process within a consumer is provided strength, intensity and
direction through motivation. There exists a hierarchy of goals mechanism that provides different sub-goals to simplify the choice selection. Depending upon the goal heirachy (priority of goals), this component acts as the powerful and imposing component that controls directly not only the subsequent processes of attention, information acquisition and evaluation, decision processes and the consumption and learning processes, but also controls indirectly the various sub-processes in the model via the main process components. The continuation and suspension of various sub-processes and their interrelationship with the main processes are all impacted by motivation. This component also converts the non-action or passive inputs in the consumers into action outputs or active behavior.

3. Attention and Perceptual Encoding: According to Bettman, attention could be voluntary as well as
involuntary in nature. When a consumer actively consciously seeks attention to achieve his goals, it is referred to as a voluntary attention. It is the conscious allocation of processing capacity to current goals. Non-voluntary or involuntary attention is the short term attention that he provides before deciding whether he should process the information that he has been exposed to and as to whether he should provide a voluntary attention. It is an automatic response to disruptive events. Non-voluntary attention could also occur when the consumer is exposed to conflicting information about the product and needs to resolve between this conflicting information. Perceptual encoding occurs when the person integrates the information that he has processes into his already existing perceptual network or database. Based on perceptual encoding and the database, the

consumer decides on the need and the quantum of marketing information that he needs to process.

Figure: The Bettman Information-Processing Model of Consumer Choice Source: Bettman, J.R., An Information Processing Theory of Consumer Choice, Redaing, Mass: Addison-Wesley, 1979, 17. In Schifman, L.G. and Kanuk, L.L., Consumer Behavior, 3rd Edition, Prentice Hall. This leads to the scanner and interrupt mechanisms and the resultant responses. The scanner and interrupt mechanisms act like on and off switches for a consumer. When the consumer realizes that he does not have adequate and appropriate information in his database (memory), he searches for information; he gives attention to and becomes receptive to information. On the other hand, if he feels that he has sufficient information, the information search process gets interrupted.

4. Information acquisition and evaluation: The consumer decides on the kind of information as well
as the quantum of information required for the choice decision. Based on heuristics, he assesses the importance and availability of information. If he has the necessary information in a sufficient quantum in his memory, he goes ahead with the next stage. Memory is the source for the internal search for information. If he feels that the information that he has in his memory is insufficient, when it is found to be insufficient, he acquires more information through external search. At this stage too the consumer again experiences the switch on and off modes through scanner and interrupt mechanisms. When the consumer realizes that he has adequate and appropriate information in his database (memory), he does not search for more information and the information search process gets interrupted; else he does search for more information. After acquiring information, the consumer evaluates the information for utility and sufficiency, and then moves on to make decision choices.

5. Decision Process: After information search and evaluation, the consumer takes a decision; the final
decision of the brand is based not only on the acquired and evaluated information, but also his personal characteristics, demographics, psychographics (motivation, learning and experiences, attitude, personality, perception, etc), social influences and situational factors. This stage is also affected by the scanner and interrupt mechanisms. If the purchase is a routine purchase, the decision making is faster and often repeat; in other cases, it may take time.

6. Consumption and learning processes: After the consumer buys decides on a choice, he purchases
the brand. The experience that he gains through the decision making and the consumption of the product in terms of satisfaction/dissatisfaction gets stored in his memory. This learning affects subsequent decision making for similar product categories, and affects the future heuristics for consumer decision making. It provides the consumer with information to be applied to similar choice situation in future. This stage is also affected by the scanner and interrupt mechanisms. Working relationships between Components and the Model: Processing capacity in an individual affects the motivation, attention, information acquisition and evaluation, decision process, consumption and learning processes. These processes impact and are impacted by their respective sub-processes. Thus, all the sub-processes, impact the processes, directly and/or indirectly, and are also impacted by them. And information processing capacity impacts and is also impacted by the various processes directly and sub-processes indirectly. An Assessment of the Model: Bettmans model is model that focuses only on information processing. It starts with the motivation to search for information; be attentive to information; acquire and evaluate information; take a decision; and finally adds up the information (based on good/bad experiences) into the memory for further use. However, critics argue that while the model provides insights into consumers, it is difficult to implement practically. iv) Engel, Blackwell and Kollats Model: Engel-Blackwell-Miniard Model of Consumer Behavior: The Engel, Kollat and Blackwell Model, also referred to as the EKB model was proposed to organize and describe the growing body of knowledge/research concerning consumer behavior. A comprehensive model, it shows the various components of consumer decision making and the relationships/interactions among them. The model went through many revisions and modifications, with attempts to elaborate upon the interrelationship between the various components and sub-components; and, finally another model was proposed in the 1990s which came to be known as the Engel, Blackwell and Miniard Model (EBM).

The model consists of five parts, viz. information input, information processing, decision process stage, decision process variables, and external influences.

1. Information input: The information input includes all kinds of stimuli that a consumer is exposed to
and triggers a kind of behavior. The consumer is exposed to a large number of stimuli both marketing (advertising, publicity, personal selling, demonstrations, store display, point of purchase stimuli) as well as non-marketing sources (family, friends, peers); thus the various stimuli compete for consumers attention. These stimuli provide information to the consumer and trigger off the decision making process.

2. Information processing: Stimuli received in the first stage provide information; the information is
processed into meaningful information. The stage comprises consumers exposure, attention, perception/comprehension, acceptance, and retention of information. The consumer is exposed to stimuli (and the accompanying information); attention determines which of the stimuli he will focus upon; thereafter he would interpret and comprehend it, accepts it in his short term memory and retains it by transferring the input to long-term memory.

3. Decision-process stage: At any time during the information processing, the consumer could enter
into this stage.The model focuses on thefive basic decision-process stages, viz., problem recognition, search, alternative evaluation, choice, and outcomes (post-purchase evaluation and behavior). There is problem recognition; this is followed by a search for information, which may be internal based on memory. The search of information is also impacted by environmental influences. Thereafter, the consumer evaluates the various alternatives; while evaluation, belief lead to the formation of attitudes, which in turn affect the purchase intention. The next stage is the choice and purchase, which gets impacted by individual differences. Finally there is an outcome, in the form of satisfaction and dissatisfaction. This outcome acts as a feedback on the input and impacts the cycle again. Environmental influences, individual differences and social influences, directly and indirectly influence each of the stages of the decision process. However, EKB proposed that it is not necessary for every consumer to go through all the five stages; it would depend on whether the problem is an extensive or a routine problem-solving behavior.

4. Decision process variables: The model proposes individual influences that affect the various stages
of the decision making process. Individual characteristics include constructs like demographics, motives, beliefs, attitude, personality, values, lifestyle, normative compliance, etc.

5. External influences: The model also proposes certain environmental and situational influences that
affect the decision making process. The environmental influences include Circles of Social Influence, like culture, sub-culture, social class, reference groups, family and other normative influences; situational influences include consumers financial condition.