MBA_sem3 _511_Consumer Behaviour

 Stage I: Bachelorhood: The stage contains a youthful single grown-up (male/female) living separated from guardians and into work. While earnings are low as they have recently begun a profession, monetary weights and duties are additionally low. As such unhitched males have a significant degree of dispensable income. Priorities and Inclinations of Procurement: They will in general spend their cash on house lease, fundamental furnishings, and kitchen gear. They are diversion arranged and like to spend on the acquisition of vehicles (especially engine bicycles), travel (journeying and occasions), experience sports (engine hustling, bungee bouncing and so forth), gyms, garments, and style accessories). Implications for Advertisers: Advertisers understand that single men have huge discretionary cash flow; they find in them an appealing section for sports, travel, amusement and fun.  Stage II: Honeymooners: The stage includes a recently hitched couple and proceeds till the primary kid is conceived. One of the mates might be working or both might be working. They are monetarily in an ideal situation than they would be in the following stages. In the event that both are working, the pay is higher. If both are working, the couple has optional pay nearby that allows a decent way of life and accommodates buys or savings. Priorities and Inclinations of Procurement: They will in general spend on making a permanent place to stay for themselves. They spend on vehicles, furniture, drapes and upholstery, gadgets, kitchen machines and utensils, and vacations. Implications for Advertisers: They structure an alluring fragment for the advertiser as they structure the most noteworthy buy rate among sections. The most noteworthy normal acquisition of durables happens in this stage.  Stage III: Parenthood: The stage contains wedded couple with youngsters. This stage reaches out for about a long-term period; and could be additionally separated into three phases, viz., Full Home I, Full Home II and Full Home III. All through these stages, the size and design of the family slowly change; income does as well and costs with fluctuating needs. The monetary costs increment quickly with youngsters being brought into the world in Full Home I and bit by bit decline as kids become autonomous and self- supporting as one arrives at Full Home III. 53 CU IDOL SELF LEARNING MATERIAL (SLM)

Full Home I: The most youthful kid in the family is six or below. Priorities and Inclinations of Procurement: While liquidity of money is low, costs are high. The family spends on infant food, diapers, prescriptions for hack and cold, specialist visits, kid toys and games, school affirmations and charges and protection policies. There are expanded costs on kid care. Implications for Advertisers: At this stage, buying is at the pinnacle, thus this is an alluring section for the advertiser. The kids in the family start to affect family buys and are enormous potential for the future. Full Home II: The most youthful kid in the family is six or above. By and large, the stage involves youngsters matured 6-12 years. Priorities and Inclinations of Procurement: Monetary position improves as one ascent up the stepping stool. On the off chance that the spouse is additionally working, youngsters are \"latchkey kids.\" The family spends on food, garments for kids, training of kids, protection arrangements and speculations. They additionally pay for clinical costs and especially, dental treatment. They go in for bargains; purchase bigger size bundles and economy packs. Lousy nourishment, style dress and extras, computer games and so on are prime demands. Implications for Advertisers: At this stage, buying is still at the pinnacle, thus this is additionally an appealing fragment for the advertiser. The youngsters, as likewise, teens proceed to impact family buys. The latchkey kids are a potential for home conveyed shoddy nourishment like pizzas and burgers. Full home III: They are more seasoned wedded couples with a subordinate as well as autonomous kids yet remaining together at home. Kids arrive at the higher instructive level; one of them may begin acquiring too. Priorities and Inclinations of Procurement: The family pay proceeds to increment thus do costs. The family keeps on spending on food, garments for teens, advanced education of kids, and furthermore rehashes acquisition of durables that were purchased in honeymooning stage or Full Home I. The family purchases new furnishings, electronic merchandise and machines and vehicles. Accordingly, there is a high normal acquisition of durables. The family additionally puts resources into land and property and additionally pads. They keep on 54 CU IDOL SELF LEARNING MATERIAL (SLM)

spending on clinical costs, especially dental specialists and visit general doctors for standard check-ups. Implications for Advertisers: At this stage, pay starts to increment as one of the kids starts to acquire. As costs see an ascent, the stage offers potential for marketers. Stage IV: Post parenthood: This is a phase that happens whenever kids have ventured out from home. They venture out from home first for instruction, and afterwards for work. As they complete their schooling and discover work, they bit by bit venture out from home individually, consequently, leaving the home. Hence, this stage has likewise been broken into two phases, viz., Void Home I and Void Home II. As one gets across Void Home I and II, the size and design of the family changes (very like the Parenthood stage and the Full Home I, II and III). Empty Home I: This is a phase that happens when at any rate one of the kids has ventured out from home. He/she has finished training, taken up a task and has ventured out from the home to begin his/her home. He/she is autonomous and can oversee on his own. While kids are figuring out how to fire up all alone, guardians are still working. Priorities and Inclinations of Procurement: The family size progressively starts to shrivel. Guardians are yet acquiring; expenses slowly decrease, thus there is the most significant level of reserve funds and extra cash close by. The family spends on food, portions for land/house, advanced education of the reliant kids, and clinical costs on dental specialist, physiotherapy, and heart. They have relaxation time close by, and sit in front of the TV, motion pictures, and may even go on a vacation. Implications for Advertisers: At this stage, two or three creatures again have discretionary cashflow close by. Monetary obligations towards kids start to diminish. This stage offers potential for advertisers who are associated with offering types of assistance like recreation, travel, and holiday. Empty Home II: In this stage, all the youngsters have ventured out from home, and the couple has resigned from occupation. They live on annuity and other government-backed retirement investments. If wellbeing licenses, they occupy low maintenance jobs. Priorities and Inclinations of Procurement: The couple has higher dispensable salaries on account of reserve funds and speculations, and they have fewer costs. They choose to spend 55 CU IDOL SELF LEARNING MATERIAL (SLM)

on all that they had been thinking to spend on yet had not had the option to due to familial obligations. They burn through cash on food, travel, and occasions, sit in front of the television and structure pastime clubs. They refurnish their home or may even move to fresher homes after retirement. Clinical costs likewise see an ascent. Notwithstanding, for those more seasoned resigned couples who do not have a lot of pay from satisfactory reserve funds and ventures, the circumstance is much different. There is a sharp drop in their income. Implications for Advertisers: The stage is rewarding for those associated with media outlets. Numerous ventures give unique limits in movement and stay as \"Senior Resident advantages, for instance, lodgings, carriers and railroads. Banks and monetary organizations additionally have extraordinary offices for those over 60, particularly higher paces of revenue on deposits. Stage V: Disintegration: This stage in the FLC happens when one of a few kicks the bucket and abandons the other enduring spouse. Priorities and Inclinations of Procurement: When one of the life partners is yet acquiring or brings in cash from reserve funds and ventures, things are minimal simpler. In any case, if he/she is not procuring, he/she follows a way of life that is efficient. The essential consumption is on meds, tests with specialists and a prohibitive diet. Implications for Advertisers: The stage is normal for a widow/single man with lower pay and the least shopping and expenses. Modifications to the FLC With changes in our public, we witness an adjustment in the customary Everyday Life Cycle and the different stages through which it advanced before. There are different structures like single; late relationships; separated (with/without youngsters); double pay, no children (DINKS); live-ins and so forth Purchaser specialists have consequently achieved changes in the conventional FLC, to reflect changes in the family and way of life courses of action. Comprehensively talking families might be named family units and non-family units (single individual or live ins). Every one of these family types has changing highlights and attributes, which likewise get shown in their purchasing patterns and utilization expenditure. 56 CU IDOL SELF LEARNING MATERIAL (SLM)

10.8 SUMMARY  Social-class classifications are positioned in a chain of importance, going from low to high status.  The factors that decide an individual's social class incorporate pay (ordinarily family unit pay), abundance (investment funds and fluid resources), type of revenue or riches (acquired or independent), occupation, and instructive fulfilment (number of long periods of formal schooling or the most extensive level attained).  Social-class awareness is an individual's degree of ID with a given social class.  Social class is the fragment of a public showed up by a progressive order of people and families with an unmistakable status.  Consumer reference bunches are bunches that fill in as edges of reference for people in their buy decisions.  A shopping bunch involves at least two individuals who shop together.  Members of casual work bunches comprise of individuals who have become companions because of working for the equivalent company.  The term virtual gatherings allude to online buyer groups.  Consumer activity bunches have arisen considering customer movement.  Social class can profoundly affect purchaser spending habits.  Reference bunches are bunching that buyers contrast themselves with or partner with.  Consumers are impacted by various sorts of reference bunches they accept they are a piece of or seek to be. 10.9 KEYWORDS Family : People who are related with each other through blood, marriage, or dwelling. Socialization:The measure by which individuals figure out how to act in manners that is adequate to different individuals from their society. Consumer Socialization:The measure by which youngsters procure the abilities, information, perspectives, and encounters important to work as consumers. Family Life Cycle:A composite variable that incorporates conjugal status, size of family, time of relatives (zeroing in on the age of the most seasoned or most youthful kid), and business status of the head of a family characterizes the family into a \"normal\" stage. Non-Traditional Families: Families that do not promptly find a way into the conventional day to the daily life cycle. 57 CU IDOL SELF LEARNING MATERIAL (SLM)

10.10 LEARNING ACTIVITY 1. Identify one traditional family and one non-traditional household. Compare the characteristics and consumer patterns of the two households. ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- 2. How children (especially teens and young adults) influence the socialization of their parents. List ten ways in which children contribute to or influence the socialization of their parents. ------------------------------------------------------------------------------------------------- --------------- ---------------------------------------------------------------------------------------------------------------- 10.11 UNIT END QUESTIONS Descriptive Questions Short Questions 1. Discuss the Social-Class Consciousness. 2. Write a short note on Types of Reference Groups. 3. Explain Reference Group Influences. 4. What is Aberrant Behaviour. 5. Discuss some of the most common organizational norms. Long Questions 1. Explain the nature of social class. 2. Discuss the types of reference groups. 3. How will you choose group influences? 4. Describe types of norms. 5. List down family life cycle stages. C. Multiple Choice Questions 1. A group that significantly influences its members’ behaviour is called ______. 58 CU IDOL SELF LEARNING MATERIAL (SLM)

a. A significance groups 59 b. A reference groups c. An influencer groups d. None of these 2. The groups we see most often (family and friends) are called ______. a. Primary groups b. Secondary groups c. Familiarity groups d. None of these 3. Which of the following is true? a. Dissociative groups are ones which everyone wants to join. b. Aspirational groups are ones which one wants to join. c. Primary groups have an official membership list. d. All of these 4. A group to which one belongs by reason of race or gender is called ______. a. An aspirational group b. An automatic group c. A formal group d. None of these 5. Which of the following is NOT a type of virtual community? a. A brand community b. A relationship community c. A product community d. All of these Answers: 1 b)2 a)3 b)4 b)5 c) CU IDOL SELF LEARNING MATERIAL (SLM)

10.12 REFERENCES Reference Books:  Rajneesh Krishna, 2014, Consumer Behaviour, Oxford University Press.  Leon Schiffman, Leslie Kanuk, 2014. Consumer Behavior, Global Edition, Pearson Education.  Assel Henry, Consumer Behaviour, Cengage Learning, New Delhi. Textbooks:  Schiffman L.G. and Kanuk L.L., Consumer Behavior, Pearson Education, New Delhi.  Hawkins, D. I. & Best R. J., and Coney, K.A. and Mookerjee, A, Consumer Behavior- Building Marketing Strategy. Tata McGraw Hill, New Delhi. Websites:  https://journals.sagepub.com/doi/full/10.1177/0003122418761857  https://theintactone.com/2018/12/14/cb-u3-topic-4-social-class-consumer-behavior/  https://www.forbes.com/sites/forbescommunicationscouncil/2018/08/27/become-a- mind-reader-by-understanding-consumer-learning/?sh=37c7c7f911b9 60 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT - 11: DIFFUSION OF INNOVATION Structure 11.0 Learning Objectives 11.1 Introduction 11.2 Types of Innovation 11.3 Diffusion Process 11.4 Factors Affecting the Diffusion of Innovation 11.5 The Adoption Process 11.6 Culture 11.7 Communication and Diffusion 11.8 Summary 11.9 Keywords 11.10 Learning Activity 11.11 Unit End Questions (Descriptive and MCQ) 11.12 References 11.0 LEARNING OBJECTIVES After studying this unit, student will be able to:  Define innovation its types and categories.  Explain the adoption process.  Outline the diffusion process.  Explain factors affecting diffusion of innovation.  Explain the culture, communication and diffusion of innovations.  Examine the culture implications for marketer’s. 11.1 INTRODUCTION Diffusion of innovations is the macro process by which the acceptance of an innovation (i.e., a new product, new service, new idea, or new practice) takes place among members of a social system (or market segments) over time. This process includes four elements: 1. The Innovation: New product, model, or service 2. The Channels of Communication: Informal or formal, impersonal, or personal groups 61 CU IDOL SELF LEARNING MATERIAL (SLM)

3. The social system: A market segment 4. Time: the length of time, one month, one year, five years, until the innovation is accepted by most of the market segment. Defining ‘New’ Products New products can be divided into products that are a result of: 1. Continuous innovation 2. Dynamically continuous innovation 3. Discontinuous innovation based on the degree of innovation The division of the term ‘new’ among products launched in the market is based on two aspects: (a) The changes required in consumer behaviour to use the innovation (b) Degree of innovation Aeroplanes, computers, and telephones were discontinuous innovations at the period when they were invented, as both the degree of innovation as well as the degree of changes required in consumer behaviour in adapting to these innovations was high. When buying a digital camera or considering Internet shopping, the change in behaviour on the part of the consumers is moderate as is the degree of innovation. Hence, these will fall under dynamically continuous innovations (since moderate changes of behaviour are involved about the two basic factors applied to diffusion of innovation). When the remote switch of a TV is considered, consumers must make only a small change about their behaviour (or practice) to use the remote along with their TV. Hence, it is a continuous innovation. The dimensions used for the classification of the ‘newness’ of a product should take a specific target segment’s perception of ‘newness’ into account. Diffusion of innovation in the Indian context has an interesting trail of history. Category development, timing of the brand’s introduction and cultural aspects are some of the important aspects that affect the diffusion of brands. The following examples will provide an idea about the diffusion of brands: In contrast, the innovation adoption process is a micro process that focuses on the stages through which an individual consumer passes when deciding to accept or reject a new product. 62 CU IDOL SELF LEARNING MATERIAL (SLM)

11.2 TYPES OF INNOVATION The definition of what constitutes a “new product” varies among product developers and marketing strategists. From a consumer perspective, an innovation represents any item that the consumer perceives as new. Many marketers maintain that new products should be classified as:  Incremental innovation  Disruptive innovation  Sustaining innovation  Radical innovation Most innovations are smaller, gradual improvements on existing products, processes, and services while some innovations can be those ground-breaking technological inventions or business models that transform industries. Because the environment and the needs of your customers are constantly changing, you need to be able to improve different areas of your business to solve emerging problems and to keep creating new value for your customers. Thus, knowing what types of innovations there are for an organization to pursue can help you discover the ones that are most suitable for your business. Understanding and focusing on the most potential ones not only helps you respond to these changing needs but also allows you to improve your ability to grow the business. 11.3 DIFFUSION PROCESS Diffusion can be applied to existing products. For example, marketers can consider (i) categories, (if not brands), with which consumers are familiar; (ii) brands with which consumers are familiar even if the categories are new to them (because of the high degree of advertising). New brands in familiar categories must address diffusion problems differently from old brands in new or unfamiliar categories. Relatively new brands (late entrants) in consumer durables like Kenstar, LG, Samsung and Whirlpool must follow a different kind of strategy in order to compete with strongly entrenched brands. LG, for instance, has been able to achieve significant diffusion by its focus on new features/benefits in familiar product categories. LG’s proposition in refrigerators was ‘preservation of nutrition’; in microwave ovens ‘health’; in washing machines ‘fabric care’; in air-conditioners ‘healthy air’ and in TV’s, it was ‘relaxed viewing’ (Golden Eye). LG was able to capture a significant market share at the premium end of the respective product categories. 63 CU IDOL SELF LEARNING MATERIAL (SLM)

Whirlpool was also able to diffuse itself in refrigerators by offering ‘Indianised’ features based on research. In the automobile sector Santro diffused itself in the Indian market by offering new features/design. Even in consumables, brands new to the market must adopt strategies with a strong differentiation. A brand called Pass offered dry fruits as a chewing option in direct competition with other chewing products. Red Label, though a well-known brand, introduced a ‘nature care’ variant when faced with competition. This was a case of an old brand in a familiar category reacting to competition. Britannia introduced several variants to diffuse itself in the market. It introduced Tiger biscuits, a new brand for the lower end of the market. Reynolds offered pens with superior features and gained acceptability. There are categories like hair dyes, contact lenses and antiseptic lotions in which consumers may be familiar with brand names (Godrej in hair dyes, Bausch & Lomb in contact lenses, Dettol in antiseptics). But these categories require concept-selling for consumers to understand the benefits and usage of the products. Microwave oven, a category that has been around for some years, has several well-known brands. The brands in such categories should formulate concept-selling in such a way that these product categories (and hence, specific brands) get prioritized in the minds of consumers. Marketers should remember that diffusion of a product does not just depend only on competition between brands. It may also depend on competition between product categories. After being in the market for several years, washing machines sell in much lesser numbers than the diffusion of personal computers. For instance, a middle-class household may prioritize a PC for educational purposes over a fully automatic washing machine. Demographics and psychographics play an important role in generic competition across product categories. Ice-creams can compete with chocolates, snacks, and aerated soft drinks. L’Oreal has done extensive concept-selling for its hair colours and has, perhaps for the first time in India, positioned itself on the fashion statement plank. This comes at a time when hair colouring is becoming a rage all over the world. 64 CU IDOL SELF LEARNING MATERIAL (SLM)

Table 11.1 Diffusion of Brands in the Indian Context Companies in the contact lens market are using a variety of strategies to diffuse the product. Positioning contact lenses as a fashion accessory is one of them (Bausch & Lomb). In a country like India, lowering costs and thereby, enhancing the total value of the offering (contact lens and its subsequent care) should enable brands to diffuse faster in the market. A brand must maintain its pioneering lead, especially after it has gained acceptance in the market. Steel almirahs (cabinets) from Godrej have had a high degree of credibility for the last several years but they were priced far higher than competition in the unorganized sector. Doing a downward product-line stretch would have helped in faster diffusion of the brand in the category. Park Avenue, in the men’s readymade clothes, has maintained its strong position for the last several years by launching variants. Launching variants, incidentally, 65 CU IDOL SELF LEARNING MATERIAL (SLM)

must be considered about the cost involved. Cadbury, with its variants, is an example. Amrutanjan and Iodex have been well-known brands in the category of pain balms. These could have repositioned themselves with variants in the recent times. In certain categories, sustained and contemporary communication can lend mileage to a pioneering brand. Bru, in instant coffee, is an example. After establishing itself strongly on the ‘taste’ attribute, the brand has been ‘updating’ its communication. Close-up also pioneered the other toothpaste gels and sustained itself for several years before the market developed into a substantial one for gel toothpastes. It effectively used communication strategies over a period. Top brands (which can be considered as pioneers)—Coke, Kodak, McDonald and Sony have sustained themselves along with the growth of the product category. Characteristics of Diffusion of Innovation The following are the distinctive characteristics of diffusion of innovation: 1. Competitive (relative) Advantage: A new product, regardless of the category of innovation, should offer a distinct advantage. Mobile telephones have the advantage of being used when on the move. Walkman offered the same advantage to music buffs. E-mails over snail-mails; mixers over traditional methods of crushing iPods and plasma TV’s over the conventional sets—all have definitive benefits. When marketers consider competitive advantage in relative terms, they must consider (a) the target segment for the product and (b) the ‘value’, as perceived by the consumer. For example, a first-time buyer (a typical upgrader from the scooter) of the latest electric car in India will perceive its relative advantage differently from the one who wants a second car for his/her household at a price nearly equal to that of, say, a Maruti Alto. This perception will be different for the two segments despite the advantages of the electric car that offers compact size, environment- friendly features and easy manoeuvrability. If shaving gels must catch up in the Indian context, they must be priced competitively with creams. Value in price, features and psychological satisfaction are such features that a new offering must give and convey the value perception in the mind-set of the consumer. Maruti (when it was introduced during the ’80s) in cars, Reynolds pen and Bajaj Chetak are brands that captured the ‘value perception’ of consumers. Reynolds makes an interesting case of value being conveyed at a higher price point. In a market full of unorganized ‘brands’, which compromised on quality, Reynolds followed skimming (higher price than the existing rivals when it was introduced), but it still created the ‘value’ association. Ariel was the first brand to launch compact detergents in 66 CU IDOL SELF LEARNING MATERIAL (SLM)

India. If the brand had created the value perception (cost per wash) in a realistic manner, it may have been a more powerful pioneering brand in this sub-category of detergents. 2.Value through Technology Value in an emerging market must consider the rural markets or towns. Dell had planned to have stores in several small towns. It had opened one in Hapur, a town in Uttar Pradesh that is surrounded by educational institutes and has a population of about three lakhs.3 Dell had gained the insight that PC’s are used for school homework through its survey. Diffusion a market requires several aspects of consumer behaviour and marketing mix elements. 3. Compatibility: Marketers must examine the extent to which a product can be compatible with the existing habits, practices, and cultural values of consumers (target segment). Gillette introduced shaving systems for women. Though positioned for urban women, it may take some time before the target segment takes some time to perceive the product as part of their personal care. Reference groups and word-of-mouth concepts are applicable to the diffusion of such a product. A brand should not normally communicate anything against the established practices and beliefs. If the example of the electric car is extended to practices or habits of a people, a consumer used to a conventional car (even if he/she is interested in it as a second car) must familiarise himself/herself with a new set of usage practices like acceleration, charging batteries, driving within the city limits, changing speeds, etc. Some brands of electric toothbrushes are found in a few shops in urban Indian markets. Electric shavers (launched by Philips and Braun in India) may also have to tide over such barriers before getting diffused in a significant manner. Washing machines in urban areas of India had diffused due to the complexities of engaging traditional domestic workers and because in many households both the husband and wife are working and need a washing machine to save time. Gllette’s introduction of shaving gel—to be used with a brush for shaving (unlike the Western markets where gel is used in a brushless shave)—is a fine example of compatibility-based offering in a market where majority of shavers use the brush. 4. Complexity: Complexity of products can put off consumers, however technologically advanced they may be. Except for two-in-one music (audio-cum-tape recorders) systems, there does not seem to be any convergence product that has taken off in any part of the world (including Internet TV’s). However, in recent times mobile phones with additional features such as MP3 and camera appear to have gained acceptance. With such significant advances in mobile, the telephony brands would be concentrating on 3G technologies. The success of convergence through mobiles (voice and data applications) would largely depend on the 67 CU IDOL SELF LEARNING MATERIAL (SLM)

availability of infrastructure and the extent to which such products remain within the affordability of consumers. India is probably one of the markets where there has been an exponential diffusion of mobiles, largely due to the declining prices. Millions of users are at the lower end of the market and the tariffs of mobiles in India are probably the cheapest in the world! Nokia had an interesting advertisement (TV commercial) for its Maps and Navigation mobile phone variants. Its ‘turn left, turn right’ campaign demonstrates the power of navigation and shows how a consumer can reach her destination in an auto rickshaw using the device without depending on anyone (GPS is available in most of the smartphones). Technological complexity may discourage target consumers from buying such products. Watch-TV is another example of an innovation that never took off despite the ‘made-in- Japan’ tag. Fear of technological obsolescence may be another reason for consumers not buying a product. Consumers may wait longer to invest in PC’s, given that their prices have come crashing in the last 10 years. The downward lower-end offerings from leading brands like HP and Lenova added credibility to the perception of consumers that they will be able to obtain more ‘value’ from the buyer if they can wait longer. Complexity is not just restricted to durable hi- tech products. Products like contact lenses and hair dyes, may also diffuse slowly either due to complicated usage or fear of usage. Easy-to-use proposition and credibility through product demonstration may enable marketers to grapple with the perceived risks in such products. 5. Trialability: The extent to which a product can be tried out also affects diffusion. This may be extremely important, especially for consumer durable products like washing machines and microwave ovens, which are not conspicuous products (like two-wheelers, watches, cars, or fashion apparel). Some of the brands of durables claim reduced usage of water or lower consumption of power. Unless backed up by the ability to be demonstrated at the point of purchase, the credibility of such claims would remain questionable. A leading store dealing with household appliances in the US has a retail showroom that permits consumers to use the offerings and satisfy themselves on several benefits and applications. Such an approach will be useful in the Indian context. 6. Observability: The degree to which products and brands can be observed by consumers influences diffusion of categories and brands. Mobile phones and fashion apparel are such good examples. 68 CU IDOL SELF LEARNING MATERIAL (SLM)

11.4 FACTORS AFFECTING THE DIFFUSION OF INNOVATION Both diffusion and adoption of innovation are very specific to a particular product or service. While some products/services are quickly accepted and diffuse rapidly, for some it takes considerable time. This is illustrated by the difference in rate of diffusion for colour TV and satellite TV for India, while the latter diffused at a very fast pace, diffusion for the former was relatively slow. Similarly, while cordless phone took considerable time to get accepted, cell phone diffused very rapidly into Indian homes. All these examples clearly illustrate that consumer acceptance potential is not the same for all newly launched products/services. Diffusion of information as well as adoption are influenced by few factors that cannot be controlled by marketers: socio – economic, cultural, legal, and technological factors along with individual factors like demographics and psychological variables. In addition to the above stated factors, there are few factors which can be controlled by marketers: Personalised or marketing communication. Research has also identified certain factors that act as triggers for the entire diffusion process. 11.5 THE ADOPTION PROCESS The following are the five-key product/service characteristics that have the potential to influence acceptance of a new product/service: compatibility, trialability, observability, complexity, and relative advantage. a. Compatibility If a new product/service relates well with the consumer need and their value system, then the diffusion becomes quicker. The less the required change in consumer behaviour for using the product/service, the higher will be the acceptance. Generally, products/services that are on the path of continuous innovation have a higher chance for adoption. As they are more compatible to the consumer lifestyle. For example, fast foods like pizza, burger, etc got diffused quite late once the lifestyle of the new generation evolved in a manner that was compatible to use packaged food. Similarly, difference in North Indian and South Indian cultures, dictate the higher diffusion of coconut oil as a cooking medium in South India vs. that in North India. b. Trialability 69 CU IDOL SELF LEARNING MATERIAL (SLM)

The rate of diffusion is directly impacted as per the relative ease with which a product/service can be tried. An opportunity to do a trial increases the comfort that a consumer develops for using the product/service. This can be facilitated by introducing smaller packets for consumer products and demos for services. Even guarantee/warranty schemes can positively impact the purchase decision. And hence, the diffusion. c. Observability Observability defines the ease with which the consumer can perceive the product/service benefits.This increases acceptance. New products that have visible, readily observed, and tangible benefits are the easiest to adopt. d. Complexity Less complex and easy to use products are more readily accepted than the more complex ones. Complexity of the technology used is a key factor that consumers consider for adoption. This fact is understood by the Technology intensive products/services. A good example to illustrate this, is marketing for consumer durables like microwaves etc. Marketers focus on communicating the observable advantages and ease of use for easy consumer adoption. Demos and trial period along with facility to pay in instalments also add to easing the purchase decision. Similar is the case with adoption of mobile phones. For technology intensive products, generally the younger generation are quick adopters. e. Relative Advantage Mentioning how the new offering compares to the existing offering Superior value increases adoption. This can be perceived in terms of the product features or the product price or availability. For example, TM vs. Bank Teller, laptop vs. computer etc. . Thus, compatibility, trialability, observability, complexity, and relative advantage impact how the product/service gets diffused. These factors are also dependent on perception of the end consumer. Barriers to the Diffusion of Innovation/Adoption Process: Research has identified certain factors that can prove to be barriers for adoption and diffusion. These can range from product features at micro level to socio economic, cultural, and technological forces at the macro level. The main barriers to adoption of new products/services can be: Value, Risk, psychological factors, and usage. 70 CU IDOL SELF LEARNING MATERIAL (SLM)

a) Value: For higher adoption, consumers must perceive more value in the new product/service in comparison to the existing product/service like how telecom consumers compare the various recharge plans. This value can be perceived in the form of product/service benefits or the product/service price. Generally, perception on price is always higher than that of the benefits. b) Risk: Risk in transitioning to a new product /service directly impacts adoption. There can be 6 types of perceived risks: Financial risk (Value vs. the price), Time risk (wastage of time in adoption), and Physical risk (harm arising out of adoption), Psychological risk (consumer ego getting hurt) and Functional risk (performance as per expectation). To overcome this barrier, marketers can use product trials, marketing communication, peer recommendations and influencers. c) Psychological Factors: These factors relate to the lifestyle, beliefs culture and value system of the consumers. These can be categorised as mainly of two types: i. Tradition Barrier: These relate to the culture and customs of the customer segment. A product/service which is in alignment with the culture is easier to get accepted else there are barriers. For example, slow adoption of western wear in Middle – Eastern countries. ii. Image Barrier: This is a result of the consumer feelings along the value chain towards the brand, dealer, or the product/service itself. This can exhibit in the form of patriotism, unacceptable different socio-economic background of the dealer or quality. This barrier can be overcome by creating different product lines in accordance with the various customer segments. d) Usage: This is a barrier that comes into play when the new offering is incompatible with the existing consumer behaviour. A basic misalignment with the current beliefs and perceptions. In this case, marketing communication alone is not sufficient, word of mouth marketing through eminent personalities helps greatly in adoption. 11.6 CULTURE  Culture can be defined through the beliefs, customs, and people’s value systems. For example, American culture can be defined in terms of values like achievement, hard work 71 CU IDOL SELF LEARNING MATERIAL (SLM)

and thrift. Belief refers to the way a person assesses situations and perceives them. Customs are the habits or set of actions that are accepted in a particular culture.  Value system offers a guideline for people to choose the best way to respond to a certain situation. 11.7 COMMUNICATION AND DIFFUSION An analysis of the Innovation Diffusion theory shows that both personalised and mass communication helps in the diffusion process. This happens because of the involvement of Human Capital. This theory states that to be sustainable, an innovation would be adopted widely. And for wide adoption, culture is an important element to align with. There are four key elements defined by Rogers to influence diffusion: Social system, Innovation, Time, and Communication channel. Figure 11.1: Rogers Key Elements  Social System – These are elements that bind the society structure like institutions, religions etc. They give a common goal to a group of people.  Innovations – This can be an idea or even an impulse that creates space for some change in the society.  Time – This is the span of time that people take to adopt an innovation like the time that adoption of mobile phones took for widespread use.  Communication Channel – These are the modes that help create awareness about the innovation. These can be via SMS, word of mouth or print media, etc. 11.8 SUMMARY  Diffusion of innovations is the macro process by which the acceptance of an innovation.  Most innovations are smaller, gradual improvements on existing products, processes, 72 CU IDOL SELF LEARNING MATERIAL (SLM)

and services while some innovations can be those ground-breaking technological inventions or business models that transform industries.  Value in an emerging market must consider the rural markets or towns.  There are certain product and service characteristics that affect the diffusion process and can influence consumer acceptance of new products and services.  The diffusion of innovation and an adoption as a process is not generic.  Culture can have a profound effect on consumer behaviour and impact how a product is marketed.  The diffusion of innovation theory analysis how the social members adopt the new innovative ideas and how they made the decision towards it. 11.9 KEYWORDS Innovation: An innovation represents any item that the consumer perceives as new and is classified into three categories reflecting the extent to which consumers are required to change existing consumption behaviour or buying patterns. Diffusion of Innovations: The framework for exploring the evolution of consumers’ acceptance of new products throughout the social system. Innovation Adoptions Process:The innovation adoption process focuses on the stages through which an individual consumer passes when deciding to accept or reject a new product. Relative Advantage: One of the five characteristics identified as a determinant of consumer acceptance of a new product representing the degree to which potential customers perceive a new product as superior to existing substitutes. Compatibility: One of the five characteristics identified as a determinant of consumer acceptance of a new product representing the degree to which potential customers perceive a new product as consistent with their present needs, values, and practices. 11.10 LEARNING ACTIVITY 1. What are the differences among the three problem-solving decision-making approaches? What type of decision process would you expect most consumers to follow in their first purchase of a new product or brand in each of the following areas: (a) chewing gum, (b) 73 CU IDOL SELF LEARNING MATERIAL (SLM)

sugar, (c) men’s aftershave lotion, (d) carpeting, (e) paper towels, (f) smartphones, and (g) luxury car? Explain your answers. ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- 2. Assume that this coming summer you are planning to spend a month touring Europe and looking for an advanced digital camera. (a) Develop a list of product attributes that you will use as the purchase criteria in evaluating various digital cameras. (b) Distinguish the differences that would occur in your decision process if you were to use compensatory versus non-compensatory decision rules. ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- 11.11 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Explain Diffusion of innovations 2. Explain diffusion process 3. Define New Products 4. Briefly explain barriers to the Diffusion of Innovation/Adoption Process 5. Explain the diffusion of innovation theory Long Questions 1. Elaborate on the types of innovation. 2. Discuss characteristics of Diffusion of Innovation. 3. Explain the adoption process 4. List the factors affecting the diffusion of innovation 5. What do you understand by diffusion of brands? B. Multiple Choice Questions 1. Which of the following statements is false? a. In discontinuous innovations, there is a change not only in the technology, but also in behavioural patterns of usage and consumption. b. Continuous innovations do not disrupt established usage and behaviour patterns c. Line extensions are discontinuous innovations. d. All of these 74 CU IDOL SELF LEARNING MATERIAL (SLM)

2. Roger’s has proposed a classification of adopters. The five adopter categories as per sequence are: a. Innovators, early adopters, early majority, late majority, and laggards. b. innovators, early majority, early adopters, late majority, and laggards c. innovators, early majority, late majority, early adopters, and laggards d. None of these 3. Which of the following is not a stage in Rogers Model of adoption? a. Knowledge b. Persuasion c. Liking d. Confirmation 4. Innovators possess certain personality traits. Which is the trait that they do not possess? a. Low on dogmatism b. High on brand loyalty c. Variety novelty seekers d. Risk takers 5. ________________barrier relates to socio-culturally accepted norms of behaviour that are regarded as “right and appropriate,” by the consumer segment. a. Social b. Tradition c. Moral d. Ethical Answers: 1 c)2 a) 3 c) 4b)5 b) 75 CU IDOL SELF LEARNING MATERIAL (SLM)

11.12 REFERENCES Reference Books:  Everett M. Rogers, Diffusion of Innovations, 4th Edition, Free Press.  Assel Henry, Consumer Behaviour, Cengage Learning, New Delhi.  Majumdar, R, Consumer Behaviour: Insights from the Indian Market, PHI Learning Pvt. Ltd., New Delhi. Textbooks:  Schiffman L.G. and Kanuk L.L., Consumer Behaviour, Pearson Education, New Delhi.  Hawkins, D. I. & Best R. J., and Coney, K.A. and Mookerjee, A, Consumer Behaviour- Building Marketing Strategy. Tata McGraw Hill, New Delhi. Websites:  https://www.yourarticlelibrary.com/innovation/diffusion-of-innovation/99839  https://www.businessmanagementideas.com/marketing/organisational- buying/organisational-buying-introduction-process-situations-and-buying-centre-roles- business-marketing/17632  https://www.mbaknol.com/marketing-management/nicosia-model-of-consumer-behavior/ 76 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT - 12: CONSUMER’S DECISION AND THE DECISION MODELS Structure 12.0 Learning Objectives 12.1 Introduction 12.2 Nature of Situational Influence 12.3 Situational Variables 12.4 Types of Consumer Decisions 12.5 Nicosia Model of Consumer Decision-making 12.6 Summary 12.7 Keywords 12.8 Learning Activity 12.9 Unit End Questions (Descriptive and MCQ) 12.10 References 12.0 LEARNING OBJECTIVES After studying this unit, student will be able to:  Explain the nature of situational influence.  Learntypes of consumer decisions.  Identify consumer decision-making models.  Analyse nicosia model. 12.1 INTRODUCTION While several psychological variables are useful in understanding the consumers’ mind-set, it is worthwhile to probe into some specific aspects of consumer decision making (CDM) to formulate the marketing strategies. CDM enables marketers to visualize a broad framework of the stages and apply the psychological or/and group variables to a specific product/market/brand situation. The process of decision making can provide several trigger 77 CU IDOL SELF LEARNING MATERIAL (SLM)

points at a conceptual level, especially when a brand wants to standout in a crowded product category or enter a ‘new-concept’ product category or elevate itself. Consumer Decision Making: Important Dimensions  What kind of approach (strategy) should a brand have when it enters a crowded category with which the consumers are familiar (for example, products like soaps, shampoos, two- wheelers, etc.)?  How should a brand promote a product that has a ‘new-concept’ and how are the stages in the CDM framework useful?  What strategies, other than advertising, might be useful in the specific stages of CDM (consumer decision making)?  How can the celebrities be used at different stages in the decision-making process?  What are the different kinds of decision making that consumers indulge in?  What are the specific differences in CDM between FMCG products and durables?  Can the needs be differentiated based on what a brand offers?  Do consumers have different kinds of ‘sets’ from which they select brands?  What kind of strategies can a brand use when consumers search for any information?  How do consumers use their evaluative criteria to take a decision across brands?  What kinds of factors influence the selection of retail outlets when a consumer decides to buy a product?’ 12.2 NATURE OF SITUATIONAL INFLUENCE Situational influences are temporary conditions that affect how buyers behave. These can be varied such as store ambience, music, lighting, location or even the smells. Most of the companies along with making the physical factors favourable, also use discounts to get consumers to buy. Apart from these factors like consumer moods, requirement and social situations also impact purchase behaviour. All businesses try to influence these factors to increase sales. 12.3 SITUATIONAL VARIABLES Marketers use the store layout to increase sales as the more time a consumer spends in the store, higher the chances of spends. This is what guides stores to place items like milk and 78 CU IDOL SELF LEARNING MATERIAL (SLM)

bread on opposite ends so that consumers must walk around the entire store. And Might want to purchase other items as well. Location of the store is also a very important factor. Starbucks exemplifies this by having placed its outlets at strategic and easily accessible locations not very far from each other. They have also made their coffee available at airports and grocery stores for maximum visibility. These factors relate to the physical stole are controllable and are called Atmospherics. Some examples of these factors at play are the use of pleasant fragrances in apartment complexes to get visitors to spend more time there. Similarly, placement of mirrors near hotel elevators makes the wait for an elevator bearable as people use that time to look at themselves.There are some physical factors that cannot be controlled like weather. While one type of weather say rain can be a great thing for umbrella companies, it can be a problem for other companies like beach resort or restaurants or clothing stores. As rain could mean less footfalls for these businesses. Businesses use discounts and offers to make their product attractive during bad weather. For example, beach resorts offer discounts during rainy season. Creating an online store is also a way to circumvent weather related problems and keep business unharmed.Another situation factor is store crowding. It can have both a positive and negative impact on customers. While sometimes purchasing behaviour might get negatively impacted due to huge in store crowds, at certain times studies have shown that this might encourage sales. This positive impact is also called ‘herd behaviour’. This behaviour can lead to increase in real estate prices. In certain scenarios people have varied responses to crowd’s basis individual levels of tolerance. A crowded concert might be a place for people to enjoy than an empty cricket stadium. The Consumer’s Time Situation Studies have shown that energy levels of the consumer depending on the time of the day or season also impact purchasing behaviour. Whether someone is a morning, or an evening person impacts the shopping patterns. Seven – Eleven stores in Japan track these behaviours very well and immediately stock up on the fast-moving items. Along with this, they also increase convenience for the time strapped consumers by facilitating payment of utility bills, insurance, etc. via its stores.Similarly, a lot of businesses are waking up to the need for providing more convenience to consumers. Some doctors even have driven in shots to hurry up the process for elderly and people in a hurry. Similarly, for efficient customer service, Amazon has a ‘Call back’ feature of customer who have an account on Amazon. 79 CU IDOL SELF LEARNING MATERIAL (SLM)

12.4 TYPES OF CONSUMER DECISIONS There can be different degrees of CDM depending on the unit cost of the product, involvement levels of consumers about the categories, the efforts involved, and the importance attached to the purchase. At the outset, there is a need to differentiate between purchase involvement and the product involvement. Purchase involvement is the interest in purchase process triggered by a need to consider a particular purchase. This kind of involvement is short term and may involve an individual or a family. Product involvement is enduring, and the consumers may be involved with a brand (Colgate, for example) or with the product category of toothpastes. A high degree of involvement with a brand may form the basis of brand loyalty and a loyal consumer may prefer the brand without gathering much information on it or evaluation. Purchase involvement and product involvement may have several implications for marketers. For example, a situation can be highlighted to create purchase involvement while brand attributes may be focused on to create brand involvement. A new kind of offering from an insurance company can highlight the needs for the offering (purchase involvement) and underscore the benefits of the brand (brand involvement). The types of decision making have been widely reported in the marketing literature and have been a part of it for the last several decades. Habitual Consumer Decision Making This kind of CDM involves no decision making at all. The consumer buys his/her preferred brand whenever a need arises, and the evaluation of the brand may take place only when it fails to perform as expected. This kind of CDM happens only when there is very low involvement with the purchase (involvement levels and decision making have been treated separately). In such situations, even the alternative of not buying the product may not arise. A consumer who is running low on toothpaste may buy the same brand. There can be two types of decisions under habitual (also referred to as nominal decision making) decision making: brand loyalty and repeat purchase decisions. Repeat purchase decisions (without loyalty) are the ones that the consumer makes without staying committed to the brand. This may be out of sheer inertia or non-availability of other brands or alternatives. There is another situation in which the consumers may buy a brand without any commitment. A consumer may keep buying a brand of detergent until another brand challenges the logic of buying the former one. Limited Consumer Decision Making 80 CU IDOL SELF LEARNING MATERIAL (SLM)

This CDM exists between habitual or nominal CDM and extended CDM. The difference between habitual and limited CDM is that the consumer may search for limited information before taking the decision. A consumer who is running out of tea may compare the brand prices or sales promotion offers. He/she may want to try a new brand, and hence, they may get information on the quality of the product or even consider the novelty of an offering. In limited CDM, there may be an internal and a limited external search (from memory). It normally occurs in low-involvement conditions. In both nominal and limited CDM, the post- purchase dissonance is highly improbable. Extended Consumer Decision Making This kind of CDM reflects a high level of purchase involvement. An extensive memory search or an external search, results in complex decision making with several alternatives/choices opened for the consumer. However, there is only less chance of dissonance right after the purchase on the correctness of the decision. (This aspect of cognitive dissonance has been dealt separately.) Extended or complex CDM is likely to occur when the unit cost of the product is high and when there is a great deal of involvement as stated earlier. Products like cars, PC’s, homes, and televisions are such categories that are likely to go through this kind of decision making. There are also certain products/services that are likely to receive significant emotional inputs in the CDM process and they may be as important as the cognitive information associated with the evaluation of high-involvement products. For example, health resorts/holiday packages are being heavily advertised. Besides the financial aspects and information about specific locations, the decision making draws heavily on the importance of the consumer places on the experience which he/she is likely to have, moments of happiness he/she can gather or how important the memories are for the consumer and how well does the family, if involved, perceives the experience. The conventional CDM model deals with different stages, namely the need stage, information search stage, consideration of alternatives, purchase, and post-purchase stage. While these aspects are very much valid even in today’s context, it may be appropriate to consider the several aspects of CDM that have become relevant to consumer segments in today’s world. There are eight factors that are critical even to decide on the type of CDM. The conventional model mentions the routine decision making (routine decisions associated with daily purchases), limited decision making (consumers may shop for a variety of products in a category and look for limited information) and extended decision making (a consumer buying highly priced product like a car or house with huge degree of involvement). 81 CU IDOL SELF LEARNING MATERIAL (SLM)

12.5 NICOSIA MODEL OF CONSUMER DECISION-MAKING Nicosia Model of Consumer Behaviour was developed in 1966, by Professor Francesco M. Nicosia. He was an expert in consumer behaviour and motivation. The model created by him encompasses the relationship between potential consumers and the business. According to this model, marketing communication by the business creates awareness that creates consumer attitude towards the product/service. Post which the consumer might search or evaluate. Once satisfied, this might lead to a purchase. This model illustrates that the business and its potential consumers are connected via a two-way channel. Where the business through its messaging influences potential customers. And the potential customers thorough their attitudes influence the business. This model has four major fields: The Firm’s Attributes and the Consumer’s Attributes This field has two sub fields: The first subfield deals with the firm’s marketing environment and communication efforts that affect consumer attitudes, the competitive environment, and characteristics of target market. Subfield two specifies the consumer characteristics e.g., experience, personality, and how he perceives the promotional idea toward the product in this stage the consumer forms his attitude toward the firm’s product based on his interpretation of the message. Search and Evaluation The consumer will start to search for other firm’s brand and evaluate the firm’s brand in comparison with alternate brands. In this case the firm motivates the consumer to purchase its brands. The Act of the Purchase The result of motivation will arise by convincing the consumer to purchase the firm products from a specific retailer. Feedback of Sales Results This model analyses the feedback of both the firm and the consumer after purchasing the product. The firm will benefit from its sales data as a feedback, and the consumer will use his experience with the product affects the individuals’ attitude and predisposition’s concerning future messages from the firm. With this model Nicosia was able to represent consumer’s 82 CU IDOL SELF LEARNING MATERIAL (SLM)

behaviour when receivers of a message and has agents in the buying process generated by that flow of information from a company. The Nicosia model of consumer behaviour offers no detail explanation of the internal factors, which may affect the personality of the consumer, and how the consumer develops his attitude toward the product. For example, the consumer may find the firm’s message very interesting, but virtually he cannot buy the firm’s brand because it contains something prohibited according to his beliefs. Apparently, it is very essential to include such factors in the model, which give more interpretation about the attributes affecting the decision process. 12.6 SUMMARY  CDM enables marketers to visualize a broad framework of the stages and apply the psychological or/and group variables to a specific product/market/brand situation.  Situational influences are temporary conditions that affect how buyers behave.  Situational influences are temporary conditions that affect how buyers behave— whether they buy your product, buy additional products, or buy nothing at all from you.  There can be different degrees of CDM depending on the unit cost of the product, involvement levels of consumers about the categories, the efforts involved, and the importance attached to the purchase. 12.7 KEYWORDS Customer Value:The ratio between customers’ perceived benefits (i.e., economic, functional, and psychological) and the resources they have used to obtain those benefits (i.e., monetary, time, effort, psychological). Consumer Involvement:The degree of personal relevance that the product or purchase holds for the consumer. Consumer Journey:The consumer journey is the newest way of describing the stages consumers pass through as they develop relationships with brands before, during, and after purchase. It includes stages where consumers interact with brands on social media. Self-Designation Method:Asking respondents to evaluate the extent to which they had provided others with information about products and influenced their purchases. Self-Image: Self-image is defined as how people perceive themselves. 83 CU IDOL SELF LEARNING MATERIAL (SLM)

12.8 LEARNING ACTIVITY 1. Explain what marketing professionals can do to make situational factors work to their advantage. ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ 2. Use situational analysis to justify the peak and lean season of tourism in Goa and Shimla. ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ 12.8 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What are the Importance Dimensions of Consumer Decision Making? 2. Describe the Situational influences. 3. Explain in brief Nicosia model of consumer decision-making? 4. What is Limited Consumer Decision Making. 5. State the types of consumer decisions. Long Questions 1. Why and how does the social situation the consumer is in play a role in behaviour? 2. Outline the types of physical factors companies try to affect and how they go about it. 3. What social situations have you been in that affected what you purchased? 4. What types of moods and time situations are likely to affect people’s buying behaviour? 5. Describe the situational factors that affect what consumers buy and when. B. Multiple Choice Questions 1. Which of the following statements is not true? a. Situational influences are permanent conditions b. Situational influences include physical factors c. Situational influences include smells 84 CU IDOL SELF LEARNING MATERIAL (SLM)

d. All of these 2. Buying behaviour can be affected by consumer's: a. Social situation b. time situation c. the reason for their purchases d. Mood 3. herd behaviour refers to: a. Crowding b. Discount schemes c. a negative impact d. None of these 4. Which of these can be witnessed in Habitual Consumer Decision Making: a. no decision making at all b. Repeat purchase decisions c. High loyalty d. All of these 5. Which of the option is not true for Nicosia Model of Consumer Behaviour? a. Focuses on the relationship between the firm and its potential consumers b. It is divided into Sic major fields c. analyses the feedback of both the firm and the consumer after purchasing the product d. None of these Answers: 1 d)2 c)3 a) 4 d)5 b) 12.8 REFERENCES Reference Books:  Rajneesh Krishna, 2014, Consumer Behaviour, Oxford University Press. 85 CU IDOL SELF LEARNING MATERIAL (SLM)

 Leon Schiffman, Leslie Kanuk, 2014, Consumer Behavior, Global Edition, Pearson Education.  Majumdar, R, Consumer Behaviour: Insights from the Indian Market, PHI Learning Pvt. Ltd., New Delhi. Textbooks:  Schiffman L.G. and Kanuk L.L., Consumer Behaviour, Pearson Education, New Delhi.  Hawkins, D. I. & Best R. J. and Coney, K.A. and Mookerjee, A, Consumer Behaviour- Building Marketing Strategy. Tata McGraw Hill, New Delhi. Websites:  https://www.coursehero.com/file/p7ovrk6o/With-respect-to-marketing-programmed- decisions-are-related-to-infrequent/  https://www.yourarticlelibrary.com/consumer-behaviour/decision-making-consumer- behaviour/involvement-of-consumers-in-decision-making/64198  https://www.mbaknol.com/marketing-management/nicosia-model-of-consumer- behavior/ 86 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT - 13: CONSUMER DECISION MAKING PROCESS I Structure 13.0 Learning Objectives 13.1 Introduction 13.2 Problem Recognition 13.3 Information Search 13.4 Evaluation of Alternatives 13.5 Summary 13.6 Keywords 13.7 Learning Activity 13.8 Unit End Questions (Descriptive and MCQ) 13.9 Reference 13.0 LEARNING OBJECTIVES After studying this unit, student will be able to: ● Learn the consumer decision making process. ● Explain problem recognition. ● Explore information search. ● Describe the evaluation of alternatives. 13.1 INTRODUCTION The following disciplines determine consumer behaviour: 1. Psychology is the study of the human mind and the mental factors that affect behaviour (i.e., needs, personality traits, perception, learned experiences, and attitudes). 2. Sociology is the study of the development, structure, functioning, and problems of human society. 3. Anthropology compares human societies’ cultures and development (e.g., cultural values and subcultures). 4. Communication is the process of imparting or exchanging information personally or 87 CU IDOL SELF LEARNING MATERIAL (SLM)

through media channels and using persuasive strategies. Consumer decision-making is the framework that integrates various concepts. The consumer journey is another approach for understanding consumers’ decisions by asserting the impact of social media. The consumer journey begins with need recognition, and in the output, stage includes consuming the product/service, which is only assumed in the decision-making model, but not stated. Additionally, it expands the decision-making model to include engaged/interacts and actively advocates. These stages usually take place when consumers interact with the brand on social media and then help promote the brand either by posting pictures with it or sharing content about it. Furthermore, the consumer journey model indicates that at any point during the decision process the consumer can reject the product or go back to an earlier stage and reconsider the alternatives. The model in Figure below ties together the ideas on consumer decision-making and consumption behaviour discussed throughout this text. It does not presume to provide an exhaustive picture of the complexities of consumer decision-making. Rather, it is designed to synthesize and coordinate relevant concepts into a significant whole. The model includes three components: (1) input; (2) process, which includes need recognition, decision spectrum, pre-purchase information search, evaluation of purchase alternatives, and decision rules; and (3) output. The consumer journey can also be placed in stages of input, process, and output. Consumer Decision-Making A process in three stages: (1) input (e.g., marketing mix, socio cultural influences); (2) process (e.g., need recognition, information search, evaluation, and decision rules); and (3) output (e.g., purchase, use, post-purchase evaluation, storage, and disposal, trust, and loyalty). Input The input component of the consumer decision-making model includes three types of external influences: 1. The marketing mix consists of strategies designed to reach, inform, and persuade consumers to buy the marketer’s products repeatedly. They include the product, advertising and other promotional efforts, pricing policy, and the distribution channels that move the product from the manufacturer to the consumer. 2. The sociocultural influences include the consumer’s family, peers, social class, reference groups, culture, and, if applicable, subculture. 88 CU IDOL SELF LEARNING MATERIAL (SLM)

3. The input also includes communications, which are the mechanisms that deliver the marketing mix and sociocultural influences on consumers. The impact of the marketing mix and sociocultural influences is the input that determines what consumers purchase and how they use what they buy. Because these influences may be directed to the individual or actively sought by the individual, a two-headed arrow is used to link the input and process segments of the model in Figure 13.1. Process The process component of the model is concerned with how consumers make decisions. To understand this process, we must consider the influence of the psychological concepts— motivation, perception, learning, personality and attitudes, awareness of choices available, information gathering, and evaluation of alternatives. Need Recognition Need recognition occurs when a consumer is faced with a “problem.” For instance, take a young executive who decides to purchase a new cell phone with a high-quality digital camera. She imagines that she would benefit from having a high-quality digital camera built into her phone because it would make it easier and more convenient to take more vivid and realistic photos without having to lug around a separate digital camera. This executive has recognized a need and identified a suitable response. There are two types of need recognition. Some consumers are actual state types, who perceive that they have a problem when a product fails to perform satisfactorily (e.g., a cell phone that develops constant static). In contrast, other consumers are desired state types, for whom the desire for something new may trigger the decision process. Need recognition is the beginning of the traditional consumer decision-making process as well as the new consumer journey model. 89 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 13.1 Consumer Decision-Making Model Decision Spectrum Not all buying decisions require the same amount of information, cognitive processing and input from reference groups and other sources. For example, the ad in Figure below is from 90 CU IDOL SELF LEARNING MATERIAL (SLM)

the Gemological Institute of America (GIA), a non-profit educational institute of the jewellery industry. The tag line, “Understand what you’re buying” is directed at consumers seeking to buy diamonds. In consumer decision-making terms, purchasing a diamond represents extensive problem solving because consumers buy diamonds infrequently and have no established criteria for evaluating them. The GIA ad tells buyers what to look for in a diamond: Carat weight, clarity, colour, cutting style, and other features. In contrast, the Advil ad in the below Figure represents routinized response behaviour—where consumers have experience with over-the-counter pain relievers and do not need to establish the criteria for evaluating them. More importantly, diamonds are not branded, whereas the Advil brand has a quality reputation and is instantly recognized by millions of consumers around the world. In stores, consumers reach for Advil without much thought. The ad also shows that Advil’s reputation enables the brand to use family branding, which is marketing different versions of a product under the same brand. When consumers have already established the basic criteria for evaluating a product or service but still need additional information to understand the differences among brands, they engage in limited problem solving. This type of decision occurs when consumers purchase updated versions of products they have bought before, which often have additional features: For example, buying a new laptop computer with multiple input devices, some of which did not exist previously (e.g., USB Type-C ports). Consumer involvement is the degree of personal relevance that the product or purchase holds for the consumer. High-involvement purchases are very important to the consumer, have a high degree of perceived risk, and result in extensive problem solving; or, if consumers have at least some knowledge about the type of product they seek, and a somewhat lower perceived risk, such purchases represent limited problem solving. Low-involvement purchases are not very important, hold little relevance, have little perceived risk, and are routinized response behaviour. Pre-Purchase Information Search Pre-purchase search begins when a consumer perceives a need that might be satisfied by the purchase and consumption of a product. Sometimes, recalling past purchases provides the consumer with adequate information to make the present choice. However, when the consumer has had no prior experience, he or she may have to engage in an extensive search for useful information on which to base a choice. Consumers search their memory—their past experiences—before seeking information from other sources. The greater the relevant 91 CU IDOL SELF LEARNING MATERIAL (SLM)

experience, the less external information the consumer is likely to need to reach a decision. Many consumer decisions are based on a combination of previous experience and external information. The act of shopping is an important form of external information. According to consumer research, there is a big difference between men and women in terms of their response to shopping. Whereas most men do not like to shop, most women claim to like the experience of shopping, finding it to be relaxing and enjoyable.3 In addition, it has become common practice for consumers to seek the opinions of their friends while shopping. They try on clothes and take a selfie or a Snapchat to seek advice on which dress to buy, for example, for their high school prom. The shopping selfie is another way that consumers seek information while shopping. It is like having your friends in your pocket. An examination of the external search effort associated with the purchase of different product categories found that, as the amount of total search effort increased, consumer attitudes toward shopping became more positive, and more time was made available for shopping. Not surprisingly, the external search effort was greatest for consumers who had the least amount of product category knowledge.4 It follows that the less consumers know about a product category and the more significant the purchase is to them, the more extensive their pre- purchase search is likely to be. Conversely, consumers high in subjective knowledge (a self- assessment of how much they feel that they know about the product category) will rely more on their own evaluations rather than on others’ recommendations. It is also important to point out that the internet has had a great impact on pre-purchase search. Rather than visiting a store to find out about a product, or calling the manufacturer and asking for a brochure, consumers can go to manufacturers’ websites and read online consumer reviews to find much of the information they need about the products and services they are considering. For example, many automobile websites provide product specifications, prices, and dealer cost information; reviews; and even comparisons with competing vehicles. Volvo’s website, for example, lets you “build” your own car, and see how it would look, for example, in different colours. Some auto company websites will even list a particular auto dealer’s new and used car inventory. There are also websites that allow women to customize many cosmetic products. Most online retailers provide a search shopping tool on their websites. Consumers can sort through the merchandise based on criteria provided by the retailer. For example, retailers that offer travel services allow consumers to search by destination and then narrow the search results by price, departure time, arrival time, number of stops, and airline. According to Seth 92 CU IDOL SELF LEARNING MATERIAL (SLM)

Godin, marketing guru, marketers should provide search options that go beyond sorting by price. He suggests that marketers figure out what delights consumers and allow them to sort based on these attributes. He suggests that sorting by price is lazy. With respect to surfing the internet for information, consider one consumer’s comments drawn from a research study: “I like to use the Web because it is so easy to find information, and it’s really easy to use. The information is at my fingertips and I don’t have to search books in libraries.” However, a Roper Starch Survey found that an individual searching the internet gets frustrated in about 12 minutes, on average; other research suggested that although the internet may reduce physical effort, there is nevertheless a “cognitive challenge” that limits consumers’ online information searches. What happens if a search is a failure? According to a study of “search regret,” consumers’ post-purchase dissonance results from an unsuccessful pre-purchase search. Furthermore, the same research revealed that failure can also have a damaging effect on retailers. However, retailers can help eliminate or reduce search regret by providing ample information, trying to reduce out-of-stock situations, and giving salespeople proper training. For a while now, researchers have been examining how the internet has affected the way consumers make decisions. It is often thought that because consumers have limited information-processing capacity, they must develop a strategy for searching the abundance of information available online. The strategy is based on both individual (e.g., knowledge, personality traits, and demographics) and contextual factors (characteristics of the decision tasks). The three major contextual factors that have been researched are: 1. Task Complexity: The number of alternatives and amount of information available for each alternative 2. Information Organization: The presentation, format, and content. 3. Time Constraint: The amount of time the consumer must decide. How much information a consumer will gather also depends on various situational factors. Figure below lists factors that increase consumers’ pre-purchase information search. For some products and services, the consumer may have ongoing experience from which to draw (such as a golfer purchasing a “better” set of golf clubs), or the purchase may essentially be discretionary in nature (rather than a necessity), so there is no rush to decide. Decision Rules Decision rules are procedures that consumers use to facilitate brand and other consumption 93 CU IDOL SELF LEARNING MATERIAL (SLM)

related choices. These rules reduce the burden of making complex decisions by providing guidelines or routines that make the process less taxing. There are two types of consumer decision rules that compare the attributes of the alternatives. Compensatory decision rules come into play when a consumer evaluates brand or model options in terms of each relevant attribute and computes a weighted or summated score for each brand. The computed score reflects the brand’s relative merit as a potential purchase choice. The assumption is that the consumer will select the brand that scores highest among the alternatives evaluated. In contrast, non-compensatory decision rules do not allow consumers to balance positive evaluations of a brand on one attribute against a negative evaluation on some other attribute. There are three types of non-compensatory rules. In following a conjunctive decision rule, the consumer establishes a separate, minimally acceptable level as a cut-off point for each attribute. If any brand or model falls below the cut-off point on any one attribute, that option is eliminated from further consideration. Because the conjunctive rule can result in several acceptable alternatives, it becomes necessary in such cases for the consumer to apply an additional decision rule to arrive at a final selection (for example, accepting the first satisfactory brand). The conjunctive rule is particularly useful in quickly reducing the number of alternatives to be considered. The consumer can then apply another, more refined decision rule to arrive at a final choice. In following a lexicographic decision rule, the consumer first ranks the attributes in terms of perceived relevance or importance. The consumer then compares the various alternatives in terms of the single attribute that is considered most important. If one option scores sufficiently high on this top-ranked attribute (regardless of the score on any of other attributes), it is selected, and the process ends. When there are two or more surviving alternatives, the process is repeated with the second highest-ranked attribute (and so on), until the consumer reaches the point that one of the options is selected because it exceeds the others on a particular attribute. With the lexicographic rule, the highest-ranked attribute (the one applied first) may reveal something about the individual’s basic consumer (or shopping) orientation. For instance, a “buy the best” rule might indicate that the consumer is quality oriented; a “buy the most prestigious brand” rule might indicate that the consumer is status oriented; a “buy the least expensive” rule might reveal that the consumer is economy minded. A variety of decision rules appear quite commonplace. According to a consumer survey, nine out of ten shoppers who go to the store for frequently purchased items possess a specific shopping strategy for saving money: 94 CU IDOL SELF LEARNING MATERIAL (SLM)

1. Practical Loyalists Those who look for ways to save on the brands and products they would buy anyway. 2. Bottom-Line Price Shoppers Those who buy the lowest-priced item with little or no regard for brand. 3. Opportunistic Switchers Those who use coupons or sales to decide among brands and products that fall within their evoked set. 4. Deal Hunters Those who look for the best bargain and are not brand loyal. We have considered only the basic consumer decision rules. Most of the decision rules described here can be combined to form new variations, such as conjunctive-compensatory, conjunctive-disjunctive, and disjunctive-conjunctive rules. It is likely that, for many purchase decisions, consumers maintain in long-term memory overall evaluations of the brands in their evoked sets. This would make assessment by individual attributes unnecessary. Instead, using the affect referral decision rule, the consumer selects the brand with the highest perceived overall rating. This type of synthesized decision rule represents the simplest of all rules. Some decision rules do not evaluate each of the attributes but consider different factors that influence purchase or use of a product. For example, in the recognition heuristic, consumers choose the product that seems familiar to them. Or in the majority vote heuristic, consumers choose the option that most other people have chosen. Research evidence suggests that German as well as American students are more likely to choose smartphone apps by employing the recognition heuristic and the majority vote heuristic. Decision Rules and Marketing Strategy An understanding of which decision rules consumers apply in selecting a particular product or service is useful for marketers in developing promotional programs. A marketer who is familiar with the prevailing decision rule can prepare a promotional message in a format that will facilitate consumer information processing. The promotional message might even suggest how potential consumers should decide. For instance, an advertisement for the latest cell phone might tell potential consumers “what to look for in a new feature-rich cell phone.” The ad might advise consumers to consider the attributes of long battery life, high-resolution screen, high-resolution video recording, and a particularly high-quality digital camera. Incomplete Information and Non-Comparable Alternatives In many decision-related situations, consumers have incomplete information on which to base decisions and must use alternative strategies to compensate for the missing elements. Missing information may result from advertisements or packaging that mention only certain attributes, 95 CU IDOL SELF LEARNING MATERIAL (SLM)

the consumer’s own imperfect memory of attributes for no present alternatives, or because some attributes are experiential and can be evaluated only after product use. There are four ways in which consumers can cope with missing information: 1. Consumers may delay the decision until the missing information is obtained. 2. Consumers may ignore missing information and decide to continue with the decision process using only the available information. 3. Consumers may change the decision strategy to one that better accommodates missing information. 4. Consumers may infer (“construct”) the missing information. In discussing consumer decision rules, we have assumed that a choice is made from among the brands (or models) evaluated. Of course, a consumer may also conclude that none of the alternatives offers sufficient benefits to warrant purchase. If this were to occur with a necessity, such as a home water heater, the consumer would probably either lower his or her expectations and settle for the best of the available alternatives or seek information about additional brands, hoping to find one that more closely met predetermined criteria. In contrast, if the purchase is more discretionary (e.g., a new pair of shoes), the consumer probably would postpone the purchase. In this case, information gained from the search up to that point would be transferred to long- term storage and retrieved and reintroduced as input when the consumer regained interest in making such a purchase. Sees Value/Willing to Pay and Commits/Plans In the consumer decision journey, before the consumer buys the product, she or he sees the value and is willing to pay. At this point, the consumer may also evaluate the paying options. In today’s marketplace, most consumers prefer not to pay with cash. Credit cards, smartphones, and other digital forms of payment (e.g., PayPal, Venmo, Alipay) are the preferred methods of payment. Consumers may choose one retailer over another because the payment options are more convenient. Output The output portion of the consumer decision-making model as well as the consumer journey consists of purchase behaviours, consuming the product, and post-purchase evaluation of the purchases. In the consumer journey, marketers also consider post-purchase behaviour in terms of their use of social media and whether they engage with or advocate for the brand. Consumers make three types of buying decisions: trial, repeat, and purchase. When a consumer purchases a product (or brand) for the first time and buys a smaller quantity than 96 CU IDOL SELF LEARNING MATERIAL (SLM)

usual, the purchase is a trial. Thus, a trial is the exploratory phase of purchase behaviour in which consumers attempt to evaluate a product through direct use. For instance, when consumers purchase a new brand of laundry detergent about which they may be uncertain, they are likely to purchase a smaller quantity than if it were a familiar brand. Consumers can also be encouraged to try a new product through such promotional tactics as free samples, coupons, and/or sale prices. When a new brand in an established product category (cookies, cold cereal, and yogurt) is found by trial to be more satisfactory or better than other brands, consumers are likely to repeat the purchase. Repeat purchase behaviour represents brand loyalty. Unlike a trial, in which the consumer uses the product on a small scale and without any commitment, a repeat purchase usually signifies that the product meets with the consumer’s approval and that he or she is willing to use it again and in larger quantities. Trial purchases are not always feasible. For example, with most durable goods (e.g., refrigerators, washing machines, electric ranges), a consumer usually moves directly from evaluation to a purchase and long-term commitment without an actual trial. Several years ago, Volkswagen had an interesting antidote for this issue. While purchasers of a new Volkswagen Beetle were awaiting delivery of their just-purchased cars, they were kept “warm” by receiving a mailing that included a psychographic tool called “Total Visual Imagery” that was personalized to the point that it showed the purchasers the precise model and colour they had ordered. Still further, post-purchase evaluation occurs after consumers have used the product, and in the context of their expectations. When a product’s performance matches expectations, consumers feel neutral. Positive disconfirmation of expectations occurs when the product’s performance exceeds expectations, and the consumer is satisfied. Negative disconfirmation of expectations occurs when performance is below expectations and the consumer is dissatisfied. Cognitive dissonance occurs when consumers try to reassure themselves that they made wise choices. In doing so, they may rationalize the decision as being wise; seek advertisements that support their choice and avoid those of competitive brands; attempt to persuade friends or neighbours to buy the same brand (and thereby confirm their own choice); or turn to other satisfied purchasers for reassurance. The degree of post-purchase analysis that consumers undertake depends on the importance of the product decision and the experience acquired in using the product. When the product lives up to expectations, the consumers probably will buy it again. When the product performance is disappointing or does not meet expectations, 97 CU IDOL SELF LEARNING MATERIAL (SLM)

they will search for better alternatives. Thus, the consumer’s post-purchase evaluation “feeds back” to the consumer’s psychological field and influences similar decisions in the future. Studies show that customer retention is often an outcome of the brand’s reputation—especially for products that consumers find difficult to evaluate. Research also found that younger customers have more involvement and higher expectations of service offerings and often experience cognitive dissonance after purchasing services. Satisfied customers feel that they receive “value for their money.” As an outcome of an evaluative judgment (i.e., the consumer purchases one of the brands or models in his or her evoked set), value implies the notion of a trade-off of benefits—the features of the purchased item—versus the sacrifice necessary to purchase it (the price of the product). As early as 1911, researchers suggested that one should view consumption as “voting.” Just as a consumer influences a political election by the act of voting, that same consumer influences the environment and society by his or her purchases. What happens after a consumer buys a product, uses it, and evaluates it? To continue the consumer journey, consumers either continue to use the product and replace it when it is finished, or they dispose of it. They might engage with the brand on social media, write positive or negative consumer reviews, and post pictures of themselves and their friends enjoying the product. Conversely, consumers may dispose of the product, give it away, throw it away, or store it in a closet for later use. Many consumers have the experience of buying a product they expected to use but did not. Those shoes for that party you did not end up going to, or that pot roast you bought but did not have time to cook. These products, called cabinet castaways, are often bought for a specific purpose. When the expected situation does not materialize, they are “left in the back of the cabinet.” Sometimes, consumers hope a new situation will present itself in which the product can be used. Mostly, though, these products just languish, until eventually, they may be discarded. Marketers need to encourage consumers to replace these products that may have spoiled and will not be used to jump-start the process of using the brand again. Liberal store return policies can also bring consumers into the stores and consumers may end up buying products they will use. 98 CU IDOL SELF LEARNING MATERIAL (SLM)

13.2 PROBLEM RECOGNITION The first step of the consumer decision-making process is recognizing the need for a service or product. Need recognition, whether prompted internally or externally, results in the same response: a want. Once consumers recognize a want, they need to gather information to understand how they can fulfil that want, which leads to step 2. But how can you influence consumers at this stage? Since internal stimulus comes from within and includes basic impulses like hunger or a change in lifestyle, focus your sales and marketing efforts on external stimulus. Develop a comprehensive brand campaign to build brand awareness and recognition––you want consumers to know you and trust you. Most importantly, you want them to feel like they have a problem only you can solve. Example: Winter is coming. This customer has several light jackets, but she will need a heavy-duty winter coat if she’s going to survive the snow and lower temperatures. 13.3 INFORMATION SEARCH Consumers tend to increase their effort on searching information to varying degrees. Some make an extra effort to probe and explore the information about product categories/brands while some others go through sources other than advertisements, such as the positive word of mouth. Information search may be internal, or memory based. It may be external, in which the consumer scans the environment to offer inputs to the CDM process. Information search takes effort, time, and money. There are benefits of information search, which includes the selection of a brand that has a better value or higher quality or one that reassures the consumer against his/her perceived risks associated with the purchase. Whenever a consumer feels a need, one must scan the memory to determine if a satisfactory solution can be found and if there are any alternatives to that solution. A consumer who is hungry can think of a fast-food restaurant, a brand of fast food or even prepare a meal by himself/herself. The consumer may also consider the type of food and associated costs. This is internal search. If he/she cannot hit a solution, he/she may undertake the external search. (The same consumer may also want information about the eateries when he/she is in a new city.) Several decisions that consumers take about low-involvement products are likely to be based on internal search. External decision making may include the following aspects: ● Opinions and attitudes of friends, relatives, or opinion leaders. 99 CU IDOL SELF LEARNING MATERIAL (SLM)

● Information provided by promotional aspects associated with the brand like advertising, personal selling, or brochures. ● Direct product trials (two-wheelers or cars). There is another type of ‘on-going’ information search, which consumers undertake without a specific problem. For example, there may be consumers who are frenzied about motorcycles. They may or may not own the vehicle but may be interested in any information on motorcycles. These consumers are involved in an ‘on-going search’ about this product category. This kind of information search occurs both because of the pleasure involved in seeking information and because such information may be useful later. This information search may be extremely useful to marketers. It may be worthwhile to identify a set of consumers who may not want to buy the product at a given point of time but are interested in the category due to their high level of involvement. A brand that can build a relationship with such consumers stands to gain attraction when the consumer is ready to buy the product category. There is a great possibility of consumers considering a brand with which they are not only familiar but have also had some interaction. TVS Scooty did just that through an online promotional method involving the target segment (youth) and collected the valuable information in a short period of time. Establishing contact and nurturing the established relationship through specific media and promotional methods appropriately to the ‘on-going search’ segment is extremely useful to the brand, especially when the category has competition. Types of Information Sought CDM requires the following types of information alternatives available, criteria for evaluating the alternatives and the performance of each alternative. A consumer is likely to search for information until he/she is satisfied that he/she has gathered these types of information. Different brands with different USP’s form the basic information about the alternatives available. Normally, in several consumer product categories, consumers perceive and interpret this kind of information through the positioning strategies of brands. For example, Lux can be positioned as an entry-level soap; Sunsilk for specializing into hair care; Clinic Plus, a therapeutic shampoo for the family and Clinic All-Clear for the youth. In fact, the perception of consumers about the probable outcome of using the brand (getting rid of dandruff or having bouncy, glamorous, attractive hair) is also an outcome of the positioning strategy of the brand. 100 CU IDOL SELF LEARNING MATERIAL (SLM)

The positioning should be such that consumers identify themselves with it and perceive the benefits of the brand. A brand of toothpaste that was launched a few decades back had fast- spreading action as its USP and consumers were not able to identify themselves with the benefit. Clear-cut positioning of benefits (functional or emotional) helps the brand to influence the evaluative criteria that consumers (targeted segment) may formulate through external search. The toothpaste gel, with its cosmetic white teeth and lifestyle positioning, has appealed to the youth and created a new criterion in the category. Consumers also have what is called ‘inert set’ of brands or ‘back-up’ brands about which they may accept information. A consumer who has made up his/her mind to buy Colgate Total based on the ‘multiple benefits’ criteria may choose Himalaya if the former is not available. This happens because consumers may be tuned to information that is close to their evaluative criteria. This can also happen in durables, but branding plays a vital role because of the high degree of perceived risk in high-involvement products. The expectation on the performance of the brand depends on four aspects: market characteristics, brand characteristics, consumer characteristics and situational characteristics. Market characteristics include available alternatives, how well the product category has been accepted, (diffusion of innovation—this has an influence on reducing the perceived risk and/or making the product category a necessity, for example, gas stoves) and availability of information through advertising or sales personnel, independent sources or through personal sources. Brand characteristics depend on brand differentiation and the value perceived (the benefits perceived also dependent on this). Consumer characteristics depend on learning and experience, social status, age in the life cycle, perceived risk, familiarity with the product and the level of involvement with the product category. Situational characteristics include availability of time, whether the product is for personal use or a gift, physical and mental energy to gather information and affordability to buy the brand. The outcome in terms of performance is complex and based on several factors associated with the types of information sought. This, in turn, depends on a set of characteristics. The influencing factors (types of characteristics) have significant implications for marketers. A microwave oven, for example, may not be perceived as a high-priority durable item in households where one of the spouses does not go out to work. An online grocery store is likely to attract the attention of a busy, young, and aspiring couple pursuing an active career. 101 CU IDOL SELF LEARNING MATERIAL (SLM)

The search for information on brands like BMW and Mercedes may be important for niche consumers who may be actively involved in deciding on the type of car to buy, not so much for its utility as for its status. The kind of information search by this niche will be quite different from those who may also learn about this information without intending to buy those brands. Perceived risk, as a consumer characteristic, can provide several dimensions in which marketers approach and provide information to a target segment (especially in durables). For example, there may be a brand in electric cars, which wants to be launched in India. The information search involved about the perceived risks of the consumer can open several strategies associated with the marketing mix elements planned for the launch. Dimensions of Information Search Information search can be explained in terms of degree, direction, and sequence. The degree of search represents the total search. This is associated with the number of brands, stores, attributes, and other information sources considered during the search process. Category killer like Vivek & Co (seller of various durable products like kitchen appliances, air conditioner, etc.). carry several brands and it becomes easy for consumers to compare the brands or attributes. Consumers may not visit many stores for the purpose of comparison. The degree of search is significantly dependent on the decision-making process. Extended decision making will involve considerable information search. In the case of durables, if the consumer is satisfied with the purchase, then he/she may minimize the search time by considering the same brand during the replacement cycle. Consumers can be segmented based on the degree of information search (based on primary research) and grouped into several categories (suggestive) like low-search group, purchase-friend assisted group (assisted by a known person), high-search group or a moderate search group. A manufacturer of a durable like a TV or a refrigerator may find that consumers in the high-search group are more likely to buy the brand than others. The brand can come out with advertisements which may encourage the consumers to search for any available information. This is more applicable to the durable that offer new features to maintain a competitive edge. For example, Titan Edge was introduced as the slimmest watch in the world. Consumer segments that engage in a considerable amount of external search may be easier to reach than those that rely on internal search. Consumers who rely on internal search may be approached through direct marketing. 102 CU IDOL SELF LEARNING MATERIAL (SLM)