INTRODUCTION TO CONSUMER BUYING BEHAVIOUR

The 1990s have borne witness to dramatic shifts in the marketplace triggered by sharp changes in
the lifestyle patterns of the past and present and the radical revolution in the telecommunication
technology. Time tested concepts on Brand loyalty and Mass Marketing, are being turned on
their heads as they fail to gauge the Behaviour of new generation customers. The behaviour is
characterized by the uniqueness of individual expectations, the preference for multiple options,
propensity to abandon Brand loyalty and switch to competition Brands that give higher
(perceived) value. The new breed is even willing to import to satisfy specific requirement. It is
difficult to classify this generation by conventional Demographic factors and unless their thought
process and buying behaviour are fully understood, decisions on product designs and packaging,
Branding and Distribution channels are likely to be misplaced. With the inevitability of change
looming large over the horizon, Indian companies must learn from their western counterparts;
not only to identify the sources, timing and direction of the changes likely to affect India, but
also the new competencies and perspective that will enable them to respond to these changes,
comprehensively and effectively. Companies offering Product or Services will need to
understand this new face of the customers. The changing Demographic profile of the population
in terms of education, income, size of family and so on, are important by what will be more
substantive in days to come will be the Psychographics of customers that is how they feel, think
or behave. Markers will have to constantly monitor and understand the underlying
Psychographics to map their respective industries are moving and decide what needs to be done,
by way of adding value that motivates customers to buy the company’s products and influence
the future industry structure.

LITERATURE REVIEW

AWARENESS : This  means to know about the existence of the product in the market. It is the
first stage of the adoption process. The consumers are exposed to the product innovation. The
consumers at this stage are not interested in more information about the product.
PERCEPTION : It is defined as the process by which an individual selects, organizes and
interprets stimuli into a meaningful and coherent of the world. It is how we see the world around
us’. Two persons subject to the same stimulus under the same conditions will react differently. A
stimulus is any unit of input to any of the senses. The study of perception is largely the study of
what we subconsciously add to or subtract from raw sensory to produce our  own private picture
of the world.

ATTITUDE : In simple dictionary meaning ‘attitude; means a way of thinking is a learned

predisposition to behave in a consistently favorable or unfavorable way with respect to a given
object. Attitudes are learned may be because of a previous experience with the product,
information acquired from others, and exposure to mass media. Attitudes are not permanent, they
do change over a period of time.

Consumer Behavior

The study of consumers helps firms and organizations improve their marketing strategies by
understanding issues such as how consumers think, feel, reason, and select between different
alternatives (e.g., brands, products);

The psychology of how the consumer is influenced by his or her environment (e.g., culture,
family, signs, media);

The behavior of consumers while shopping or making other marketing decisions;

Limitations in consumer knowledge or information processing abilities influence decisions and

marketing outcome;

How consumer motivation and decision strategies differ between products that differ in their
level of importance or interest that they entail for the consumer; and how marketers can adapt
and improve their marketing campaigns and marketing strategies to more effectively reach the
consumer.

Understanding these issues helps in adapting strategies by taking the consumer into
consideration. For example, by understanding that a number of different messages compete for
our potential customers’ attention, one learns that to be effective, advertisements must usually be
repeated extensively. It is also learnt that consumers will sometimes be persuaded more by
logical arguments, but at other times will be persuaded more by emotional or symbolic appeals.
By understanding the consumer, the company will be able to make a more informed decision as
to which strategy to employ.

The "official" definition of consumer behavior given in the text is "The study of individuals,
groups, or organizations and the processes they use to select, secure, use, and dispose of
products, services, experiences, or ideas to satisfy needs and the impacts that these processes
have on the consumer and society.

Behavior occurs either for the individual, or in the context of a group (e.g., friends influence
what kinds of clothes a person wears) or an organization (people on the job make decisions as to
which products the firm should use).

Consumer behavior involves the use and disposal of products as well as the study of how they
are purchased. Product use is often of great interest to the marketer, because this may influence
how a product is best positioned or how we can encourage increased consumption. Since many
environmental problems result from product disposal (e.g., motor oil being sent into sewage
systems to save the recycling fee, or garbage piling up at landfills) this is also an area of interest.

Consumer behavior involves services and ideas as well as tangible products.

The impact of consumer behavior on society is also of relevance. For example, aggressive
marketing of high fat foods, or aggressive marketing of easy credit, may have serious
repercussions for the national health and economy.

There are four main applications of consumer behavior:

The most obvious is for marketing strategy—i.e., for making better marketing campaigns. For
example, by understanding that consumers are more receptive to food advertising when they are
hungry, we learn to schedule snack advertisements late in the afternoon. By understanding that
new products are usually initially adopted by a few consumers and only spread later, and then
only gradually, to the rest of the population, we learn that (1) companies that introduce new
products must be well financed so that they can stay afloat until their products become a
commercial success and (2) it is important to please initial customers, since they will in turn
influence many subsequent customers’ brand choices.

As a final benefit, studying consumer behavior should make us better consumers. Common sense
suggests, for example, that if you buy a 64 liquid ounce bottle of laundry detergent, you should
pay less per ounce than if you bought two 32 ounce bottles. In practice, however, you often pay a
size premium by buying the larger quantity. In other words, in this case, knowing this fact will
sensitize you to the need to check the unit cost labels to determine if you are really getting a
bargain. There are several units in the market that can be analyzed.

Research Methods

There are two main categories of research methods. Secondary research uses research that has
already been done by someone else. For example, marketers often find information compiled by
the U.S. Census very useful. However, in some cases, information specific enough to satisfy a
firm’s needs is not publicly available. Original research that a firm does for itself is known as
primary research.

There is no one perfect primary research method. Each has strengths and weaknesses, and thus
the appropriate method must be selected based on research needs.

Surveys are useful for getting a great deal of specific information. Surveys can contain open-
ended questions  or closed-ended, where the respondent is asked to select answers from a brief
list. Open ended questions have the advantage that the respondent is not limited to the options
listed, and that the respondent is not being influenced by seeing a list of responses. However,
open-ended questions are often skipped by respondents, and coding them can be quite a
challenge. In general, for surveys to yield meaningful responses, sample sizes of over 100 are
usually required because precision is essential.

Surveys come in several different forms. Mail surveys are relatively inexpensive, but response
rates are typically quite low—typically from 5-20%. Phone-surveys get somewhat higher
response rates, but not many questions can be asked because many answer options have to be
repeated and few people are willing to stay on the phone for more than five minutes. Mall
intercepts are a convenient way to reach consumers, but respondents may be reluctant to discuss
anything sensitive face-to-face with an interviewer.

Focus groups involve getting a group of 6-12 consumers together to discuss product usage.
Focus groups are especially useful if we do not have specific questions to ask yet, since we don’t
know what consumers’ concerns might be. Drawbacks of focus groups include high costs and the
fact that generalization toward the entire population is difficult for such small sample sizes. The
fact that focus groups involve social interaction also means that participants may say what they
think will make themselves look good rather than what they really believe (the social desirability
bias).

Personal interviews involve in-depth questioning of an individual about his or her interest in or
experiences with a product. The benefit here is that one can get really into depth . but this
method of research is costly and can be extremely vulnerable to interviewer bias.

Projective techniques are used when a consumer may feel embarrassed to admit to certain
opinions, feelings, or preferences. The main problem with this method is that it is difficult to
analyze responses.

Observation of consumers is often a powerful tool. Looking at how consumers select products
may yield insights into how they make decisions and what they look for. Observation may help
in determining how much time consumers spend comparing prices, or whether nutritional labels
are being consulted.

Physiological measures are occasionally used to examine consumer response. For example,
advertisers may want to measure a consumer’s level of arousal during various parts of an
advertisement.

 Segmentation
Segmentation basically involves dividing consumers into groups such that members of a group
(1) are as similar as possible to members of that same group but (2) differ as much as possible
from members other segments. This enables us then to "treat" each segment differently—e.g., by:

Providing different products (e.g., some consumers like cola taste, while others prefer lime) .
Offering different prices (some consumers will take the cheapest product available, while others
will pay for desired features). Distributing the products where they are likely to be bought by the
targeted segment.

In order for a segment structure to be useful:

     Each segment must have an identity—i.e., it must contain members that can be
described in some way (e.g., price sensitive) that behave differently from another
segment.

     Each segment must engage in systematic behaviors (e.g., a price sensitive
segment should consistently prefer the low price item rather than randomly
switching between high and low priced brands).

     Each segment must offer marketing mix efficiency potential—i.e., it must be
profitable to serve. For example, A smaller segment may be profitable if, for
example, it is price insensitive or can be targeted efficiently . Some segments are
not cost effective.

There are three "levels" of segmentation. Levels here refer to the tradeoff between the difficulty
of implementing a segmentation scheme and the benefits that result.

     The first level of segmentation involves personal characteristics—e.g.,

demographics. The trouble with this method of segmentation, however, is that
there is often not a good correlation between personal characteristics of
consumers and what they want to buy. Psychographics includes a bit more
information about the consumer than his or her mere descriptive characteristics.
      The second level is benefit desired—that is, segmenting on what someone wants
rather than who he or she is. Implementing segmentation on benefit desired is
more difficult. The benefit, however, is that one can now make product that
matches more closely a particular segment’s specific desires, and one can
promote, price, and distribute it according to the desires of the segment. This
method, then, lends itself extremely well to strong product positioning—one make
a product that offers specific benefits, and we aggressively promote this fact to
interested consumers. A drawback, however, is some efficiency is lost in
marketing communication.

     The third level is segmentation based on behavior. Behavior here refers to a
person’s response (or lack of response) to a given treatment. The rewards are
often great, because one can tailor the kind of deal we give a consumer to the
minimum concession needed to get that consumer to buy our (as opposed to a
competing) product.

Direct marketing offers exceptional opportunities for segmentation because marketers can buy
lists of consumer names, addresses, and phone-numbers that indicate their specific interests.

Culture

Culture is part of the external influences that impact the consumer. That is, culture represents
influences that are imposed on the consumer by other individuals.

The definition of culture offered in the text is "That complex whole which includes knowledge,
belief, art, morals, custom, and any other capabilities and habits acquired by man person as a
member of society." From this definition, one can make the following observations:

Culture, as a "complex whole," is a system of interdependent components.

Knowledge and beliefs are important parts. Other issues are relevant. Art, for example, may be
reflected in the rather arbitrary practice of wearing ties in some countries and wearing turbans in
others.
Culture has several important characteristics: (1) Culture is comprehensive. This means that all
parts must fit together in some logical fashion.  (2) Culture is learned rather than being
something we are born with. (3) Culture is manifested within boundaries of acceptable behavior..
(4) Conscious awareness of cultural standards is limited. (5) Cultures fall somewhere on a
continuum between static and dynamic depending on how quickly they accept change.

Cultural rules can be categorized into three types. Formal rules carry relatively explicit standards
as to how one should behave, and violations often carry severe sanctions. Informal rules, on the
other hand, are less explicit and may not carry sanctions for violation. Finally, technical cultural
rules involve implicit standards as to what constitutes a good product.

Language is an important element of culture. It should be realized that regional differences may
be subtle.

Subculture is often categorized on the basis of demographics. While part of the overall culture,
these groups often have distinguishing characteristics. An important consequence is that a person
who is part of two subcultures may experience some conflict.

Values are often greatly associated with age groups because people within an age-group have
shared experiences. Regional influence, both in the United States and other areas, is significant.

Family Decision Making

The Family Life Cycle. Individuals and families tend to go through a "life cycle." The simple life
cycle goes from

child/teenager ---> young single ---> young couple* ---> full nest

---> empty nest ---> widow(er).

A "couple" may either be married or merely involve living together. The breakup of a non-
marital relationship involving cohabitation is similarly considered equivalent to a divorce.

full nest ---> single parent

This situation can result either from divorce or from the death of one parent. Divorce usually
entails a significant change in the relative wealth of spouses. In some cases, the non-custodial
parent (usually the father) will not pay the required child support, and even if he or she does, that
still may not leave the custodial parent and children as well off as they were during the marriage.
On the other hand, in some cases, some non-custodial parents will be called on to pay a large part
of their income in child support. This is particularly a problem when the non-custodial parent
remarries and has additional children in the second (or subsequent marriages).

Divorced parents frequently remarry, or become involved in other non-marital relationships;

thus, we may see

full nest ---> single parent ---> blended family

Another variation involves

young single ---> single parent

Generally, there are two main themes in the Family Life Cycle, subject to significant exceptions:

As a person gets older, he or she tends to advance in his or her career and tends to get greater
income (exceptions: maternity leave, divorce, retirement).

Unfortunately, obligations also tend to increase with time (at least until one’s mortgage has been
paid off). Children and paying for one’s house are two of the greatest expenses.

Note that although a single person may have a lower income than a married couple, the single
may be able to buy more discretionary items.

Family Decision Making: Individual members of families often serve different roles in decisions
that ultimately draw on shared family resources. Some individuals are information
gatherers/holders, who seek out information about products of relevance. These individuals
often have a great deal of power because they may selectively pass on information that favors
their chosen alternatives. Influencers do not ultimately have the power decide between
alternatives, but they may make their wishes known by asking for specific products or causing
embarrassing situations if their demands are not met. The decision maker(s) have the power to
determine issues such as:

 whether to buy;
 which product to buy (pick-up or passenger car?);
 which brand to buy;
 where to buy it; and
 when to buy.

One is bargaining—one member will give up something in return for someone else. strategy is
reasoning—trying to get the other person(s) to accept one’s view through logical argumentation.

Group Influences

Humans are inherently social animals, and individuals greatly influence each other. A useful
framework of analysis of group influence on the individual is the so called reference group—the
term comes about because an individual uses a relevant group as a standard of reference against
which oneself is compared. Reference groups come in several different forms. The aspirational
reference group refers to those others against whom one would like to compare oneself.
Associative reference groups include people who more realistically represent the individuals’
current equals or near-equals—e.g., coworkers, neighbors, or members of churches, clubs, and
organizations. Finally, the dissociative reference group includes people that the individual would
not like to be like.

Reference groups come with various degrees of influence. Primary reference groups come with a
great deal of influence—e.g., members of a fraternity/sorority. Secondary reference groups tend
to have somewhat less influence—e.g., members of a boating club that one encounters only
during week-ends are likely to have their influence limited to consumption during that time
period.

Another typology divides reference groups into the informational kind (influence is based almost
entirely on members’ knowledge), normative (members influence what is perceived to be "right,"
"proper," "responsible," or "cool"), or identification. The difference between the latter two
categories involves the individual’s motivation for compliance. In case of the normative
reference group, the individual tends to comply largely for utilitarian reasons—dressing
according to company standards is likely to help your career, but there is no real motivation to
dress that way outside the job. In contrast, people comply with identification groups’ standards
for the sake of belonging—for example, a member of a religious group may wear a symbol even
outside the house of worship because the religion is a part of the person’s identity.

Diffusion of Innovation

The diffusion of innovation refers to the tendency of new products, practices, or ideas to spread
among people. Usually, when new products or ideas come about, they are only adopted by a
small group of people initially; later, many innovations spread to other people. The saturation
point is the maximum proportion of consumers likely to adopt .

Several forces often work against innovation. One is risk, which can be either social or financial.
Another risk is being perceived by others as being weird for trying a "fringe" product or idea.
Other sources of resistance include the initial effort needed to learn to use new products (e.g., it
takes time to learn to meditate or to learn how to use a computer) and concerns about
compatibility with the existing culture or technology. Innovations come in different degrees. A
continuous innovation includes slight improvements over time. A dynamically continuous
innovation involves some change in technology, although the product is used much the same
way that its predecessors were used—e.g., jet vs. propeller aircraft. A discontinous innovation
involves a product that fundamentally changes the way that things are done—e.g., the fax and
photocopiers.

Some cultures tend to adopt new products more quickly than others, based on several factors:

     Modernity: The extent to which the culture is receptive to new things. In some
countries, such as Britain and Saudi Arabia, tradition is greatly valued—thus, new
products often don’t fare too well. The United States, in contrast, tends to value
progress.
      Homophily: The more similar to each other that members of a culture are, the
more likely an innovation is to spread—people are more likely to imitate similar
than different models. The two most rapidly adopting countries in the World are
the U.S. and Japan. While the U.S. interestingly scores very low, Japan scores
high.

     Physical distance: The greater the distance between people, the less likely
innovation is to spread.

     Opinion leadership: The more opinion leaders are valued and respected, the more
likely an innovation is to spread. The style of opinion leaders moderates this
influence, however. In less innovative countries, opinion leaders tend to be more
conservative, i.e., to reflect the local norms of resistance.

Perception

Background. Our perception is an approximation of reality. Our brain attempts to make sense out
of the stimuli to which we are exposed.

Factors in percpetion. Several sequential factors influence our perception. Exposure involves the
extent to which we encounter a stimulus. Most of this exposure is random—we don’t plan to
seek it out. Exposure is not enough to significantly impact the individual—at least not based on a
single trial In order for stimuli to be consciously processed, attention is needed. Interpretation
involves making sense out of the stimulus. Weber’s Law suggests that consumers’ ability to
detect changes in stimulus intensity appear to be strongly related to the intensity of that stimulus
to begin with.

Several factors influence the extent to which stimuli will be noticed. One obvious issue is
relevance. Consumers, when they have a choice, are also more likely to attend to pleasant
stimuli (but when the consumer can’t escape, very unpleasant stimuli are also likely to get
attention—thus, many very irritating advertisements are remarkably effective). Surprising
stimuli are likely to get more attention—survival instinct requires us to give more attention to
something unknown that may require action. A greater contrast (difference between the stimulus
and its surroundings) as well as greater prominence (e.g., greater size, center placement) also
tend to increase likelihood of processing.

Learning and Memory

Background. Learning involves "a change in the content or organization of long term memory
and/or behavior." The first part of the definition focuses on what we know (and can thus put to
use) while the second focuses on concrete behavior.

Classical conditioning. Pavlov’s early work on dogs was known as classical conditioning.
Pavlov discovered that when dogs were fed meat powder they salivated. Pavlov then discovered
that if a bell were rung before the dogs were fed, the dogs would begin salivating in anticipation
of being fed (this was efficient, since they could then begin digesting the meat powder
immediately). Pavlov then found that after the meat had been "paired" with the meat powder
enough times, Pavlov could ring the bell without feeding the dogs and they would still salivate.

In the jargon of classical conditioning, the meat powder was an unconditioned stimulus (US) and
the By pairing the bell with the unconditioned stimulus, the bell became a conditioned stimulus
(CS) and salivation in response to the bell (with no meat powder) became a conditioned response
(CR).

Operant conditioning. Instrumental, or operant, conditioning, involves a different series of

events, and this what we usually think of as learning. The general pattern is:

Behavior ---> consequences ---> behavior is more or less likely to be repeated

There are three major forms of operant learning. In positive reinforcement, an individual does
something and is rewarded. He or she is then more likely to repeat the behavior.

Punishment is the opposite. It should be noted that negative reinforcement is very different from
punishment.

In general, marketers usually have relatively little power to use punishment or negative
reinforcement.
Several factors influence the effectiveness of operant learning. In general, the closer in time the
consequences are to the behavior, the more effective the learning. However, it is not necessary to
reward a behavior every time for learning to occur. Even if a behavior is only rewarded some of
the time, the behavior may be learned.

Memory. There are two kinds of memory. When you see an ad on TV for a mail order product
you might like to buy, you only keep the phone number in memory until you have dialed it. This
is known as short term memory. In order for something to enter into long term memory, which is
more permanent, you must usually "rehearse" it several times. A special issue in memory are so
called "scripts," or procedures we remember for doing things. Scripts involve a series of steps for
doing various things (e.g., how to send a package).

Motivation, Personality, and Emotion

Perspectives on Consumer Behavior and Motivation: People considered several perspectives on

behavior as a way to understand what motivates the consumer. Each of these perspectives
suggests different things as to what the marketer should do and what can (and cannot) be
controlled.

The Hard Core Behavioral perspective is based on learning theories such as operant and
classical conditioning. These theories suggest that consumers must learn from their own
experiences rather than merely observing other people who overeat and get sick.

The Social Learning Perspective, in contrast, allows for vicarious learning--i.e., learning
obtained by watching others getting good or bad consequences for behavior. The models that
may be observed and imitated include peers and family members as well as relevant others that
may be observed in advertising. Certain people are more likely to be imitated than
othersGenerally, observations are made of overt behavior, but some room is made for individual
reasoning in learning from others. This perspective is clearly more realistic than that of the "Hard
Core" view.

The Cognitive approach emphasizes consumer thinking rather than mere behavior.Here, the
emphasis is on how people reason themselves to the consequences of their behavior. It is often
somewhat more difficult to attempt to "get into" a consumer’s head than it is to merely observe
his or her behavior, and what we "observe" is somewhat more subjective.

The Biological approach suggests that most behavior is determined by genetics or other
biological bases. By this perspective, it is suggested that consumers eat the foods they eat in
large part because the body craves these foods. The main implication of biological determinism
is that the marketer must adapt--for example, food advertisements are more likely to be effective
when people are hungry, and thus they might better be run in the late afternoon rather than in the
late morning.

The Rational Expectations perspective is based on an economic way of looking at the World.
The Psychoanalytic perspective is based on the work of historical psychologists such as Sigmund
Freud who suggest that (1) much behavior has a biological basis which is (2) often sexual in
nature, and (3) that early experiences in childhood will have a profound, but unconscious effect
on later life. Although modern psychologists certainly recognize that early experiences may
influence later psychological well being, the psychoanalytic view has largely been discredited
today as being much too centered on the issue of sex. 

Properties of motivation: Motivation is described through several properties:

     Motivation is composed of energy and direction. A person may or may not have
enough motivation to engage in a given activity.

     Motives may be overt, hidden, and multiple. Some motivations are publicly
expressed (e.g., the desire to buy an energy efficient house), while others (e.g., the
desire to look wealthy by buying a fancy car) are not.

     Many motivations are driven by the desire for tension reduction (e.g., eliminate
thirst or hunger).

     Motivations can be driven by both internal and external factors.

      Motivations may have either a positive or negative valence--people may either be
motivated to achieve something (e.g., get a promotion at work) or avoid
something (e.g., being hospitalized without having adequate insurance).

     Consumers are motivated to achieve goals. Achieving these goals may require
sustained activity over time (e.g., exercising every day for months or years) as
opposed to just taking some action once.

     Consumers maintain a balance between the desires for stability and variety. M

     Motivation reflects individual differences. Different consumers are motivated to

achieve different things, and it may be difficult to infer motivations from looking
at actual behavior without understanding these differences in desired outcomes.

Personality and consumer behavior: Traditional research in marketing has not been particularly
successful in finding a link between personality and consumer behavior. Emotion. Emotion
impacts marketing efforts in several ways. One purpose is to get attention to a stimulus (since
emotionally charged individuals tend to be less predictable than calmer ones, there has been an
evolutionary advantage in paying attention to emotion). Secondly, emotion influences
information processing.

Attitudes

Definition. Consumer attitudes are a composite of a consumer’s (1) beliefs about, (2) feelings
about, (3) and behavioral intentions toward some object within the context of marketing, usually
a brand or retail store. These components are viewed together since they are highly
interdependent and together represent forces that influence how the consumer will react to the
object.

Beliefs. The first component is beliefs. A consumer may hold both positive beliefs toward an
object (e.g., coffee tastes good) as well as negative beliefs (e.g., coffee is easily spilled and stains
papers). In addition, some beliefs may be neutral.
Affect. Consumers also hold certain feelings toward brands or other objects. Sometimes these
feelings are based on the beliefs (e.g., a person feels nauseated when thinking about a hamburger
because of the tremendous amount of fat it contains), but there may also be feelings which are
relatively independent of beliefs.

Behavioral intention. The behavioral intention is what the consumer plans to do with respect to
the object (e.g., buy or not buy the brand). As with affect, this is sometimes a logical
consequence of beliefs (or affect), but may sometimes reflect other circumstances.

Attitude-Behavior Consistency. Consumers often do not behave consistently with their attitudes
for several reasons:

     Ability. He or she may be unable to do so.

     Competing demands for resources.

     Social influence.

     Measurement problems. Measuring attitudes is difficult. In many situations,

consumers do not consciously set out to enumerate how positively or negatively
they feel about mopeds.

Attitude Change Strategies. Changing attitudes is generally very difficult, particularly when
consumers suspect that the marketer has a self-serving agenda in bringing about this change
(e.g., to get the consumer to buy more or to switch brands).

Changing affect. One approach is to try to change affect, which may or may not involve getting
consumers to change their beliefs. One strategy uses the approach of classical conditioning try to
"pair" the product with a liked stimulus. Finally, products which are better known, through the
mere exposure effect, tend to be better liked--that is, the more a product is advertised and seen in
stores, the more it will generally be liked, even if consumers to do not develop any specific
beliefs about the product.
Changing behavior. People like to believe that their behavior is rational; thus, once they use our
products, chances are that they will continue unless someone is able to get them to switch.
----One way to get people to switch to one brand is to use temporary price discounts and
coupons; however, when consumers buy a product on deal, they may justify the purchase based
on that deal (i.e., the low price) and may then switch to other brands on deal later. A better way
to get people to switch to our brand is to at least temporarily obtain better shelf space so that the
product is more convenient. Consumers are less likely to use this availability as a rationale for
their purchase and may continue to buy the product even when the product is less conveniently
located. (Notice, by the way, that this represents a case of shaping).

Changing beliefs. Although attempting to change beliefs is the obvious way to attempt attitude
change, particularly when consumers hold unfavorable or inaccurate ones, this is often difficult
to achieve because consumers tend to resist. Several approaches to belief change exist:

     Change currently held beliefs. It is generally very difficult to attempt to change
beliefs that people hold, particularly those that are strongly held, even if they are
inaccurate.

     Change the importance of beliefs.

     Add beliefs. Consumers are less likely to resist the addition of beliefs so long as
they do not conflict with existing beliefs.

     Change ideal. It usually difficult, and very risky, to attempt to change ideals, and
only few firms succeed.

One-sided vs. two-sided appeals. Attitude research has shown that consumers often tend to react
more favorably to advertisements which either (1) admit something negative about the
sponsoring brand or (2) admits something positive about a competing brand Two-sided appeals
must, contain overriding arguments why the sponsoring brand is ultimately superior.

The Elaboration Likelihood Model (ELM) and Celebrity Endorsements. The ELM suggests that
consumers will scrutinize claims more in important situations than in unimportant ones.
The ELM suggests that for "unimportant" products, elaboration will be low. However, for
products which are either expensive or important for some other reason elaboration is likely to be
more extensive, and the endorser is expected to be "congruent," or compatible, with the product.

Appeal approaches. Several approaches to appeal may be used. The use of affect to induce
empathy with advertising characters may increase attraction to a product, but may backfire if
consumers believe that people’s feelings are being exploited. Fear appeals appear to work only
if (1) an optimal level of fear is evoked--not so much that people tune it out, but enough to scare
people into action and (2) a way to avoid the feared stimulus is explicitly indicated. Humor
appears to be effective in gaining attention, but does not appear to increase persuasion in
practice. In addition, a more favorable attitude toward the advertisement may be created by
humorous advertising, which may in turn result in increased sales. Comparative advertising,
which is illegal in many countries, often increases sales for the sponsoring brand, but may
backfire in certain cultures.

Self-Concept, Situational Influences, and Lifestyle

The self-concept. The consumer faces several possible selves. The actual self reflects how the
individual actually is, although the consumer may not be aware of that reality  In contrast, the
ideal self reflects a self that a person would like to have, but does not in fact have. The private
self is one that is not intentionally exposed to others. The key here is to keep in mind which kind
of self one is trying to reach in promotional messages.

Individuals will often seek to augment and enhance their self concepts, and it may be possible to
market products that help achieve this goal.

Lifestyles. Self-concept often translates into a person’s lifestyle, or the way that he or she lives
his or her life. Attempts have been made to classify consumers into various segments based on
their lifestyles. For example, both "Achievers" and "Strivers" want public recognition, but only
the Achievers have the resources to bring this about. A global analogue is the Global Scan.

Situational influences. Specific circumstances often influence consumer behavior. Consumers

whose attention is demanded elsewhere are likely to disregard commercial messages.
Consumer Decision Making

Definitions. Consumer decision making comes about as an attempt to solve consumer problems.
A problem refers to "a discrepancy between a desired state and an ideal state which is sufficient
to arouse and activate a decision process."

Consumer Problem Recognition. Consumers often note problems by comparing their current, or
actual, situation, explicitly or implicitly, to some desired situation. In terms of the "big picture,"
what is compared may be the totality of one’s lifestyle.

Problems come in several different types. A problem may be an active one (e.g., you have a
headache and would like as quick a solution as possible) or inactive-- you are not aware that your
situation is a problem (e.g., a consumer is not aware that he or she could have more energy with
a new vitamin). Problems may be acknowledged (e.g., a consumer is aware that his or her car
does not accelerate well enough or unacknowledged (e.g., a consumer will not acknowledge that
he or she consumes too much alcohol). Finally, needs can be relatively specific (generic), as in
the need for enjoyment (which can be satisfied many different ways), or specific, as in the need
for professional attire to wear at a new job.

Creating problems for consumers is a way to increase sales, albeit a questionably ethical one.
One way to create new problems, and resultant needs, is to create a new ideal state.

There are two main approaches to search. Internal searches are based on what consumers already
know. Thus, it may be important for certain firms to advertise to consumers before they actually
need the product. A problem is that some excellent ones which are not remembered, or have
never been heard of, are not considered. External searches get people to either speak to others
(getting information by word of mouth) or use other sources (such as advertisements now sought
out or yellow page listings). Consumers often do not consider all alternatives. Some are not
known (the "unawareness" set), some were once known but are not readily accessible in memory
(the "inert" set), others are ruled out as unsatisfactory (the "inept" set--e.g., Glad bags attempts to
get "bargain bags" into that set), and those that are considered represent the "evoked" set, from
which one alternative is likely to be purchased.
The amount of effort a consumer puts into searching depends on a number of factors such as the
market (how many competitors are there, and how great are differences between brands expected
to be?), product characteristics (how important is this product? How complex is the product?
How obvious are indications of quality?), consumer characteristics (how interested is a
consumer, generally, in analyzing product characteristics and making the best possible deal?),
and situational characteristics (as previously discussed).

Two interesting issues in decisions are variety seeking (where consumers seek to try new brands
not because these brands are expected to be "better" in any way, but rather because the consumer
wants a "change of pace," and "impulse" purchases. Impulse purchases are, generally speaking,
unplanned, but represent a somewhat fuzzy group.

Public Policy Issues

There are certain marketing practices which may harm consumers. Two main issues are (1)
deceptive marketing practices (such as misleading advertising) and (2) the marketing of
dangerous or otherwise harmful products (e.g., tobacco). The following are some ethical
problems that occur in marketing, and the question arises as to which, if any, kind of government
intervention is appropriate.

     Marketing efforts may encourage excess consumption (e.g., products that
consumers cannot afford and do not really need). However there are many gray
areas--e.g., cosmetics, video games, and even something as politically correct as a
gourmet coffee houses. A special case involves marketing to children, whose
parents may be coerced, often out of guilt, to buy questionable items aimed at
children.

     Resource depletion and waste disposal issues associated with the above
consumption. Some European countries have mandated that manufacturers be
required to take back packaging materials for their products.

     Deceptive marketing practices: Products claim benefits which really do not result
from use of the product (as is done by numerous manufacturers of nutritional
 supplements); advertising may be misleading (may not indicate the true cost of a
product up front or may contain "fine print" that the consumer is unlikely to see or
understand)

     Products are unhealthy (e.g., many children’s foods contain excessive fat).

Government action is often considered, although it may not always be effective. For example,
although the government requires the use of warning labels on some products, manufacturers
will often try to "water down" the warnings as much as possible. Further, the prevalence of
warning labels today may desensitize consumers since reading all of them carefully would
provide the consumer with information overload.

Another issue is anti-competitive behavior. Antitrust laws are generally aimed at prohibiting
firms from conspiring to "fix" prices or collectively drop service levels. Antitrust law is,
however, a "thorny" area. Consumers may benefit, for example, as some less efficient firms are
driven out of business, and may benefit from the efficiencies which may or may not materialize
when large firms "gobble up" smaller ones--a defense used in the Microsoft trial.
 Sales Promotion at different Level and different programme

 
One of the most difficult marketing decisions facing companies is how much to spend
on promotional John Wanamaker, the departmental - store magazine, said, "I know
that half of my advertising is wasted but I don't know which half."

Thus it is not surprising that industries and companies vary considerably in how much
they spend on promotion. Promotional expenditures might amount to 30-50% of sales
in case in cosmetics industry and only 10-20% in the industrial equipment industry.
Within a industry, a low and high spending companies can be found.

How do companies decide on their promotion budget? There are mainly four methods
of this :

• Affordable Method :

Many companies set the promotion budget at what they think the company can afford.
One executive explained this method as follows : "Why, it’s simple. First I go upstairs
to the controller and how much they can afford to give us this year. He says a million
and half. Later, the boss comes to me and asks how much we should spend and I say
‘Oh about a million and half."

It is a method which is uncertain one and makes long term planning difficult.

• Percentage of Sales Method :

Many companies set their promotion expenditures at a specified percentage of sales.

Accordingly the sales is set on the basis of sales.
In this a specified sales percentage is decided for the promotional budget Advantages
of this method :

First, its use means that promotional budget vary with what a company can afford.

Second, it encourages the management to think in terms of the relationship among

promotion costs, selling price, and profit per unit,

Third, it encourages the competitive stability to the extent that competing firms spend
approximately the same % of their sales on promotion.

Inspite of the advantages, the % sales method has little to justify it. Its reasoning is
circular : It views sales as the determiner of the promotion rather than as a result. It
leads to budget setting by availability of funds rather than by marketing opportunities.

• Competitive Parity Method :

Some companies set their promotional budget to achieve share-of-voice parity with
other competitors. Two arguments are made in support of competitive parity method.
One is that the competitors expenditure represents the collective wisdom of the
industry. The other is that maintaining a competitive parity helps prevent promotional
wars.

Neither argument is valid. There are no grounds for believing that competition knows
better what should be spent on promotion.

• Objective and Task Method :

The objective & task method calls upon marketers to develop their promotion budgets
by defining their specific objectives, determining the task that must be performed to
achieve these objectives, and estimating the cost of performing these tasks.
Deciding on the promotion mix :

Companies face the task of distributing the total promotion budget over the five
promotional tools :

• Advertising

• Sales Promotion

• Public Relations and Publicity

• Sales Force

• Direct Marketing.

Whatever method a company adopt for promoting its product it must be from above
mentioned method.

Sales Promotion
Promotion is the final element in the marketing mix. After the nature of product is decided, its
price fixed and the methods of distribution decided, the manufactures has to take effective steps
in meeting the consumers in the markets. In the present consumer oriented markets it is the duty
of manufacturers to know what is required by the consumer. It is also their duty to make the
customers know where, when how and at what prices. The products would be available.

Meaning of Promotion

The term promotion is the term and includes mainly three type of sales activity :

1. Mass impersonal selling methods (Advertising).

2. Face to face personal selling (Salesman ship).

3. Activities other than personal selling and advertising such as point of purchase
display (P.O.P.) show and exhibitions, demonstrations and other non securing selling
efforts. This form of activity is called ‘Sales Promotion’.

There are two type of promotion blends :-

1. Pull Blend.

2. Push Blend.

Both of these are closely related to the channel of Distribution.

1. A pull blend is one in which mass impersonal, sales efforts are given the greatest
emphasis. The purpose of pull blend to pre-sell to the final consumers. So that they
demand the product at the retail level of distribution. The firm adopting this strategy
would spend more on advertising and sales promotion rather than in personal selling.
These efforts pull down the product from the manufacturer.

2. A push blend emphasizes personal selling. Naturally firms adopting this method
develop a strong sales force at both the distributor and the dealer level. This method
would tends to push the product through the channel of distribution.

Promotion and Selling

The term promotion is very often used as a synonym for selling. But selling is a narrow
term which includes only transfer of title or personal selling. Promotion on the other hand
is broader in its outlook and includes a variety of activities used ultimately for increasing
sales volume.
 

Promotion and Sales Promotion

Similarly the terms sales promotion can not be taken to mean what is commonly does. Sales
promotion, is only a part of the promotion. Basically promotion is an "exercise" in information
persecution and influence. Promotion has come to mean the over all co-ordination of advertising
selling, publicity and public relations. Promotion is a helping function designed to make all other
marketing activities more effective and efficient. But sales promotion as such helps only the
selling activity still, there exit same difference of opinion on the real connection of the term sales
promotion.

Acc. to A.H.R. Delons :-

"Sales promotion means any step that are taken for the purpose of obtaining or increasing sales".

Acc. to W.Q. Kelly Opines :-

"Muddled misused misunderstood that is sales promotion Acc. to him the field of
sales promotion as a marketing activity is still vaguely defined and organized.

Sales Promotion and Advertising

There is no universally accepted distribution between these two terms. To same advertising
includes all forms of mass media communication directed towards influencing the end consumer.
Sales promotion on the other hand, includes the form of mass communication directed towards
information and influencing the channel of distribution (e.g. distributors, retailers etc.). Hence a
price of product literature distributed by retailers in sales promotion. These sales promotion
merges on one side in to advertising and on the other in to personal salesman ship. It is
concerned with the dissemination of information to whole salers, retailers, customers (both actual
and potential, and to the salesman).

Sales promotion is concerned with the creation. Application and dissemination of material and
techniques that supplement advertising and personal selling. Sales promotion makes use of direct
mail, catalogues, trade shows, sales contests, premiums, samples, windows displays and other
aids. Its purpose is to increase the desire of salesman, distributors and dealers to sell a certain
brand to make consumers more eager to buy that brand. Personal selling and advertising do
include prospects to make these decisions. Sale promotion provides an extra stimulus.

Objective of Sales Promotion

1. To increase sales directly by publicity through media which are complementary to press and
poster advertising.

2. To disseminate information through sales man dealers etc. So as to insure the product getting
in to satisfactory use by the ultimate consumer.

3. To attract new consumer.

4. To face the competition effectively.

5. To help salesman in selling more to the retailers and consumers.

6. To check seasonal decline in sales. Generally speaking sales promotion involves rendering the
following services:-

(a) Services to dealers.

(b) Services to own salesman.

(c) Special publicity.

 

Sales Promotional at different levels

1. Sales promotion at Dealers Level :-

It may include various schemes some of which are discussed here.

(i) Advertising Materials :-

The advertising material prepared by the company such as store signs, banners, shelf signs, board
etc. are distributed to sub dealer for display purposes this is in fact a method of advertising.

(ii) Store Demonstration :-

In the promises of the whole saler or the retailer the products sales personnel will conduct special
demonstration for the companies product. A personal demonstration is good to introduce a new
product at its peculiar advantage can be high lightened and the consumer’s doubt clear. It can be
used to restimulate an old product. A good demonstration with a great dealer of action will draw
heavy crowds in to the store and will attract attention to the product.

(iii) Special Display and Shows :-

These are in seasonal in character but could be arranged in an elaborate manner and for all the
products of an company. Usually these are arranged along with trade fair and exhibition. Besides
effecting sales these shows impress the company’s name generally on the public.

Sales promotion at consumer’s level

The various schemes of sale promotion at Consumer’s Level may include.

1. Coupons (A Chit of Stated Value) :-

These are given directly to the consumer these coupons are in most cases kept inside
the package. The consumers many receive a price reduction of the stated values of the
coupon at the time of purchase. The retailer receives reimbursement for the value of
the coupon form the manufacturer. Coupons act as a short run stimulus to the sale of
the product, since they are directly tied with the purchase of the item. They encourage
the retailer to stock the product.

What is important is that a coupon offer does not spoil the named price of the brand
nor does it un pair the margin of the dealers. But it is not easy to measure the
effectiveness of a coupon offer. One over knows how many customer would have
bought the product without the incentive. It is also difficult to find out how many
customers were held after the coupon offer expired.

2. Price-off-offer (Also known as bargain offer price packs) :-

This offer is intended to stimulate the sales during a slump season. In this method the
customer is offered a reduction from the printed price list. It is also used when a
substitute for competing product enters the market.

Many experts on sales promotion fed that ‘Off Schemes’ are among the weaker and
less desirable methods of promotion. These can be trade resentment particularly when
the retailer raises the price to retain his margin. Secondly that is not conductive to
building up brand loyalty. Consumers may simply shift to the products that offer this
scheme.

3. Samples :-

In the hope of converting a prospect into a customer a sample (Some quantity of the
product) may be given. This helps the consumer to verify the real quality of the
product. Various pair manufacturing companies offer this method. For developing
brand loyalty this method is quite useful. Sampling is a fast method of demand
creation because one knows the result as soon as the consumer has had time to use the
sample and buy the brand.

Disadvantage of Sampler :-

Offering sample in quit expensive. There is the cost of producing samples. The
distribution costs are also high. Sample have to be mailed to potential customers or to
be distributed through retail shops. There are also problems when the real product
does not resemble the sample supplied.

4. Money Refund Offer :-

An offer usually stated on the package is that manufacturers will return with in a
stated period part or all of the purchaser’s money if he is not completely satisfied with
the product.

5. Trading Stamps :-

A premium in the form of stamps is given by the sellers to consumers while selling
goods. The number and value of stamp that the buyer receives depends on the values
of the purchase. These stamps are redeemable through premium catalogues at the
stamp redemption centres.

6. Buy-Back Allowance :

This an allowance following a previous trade deal not offer a certain amount of money
for new purchases based on the quantity of purchases on the first trade deal. It extends
the life of a trade deal and helps to prevent part deal sales decline. It greatly
strengthens the buyer’s motivation to co-operate on the first deal.

7. Premium :-
There are various forms of premiums provided by the manufacturer as sales
promotional devices :-

(a) Coupons are supplied for effecting price reductions.

(b) Factory in pack premium these are popular in the case of Body food and Tin food
items, Spoons, Cups, Measuring, Glass etc. and such other items are packed with the
product in the box itself. Factory in pack premium are particularly goods for product
meant for children. The Binaca Toothpaste packs contain animal shape toys. These are
very attractive and qutie popular among the children.

(c) Self Liquidating Premiums :-

The cost of the premium is collected from the buyer himself. But when the buyers
pays for it he has to pay only a considerably low price for the premium. This is
possible for the manufacturer purchases the items in bulk at a premium and his cost
per unit as is substantially low.

Other Steps by Manufacturer for Promoting Sales

Dealers can be helps in different ways :-

1. Communicating Market News :-

Often this service is reciprocal the manufacturer may acquaint his dealer with the fact
relating to his production and prices while the dealer may familiarize him in return
with the information bearing on charges in the consumer's demand, their like and
dislike complaints and criticism, substitutes etc.

2. Inviting to Sales Conference and Convention :-

The gestures of regard and respect pave the way for better relation and co-operation.

3. Offering Reasonable Terms of Sale :-

Of all the forms of encouragement, the monetary incentive evokes immediate

response. Hence every producer must offer the most responsible terms of sale such as
longer periods of credit and higher rates of descants.

4. Supplying suitable packages and useful things.

5. By taking the return back.

6. By furnishing them with sales literature and display materials.

Aggressive Selling

Meaning :-

Goods are produced for market. Manufacturers have to make efforts to sell all they
produce. When the manufacturers uses various sales efforts to obtain increased sales
volume for his product it is called aggressive selling or offensive selling. The sales
efforts which a manufacturer makes to retain his customers i.e. to protect his already
established market against against his competitors is termed as defensive selling. In
contrast to this aggressive selling is concerned with the sales efforts made with the
express objective of selling more by expanding the market for the product of the
selling firm.

Aggressive Selling and Defensive Selling :-

Aggressive selling is based on the answer to the question how much does the firm
gain (in term of sales with profit) by using this method defensive selling is based on
consideration as to how much the firm will lose if it does not use this method increase
of sales can be obtained from two sources:-

1. New customers if the market is expending.

2. From the competitors i.e. those consumers who were purchasing similar product of
competiting firms, if the market for the product is static.

Acc. to H. Whitehead :-

"In case of an expanding market all the firm may stand to gain by following the
methods of aggressive selling but if the market is static manufacturer of a new market
will have to be much more aggressive to capture the established market of
competitors".

When Aggressive selling is resorted ?

Usually manufacturer of a new product has to do aggressive selling :-

1. When the product has been improved.

2. When the manufacturer’s product is supervisor in quality to the product of the

established competitor.

3. When the total market for the product or line of product to expanding.

4. If the manufacturer’s share of the market is comparatively small.

5. If the manufacturer has unused production capacity with heavy investment in plant
and equipment he will like to develop the demand for his product rapidly so that
demand for his product is equal to the optimum production capacity of his plant ; and

6. When primary demand for a product must be created and provision must be made
in the channel of distribution to educate consumers regarding the new product and to
instruct them in its use.

Method of Aggressive Selling :-

Sales promotion efforts use for aggressive selling may be divided in two classes.

1. Trade Promotion.

2. Consumer Promotion.

1. Trade Promotion :-

Under trade promotion methods special incentives are offered to the trader to buy
products of the firm. Such incentive may take one or more of the following firm :-

(a) Cash Allowance :-

A definite percentage of discount is allowed on the purchase of given unit of a

product.

(b) Extra Product :-

Instead of giving any cash allowance extra product is given with each unit of product
ordered. For instance if a box normally contains 20 Cakes of Soap, special box
contains 25 cakes may be made and sold at the same price as that of the box of 20
cakes.
(c) Gifts :-

Various gifts are awarded in return for an order of a particular magnitude.

2. Consumer Promotion :-

Under consumer promotion method special incentives are offered to the consumers to
buy the firms product. The more prominent amongst such incentives are as following.

(a) Coupons :-

A coupon of a giving value is sent to the consumer. By presenting this coupon to the
retailer consumers can purchase a particular product mentioned on the coupon at a
reduced price. The retailer sells the products mentioned. In the coupon to such
consumer (consumers presenting the coupons) under and agreement with the
manufacturer at a price lower than the user retail price. Thus the consumer get the
benefit of reduced price to the extent of the value of the coupons.

(b) Self Liquidating Offers :-

Under this system, the firm offers an article at an attracting price if the consumer send
a given sum of money accompanied by a given number of box tops from the packages
of a particular product the benefit to the consumer is that he receives the articles at a
bargain price.

(c) Bargain Packs :-

Under this system a product is sold at a reduced price for a short period Bargain pack
method encourages new consumers to try the product. It is also helpful in obtaining
large displays in the shops.
(d) Sampling :-

The method involves giving the product or a small quantity of the product to a
consumer free with the hope that the customer will be favourable impressed with its
actual use and will eventually become a regular purchaser of the product.

A firm selling new product or an extensively improved product finds this methods
useful. Also a firm whose market is hold by competitors whose free sampling almost
expensive.

The above mentioned methods may be reinforced by adopting.

(i) Direct method of selling through.

(ii) Offer of door to door selling.

(iii) Hire purchase and installment payment methods of selling and by forming
combination.

Other Methods of Aggressive Selling :-

(i) Employment of ‘Missionary Salesman also known as Promotional Salesman’.

These salesman call upon retailers and aggressively promote a product.

(ii) Instead of using wholesalers, the firm may develop its own sales force to call
directly on retailers.

(iii) The firm may follow a compromise method by employing a manufacturer’s agent
and giving him a large enough commission to encourage him to sell product
intensively and aggressively.
(iv) New territory exploitation sales promotion has a particularly important role in
developing the company’s product in new territories.

(v) Increment and promotions.

(vi) Letters to dealer and Customer.

In fact, an ingenious sales manager can devise any number of incentives schemes for
promoting the sales volume.