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Open Rubric
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University of South Africa
Muckleneuk, Pretoria
MNM2605/1/2013–2019
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CONTENTS
Page
preface iv
Topic 1: INTRODUCTION TO CONSUMER BEHAVIOUR 1
Study unit 1: Nature of consumer behaviour 2
Study unit 2: Creating market value for consumers 11
Topic 2: EXTERNAL AND GROUP FACTORS THAT INFLUENCE CONSUMER

BEHAVIOUR 16
Study unit 3: Market characteristics 17
Study unit 4: Culture and subculture 23
Study unit 5: Reference groups and social class 32
Topic 3 INTERNAL AND INDIVIDUAL FACTORS THAT INFLUENCE

CONSUMER BEHAVIOUR 40
Study unit 6: Personal characteristics, personality and self-concept of consumers 41
Study unit 7: Consumer perception and learning 52
Study unit 8: Consumer motivation and attitudes 62
Topic 4: CONSUMER Decision-making AND DIFFUSION OF INNOVATION 73
Study unit 9: Consumer decision-making process and family or household decision-

making 74
Study unit 10: Diffusion of innovation and the consumer adoption process 83
Topic 5: MARKETING ACTIVITIES DIRECTED AT INFLUENCING CONSUMER

BEHAVIOUR 97
Study unit 11: Communication and persuasion 98
Study unit 12: Market segmentation 110
Study unit 13: Factors that influence consumer loyalty 123
Study unit 14: Building relationships with consumers 138
Study unit 15: Value of e-commerce in consumer behaviour 148
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PREFACE
Dear Student
We have great pleasure in welcoming you to the module, Consumer Behaviour (MNM2605).
We would like you to share our enthusiasm for this field of study, and as a first step we
urge you to read this preface thoroughly. Refer to it as often as you need to, since it will
definitely make studying of this module a lot easier for you.
The field of consumer behaviour is extremely dynamic and challenging. The learning
content and activities contained in this study guide will provide you with opportunities
to explore the latest developments in this field and help you to discover the field of
consumer behaviour as it is practised today.
1. AIM OF THIS MODULE

The aim of this module is to enable you to gain a better insight into, and an understanding
of, the principles of consumer behaviour. It is, therefore, necessary to study the nature
of consumer behaviour; external and group factors that have an impact on consumer
behaviour; internal and individual factors that influence consumer behaviour; consumer
decision-making; and diffusion of innovation, as well as marketing activities directed at
influencing consumer behaviour.
2. LEARNING OUTCOMES
After studying this module, you should be able to do the following:
• explain the nature of consumer behaviour

• explain how to create market value for the consumer
• discuss the market characteristics that influence consumer behaviour
• explain the influence of culture and subculture on consumer behaviour
• discuss the way reference groups and social class influence consumer behaviour
• discuss the influence of personal characteristics, personality and the self-concept on
consumer behaviour
• explain and illustrate the influence of consumer perception and learning on consumer
behaviour
• discuss the implications of motivation on consumer behaviour
• explain how attitudes influence consumer behaviour
• discuss the consumer decision-making process and the role of family or household
decision-making in influencing the consumer
• explain and illustrate the diffusion of innovation and the consumer adoption process
• explain the concept of communication and persuasion in influencing consumer
behaviour
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• discuss the role of market segmentation in consumer behaviour
• explain factors that influence consumer loyalty
• discuss the process that is followed in building relationships with consumers
• explain and illustrate the value of e-commerce in consumer behaviour
3. OVERVIEW OF THIS MODULE

It is important to note that consumers vary and may take on different roles in the buying
decisions in which they participate. To understand their customers, marketers need to
know everything they can about them, for example, what they need and want; how they
perceive marketing messages, such as advertisements and products; how to influence
their attitudes; what motivates them; and how they make decisions about buying and
using products. It is also necessary to study the culture of the members of the target
market and the groups that influence their behaviour. Once the consumer behaviour of
a target market has been studied and analysed, the marketer can proceed to influence
customers in such a way that they have a favourable attitude towards the marketer’s
particular market offering.
This module deals with a wide spectrum of important aspects related to consumer
behaviour, which are divided into the following topics:
Topic 1 determines the nature of consumer behaviour. We focus briefly on the importance
of consumer behaviour, the applications of knowledge of consumer behaviour, and
the nature of consumer behaviour. We also consider the creation of market value for
consumers, which looks at the definition of value as a concept and we explore this concept
by discussing the market value of a product or service and the organisation’s perspective
in terms of measuring value.
Topic 2 deals with external and group factors that influence consumer behaviour. It
analyses market characteristics, the issues relating to culture and subculture, as well as
reference groups and the idea of social class.
Topic 3 focuses on internal and individual factors that influence consumer behaviour,
including personal characteristics, personality, self-concept, perception, learning,
motivation and attitudes of consumers that influence their behaviour.
Topic 4 covers consumer decision-making and diffusion of innovation (ie the distribution
of a new product or service). The consumer decision-making process is examined, and
the diffusion of innovation and the consumer adoption process are explored.
Topic 5 focuses on and highlights marketing activities directed at influencing consumer

behaviour. These activities consist of communication and persuasion, market segmentation,
factors influencing consumer loyalty, building relationships with consumers, and the value
of e-commerce in consumer behaviour.
Please note that the content of this study guide is by no means comprehensive and you
have to read and study the relevant sections of the prescribed book as well.
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The framework of this module on consumer behaviour is given below after section 10
of this preface.
4. STUDY MATERIAL
The study material for this module consists of this study guide, a prescribed book, and
several tutorial letters. The tutorial letters and the study guide will be sent to you during
the course of the year. Please note that the prescribed book is very important because
you will not be able to complete this module successfully without it. In addition to the
prescribed book, you are encouraged to consult other sources, such as those available
at the Unisa library.
Please consult Tutorial Letter 101 for the details of your prescribed book.
5. THE APPROACH TO LEARNING AND TEACHING IN THIS

MODULE
The purpose of this study guide is to enable you to put the theoretical concepts introduced
in the prescribed book into practice, and at the same time provide you with a number of
exercises and questions that will assist you in preparing for the examinations. It is essential
that you work through the study guide so as to improve your chances of performing well
in the examinations. However, it also is essential that you are familiar with the theory as
discussed in the prescribed book. Your prescribed book and the study guide complement
each other. Although the study guide will assist you with the learning process, it will not
equip you adequately for the examinations. You have to include the prescribed book as
part of your study material as well.
5.1 Suggestions on how to approach your studies for this module

Tutorial Letter 101 and the study guide will direct you on how to approach all the learning
material and other resources, and to consider how you may use these to your benefit, for
example, how to make the best use of SMSs, peer collaboration groups, learning centres
and career counselling. As a distance education student, you need to know whom to
contact for academic and administrative matters, and how to manage your time.
In the study guide, we make a clear distinction between the sections of the prescribed
book that you simply have to read, and the sections that you have to study.
• Studying
The sections that have to be studied are clearly indicated and form the basis for assignments
and examinations. To be able to do the activities and assignments for this module, to
achieve the learning outcomes, and to be successful in the examination, you need
a thorough understanding of the content of these sections in the study guide and
the prescribed book. In order to understand the study material properly, you need to
accept responsibility for your studies and realise that learning involves far more than just
(vi)
memorising. You will be expected to show that you understand and are able to apply
the information, not merely memorise it.
• Reading
Some parts of the study guide indicate that you need to read a certain section of the
prescribed book or the study guide. This means that you should take note of the content
of this section, as it provides useful background information or offers another perspective
or gives further examples. It also gives you some context, improves your ability to take
notes and enhances your understanding of the subject matter.
You have to spend at least 120 hours on this module. This includes approximately 40 hours
on reading and studying the study material, 40 hours on activities and assignments and
40 hours on preparation for the examination. We encourage you to follow the proposed
schedule for the allocation of time for the various topics, study units and other activities
supplied in Tutorial Letter 101.
You may wish to read broader than just the study guide and the prescribed book. Do
not simply accept the information you read in the prescribed book or other sources, but
make sure that you critically evaluate the ideas and information that you come across.
Test your understanding of the ideas that you learn about in this module by trying to
apply them in real-life situations.
5.2 I mportance of completing activities, assignments and self-assessment

questions
5.2.1 Activities
You will come across various types of activity in this study guide. They will require you
to do the following:
• reflect on work covered

• complete assessment questions
• do self-assessment
We consider your completion of the activities in the study guide and the assignments
crucial to your successful completion of this module. Firstly, the activities in the study
guide will help reinforce your learning and, secondly, they will give you an idea of the
type of application questions that will be asked in the examination.
5.2.2 Assignments
You will find the assignments for this module in Tutorial Letter 101. The completion of
assignments is essential to achieve the learning outcomes. By completing the assignments,
you will get a feel for the type of questions you can expect in the examination and, in
addition, you will get first-hand feedback from the lecturer. The assignment questions
also give you the opportunity to apply the theory to a case study or a practical situation
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related to your own workplace. We will inform you of the purpose of each assignment
and will let you know which module outcomes will be assessed by the assignment. We
will also provide you with the criteria used for assessing the assignment in order for you
to understand how to approach the answering of specific questions.
Details of the assignments with their associated assessment criteria and the format and
requirements of the examination are provided in Tutorial Letter 101.
5.2.3 Assessment questions

At the end of each section of this study guide, you will find a list of assessment questions
based on the work covered in that section. We advise you to work through these questions
diligently, since they provide extremely useful opportunities to prepare yourself for possible
examination questions. Self-assessment plays a very important role in the mastery of
learning outcomes and you should, therefore, complete the self-assessment activities in
the study guide.
You will find most of the answers to these questions in the study material contained in
the study guide and prescribed book. We believe that you should not be faced with any
surprises when you write the examination, so it is in your own interests to work through
these assessment questions.
To do well in essay questions, you need to structure your answers logically. You have to
use appropriate headings and subheadings and include a bibliography at the end. You
will find guidelines for the technical presentation of assignments in Tutorial Letter 301
MNALLEQ.
5.2.4 Assessment of the module

During the semester you will be assessed on your assignments, and in the examination
at the end of the semester, you will be assessed against transparent assessment criteria
that link directly to the outcomes of the module.
The compulsory assignment mark(s) will count, together with your final assessment,
towards your total mark. Further details of the assessment and examination requirements
of this module are supplied in Tutorial Letter 101.
6. EXAMINATIONS
6.1 Prescribed material

All study material is relevant for the examinations. In addition to understanding the
theoretical principles provided, we expect you to be able to apply these principles to a
practical situation in a given case study or scenario.
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6.2 Format of the examination paper
The duration of the examination is two hours. The format of the examination paper for
this module is as follows:
• The examination paper comprises two sections.

• Section A is compulsory and counts 40 marks. This section will consist of multiple-
choice questions.
• Section B counts 30 marks. You will be given three 15-mark questions, of which you
have to answer any two. The questions may be essay-type questions and/or may have
subsections. The questions may be based on a case study.
The time limitation means that you need to plan your time carefully. Do not waste time on
any one question. If you battle with a particular question, move on to the next question
and come back to the difficult one later on.
7. KEY CONCEPTS IN ASSIGNMENTS AND EXAMINATIONS

When we formulate assignment and examination questions, we word them in such a
way that you will know exactly what is expected of you. For example, we may ask you to
list, describe, illustrate or demonstrate something, compare two things, or construct, relate,
criticise, recommend or design something.
Below is an explanation of the various levels of cognitive thinking that you will be expected
to apply, and the kind of instructions that we will give you with regard to each. This system
is known as Bloom’s taxonomy.
• Knowledge: This is essentially memorisation and the recall of information. At its

simplest, it involves the recall of facts or terminology, such as names, dates and
definitions. It can also involve the recall of principles and generalisations, or ways of
doing things. Outcomes/instructions written at this level will typically use verbs (these
are the words that tell you what you have to do), such as name, list, define, label, select,
state, write, describe, identify and recall.
• Comprehension: This involves making sense of things, rather than just remembering
them. Comprehension usually requires you to translate information into your own
words. Outcomes or instructions written at this level will typically use verbs, such as
convert, illustrate, distinguish, interpret, rewrite, discuss, give examples and summarise.
• Application: This is the use of information and ideas in new situations, such as in
solving problems that have a single or best answer. Outcomes or instructions written
at this level will typically use verbs, such as calculate, demonstrate, construct, compute,
solve, relate, show, use and apply.
• Analysis: This is the examination of information in a systematic manner to identify
the important ideas, the relative hierarchy of those ideas and the relations between
the ideas. Outcomes or instructions written at this level will typically use verbs, such
as analyse, differentiate, categorise, classify, relate, illustrate, outline, compare, contrast,
discriminate, explain and hypothesise.
• Synthesis: This is the construction of something new by combining several pieces of
information to make a coherent whole (such as a plan). Outcomes or instructions written
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at this level will typically use verbs such as plan, adapt, combine, create, compile, compose,
construct, model, revise, design, develop, formulate and organise.
• Evaluation: This involves making judgements about the quality or value of things (with
reference to either internal evidence or external criteria). Outcomes or instructions
written at this level will typically use verbs, such as assess, judge, choose, criticise, rate,
argue, justify, evaluate, decide, recommend and conclude.
In this module, you will be asked to operate on all levels of Bloom’s taxonomy. Please
make sure that you know what is expected of you in each question.
8. USE OF ICONS
The icons used in this study guide are listed below, together with an explanation of what
each one means:
Icon Description
Key concepts. The Key Concepts icon draws your attention to

certain keywords or key concepts in the topic or study unit.
Learning outcomes. The Learning Outcomes icon indicates

which aspects of the particular topic or study units you have to
master. You will need to demonstrate that you have mastered
these aspects.
Study. The Study icon indicates which sections of the prescribed

textbook or the study guide you need to study and internalise.
Read. The Read icon will direct you to read certain sections of
the prescribed textbook for background information.
Activity. The Activity icon refers to activities that you must

complete in order to develop a deeper understanding of the
study material.
(x)
icon Description
assessment. The Assessment icon means that you will be

required to test your knowledge, understanding and application
of the material you have just studied.
feedback. The Feedback icon indicates that you will receive

feedback on your answers to the self-assessment activities.
Time-out. The Time-out icon indicates that you should take a

rest because you have reached the end of a study unit or topic.
reflection. The Reflection icon requires you to reflect on the

important issues or problems dealt with in the study unit.
Summary. The Summary icon requires you to summarise the

important topics in this study unit.
9. IMPORTANT ADVICE
Keep the following tips in mind as you study so as to increase your chances of completing
this module successfully:
• Study the prescribed study material conscientiously according to the guidelines

provided.
• Discuss the subject matter with colleagues and specialists.
• Do the activities.
• Prepare in time for the submission of compulsory assignments and do non-compulsory
assignments as well.
• Apply your knowledge in practice.
• Prepare properly for the examinations.
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10. WHAT YOU CAN EXPECT FROM UNISA
You can expect us to do the following:
• Provide you with up-to-date and relevant study material that is regularly compared
with, and benchmarked against, similar local and international programmes.
• Keep the study material in line with the needs of industry and commerce by consulting
regularly with the profession, and with industry leaders and government officials.
• Assist you by giving you the opportunity to develop competencies and skills at a
certain level. You will be assessed according to the level descriptors of the National
Qualifications Framework.
• Support you whenever you require assistance. You may contact your lecturers by
making an appointment to see them in person, by telephone, via e-mail or the internet.
We understand that studying by means of distance learning is more challenging than
attending a residential university.
• Provide you with clear indications of what we expect from you in terms of your
assessment.
Provide prompt feedback on assignments. We will return your assignments and our
feedback within three weeks of the due date if you have submitted the assignment
before the due date.
We hope you will enjoy your studies! We are certainly looking forward to being your
partners in this endeavour.
Best wishes
Your lecturers for Consumer Behaviour
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MODULE FRAMEWORK
TOPICS STUDY UNITS
1. Nature of consumer behaviour

1. IINTRODUCTION TO CONSUMER
BEHAVIOUR 2. C
reating market value for
consumers
3. Market characteristics
2. EXTERNAL AND GROUP FACTORS
4. Culture and subculture
THAT INFLUENCE CONSUMER
BEHAVIOUR 5. R
eference groups and social
class
6. P
ersonal characteristics, per
sonality and self-concept of
consumers
3. INTERNAL AND INDIVIDUAL
FACTORS THAT INFLUENCE 7. C
onsumer perception and
CONSUMER BEHAVIOUR learning
8. C
onsumer motivation and
attitudes
9. C
onsumer decision-making
process and family or
4. CONSUMER DECISION-MAKING household decisionmaking
AND DIFFUSION OF INNOVATION
10. Diffusion of innovation and the
consumer adoption process
11. Communication and persuasion
12. Market segmentation
13. Factors that influence consumer

5. MARKETING ACTIVITIES DIRECTED loyalty
AT INFLUENCING CONSUMER
BEHAVIOUR 14. Building relationships with
consumers
15. Value of e-commerce in

consumer behaviour
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Topic 1
INTRODUCTION TO CONSUMER
BEHAVIOUR
AIM
To help you develop an understanding of the nature of consumer behaviour and of ways
to create market value for the consumer
Learning outcomes
On completion of this topic, you should be able to

• demonstrate an understanding of the nature of consumer behaviour
• explain how market value can be created for the consumer
topic CONTENT
Study unit 1: Nature of consumer behaviour
Study unit 2: Creating market value for consumers
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Study unit 1
NATURE OF CONSUMER BEHAVIOUR
INTRODUCTION
Companies compete for the consumer’s patronage. Even though their products may be
virtually the same, organisations will try to use their understanding of consumer motives
and reasons for buying to offer consumers more value. In this way, each organisation tries
to distinguish itself from its competitors, based on some benefit(s) that its products or
services offer to consumers. For a benefit to be meaningful, the consumer must perceive
it as meaningful. This involves the concept of consumer value. Accordingly, a company
tries to convince its consumers that they will get superior value from its products. To do
this it is important that marketers have a thorough understanding of consumer behaviour.
There are various definitions of consumer behaviour. In simple terms, we can define
consumer behaviour as a subject, as the study of how individuals decide to spend their
available resources (time, money, effort) on consumption-related items. It includes the
study of what they buy, why they buy it, when they buy it, where they buy it, how often
they buy it and how frequently they use it.
From this definition, it should be clear that understanding consumer behaviour is not a
simple matter. Buyers may state their needs and wants, but act otherwise. For example,
they may respond to influences that change their mind at the last minute. It is important
for marketers to understand their target consumers’ wants, perceptions, and shopping and
buying behaviour in order to know how to communicate with their particular consumers,
and target their market offering (eg product or service) better at specific consumers.
2
Consider the following example:
Toothpaste buying behaviour
When trying to understand their market, researchers of consumer behaviour want to

know and find answers to the following questions about the behaviour of consumers
who buy toothpaste:
• What type of toothpaste do consumers buy – gel, striped, in a tube, or with a pump?
• What brand do they prefer – a national brand, a private brand or a generic brand?
• Why do they buy it – to prevent tooth decay, to remove stains, to use as a mouthwash,
or to have fresh breath?
• Where do they buy it – in a supermarket, pharmacy or convenience store?
• How often do they use it – when they wake up, after each meal, when they go to bed
or any combination of these?
• How often do they buy it – weekly, fortnightly, or monthly?
In the business world, consumer behaviour is about human response, that is, how and
why people buy and use products, and how they react to prices, advertising and other
marketing communication. It is, therefore, important that marketers have a working
knowledge of consumer behaviour, as marketing serves as the link between consumers
and the organisation.
OVERVIEW OF THIS STUDY UNIT

This study unit explains the nature of consumer behaviour and its role in marketing.
Consider the following questions: How do you spend your money? What type of value do
you place in the products that you buy? Do you patronise the same shops as your friends
and family? These are all questions that are aimed at understanding why consumers buy
certain products and how they intend to use them. As marketers, we try to understand
consumer behaviour in order to position our organisation and our products or service
effectively, which subsequently enables us to cater effectively for our customers’ specific
needs. Satisfying customers’ needs is our main goal, and creating loyalty and repeat
business is what we attempt to achieve, as a result these factors lead to sustainable and
profitable business practices.
You will need approximately four hours to work through this study unit. Make sure
that you understand the topics covered. Although this study unit is mainly for reading
purposes, it is important to understand the contents as it forms the basis of your studies
in consumer behaviour.
3 MNM2605/1
Introduction
Overview of this study unit
Key concepts
1.1 Defining consumer behaviour
1.2 Importance of consumer behaviour
1.3 The applications of knowledge of consumer behaviour
1.4 Role of consumer behaviour in a marketing strategy
1.5 Nature of consumer behaviour
1.6 Assessment
1.7 Reflection
1.8 Summary
The layout of this study unit is as follows:
Introduction
to consumer Defining consumer behaviour
behaviour
Importance of consumer behaviour
The applications of knowledge of consumer behaviour
Role of consumer behaviour in the marketing strategy
Nature of consumer behaviour
4
Key concepts
After working through this study unit, you should be able to explain/define the following
concepts:
• consumer behaviour
• marketing concept
• marketing strategy
• consumer orientation
• profit orientation
• organisational integration
• social marketing
• purchasing decision
1.1 Defining consumer behaviour
Study this topic in the prescribed book.
You will note that the definition of consumer behaviour includes a variety of activities
and a number of roles that people can fulfil (see Figure 1.1 in your prescribed book). The
term consumer behaviour includes the following dimensions:
• Types of consumer. Here a distinction is made between household and business

consumers.
• The three consumer roles. To conclude a business transaction, three consumer roles are
required, namely that of the buyer, the payer and the user.
• Physical and mental activities. Physical activities include visiting a store and discussing
a product with a salesperson, whilst mental activities include the consumer assessing
the compatibility of the product with his or her needs.
In the next section, we focus on the importance of consumer behaviour and its influence
on the success of the organisation.
1.2 Importance of consumer behaviour
Take note of the reasons why understanding consumer behaviour plays an important role
in the success of an organisation. These three reasons include realising that the purpose
of the business is based on consumer satisfaction; carrying out the marketing concept;
and achieving a consumer focus (see Figure 1.3 in the prescribed book).
5 MNM2605/1
The following section contains a discussion of the application of consumer behaviour to
aspects such as an organisation’s marketing strategy and an individual’s understanding
of his or her environment.
1.3 The applications of knowledge of consumer

behaviour
Consumer behaviour plays a vital role in marketing management, and it also helps
individuals to understand themselves and their environment better. Make sure that
after studying this section of the work you understand the value of knowledge about
consumer behaviour in connection with successfully implementing certain marketing
concepts. Factors such as the organisation’s marketing strategy, social marketing and
informed individuals are important in this regard.
• An organisation’s marketing strategy is based on certain beliefs about consumer

behaviour, such as why consumers buy certain products, or how an individual’s family
may influence his or her buying behaviour. An organisation that knows more than
its competitors about consumer behaviour has an advantage over them.
• The social marketing strategy of an organisation also requires a sound understanding
of consumer behaviour. For example, before an organisation can launch a socially
responsible campaign, such as sponsoring an underprivileged soccer team, it needs
to understand how this will influence consumer perceptions of the organisation.
• Informed individuals can develop a sound knowledge of consumer behaviour, and can
help to enhance individuals’ understanding of themselves and of their environment.
The next part of the work focuses on the role of consumer behaviour in the formulation
and development of the organisation’s marketing strategy.
6
1.4 R
ole of consumer behaviour in a marketing
strategy
Consumer reaction to an organisation’s strategy will determine the organisation’s success.

This reaction will also help consumers to determine how successful the organisation has
been in fulfilling their needs. As can be seen from Figure 1.5 in the prescribed book, a
marketing strategy comprises many interrelated components, including market analysis,
market segmentation, marketing strategy, and consumer decisions and outcomes. We
are now going to highlight market analysis, market segmentation and marketing strategy
components to reflect on the effect that consumer behaviour has on these components.
1.4.1 Market analysis
A market analysis requires an in-depth understanding of an organisation’s own capabilities,

its competitors’ capabilities, consumer behaviour and the environmental conditions that
exist in the market in which an organisation operates. These aspects can be summarised
as follows:
• As far as its customers are concerned, an organisation needs to have an in-depth

understanding of their behaviour. An organisation can use marketing research to
identify the needs and wants of customers.
• The organisation must also understand its own capabilities, such as its managerial
skills, reputation in the market and financial capabilities.
• An organisation’s competitors must be studied thoroughly in terms of their capabilities
and strategies, in order for the organisation to meet the needs of its customers better
than its competitors.
• The environment in which the organisation operates must also be examined, because
failure to take variables into account, such as the economy and the technological
environment, could lead to the failure of an organisation.
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1.4.2 Market segmentation
It is vitally important for an organisation to divide the total heterogeneous market into
smaller homogenous segments based on similar consumer characteristics. This enables
organisations to understand and cater for the diverse needs of consumers better. Note
the steps in the market segmentation process when you read this section.
1.4.3 The marketing strategy
A marketing strategy is a “tool” that an organisation develops to provide superior consumer

value to its selected target market in an effort to satisfy the consumers’ needs better than
its competitors. To this end, the organisation must combine the product, price, distribution
and communication elements at its disposal to satisfy the needs of the consumers in
its target market. The combination of these elements or 4 Ps (product, price, place and
promotion) is called the marketing mix. These elements can be summarised as follows:
• The product is a set of tangible (ie we can touch, smell or taste them, such as a packaged
product) and intangible (ie we cannot physically touch, smell or taste them, such as
the service delivered/or rendered in a restaurant) attributes.
• The function of the marketing communications or promotion element is to inform,
persuade and remind the market about the organisation or its product or service.
Marketing communication includes: personal selling, advertising, publicity, sales
promotion and public relations.
• The price is the amount of money needed to obtain a product or service.
• The role of the distribution element in the mix is to get the product or service to the
organisation’s target market, because if it is not where the consumer requires it to be,
the organisation will be unable to satisfy the consumer’s needs.
1.4.4 Outcomes
When studying this section, note the different outcomes that are pursued and strived for
by the organisation, the individual and society. The organisation would like to position its
products positively in the mind of the consumer, generate sales and keep their customers
happy. The individual, on the other hand, would like to experience fulfilment and needs
8
satisfaction, whereas society wants to achieve economic growth and encourage people
to buy environmentally friendly products or services.
1.5 Nature of consumer behaviour
The nature of consumer behaviour is summarised in Figure 1.6 in the prescribed book.
When reading this section, note the internal and external influences; market and personal
characteristics; as well as the consumer and his or her decision-making processes. The
theory in this module is organised according to these aspects.
Looking at the above picture, how will your behaviour influence your life and future
purchase decision-making processes?
Activity 1.1
Identify the payer, gatekeeper, influencer, user, decider and buyer in the following
paragraph:
Thabo has recently been selected to join his school’s tennis team. The tennis shoes he
wore to play tennis at home and at the gym are worn out, and he will have to get a new
pair if he is to represent his school in the tennis team. His mother feels that buying an
expensive pair of shoes, such as Nike or Reebok, is unnecessary because he is only a
teenager. She gives Thabo money to buy the shoes. His father takes him shopping and
buys him a pair of shoes for R100.
1Feedback
You would have noticed that Thabo is the user of the tennis shoes. His mother paid for the
shoes (the payer), provided some information and controlled the flow of information to her
family (gatekeeper and influencer), while his father actually took him shopping and bought
the shoes (buyer and decider).
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11.6 ASSESSMENT
1. Define the concept of consumer behaviour.

2. Discuss the nature of consumer behaviour.
3. You want to buy a new car. Discuss the steps involved in your purchasing decision
and relate them practically to buying a car.
4. Explain the role that consumer behaviour plays in marketing strategy.
21.7 REFLECTION
Before you continue to the next study unit, reflect on the following questions:
1. Where do you think you will be able to use the skills you learnt in this study unit in
your professional life?
2. What did you find difficult? Why do you think you found it difficult? Do you understand
it now or do you need more help? What are you going to do about it?
3. What did you find interesting in this study unit? Why did it appeal to you?
4. How long did you take to work through this study unit? Are you still on schedule or
do you need to adjust your study programme?
31.8 SUMMARY
By studying this study unit you would have come to an understanding of

what consumer behaviour is and what implications it has for marketers and
businesses. You should also have become aware of the sheer complexity of the
marketing profession by seeing it as being multidisciplinary and encompassing
a plethora of thought processes and considerations in order to achieve business
success.
In the next study unit we deal with marketers having to create market value for
consumers. This is where we begin to examine the fundamentals of prevailing
superior market values to customers.
10
Study unit 2
CREATING MARKET VALUE FOR CONSUMERS
INTRODUCTION
Can you remember the last time you bought a fairly expensive product? Think of the
thought processes involved in the different steps you took to purchase the product. There
was a lot of consideration and concern about whether you were purchasing the right thing,
whether it was worth the price, and if it would meet your needs or requirements. You
probably took a lot of care and time in weighing up the decision and consulted widely,
especially with your family and/or friends. The fact is that we consider all of these things
in order to determine whether the product will be of value to us.

In study unit 1 we emphasised that marketers need to offer superior value to consumers
to differentiate themselves from their competitors. Think of studying here at Unisa versus
studying at another university: What “value” did you see at Unisa that influenced your
decision to study at this university? In this study unit we look at the concept of “value” in
more detail and break it down into more specific concepts to be able to define exactly
what is meant by value from a consumer point of view.
The focus of this study unit is divided into the following main topics:
• understanding what is meant by value

• investigating the different views of market value
• the process to be followed in measuring value
You will need approximately four hours to work through this study unit. Make sure you
understand the topics covered.
11 MNM2605/1
Introduction
Key concepts
2.1 Definition of value
2.2 Market value of a product or service
2.3 The organisation’s perspective of measuring value
2.4 Assessment
2.5 Reflection
2.6 Summary
Creating
market value Definition of value
for consumers
Market value of a product or service
The organisation's perspective of measuring value
12
Key concepts
concepts:
• market value
• consumer roles
• universal values
• personal values
• performance value
• price value
• credit value
• service value
• personalisation value
• value metrics process
• consumers’ perceived value
• key buying factors
• balanced scorecard
2.1 Definition of value
The definition that you need to focus on is the one related to market value, since we are
dealing with the consumer in this module. Market value concerns the potential to meet
the needs and wants of consumers, which is the key to marketing!
In the next part of the study guide we discuss the market value of a product or service
to the consumer.
2.2 Market value of a product or service
In this section we see that market value has two components, namely the universal values
and the personal values. Universal values are linked to the expectations of the consumer
in terms of the basic needs – things you would expect to get when you purchase a
particular product or service. If you purchase a lawnmower, the universal value for the
person mowing the lawn is that the lawnmower should work and actually cut the grass.
Personal values can be broken down into group-specific personal values (those of the
target market or a specific group) and individual-specific values (those that are there
for the consumer to enjoy as an individual and which give him or her the feeling that
the product has been customised to satisfy their individual needs). In the lawn mower
13 MNM2605/1
example, when the delivery person adjusts the controls and the angle of the handles to
suit the specific consumer he is adding individual-specific value.
We can look at the type of value (universal and personal) required by a consumer across
the three roles that a consumer can perform over time – they are the user, the payer,
or the buyer. For each of these three roles the expected value in terms of universal and
personal values changes. This is shown in Table 2.1 in the prescribed book.
Activity 2.1
Use Table 2.1 in the prescribed book to describe the universal and personal values for a
user and a buyer of a new laptop computer.
2Feedback
The table shows that for a user there are three types of value. The universal value is for
performance value. We would expect the laptop to function well and effectively every time it
is switched on. The personal group value would be social value – we would purchase a brand
or product that is congruent with our friends’ views of what is a correct brand, such as an Acer
or a Sony. This will be explained further in a later unit under reference groups – they help set
norms of behaviour for their members. The personal individual value would be emotional value
– the emotional state that the product induces in us. This could be the feeling of satisfaction
and contentment that the Acer or Sony gives us when we use it. Using it can be such a pleasure
that we get experiential value through its use or consumption.
For a buyer the universal value would be service value – the good advice received at the
Sony retail outlet during the purchase, the nationwide service and parts back-up service after
the purchase, and the Sony brand name that reduces the risk of purchasing a less-respected
brand. The group-specific personal value would be the convenience of having a Sony outlet
at all the major cities in popular shopping malls, and the individual specific personal value
would be personalisation value obtained through the attention and care taken by the Sony
salesperson in ensuring the laptop is best suited to the consumer’s requirements.
Analyse another example, such as purchasing a cell phone. In the prescribed book you will
find a good explanation of the values of a consumer’s three roles when buying a cell phone.
In the following section we focus on the organisation’s perspective in relation to the

measuring of value.
2.3 Organisation’s perspective of measuring value
The important point to note in this section is that there has been a shift from merely
measuring consumer satisfaction, towards measuring consumer value. This is a more
14
comprehensive and broader evaluation, since it incorporates looking at competitors and
their customers, as well as own customers. This is done through the value metrics process.
Make sure you grasp the four steps of the process well and also understand the concepts
relevant to each step, such as consumer value management (CVM), perceived value, key
buying factors, and the balanced scorecard.
This is an important section because one of the strong trends in business currently revolves
around the measurements (or metrics) of marketing to ensure we can determine and
implement effective strategies based on analysis.
42.4 ASSESSMENT
1. Define the term value.

2. Briefly discuss, using practical examples, the different values for the three consumer
roles in purchasing and using a car.
3. Explain how you would measure the value added to a consumer who is using a car
that he or she has recently purchased.
4. Discuss the concept of a balanced scorecard and the core measures used to measure
consumer value.
52.5 REFLECTION
1. Do you understand the different types of value for the different types of consumer
role?
2. Did you learn more about what is meant by value and how it can be measured?
3. How long did it take you to work through this study unit? Are you still on schedule
or do you need to adjust your study programme?
4. What topic did you find interesting in this study unit? Why did it appeal to you? Will
you approach the purchase of products differently now?
62.6 SUMMARY
In this study unit, we began by discussing the meaning of value. We looked at

the market value of a product, and then we discussed the different components
of market value across the three possible consumer roles. We ended the study
unit with a discussion on the organisation’s perspective on measuring value.
In the next study unit you will be introduced to market characteristics that
influence consumer decision-making.
15 MNM2605/1
Topic 2
External and group factors that
influence consumer behaviour
AIM
To help you develop an understanding of external and group factors that influence
consumer behaviour.
To understand these external and group factors it is necessary to gain insight into the
following: the market characteristics that influence consumer behaviour; the culture and
subculture that impact on consumer behaviour; as well as the influence of reference
groups and social class.
Learning outcomes

• demonstrate an understanding of the influence of market characteristics on consumer
behaviour
• explain the influence of culture and subculture on consumer behaviour
• discuss how reference groups and social class influence consumer behaviour
topic CONTENT
Study unit 3: Market characteristics
Study unit 4: Culture and subculture
Study unit 5: Reference groups and social class
16
Study unit 3
MARKET CHARACTERISTICS
INTRODUCTION
Global warming may put many of South Africa’s coastal towns and beachfront properties
at risk of being under water! If you have been paying attention to the mass media, you will
be aware of the growing concern about global warming and the possible consequences
of this phenomenon. The statement at the beginning of this paragraph is an example
of some of the alarming warnings being issued by some sections of the media and the
scientific community. It is feared that global warming is having an effect on water supplies
and temperature levels in South Africa, and that this will subsequently impact on food
crops and land utilisation. This is a very topical example of one of the market variables
that is influencing the behaviour and decision-making of consumers.

Look at Figure 1.6 in the prescribed book, which introduces you to some of the major
market components or characteristics that influence decision-making by consumers
and/or organisations. In this study unit we cover these market characteristics in some
depth. These characteristics are related to the macroenvironmental variables found in
the marketing environment and are external to the organisation. It is therefore important
that the organisation monitor these variables constantly, because they can either pose a
threat to its existence or provide it with an opportunity for growth.
This study unit is divided into the following main topics:
• the influence of demographics on both individuals and households

• the impact of physical, economic, governmental, societal and technological factors
on decision-making
• evolving trends influencing consumer decision-making
17 MNM2605/1
You will need approximately four hours to work through this study unit. Make sure that
you understand the topics that it covers.
Introduction
Key concepts
3.1 Demographical characteristics
3.2 Other market characteristics
3.3 Developing trends that influence consumer behaviour
3.4 Assessment
3.5 Reflection
3.6 Summary
Market Demographical characteristics

characteristics
Other market characteristics
Developing trends that influence consumer behaviour
18
Key concepts
After working through this study unit, you should be able to explain or define the
following concepts:
• demography
• economic factors
• governmental factors
• physical factors
• societal factors
• technological factors
• green marketing
• cause-related marketing
• gender-based marketing
3.1 Demographical characteristics
This section explains some of the statistics related to the study of people and in this
section you are introduced to typical demographical terms, as well as some of the trends
related to them. These terms are important because they are often used in marketing to
describe target markets and provide clarity on the type of consumers in specific targeted
markets. Since you are involved in the field of marketing you need to understand these
terms in relation to consumer behaviour. Take note that they use different terms to
describe individual consumers and households. A household is a group of consumers
living together who may or may not be related. Examples would be a family living together
in a house, or a group of friends living in a commune. The issues discussed under the
general term households are all very topical, as South Africa is a developing country and
these are everyday issues faced by many people in this country.
Activity 3.1
Read a current newspaper of your choice to see if the descriptors used for individuals
and households are discussed.
3Feedback
The issues highlighted under “Individuals” and “Households” in the prescribed material are
often found in newspaper articles and may even be the basis of front-page articles.
Individuals
•• Population: The newspaper may discuss the impact of HIV/Aids on South Africa’s overall
population.
19 MNM2605/1
•• Age distribution: It may mention the high percentage of young people in South Africa,
as it is a developing country, which makes it an attractive consumer market for fashion
marketers.
•• Physical distribution of the population: The influx of many young people to urban areas
may be highlighted.
•• Education and literacy levels: The disappointing number and level of matric learners who
pass maths and science may be noted.
•• Labour market: The efforts at job creation and the unemployment ratios among the youth
are often mentioned in the news.
•• Unemployment and its effect on crime levels: These two issues are often linked in the news.
•• Formal and informal sectors: These are often discussed in relation to job creation.
•• Migrant work: This is often highlighted as government tries to improve the prospects and
rights of migrant workers.
While you are working through the relevant “Household” examples, you will definitely come
across newspaper articles that focus on housing (eg an article on the housing shortage
resulting from the large influx of people into urban areas), water sources, energy supply,
telecommunication, health care, and household income, since these are all relevant issues in
a developing country context.
In the following section we focus on other important market characteristics that influence
consumer behaviour.
3.2 Other market characteristics
In this section we see that the market characteristics correspond to a large extent with
the variables in the macroenvironment. These other market characteristics (economic,
governmental, physical, societal and technological) are visible in our everyday lives, and
the volatility of these variables forms part of what makes a country, such as South Africa,
so interesting. These market factors provide both opportunities and threats to marketers,
and it is important that a marketer is up to date both with what is happening and what
the future trends for these factors will be. The above-mentioned statement relating to
opportunities and threats is important because marketers have to be prepared and plan
for future upcoming trends as and when they happen.
Activity 3.2
After studying the topic for this section in the prescribed book, give a description of what
you think the major issues will be for the other market factors in the next three years.
20
4Feedback
This exercise will help you understand why the marketer has to monitor and respond to market
factors. You have to visualise the trends affecting consumers and identify how they will affect
the marketer in his or her efforts to satisfy consumer needs and achieve a reasonable profit.
Research and scenario planning will guide the marketing team and help them to think clearly
in the occurance of any eventuality. Factors such as the following all have the potential to
affect consumer behaviour:
•• Economic factors. Did you predict a growing economy, a stagnant economy, or a declin-
ing economy (recession)?
•• Governmental factors. This is a very dynamic factor, especially the efforts to foster a
more competitive environment and to promote consumer rights.
•• Physical factors. Did you predict a water shortage, which is a real concern for marketers?
•• Societal factors. Did you see a more open South African society or did you forecast a
more internal view?
•• Technological factors. This one is really difficult, because the rate of change of these fac-
tors is accelerating. Did you predict a palm-held device that combines cell phone, music,
financial, educational and entertainment services and functions? You may even receive
all your study material electronically via your palm-held device! This device is apparently
not too far off!
SABMiller has, according to a recent report, looked at global scenarios with the issues of
restricted water resources and usage in mind. This has resulted in a number of exciting ideas
on reduced water usage in brewing beer, such as a floating brewery on a ship, which could
facilitate entry into new markets.
We are now going to focus on the evolving trends that influence consumer behaviour.
3.3 Developing trends that influence consumer

behaviour
The important point to note in this section is that there has been a marketing response
to the types of issue identified in the previous two sections. Some of these responses
are discussed in this section. Make sure you understand the five marketing responses
and familiarise yourself with the corresponding examples as they are all newsworthy
and important for marketers to keep in mind when planning their marketing strategies.
This is an important section, since these responses are linked to the issue of business
sustainability, which relates to the long-term prospects of a business in a broader context
than merely that of financial measures.
21 MNM2605/1
73.4 ASSESSMENT
1. Explain what is meant by demography.

2. Compare the factors used to describe individuals with those used to describe
households.
3. Discuss the influence of the other market factors on consumer behaviour in South
Africa.
4. Explain the concept of green marketing, and describe the benefits a marketer can
gain from applying it.
5. Describe what is meant by cause-related marketing and how it can be used to build
a win–win situation for the marketer and society.
6. Discuss the effect that the changes in gender roles and sexual preferences have had
on marketing efforts?
83.5 REFLECTION
1. Do you understand the different market factors and their affect on consumer
behaviour?
2. Did you think about the market factors that will impact most on you as a consumer?
3. How long did it take you to work through this study unit? Are you still on schedule
or do you need to adjust your study programme?
4. What topic did you find interesting in this study unit? Why did it appeal to you? Will
you look at products more closely to see if they are using some of the techniques
and approaches described in the prescribed book? Would you pay more for a green
product or a cause-related product?
93.6 SUMMARY
We started this study unit by discussing demography and its use in marketing.
We looked at the other market factors that are important as they significantly
affect the marketing effort, and then we discussed the developing trends
and responses that marketing has already made to ensure relevance and
sustainability.
In the next study unit we investigate culture and its powerful influence on
society in general, but we focus on consumers in particular.
22
Study unit 4
CULTURE AND SUBCULTURE
INTRODUCTION
In the marketing context, culture can be described as the particular way that people in
different countries and regions across the world organise their society, live and behave. It
encompasses language, a system of shared political, economic and social beliefs; values,
norms, morals, customs, rituals, buildings and infrastructure, artefacts, music, art, symbols,
food and drink, leisure activities and many other characteristics of a society that influence
consumer behaviour. Culture is learnt and then passed on from one generation to another
by all the many social institutions and organisations that exist in a society. To get an idea of
what culture is, look at the four images below. Refer to these photographs again once you
have studied the study unit to see whether you view them from a different perspective.

This study unit deals with culture and subculture as part of the external and group factors
that influence consumer behaviour. The first part involves the description of culture and
its dynamic nature. Thereafter the focus is on assisting you to understand the concept of
subculture and the influence of cultural values on society. This study unit also gives detailed
information on the South African core values and the methods used to measure culture.
• the nature of culture, and its influence on consumer behaviour

• South African core values and the measurement of culture
You will need approximately eight hours to work through this study unit. Make sure you
understand the topics it covers.
23 MNM2605/1
Introduction
Key concepts
4.1 Nature of culture
4.2 Dynamic nature of culture
4.3 Subculture
4.4 Cultural values and society
4.5 South African core values
4.6 Measurement of culture
4.7 Assessment
4.8 Reflection
4.9 Summary
Culture and
Nature of culture
subculture
Dynamic nature of culture
Subculture
Cultural values and society
South African core values
Measurement of culture
24
Key concepts
concepts:
• culture
• custom, beliefs and values
• language, symbols and rituals
• enculturation and acculturation
• subculture
• social values
• personal values
• value concept
4.1 Nature of culture
In this section you will notice that culture is an external group factor that influences
consumer and buyer behaviour when making decisions related to products and services
that will fulfil their needs and wants. Culture is everything a person learns and shares with
members of a society, including ideas, norms, morals, values, knowledge, skills, technology,
material objects and behaviour. If you look at it in another way, culture represents a
society’s personality and collective mental coaching. It is part of our conditioning that
we share with other members of our nation, region, or group, but not necessarily with
members of other nations, regions or groups.
You need to take note of the fact that culture cannot be defined in narrow, short and simple
terms. When culture is defined it must be seen in a certain context. From a consumer
behaviour perspective, culture can be defined as the sum total of learnt beliefs, values
and customs that direct the consumer behaviour of members of a particular society
or nation. It is a system of interdependent components that include the activities that
characterise the behaviour of particular communities of people, such as the way they
eat, how they talk, their appearance and their general behavioural patterns, but it also
extends beyond these activities.
We are now going to look at the different aspects of culture.
• Customs, beliefs and values

After studying this part of the work you must be able to distinguish between culture, beliefs
and values. Customs are overt modes of behaviour that constitute culturally approved
or accepted ways of behaving. Customs consist of daily or routine behaviour, which are
usual and acceptable. For example, in South Africa it is customary not to swear and fight
in public, because this kind of behaviour is unacceptable. You have to understand that
beliefs consist of a large number of thought processes or expressed statements that
25 MNM2605/1
reflect a person’s particular knowledge and assessment of something, whereas values
encompass widely held beliefs that affirm what is desirable in a society.
• Needs and culture

It is important to realise that the existence of culture helps members of society to satisfy
their needs, because it gives direction and guidance in the different phases of human
problem solving. Culture provides tried-and-trusted methods to satisfy physiological,
personal and social needs. For example, according to the Tswana culture a man needs to
wear a jacket, as a sign of respect, when going to a funeral. This meets the social needs
of the community and is the “right” thing to do.
• Learning and culture

For a society to embrace culture, the members of a particular society have to be familiar
with its culture, which usually happens as a result of learning that begins at an early stage
of their lives. We acquire learning of culture from our social environment that involves a
set of beliefs, values and customs that are practised among a society. Learning occurs in
three distinct forms namely, formal, informal and technical learning. An example of formal
learning is when parents and adults teach a young boy how to conduct himself around
people. Informal learning happens when a child imitates the behaviour of his school mates,
whereas technical learning is a result of students having been instructed by lecturers on,
for instance, how to conduct themselves during interviews when seeking employment.
• Language, symbols and rituals

To fully appreciate culture, you must acknowledge the role language, symbols and rituals
play. Language forms part of culture in that it contributes to a society by providing a
communication tool that is common and shared by people. For example, the use of
language, such as English, Zulu or Tswana, enables the marketer to distinguish between
the different cultures of the people who speak and understand these languages. A
symbol is anything that represents something in a specific culture: a cross, for example,
symbolises Christianity. The use of rituals in defining a specific culture helps marketers
to design marketing promotions and products that avoid conflict between the marketer
and the people practising the ritual.
In the next section we look at the dynamic nature of culture, because it is important to
realise that culture is not static and changes over time.
4.2 Dynamic nature of culture
It should be noted that culture is continually evolving. As a result the sociocultural

environment should be carefully monitored by the marketer in order to adjust promotion
messages and product development. It is important to realise that cultural values are both
dynamic and permanent. They gain permanence as parents pass them on to their children.
26
Culture is dynamic when certain values change over time. Various factors, such as new
technology, changing values and changing customs contribute to changes in a specific
society. In South Africa, new values such as freedom, democracy, and empowerment
have emerged.
When you study this section in the prescribed book, take special note of the factors
marketers need to consider with regard to the changing nature of culture, enculturation
and acculturation.
Marketing is increasingly a global activity – hence the need to study foreign culture. The
following are examples of marketing and advertising mistakes resulting from ignorance
of foreign culture:
• Coca-Cola had to withdraw its two-litre bottle from the Spanish market after discovering
that it did not fit into the local refrigerators.
• Colgate’s Cue toothpaste caused problems in France because the word “cue” is a crude
term for “backside” in French.
Activity 4.1
After you have studied the above section on the dynamic nature of culture, answer the
following question:
“Marketing is increasingly a global activity – hence the need to study foreign culture.”
Comment on this statement.
5Feedback
You could have referred to issues such as the following:

•• Cultures differ with regard to business agreements; some people base agreements more
on rules of negotiations and legal framework, while others base it on business customs
and moral practices. For example, the Middle East operates on the basis of entrenched
business customs, which differ from the legal framework used in a country such as the
United States (US). Middle Eastern contracts are founded on personal trust rather than
on legal paperwork, while the reverse is the case in the US.
•• In some cultures, such as those in India and the Middle East, friendships and personal
connections become symbols of power, respect and status. In these cultures, people like to
do business with friends, or only once business associates have developed a certain level
of friendship and trust. In other countries friends are not as important as good business
27 MNM2605/1
allies. There business is conducted on a more impersonal basis, according to the mutual
benefit the two parties expect.
•• As with friendship, getting to know one another prior to conducting business is a practice
followed in many cultures. The Japanese tea ceremony is a good example of this. In the
US, a golf foursome is not uncommon as a means of building relationships in corporate
America. In many other cultures, such as Latin America, Asia and Eastern Europe, estab-
lishing a personal relationship is often a prelude and a prerequisite to doing business
with anyone.
•• Women’s roles in business dealings are perceived differently in different cultures. In the
US, women play a significant role in business dealings. In other countries, such as in the
Middle East, women executives are less likely to be treated as equals, something US busi-
nesses have to be aware of, and in South Africa women are as important as their male
counterparts.
4.3 Subculture
This section of the work focuses on the concept of subculture. You will be expected to
define subculture and discuss its implications for marketing. South African society is
fragmented into many cultural groups and subgroups. The following factors are highlighted
in the prescribed book and must be studied:
• Definition of subculture. A subculture is a distinct cultural group that exists as an

identifiable segment within a larger, more complex society. Examples of subcultures
are different nationalities (South African, European), religions (Christians, Muslims),
language groups, racial groups and geographical regions (Western Cape, Gauteng).
• Different perspectives on the diversity of South African culture. For example, the rainbow
nation metaphor usually suggests strength and richness in the diversity of race groups,
nationalities and many other attributes that contribute in unifying a nation.
• Subculture categorised on the basis of demographics. For example South Africa has a
relatively young population and age is viewed as an important subculture. Marketers
are naturally interested in knowing what products will sell well in the youth market
and how the youth spends its income.
• Subculture on the basis of geographic region. For example, people living in Cape Town
are characteristically fond of deep-sea diving, surfing, seafood and wine, whereas
people in the Eastern Cape will spend their income on basic food and improving
subsistence farming in their province.
The image below represents a subculture that revolves around street trends for alternative
teenagers:
28
In developing advertising messages, for example, the marketer needs to understand the
different cultures in order to interpret the use of symbols correctly, and to avoid portraying
unacceptable behavioural patterns. Effective communication can take place only if the
theme of the advertising message reflects the cultural norms, values and symbols of the
cultural group at which it is directed.
4.4 Cultural values and society
You need to note that social institutions, such as the family, educational institutions, places
of worship and the mass media make the sharing of culture a reality. For example, Unisa
is an educational institution where the sharing of culture is possible. The use of mass
media also makes it possible for different youth groups to share their experiences, as in
the case of magazines such as Y!magazine.
In the next section you have to focus on the following important elements of cultural
values and society:
• Distinction between individualism and collectivism

This dimension of culture has an influence on the way societies behave and what they
buy. In individualistic societies, advertising, for example, usually emphasises individualism,
while in collectivist societies, the group factor is more important in the advertisement.
• Social values
It is essential that you understand that social values are deep-seated motivations instilled
by culture. People in a society are more inclined to stick to their values rather than follow
other’s opinions, which can easily be influenced by current debates. To fully grasp this
part of the work, you have to understand a number of key concepts that relate to social
values, which you have to study in your prescribed book. The marketing implications of
social values can, for example, be a consumer who purchases a pair of expensive Nike
sneakers to express his outgoing personality or social status in society.
29 MNM2605/1
• Personal values
You need to note that personal values are the underlying determinant of consumer
attitudes and consumer behaviour. For example, if the consumer’s personal values revolve
around being a free spirit and having an outgoing personality, the type of products and
services he or she purchases will reflect this.
• Value concept in marketing

You need to grasp the idea that, in the context of marketing, the value concept refers to
people and objects. This relates to the values that people hold as a society and the values
that the object or brand represent. Values strongly influence consumer behaviour, since
they influences choice. Consumers tend to buy products that are personally relevant or
valuable to their self-concept.
4.5 South African core values
In this section you have to note that the identification of core values in South Africa is
an extremely difficult task because of a number of factors. One such factor is that it is a
diverse country consisting of a variety of subcultures, such as bikers, sport fans, church
denominations, the Y-generation, and so on. These subcultures individually interpret and
respond to society’s basic beliefs and values in their own specific way.
4.6 Measurement of culture
In this section, you have to understand the various methods that are applied to measure
culture. According to the prescribed book, there are three methods which are commonly
used by marketers to find out more about the culture and values of a society and, in
particular, the consumers in that society. The three methods for measuring culture are
content analysis, consumer fieldwork and social values measurement.
104.7 Assessment
1. Explain the nature of culture by highlighting customs, beliefs and values.

2. Explain the dynamic nature of culture.
3. What are the implications of subculture in South Africa?
4. Explain the following concepts that are associated with culture:
30
 individualism and collectivism
 social values
 personal values
 value concept
11 4.8 REFLECTION
12 4.9 SUMMARY
This study unit began with a focus on the nature of culture, which involves the
sum total of learnt beliefs, values and customs that influence and direct the
consumer behaviour of members of a particular society. When studying the
nature of culture make sure that you understand the key elements of culture
as mentioned in section 4.1 above. You also have to understand the dynamic
nature of culture as it is not a static phenomenon. In this study unit we examined
the concept of subculture and cultural values and their influence on society. In
the last section of this study unit we looked at the South African core values
and the measurement of culture. You should be able explain the implications
of culture and its influence on marketing decisions.
In the next study unit we look at the influence of reference groups and social
class in the consumer behaviour. This unit relates to culture in as far as reference
groups and social class all form part of the external and group factors that
influence consumer behaviour.
31 MNM2605/1
Study unit 5
REFERENCE GROUPS AND SOCIAL CLASS
INTRODUCTION
Zack leads a secret life. During the week, he is a straight-laced stock analyst for a major
investment firm. The weekend is another story. Come Friday evening, it’s off with the
Brooks Brothers suit and on with the black leather, as he trades his BMW for his treasured
Harley-Davidson motorcycle. A dedicated member of HOG (Harley Owners’ Group), Zack
belongs to the faction or a group of Harley riders known as RUBS (rich urban bikers).
Everyone in his group wears expensive leather vests with Harley insignias and owns
customised Low Riders. Just this week, Zack finally got his new Harley belt buckle that
his fellow riders had pointed out to him in the Hog Tails magazine – now he won’t have
to take any more ribbing from them about his old “wimpy” belt.
Zack has spent a fortune on his bike and on outfitting himself to be like the rest of the
group. But it is worth it. Zack feels a real sense of brotherhood with his fellow RUBS. The
group rides together in two-column formation to bike rallies, which sometimes attract
up to 300 000 cycle enthusiasts. What a sense of power he feels when they’re all cruising
together – it’s them against the world!
From the above scenario we can infer that Zack is influenced by different reference groups,
for example, the work group and the motorcycle group. As a result both of these groups
influence his behaviour and his purchasing decisions.

As can be seen from the title of the study unit, it deals with the topic of reference groups
and social class. In basic terms, reference groups refer to the people that you are in contact
with and who can influence your purchasing decisions. This study unit deals with the
nature of these reference groups and the types of reference group that consumers can
belong to. It also reviews the determinants of reference group influence. Social class is also
an important aspect that is dealt with in this study unit. Social class in the South African
32
context is also discussed and the ways in which you can use both reference groups and
social class in marketing are explored.
The focus of this study unit is divided into the following main topics:
• the different reference groups and how they influence individual decision-making
• social class and changes in the South African social structure
You will need approximately eight hours to work through this study unit. Make sure that
you understand the topics covered.
Introduction
Key concepts
5.1 Nature of reference groups
5.2 Types of reference group
5.3 Determinants of reference group influence
5.4 Social class
5.5 BMR research on changes in the South African social class structure
5.6 Assessment
5.7 Reflection
5.8 Summary
Reference
Nature of reference groups
groups
Types of reference group
Determinants of reference group influence
Social class BMR research on changes in South African social class

structure
33 MNM2605/1
Key concepts
concepts:
• reference groups
• formal and informal reference groups
• primary and secondary reference groups
• membership and non-membership reference groups
• aspirational reference groups
• dissociative groups
• social class
5.1 Nature of reference groups
When studying this section, take note that individuals may belong to many types of group.
A group consists of two or more people who interact with one another to accomplish
the same goal. Examples include: families, religious groups, close personal friends, co-
workers, members of an organisation, leisure and hobby groups, and neighbours. Any
of these groups may become reference groups.
5.2 Types of reference group
In this section, you will see that a reference group involves one or more persons that a
consumer uses as a basis for comparison or “point of reference” in forming responses and
performing behaviours. In all reference groups, there are distinctive norms of behaviour
and members are expected to conform to these norms in order to avoid being sanctioned.
There are several types of reference group, namely:
Formal reference groups. A formal reference group could be the people

who work with you or the people who you with are in your dance class.
34
Informal reference groups. An informal reference group could be your
family and friends.
Primary reference groups. A primary reference group could be people

in the same class at school or university, and with whom you have
contact on a daily basis.
Secondary reference groups. A secondary reference group could be a

group in another country with whom you do not have face-to-face
contact, but which still exerts an influence on your buying behaviour.
Membership and non-membership reference groups. An example

of membership would be members of a church, while a non-
membership reference group would not necessarily be members
of a particular church but people who still model their behaviour
on that of the members of the church.
Aspirational reference groups. These are groups that people aspire

to belong to. You may, for example, want to belong to the group of
graduates from Unisa who are also future professionals.
Dissociative reference groups. These are groups that you avoid or

reject. An example could be smokers if you are a non-smoker.
Consumers generally associate with certain reference groups for the following three
reasons:
• Information (informational influence). Consumers often accept the opinions of group

members as credible, especially when it is difficult to assess product or brand
characteristics by observation. A group can, for example, dispense useful information
on the use of the Apple iPhone.
• Reward and punishment (normative and utilitarian influence). When the consumer fulfils
group expectations, he or she may receive a reward, but if he or she transgresses the
rules of the reference group, the particular person can be sanctioned and punished.
• Identification influence (value-expressive influence). The consumer buys something
because it helps him or her to be like somebody else (a role model).
35 MNM2605/1
It is important in this section that you understand the different types of reference group.
You need to be able to discuss them in detail.
5.3 Determinants of reference group influence
This section of the study unit focuses on some of the determinants of reference group
influence.
• Group influence is strongest when the use of a product, for example a Nokia cell
phone, is clearly visible to the group and the majority of the members use it to, for
example, communicate or play games.
• Reference groups have a strong influence on the ownership of certain products, for
example owning designer clothes, such as Gucci or Lacoste, but have much less effect
on necessities, such as stoves or washing machines.
• The more committed a person is to a group, the more he or she will conform to the
group norms by, for example, buying products or using services that are acceptable
to the group and which meet its expectations.
• The more relevant a particular activity is to the group’s functioning, the stronger the
pressure will be to conform to the group norms concerning that particular activity.
An example is watching a sports event with the group and wearing similar clothes to
the event.
Reference group influence is often used in advertising by using a well-known person

with whom people can identify, and this association persuades the consumer group to
use the specific product. You can see examples of such advertising below. The use of
reference groups in advertising is discussed in more detail in the relevant section of the
prescribed book.
We shall now consider social class and its influence on consumer buying behaviour.
36
5.4 Social class
The purpose of this section is to highlight the importance of social class in consumer
buying behaviour. Social classes are groups that enjoy more or less the same prestige
and status in society. Accordingly, individual consumer behaviour is influenced by social
class. The marketer knows that most consumers aspire to membership of a higher social
class. His or her marketing message, therefore, implies that by buying a specific product
the consumer may attain membership to a higher social class.
Every country has a different social class structure. South Africa represents a social class
structure that is more or less triangular shaped (see Figures 5.2 and 5.3 in the prescribed
book), with a limited number of people in the upper class, more in the middle class and
the majority in the lower-class category.
One of the ways that is generally used internationally and in South Africa to describe
social class and to segment consumer markets is the Living Standards Measure (LSM).
Take note that LSMs are based on the standard of living of the population and make
use of various criteria for this purpose. The South African population is currently ranked
according to 10 LSMs. This ranking is based on the measurement of certain criteria and
characteristics of the population and starts with LSM 1, as the lowest category, and ends
with LSM 10 as the highest category.
Visit www.saarf.co.za and click on the SAARF LSM link on the left hand panel for more
information on LSM groups in South Africa.
When you study the relevant section in the prescribed book, also note the marketing
implications of social class. We are now going to look at some trends in consumer behaviour.
Do you want to know what your LSM is?
Visit http://www.eighty20.co.za/databases/show_db.cgi?db=fulllsmcalculator and tick

the appropriate items in your household to see what your LSM is.
37 MNM2605/1
We are now going to look at some trends in consumer behaviour.
5.5 BMR research on changes in South African class

structure
Study this section in the prescribed book.
The Bureau of Market Research (BMR) at Unisa conducted a

study of the changes occurring in the South African social
environment and reported certain dramatic changes in our
social class structure as depicted in Table 5.1 in the prescribed
book. Also work through the changes in the social structure of
the South African race groups. After studying this section you
should be able to understand the changes in the social structure
of South Africa, and the implications of these changes on the
marketing of products and services by marketers.
13 5.6 Assessment
1. Define reference groups and briefly explain their place in consumer buying behaviour.
2. You are appointed as the marketing manager for a new expensive handbag brand.
How would you take reference groups into account when marketing the product?
3. Differentiate between the different types of reference group. Is it possible for one
consumer to belong to multiple reference groups? Explain your answer by using
practical examples.
4. Explain what social class is and how it can be used to determine consumer buying
behaviour.
5. What are the implications of social class for a South African marketer who wants
to open a new supermarket in a rural area?
14 5.7 Reflection
1. Where do you think you will be able to use the skills you have learnt in this study
unit in your professional life?
3. What did you find interesting in this study unit? Why?
38
155.8 SUMMARY
We started this study unit by looking at the nature of reference groups and the
different types of reference group. These reference groups clearly influence
customer buying behaviour in some way or another. It is important for all
marketers to understand reference groups in order to market their product
effectively. Social class was also discussed in depth as this too has a major
influence on buying behaviour. The study unit concluded by reviewing the
South African social class structures and indicating the changes that have taken
place over the last few years, and it is important to take these into account
when planning your marketing endeavour.
In the next study unit, we look at internal and individual factors, which deal
with personal characteristics, personality and self-concept, which all influence
consumer behaviour.
39 MNM2605/1
Topic 3
Internal and individual factors
that influence consumer
behaviour
AIM
To help you develop an understanding of the internal and individual factors influencing
consumer behaviour.
To understand these internal factors, it is necessary to gain insight into factors such as
personal characteristics, personality and self-concept, perception and learning, as well
as the motivation and attitudes of consumers that influence their behaviour.
Learning outcomes

• discuss the influence of personal characteristics, personality and the self-concept on
consumer behaviour
• explain and illustrate the influence of consumer perception and learning on consumer
behaviour
• discuss the implications of motivation and attitude for consumer behaviour
topic CONTENT
Study unit 6: Personal characteristics, personality and self-concept of consumers
Study unit 7: Consumer perception and learning
Study unit 8: Consumer motivation and attitudes
40
Study unit 6
PERSONAL CHARACTERISTICS, PERSONALITY AND
SELF-CONCEPT OF CONSUMERS
INTRODUCTION
Personal characteristics in the marketing context include the age, race and gender of
individual consumers, but they also form part of “group traits” as they are shared by,
and describe, groups of people. For marketers, the study of personality entails the
identification of consistent need levels and behavioural patterns that individuals follow
to satisfy their needs and wants. The marketers of Apple iPhone have done extensive
research into the generation Y market, and their marketing campaigns are designed to
appeal to individuals with similar personalities in this group. You will get an idea of what
personal characteristics and personality are by looking at the pictures below. Have a look
at them again once you have studied this study unit to establish whether you see them
in a different perspective.

This study unit deals with personal characteristics, personality and self-concept as they
relate to internal and individual factors that influence consumer behaviour. When marketers
consider a new product they have to ask: Who is the consumer? Why would he or she
purchase the product? A number of factors influence consumer decision-making on
whether or not to buy a specific product. In the previous study units we looked at the
external factors that influence consumer behaviour. In this study unit we look at the
consumer’s personal characteristics that have an influence on decision-making and the
marketing of products. These characteristics are categorised into two groups: one that
the consumer cannot control (age, race and gender) and the other group that are the
specific individual characteristics of an individual, such as personality and self-concept.
41 MNM2605/1
This study unit is broken down into the following main topics:
• personal characteristics and how they influence consumer decisions

• the concepts of personality and self-concept and why it is critical to take these elements
into consideration when developing a new product
Introduction
Key concepts
6.1 Race
6.2 Gender
6.3 Age
6.4 Nature of personality
6.5 Characteristics of personality
6.6 Personality theories
6.7 Influence of personality on lifestyle
6.8 Value of personality to marketers
6.9 Self and self-concept
6.10 Assessment
6.11 Reflection
6.12 Summary
42
Personal
Race
characteristics
Gender
Age
Personality
and Nature of personality
self-concept
Characteristics of personality
Personality theories
Influence of personality on lifestyle
Value of personality to marketers
Self and self-concept
Key concepts
concepts:
• personal characteristics and three consumer roles

• race and marketing communications
• Living Standards Measurement (LSM)
• gender identity
• changing role of men and women
• importance of age to marketers
• nature of personality
• characteristics of personality
• Gestalt theory
• trait theory
• neo-Freudian theory
• self-concept
43 MNM2605/1
6.1 Race
You should take special note of the definition of race and the racial groups in South Africa
when studying this section. Make sure you are able to distinguish between the concept
of ethnic identity and that of race by referring to the example in the prescribed book. In
this regard you should be able to give various examples of products and services that are
targeted at different races. Most companies that manufacture hair, skin and other beauty
care products, such as Revlon and Amka, group market their products by focusing on the
differences between the needs and wants of different racial groups instead of using race
as a discriminating factor. As discussed in the previous study unit, the SAARF Universal
LSM has developed a tool called the Living Standards Measurement (LSM) for assisting
marketers in South Africa to deal with the issue of race. Refer to Table 6.2 and the further
sections in the prescribed book, which explain how the South African market has been
segmented without using income as a variable. It also gives a basic explanation of the
different LSMs.
The section that follows looks at gender as one of the personal characteristics of consumers.
6.2 Gender
In this section, the terms gender and sex are used interchangeably to refer to whether a
person is biologically male or female. This is a very important trait to marketers, since
there are significant differences between men and women and their consumption
patterns. As illustrated in Table 6.3 of the prescribed book, there is a wide variety of
product categories that illustrate how men and women differ with regard to their tastes
and consumption patterns.
44
There are two major factors that impact on products and that marketers must take into
consideration when selling their products. The first is the impact of gender on the products
and the second is the changing roles of men and women in the use of various products
and services. Some South African electronics retailers, such as Incredible Connection, are
making it their mission to recruit more female store managers and employees to make
female consumers feel more at ease.
Pay attention to the changing role of women and the four female market segments,
namely, traditional housewife, trapped housewife, trapped working woman and career
working woman, which are discussed in the prescribed book. There has also been a
change in the traditional role of men with regard to the concept of the “new” man, who
is also responsible for certain household duties and grocery shopping for the family unit.
In the next section, we look at age as a personal characteristic that has to be considered
by marketers and other decision makers in an organisation when marketing a product
or service.
6.3 Age
Our taste in food, clothes, furniture and recreation is often related to our age. Adults
experience certain transformations as they go through life and their behaviour changes as
they mature. Marketers should consider critical life events or transitions, such as marriage,
child birth, illness, relocation, divorce, career change, and death of a spouse or partner,
as these circumstances give rise to new needs.
The key point that you need to understand in this section is that marketers must understand
exactly what they refer to when they discuss the concept of age. The definition of age
has to take chronological age, biological age and psychological age into consideration.
The impact of generation X and generation Y on marketing is also significant and the
differences between these generations should be studied.
45 MNM2605/1
Activity 6.1
Listed below is a series of statements used in a survey on consumer attitude. Estimate

what percentage of married men and women correlates with each statement and write
down your answer:
Statement % of consumers
agreeing
% men % women
1. A store’s brand is usually better than a brand

advertised nationwide.
2. I went fishing at least once in the past 12 months.
3. I am a home body.
4. Information from advertising helps me to make

better buying decisions.
5. I like to pay cash for everything I buy.
6. A woman’s place is in the home.
7. I like herbs and spices.
8. The father should be boss in the house.
9. You have to use disinfectants to get things really

clean.
10. I believe beings from other planets have visited the

earth.
6Feedback
The following answers were the result of similar questions in a survey, which formed part of
a lifestyle study in the US:
1 M 55% W 57% 6 M 26% W 20%

2 M 39% W 24% 7 M 68% W 75%
3 M 63% W 68% 8 M 49% W 28%
4 M 53% W 56% 9 M 64% W 65%
5 M 57% W 57% 10 M 41% W 39%
The implications of the results of the above survey are that when marketing messages are
created the marketers have to decide whether they are aimed at men or women.
46
Sections 6.4 to 6.9 look at personality and self-concept and their influence on consumer
behaviour. Many segmentation strategies can be grouped into these four categories:
• Geographic and geo-demographic. Region, climate and population density; for example,
SABMiller can decide to segment its market by using a combination of variables, such
as region (Mpumalanga and Gauteng), for its main distribution areas, while using age
to classify and segment its market (no under 18s allowed to consume their product).
• Demographic. Age, sex, education, occupation, religion, race, nationality, family size
and family cycle
• Behavioural attitudes. Knowledge benefits the use of status, usage rates, loyalty status,
readiness to buy and occasions.
• Psychographic. Personality and lifestyle; Clover-Danone, for example, segment its
market by aiming its yoghurt at health-conscious consumers.
Personality traits are classified as a psychographic segmentation strategy and this factor
is explored in the remainder of this section.
6.4 Nature of personality
The purpose of this section is to highlight and discuss the definitions of personality given
by various sources. As you will see in the rest of this study unit, the varying elements of
personality can be easily used or controlled to present radically different products. You
will also notice how marketers can use each of the responses to position their products
strategically, as well as to differentiate between them so that they appeal to different
personalities.
Personality comprises those inner psychological characteristics that both determine and
reflect the way a person responds to his or her environment. It is also described as an
individual’s consistency in coping with his or her environment. For a more comprehensive
definition, refer to the prescribed book. Examples of personality traits include confidence,
dominance, autonomy, deference, sociability, defensiveness, and adaptability. After
studying this part of the work you should be able to give a detailed definition of the
concept of personality.
In the next section we focus on the characteristics of personality.
47 MNM2605/1
6.5 Characteristics of personality
When studying personality, four characteristics are of vital importance:
• Personality reflects individual differences.

• Personality is consistent and enduring.
• Personality is conceived as a complete actualisation of oneself in an environment.
• Personality can change.
You should be able to understand and discuss these characteristics of personality.
The next section focuses on a number of personality theories that have been developed,
based on certain characteristics and varying traits.
6.6 Personality theories
Figure 6.1 Personality theories
personality
theories
Freud’s psycho-
Neo-Freudian theory Trait theory Gestalt theory
analytic theory
Unconscious motives Personality is Personality is

Social relationships
and repressed needs composed of a set of an outcome of
are fundamental
resulting in a non- traits described by introducing a
to the formation of
empirical approach the general response person to a total
personality
to personality to predispositions environment
Figure 6.1 above summarises four well-known personality theories that are used in the
study of consumer behaviour. For a more comprehensive discussion of these theories,
study your prescribed book. Your ability to discuss and give practical examples of these
theories is very important in this part of the work.
48
In the following section we look at the influence of personality on lifestyle. For example,
Freud’s psychoanalytic theory suggests that using a particular product, for instance
expensive clothes, such as Armani brand jeans, enhances one’s self confidence.
6.7 Influence of personality on lifestyle
Over the years marketers have found it difficult to segment the market using personality,
which is why the focus has now shifted to lifestyle. Lifestyle is defined as the way people
live and interact within the environment or simply a person’s way of being and living in
the world. It is also described as a person’s pattern of living in the world as expressed
through activities, interests and opinions. For example, if a consumer purchases a BMW
car, it implies that the lifestyle of the particular consumer will automatically change in
terms of self-confidence and the manner in which he conducts him- or herself in relation
to colleagues and friends. After having studied this part of the work you should be able
to explain the influence of personality on lifestyle.
6.8 Value of personality to marketers
The final main element we consider under personality is the value of personality to
marketers. Marketers are of the opinion that personalities do influence the types and
brands of purchased goods and services consumers select. However, marketers face
various challenges when trying to segment the market based on these factors, hence
the need to overcome these challenges.
When studying this section it is important to note that the identification of personality
variables, which appear to be linked logically to product usage, is likely to improve the
marketer’s ability to segment the markets. It will subsequently enable them to design
49 MNM2605/1
promotional strategies that will appeal to the personality characteristics of existing
target markets. Look at Table 10.1 of the prescribed book as well in order to form a better
understanding of inner- and outer-directed personality appeals.
In the next section we discuss the self and self-concept.
6.9 Self and self-concept
The concept of self-image has strategic implications for marketers. From personal
experience, you would have noticed that personality relates to how a person interacts
or relates to his or her environment. Self-concept deals with the individual’s perception
of him- or herself and is associated with image or personality. Therefore, a consumer
has an image of him- or herself, which refers to the consumer’s attitude towards him- or
herself. Self-concept can be regarded as the totality of the thoughts and feelings of an
individual about him- or herself. For example, a man may feel better about himself in a
social context as a company director as opposed to a ladies’ man.
Table 10.2 in the prescribed book gives the various types of self-concept and the various
dimensions with which to look at them. The concepts of the extended self and the
alternative self should also be thoroughly studied.
Make sure you understand the use and purpose of self-concept and that you are able to
make suggestions on how they should be used to contribute to the branding strategy.
16 6.10 Assessment
1. Discuss your understanding of the three major personal characteristics and the
three consumer roles by giving examples from the South African market.
2. Thandiwe is a qualified chartered accountant and recently married Tebogo, a
journalist, who has been doing freelance work for the past three years. The couple
has decided to have children within the next two years. Explain how their roles will
change when they become parents to their first child.
3. Define the concept of personality.
4. Describe four characteristics of personality.
5. Explain the four personality theories and give examples relating to each.
6. Describe the value of personality to marketers.
7. Define the various types of self-concept and give examples of each.
6.11 Reflection
17
50
186.12 SUMMARY
We started this study unit by looking at the scope of personal characteristics,

personality and self-concept. The three key personal characteristics, namely
age, gender and race were then discussed. The key topics to be studied in the
study unit revolve around the influence of these personal characteristics on
marketing and the useful tool that was developed by the SAARF to segment
markets. It is extremely important that you are able to describe each of the
Living Standards Measurement categories and to make suggestions on how they
can be used by the marketer in product positioning and brand development.
The concepts of personality and self-concept were also explored and their
importance to brand development was discussed. This study unit concluded
by pointing out that you need to think beyond the traditional methods of
market segmentation and consider the importance of personality and personal
characteristics in segmentation, brand development and product positioning.
In the next study unit we will look at perception and learning pertaining to
consumer behaviour towards products and services.
51 MNM2605/1
Study unit 7
CONSUMER PERCEPTION AND LEARNING
INTRODUCTION
In this study unit you have to focus on the two internal and individual factors that
influence consumer or buyer behaviour. The first factor has to do with perception and
can be described as the way that consumers interpret, see or give meaning to the world
around them. The following scenario gives a practical view of perception:
At the opening of the academic year, the Principal and Vice-Chancellor of Unisa gave a
speech. One employee thought it was a good, well-delivered speech, but the person
sitting next to this cheerful person thought the speech was terrible. The difference in
opinion between these two individuals is the result of a difference in their perceptions.
The second factor has to do with learning, which involves the process by which individuals
acquire buying and consumption knowledge and experience, which they apply to future
behaviour. By looking at the four photographs below you will get a visual understanding
of what perception and learning entail.

This study unit deals with consumer perception and learning as part of the internal and
individual factors that influence consumer behaviour. The first part that we are going to
look at involves perception. The focus is on assisting you to understand the perceptual
process and the link between perception and marketing. This study unit also gives details
on the nature of learning, the elements of learning and the theories of learning.
This study unit can be divided into the following main topics:
• the nature of perception, the perceptual process and the relationship between
perception and marketing
• the nature of learning, the elements of learning and theories of learning
52
You will need approximately ten hours to work through this study unit. Make sure that
Introduction
Key concepts
7.1 Nature of perception
7.2 Perceptual process
7.3 Perception and marketing
7.4 Nature of learning
7.5 Elements of learning
7.6 Theories of learning
7.7 Assessment
7.8 Reflection
7.9 Summary
Consumer
perception Nature of perception
and learning
Perceptual process
Perception and marketing
Nature of learning
Elements of learning
Theories of learning
53 MNM2605/1
Key concepts
concepts:
• perception
• exposure
• attention
• interpretation
• recall
• perception and marketing
• stimulus
• response
• reinforcement
• classical conditioning
• instrumental conditioning
• cognitive theory
7.1 Nature of perception
It is important that you understand how consumers formulate perceptions as they relate
to the world and the environment around them. Perception is defined as a process by
means of which people select, organise and interpret stimuli. By using their senses of
sight, hearing, smell, touch and taste they become aware of all stimuli. In other words,
perception is the way people see the world. Note that the process of perception begins
by firstly being exposed to a stimulus, such as an advertisement or product, then paying
attention to it, and, finally, interpreting its meaning in order to respond to it. As future
marketers you should remember that consumers can be reached by using more than
just the senses of hearing and seeing. A food or a perfume manufacturing company, for
instance, will also have to rely heavily on the sense of smell to influence its consumers
positively. Look around you and assess how many products rely on the senses of smell,
touch and taste to attract consumers. The following image depicts the five senses and
illustrates their application in our daily lives:
54
The following are more examples of sensory stimuli:
• Sight plays a role in purchasing jewellery or clothes. Hearing plays a role in purchasing
musical instruments and electronic equipment. Touch plays a role in purchasing
material and clothes. Taste plays a role in purchasing sweets, toothpaste and food.
Smell plays a role in purchasing perfume, fresh bread, flowers and deodorants.
When purchasing a new car, virtually all the senses (except taste) play a role in
influencing perception.
In the next section, we are going to discuss the three elements of perception. After studying
this section you should be able to discuss these three elements and give examples where
necessary.
• Perception is selective
You need to note that consumers pay selective attention to stimuli. They will be interested
only in those that appeal to them and will mentally block out any stimuli that do not appeal
to their needs. For example, BMW will try to entice consumers with an advertisement,
but may find that some consumers are so passionate about Mercedes-Benz that this will
block out any stimuli from BMW. In the context of consumer behaviour, paying selective
attention to stimuli is referred to as perceptual defence. Perception plays a role in the
interpretation of marketing messages by the individual consumer.
• Perception is subjective
This element involves the individual consumer’s reaction according to his or her
interpretation of stimuli and not always according to the objective reality. Moreover,
subjective factors always play a role in perception. Few people perceive things in exactly
the same way. For an example of this fact, refer to the introduction section of this study
unit.
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• Perception is based on the individual’s frame of reference
The individual’s perception is based on his or her experience. This experience is the
bedrock on which the individual’s frame of reference is based. Individual consumers
normally pay attention only to those things they have experienced or are interested in. If
a person is, for example, interested in going on safari, he or she will be inclined to notice
advertisements for safari tours and tour operators that specialise in this type of activity.
7.2 Perceptual process
In this section we focus on the perceptual process, which consists of four phases, namely
exposure, attention, interpretation and recall (or memory). After studying this section, you
must be able to explain the perceptual process and provide examples of how marketers
can influence this process favourably.
Click on the following link to understand how the perceptual process works in practice:
http://neelam90.blogspot.com/2009/12/perceptualprocess.html
• Exposure. Exposure is the degree to which people notice a stimulus that is within
range of their sensory receptors. The marketer, therefore, has to place the company’s
messages where targeted consumers will be exposed to them. Most of the stimuli to
which we expose ourselves are self-selected – we therefore refer to selective exposure
as a perceptual defence mechanism. A consumer can, for example, avoid unwelcome
stimuli by quickly paging through a magazine and ignoring the advertisements or by
turning off the radio or television when commercials are aired.
A marketer may find different ways to gain exposure, for example:
- Place advertisements in unconventional places, such as on the front inside shopping

trolleys, on walls in sports stadiums, and on cubicle doors in restrooms, where the
marketer has a “captive audience”.
- Determine which type of media consumers in the target market are most frequently
exposed to, and use these types of media as subsequent advertising vehicles.
• Attention. Attention refers to the extent to which processing activity is devoted to a

particular stimulus. Think, for example, about interesting and boring lectures. This
means the allocation of attention can vary according to the recipient (ie student’s
mind set at the time) and the characteristics of the stimulus (ie the lecture). In the
same way, selective attention causes a consumer not to comprehend the content of
the marketing message.
The marketer should try to overcome selective attention. The following are ways in
which this can be done:
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- Larger stimuli (full-page advertisements versus fractional advertisements) and
higher frequency (the repetition of advertisements on the radio or in other types
of media) will be more likely to be noticed.
- Colour and movement attract attention.
- Products in a store at eye level are more likely to be noticed than those on higher
or lower shelves.
• Interpretation. When a consumer has been exposed to a marketing message, and has
paid attention to it, the message still needs to be interpreted in the way intended by
the marketer. Selective interpretation occurs when the stimuli are perceived, but the
message itself is not interpreted correctly – the consumer distorts the meaning or
misunderstands it. To avoid this, a marketer can, for example, do the following:
- Pre-test the message to ensure it will be interpreted correctly.

- Determine how cultural differences influence the use of colour, symbols and
numbers.
• Recall (or memory). Consumers do not remember all the information they see, hear or
read, even if it has drawn their attention and they have interpreted it. Again, recall is
also selective as the consumer often remembers only certain stimuli and forgets others
which may not be important to him or her. Marketers need to consider the following
to overcome selective recall:
- Visibility influences the ability to retrieve items from our memory for use in
consumption decisions. In this case it would help to make use of demonstrations.
- Repetition is important for reinforcing the message.
- Make use of the consumer’s ability to learn, the result of a combination of motivation,
attention, experience and repetition.
7.3 Perception and marketing
When you study this section, it is essential to understand that marketers’ knowledge of
consumer perception enables them to formulate and adjust their retail strategy, brand
image and pricing to influence consumer behaviour.
• Retail strategy could involve the marketer having to make decisions that will positively
influence the consumer’s perception with regard to the overall store. The retail strategy,
for example, may use point-of-purchase displays in a colourful way and erecting big
shelf spaces for products that attract more attention from consumers.
• The brand image of the product could be positioned in such a way that consumers
perceive it in a positive and favourable manner when compared to other competing
products. The Mercedes-Benz brand, for example, can be positioned as having safety
features that are unmatched by competing brands.
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• Price as a quality cue can be used to influence consumer perception by associating
price with the quality of the highest standard and other supporting services to be
derived from using and owning a product, such as Russell Hobbs appliances. These
appliances are linked to high quality, performance and unique designs.
Activity 7.1
Marketers often use attractive models to attract attention to their advertisements. This is
particularly true when the advertisement is directed at males. How effective do you think
this marketing tactic is in influencing males to buy certain products or use certain services?
7Feedback
Marketers not only want their target audience to look at the models in their advertisements;
they also want to communicate something about their product. However, since there are more
commercials than consumers can possibly look at, marketers often use attractive models,
humour, or other elements to attract the target market’s interest. If this strategy is not well
executed the models may overshadow the advertising message and lead to consumers not
paying attention to the essence of the message. This strategy will require a marketer to strike
a balance between the model and the essential message to be communicated. The marketer
must guard against using a model that does not complement the advertised product or service.
We will now shift the focus to a new topic that looks at consumer learning. Remember
that consumer learning still forms part of internal and individual factors that influence
consumer behaviour.
7.4 Nature of learning
In this section, you must be able to define learning as the process by which individuals
acquire buying and consumption knowledge and experience, which they apply to future
behaviour. It is important to highlight that all aspects of the individual (motives, attitudes,
perception and personality) are formed through the process of learning. The external
factors, such as the family, culture, social class and reference group also greatly influence
the individual as he or she learns and experiences in these contexts and situations. The
consumer must, for example, learn which product attributes relate to which brand, where
it can be purchased and at what price it can be bought. Consumers must also be able
to recognise the distinctive packaging and remember the information supplied in the
marketing message when they are in a position to purchase the product.
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We will now focus on the basic three elements of learning – stimulus, response and
reinforcement.
7.5 Elements of learning
In this section you are expected to understand and explain the elements of learning, that
is, stimulus, response and reinforcement. Pay attention to these elements of learning
when you study this section in the prescribed book and make sure you understand their
implications for marketing.
• Stimulus
The first requirement of learning is a stimulus, which is something that stimulates the
learner’s interest. Marketers can stimulate consumers by using physical things, such as
products, brands and size, or intangibles, such as service, quality and satisfaction. Once
consumers have perceived a stimulus, they must be motivated to seek the object before
learning occurs. Motivation, therefore, acts as a spur to learning, with motives serving
as stimuli to learning. The stronger the motivation, the quicker the consumer learn. For
example: The marketer of Coca-Cola can use the fact that soft drinks have the ability to
quench thirst, which serves as motivation for the consumer to obtain more information
on the nutritional value, the price and the availability.
• Response
It is important to realise that motives stimulate learning, while the cues are the stimuli
that give direction to the motives. For example, the Coca-Cola advertisement is the cue
or stimulus that suggests a specific way to satisfy a particular motive, which is to quench
thirst by buying and drinking the soft drink. As soon as the consumer buys the soft drink
he or she will respond to the Coca-Cola stimuli. A response is any action, reaction or state
of mind resulting from a particular stimulus or cue. The type of consumer response relies
heavily on reinforcement.
• Reinforcement
Reinforcement involves an action by the marketer that will stimulate the consumer to
buy more of the product or to test the product. It is an inducement, which means there
is a probability that a given response to a specific stimulus will reoccur, given the same
stimuli and situation. This means that reinforcement is the “thing” that causes the individual
to relate the response to the stimulus correctly, resulting in repetitive behaviour that
establishes future behaviour. For example, a woman, whose friends regularly ask her to
serve a certain brand of soft drink when they visit her and subsequently comment on its
flavour (in this case a Coke [stimulus]), may learn to prefer that particular brand (response).
The two important aspects of reinforcement are repetition and participation. To increase
reinforcement, the same action should be performed several times. Participation can also
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help with reinforcement. An active role in any activity generally results in the acquisition
of more knowledge about the activity.
7.6 Theories of learning
In this section we focus on the theories of learning. It is important to realise that these
theories are very relevant to marketing and you must understand their marketing
implications and be able to discuss each of them.
• Classical conditioning refers to the phenomenon whereby a person tends to relate

two stimuli to each other if the association between them is shown continuously. For
example, MTN has been projecting to teenagers that owning a cellphone leads to
wide acceptance and praise within the peer group, which will over time establish a
subconscious association between a cellphone and status.
• Instrumental conditioning is when learning occurs while the consumer is being
conditioned to believe that a specific response to a stimulus will lead to a positive
reward.
• Cognitive theory is when learning involves the internal mental processes, whereby the
consumer actively participates by acquiring information, interpreting and evaluating
it and then taking action on the basis of the acquired knowledge. For example: the
consumer needs economical transport and actively collects information to fulfil this
need. The consumer collects information on reliable vehicles that are low on fuel
consumption by visiting various dealers and speaking to friends. During this process
of collecting information the consumer is actively seeking information that might fulfil
his or her transport needs.
The image below indicates the learning theories relating to conditioning.
Source: Pavlov's Classic Experiment per Operant Conditioning
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19 7.7 ASSESSMENT
1. Explain the nature of perception and indicate how the marketer should take this
into account in his or her marketing messages.
2. Explain the perceptual process and highlight the actions the marketer takes to
ensure exposure, attention, interpretation and recall.
3. How can the marketer ensure perception in the areas of retail strategy, brand image
and price?
4. Explain the nature and elements of learning and indicate the marketer’s action
with regard to each element of learning.
5. Discuss the theories of learning, namely classical conditioning, instrumental
conditioning and cognitive theory, and give an example of each.
20 7.8 REFLECTION
Before you continue with the next study unit, reflect on the following questions:
21 7.9 SUMMARY
In this study unit we looked at the individual factors influencing consumer

behaviour, namely perception and learning. When studying the nature of
perception we need to focus on the understanding that perception is selective
and subjective and that it is based on the individual’s frame of reference. It is
also important to realise that the perceptual process consists of four phases,
that is, exposure, attention, interpretation and recall. You should be able
to explain the nature of learning in the marketing context and describe its
three elements. The three theories of learning, namely classical conditioning,
instrumental conditioning and cognitive theory should be thoroughly studied.
In the next study unit we look at consumer motivation, which usually occurs
when a consumer wants to satisfy a need that has surfaced. The concept of
attitude will also be discussed.
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Study unit 8
CONSUMER MOTIVATION AND ATTITUDES
INTRODUCTION
Phineas, a 45-year-old sales executive, likes to party and enjoys food that is high in calories.
After spending some time in ICU as a result of a heart bypass, he realises that if he wants
to live longer and see his children grow up, he should lead a healthy lifestyle. In order
to live longer he needs to eat healthy food and exercise more. Phineas is motivated by
the prospect of a longer life and he has therefore developed a positive attitude towards
healthy food (low in calories) and exercise. This makes him alert and receptive to marketing
communication related to health products on which he will spend money.
Marketers try to satisfy consumer needs and one of the most important questions they
have to answer is: Why do people buy our product? In Phineas’s case marketers can ask:
Why does Phineas buy health products? Answering this question requires an understanding
of consumer motivation and attitude.
• Motivation is the driving force (motive) within the individual that moves him or her to
act. It starts with stimulated needs that lead to aroused attention and result in goal-
directed actions. A basic tenet of psychology is to “look behind the behaviour”. When
retailers examined consumers’ buying choices they found unsatisfied needs to be a
motivational factor. Needs are the basic sources of buyer behaviour, but have to be
stimulated before the consumer is driven into action.
• Attitude refers to what people like or dislike, favour or oppose. If someone asks, “What
is your attitude towards Bafana Bafana’s coach?” they want to know if you like or dislike,
favour or oppose him (and his coaching techniques and methods). Similarly, if we were
asked whether we like or dislike a product (eg SAB non-alcoholic beer), the service at
a restaurant (eg Spur) or a particular retailer (eg Shoprite-Checkers, PicknPay) or an
advertising theme (eg Nissan’s “shift expectation”), we are in fact asked to express
our attitude.
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The main theme of this study unit is consumer motivation and attitude, and this study
unit is divided into two main topics:
• Motivation. We will address the nature of motivation, the classification of motives, and
psychographics. It is important to understand consumer motives to ensure that needs
are appropriately met by a product.
• Attitude. Consumers have an attitude towards virtually every product or brand they
are aware of, although these will differ in intensity and complexity. We will, therefore,
discuss the nature, ABC Model and functions of consumer attitudes as well as attitude
formation. Lastly, we will look at attitude change.
You will need approximately ten hours to work through this study unit. Make sure you
understand the topics that are covered.
Introduction
Key concepts
8.1 Nature of motivation
8.2 Classification of motives
8.3 Psychographics
8.4 Nature of consumer attitudes
8.5 ABC model of attitudes
8.6 Functions of attitudes
8.7 Attitude formation
8.8 Attitude change
8.9 Assessment
8.10 Reflection
8.11 Summary
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Motivation Nature of motivation
Classification of motives
Psychographics
Attitude Nature of consumer attitude
ABC model of attitudes
Functions of attitudes
Attitude information
Attitude change
Key concepts
concepts:
• motivation
• need arousal
• Maslow’s hierarchy of needs
• economic and emotional motives
• lifestyle
• psychographics
• nature of consumer attitudes
• ABC model of attitudes
• functions of attitudes
• attitude formation
• attitude change
• consumer attitudes
• cognitive component
• affective component
• behavioural component
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8.1 Nature of motivation
All behaviour starts with needs and wants. For example, everyone needs some kind of
liquid to quench their thirst. Some people learn to satisfy this need by drinking mineral
water, others a soft drink and others coffee or tea. A motive is a need or a want that is
sufficiently stimulated to move an individual to seek satisfaction.
For any given need, there are many different and appropriate goals to be achieved by
consumers. Marketers must understand these needs in order to stimulate the consumers.
When you study section 8.2 in the prescribed book, pay attention to the relationship
between needs, motives and behaviour and how need arousal occurs.
8.2 Classification of motives
In order to understand motivation, it is important to classify motives and their underlying

needs. The three most common classifications of motives are Maslow’s hierarchy of
needs; McGuire’s psychological motives (you need to read through this classification);
and economic and emotional classification. These three will now be discussed:
• Maslow’s hierarchy of needs
Abraham Maslow formulated a hierarchy of five need levels arranged in the order in which
people seek to gratify them.
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Activity 8.1
Study Figure 8.2 in the prescribed book and identify the various needs in your own life
that are classified on each of the five levels of Maslow’s hierarchy.
8Feedback
Did you notice that at some time in your life each of the levels has played a particularly important
role? For example, when you are hungry (need), you probably satisfy this need by eating a
sandwich or some cereal. When you went to school, did you try to impress your friends with
your new watch (ego need)? Do you like to belong to a group of friends (social need)? Now
that you are a student at Unisa, do you dream about graduating (self-actualisation need)?
Maslow recognised that at any given time, most people are working towards satisfying
needs at different levels of the hierarchy and that the needs at various levels can never
be completely satisfied.
• McGuire’s psychological motives
Read this topic in the prescribed book.
McGuire’s motive classification is more specific than Maslow’s, as McGuire distinguishes

between internal and external non-social motives. These motives are summarised in
tables 8.2 and 8.3 in the prescribed book.
• Economic and emotional classification
Another set of motives that influence buying behaviour is economic motives. Economic
motives are rational by nature, for example they deal with the technical functions and
performance of a product, and are usually expressed in quantitative terms. For example,
when a consumer buys a new car, he or she may be concerned about economy (eg petrol
consumption), reliability, durability and quality, which are functional motives.
You should remember that the satisfaction of emotional needs is not a non-rational act – it
is almost impossible to make any decision on a purely rational basis as emotional motives
invariably influence the consumer’s buying decision. However, people are usually reluctant
to admit that their buying behaviour is influenced by emotional motives. For example, if a
consumer buys a luxury car he or she will not easily concede that the underlying motive
was his or her need for recognition (esteem motive). The consumer rationalises his or her
66
motive by alleging that the reason for the purchase is in fact the durability (economic
motive) of the product.
In the next section we look at psychographics, which is an important facet or aspect of

motivation.
8.3 Psychographics
When you study this section in your prescribed book, note the following aspects of
psychographics:
• psychographics and lifestyle

• values determine lifestyle
• psychographic profiles
• uses of psychographics
The aim of psychographics is to classify individuals on the basis of psychological dimensions,

such as personality, motives and lifestyles. It is important to note the relationship between
psychographics and lifestyle and psychographics and values.
When you study the section on motive, make sure you can answer multiple-choice as
well as discussion (essay) questions on the aspects covered in this study unit. For multiple
choice questions refer to your prescribed book and for discussion questions refer to the
assessment section of this study guide.
In the next section the focus is on the attitude of consumers. Attitude influences consumers’
behaviour and their purchasing decisions.
8.4 Nature of consumer attitudes
A consumer attitude can be described as a learnt predisposition to behave in a consistently

favourable or unfavourable way towards market-related objects, events or situations.
This shows that attitudes towards certain products or services may be positive, negative
or neutral.
For example, if you say you like Coca-Cola, it means that you have a positive attitude
towards it. If you say you do not like smoking, you are in fact saying that you have a
negative attitude towards it.
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One of the marketer’s greatest challenges is to influence consumers to such an extent that
they have a favourable attitude towards the product or service a particular organisation
offers.
8.5 ABC model of attitudes
How do people, especially young people, form their initial, general attitudes towards
“things”? Consider their attitudes towards the clothing they wear, for example underwear,
casual wear and business attire. More specifically, how do they form attitudes towards,
for example, Calvin Klein underwear or Levi’s Gap casual wear? What are their attitudes
towards the store where they buy their clothes? Would they buy underwear, casual wear
and business clothing from Edgars, Woolworths or Stuttafords, or from more exclusive
shops?
The answers to these questions lie in the fact that attitudes are learnt. We form attitudes
relevant to buying behaviour as a result of direct experience with the product, information
obtained from others and exposure to mass media, such as advertisements in newspapers,
on television, and so on. It is also important to realise that attitudes tend to be consistent
with the behaviour they reflect. For example, if a consumer likes full-cream milk, we expect
him or her to buy it. Similarly, if a consumer is not particularly fond of full-cream milk, we
expect him or her not to buy it. Consumers are, therefore, free to act as they wish and we
expect that their actions (or behaviour) will be consistent with their attitudes.
According to the ABC model of attitude, attitude consists of the following three main
components (as discussed in the prescribed book):
• Cognitive component (C)

The total configuration of beliefs about any product or retail store, for example, represents
the cognitive component of the consumer’s attitude towards the particular product or
store. Customers’ beliefs about a brand are, therefore, the characteristics they ascribe to it.
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• Affective component (A)
The affective component of an attitude involves a consumer’s emotions or feelings
about a particular product, brand or retail store. The statement, “Coffee X is overpriced”,
therefore, implies a negative affective reaction to a specific aspect of the product, which
combined with feelings about other attributes, will determine the overall reaction to this
brand of coffee.
• Behavioural component (B)

This represents the outcome of the cognitive and affective components – to buy or not to
buy a product or patronise a particular store. What consumers do with their knowledge
of, and feelings towards, a product is very important to a company. The customer may
have positive information about a product and may like it, but may not actually buy it
for a variety of reasons. Habit in respect of another brand may be strong, there may be
other brands that the customer likes better or the preferred brand may be unaffordable.
8.6 Functions of attitudes
People have certain attitudes (or acquire some of them) because they serve certain
functions. For example, attitudes perform important functions in helping consumers
adjust to difficult situations, express their values, organise their knowledge and defend
their egos in threatening situations. Unless retailers and marketers know the function
served by a particular attitude, they are in no position to understand or influence it. In
your prescribed book the following functions are explained:
• utilitarian function
• ego-defensive function
• value expressive function
• knowledge function
Make sure that you are able to discuss and distinguish between the above-mentioned
functions.
8.7 Attitude formation
All individuals and groups develop beliefs (or attitudes), which help them make everyday
sense of their particular inhabited world. Not all beliefs are based on facts and will vary
from nation to nation and culture to culture. Developing societies may believe one thing
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and more developed societies another. Some attitudes and beliefs are based on localised
day-to-day experiences, some are based on learning and copying others and others can
be passed down within the family from generation to generation. Attitudes may be based
on religion and received wisdom and have little or no scientific substantiation. Attitudes
can also develop by reading, watching TV, listening to the radio, or through discussions
and arguments with people, using the internet, as well as by investigation and through
cognitive processes.
As marketers are interested in predicting consumer behaviour, they are extremely

interested to know how attitudes are formed about their product and services, and the
other elements of the marketing mix.
The following are the different ways in which attitudes are formed:
• classical conditioning
• instrumental conditioning
• cognitive learning theory
• experience
• external authorities
• marketing communication
Make sure you can discuss and distinguish between the ways in which attitudes are formed.
8.8 Attitude change
Although consumer attitudes are relatively stable in the short run, changes do occur.
In fact, some consumer attitudes are always changing. There have been an enormous
number of changes in society over the last 50 years. This has caused people to evaluate,
adapt and change attitudes about the way they think on a whole range of issues from
marriage, eating and drinking to communication and leisure activities. In many countries
50 years ago, more than 95% of all couples would not have contemplated living together
before marriage; now more than 75% say they would live together before marriage.
Fifty years ago most adults smoked and it was a central part of everyone’s life; smoking
in the cinema, the theatre, on public transport and at work was commonly done. Now,
the figure is down to less than 25%. Self-service supermarkets and frozen food were still
a futuristic concept and the nearest thing to a ready meal was buying take-away fish
and chips. Much of this attitude change has happened gradually while other changes,
especially over the last 10 to 15 years, have taken place much faster. These changes have
been easier for younger people to accommodate than for older ones.
Marketing has played an enormous part in the process of changing people’s attitudes, both
as a leading player and as a mirror that follows and reflects change as it happens. It has
been a leading player in educating and changing people’s attitudes across a wide range
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of markets and products. This includes attitude changes to things such as computers, the
internet and cell phones, as well as lifestyle changes related to the family, travel, holidays,
24-hour shopping and so on.
It is important for marketers to develop strategies to change attitudes, especially the

following components of attitudes:
• affective component
• behavioural component
• cognitive component
Study the factors that influence attitude change (section 9.6.4) in the prescribed book
and do the following activity:
Activity 8.2
Advertising messages, in particular, affect buying behaviour. The source of the message,
the appeals used in it and many other factors help to effect changes in attitude. Try to
find (or suggest) examples of advertisements that will help effect change.
9Feedback
Have you perhaps thought of the following example?
Lucas Radebe or Bryan Habana could be a credible source and consumers will believe them if
they endorse the use of, for example, a specific deodorant in an advertisement.
Celebrity sources may enhance attitude change because they attract more attention to the
advertisement. For example, a beautiful woman such as Cindy Crawford could endorse a new
type of lipstick by Revlon (the one that lasts all day).
Fear appeals, for example, make use of the threat of negative consequences if attitudes or
behaviour are not altered. A headline that reads “I woke up in hospital. Patti never woke up”
would be an example of fear appeal to promote the use of seatbelts or in the Arrive Alive road
safety campaign.
Can you think of a humorous appeal that could influence the creation of a more positive
attitude?
22 8.9 Assessment
1. Explain the nature of motivation.

2. Identify which level of Maslow’s hierarchy the following products appeal to:
(a) Volvo cars
(b) Absa home loans
(c) Unisa
(d) Castle beer
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(e) Samsung refrigerators
(f) Mercedes-Benz cars
3 Explain the economic and emotional classification of motives.
4 Explain how psychographics influence lifestyle and use practical examples to
illustrate the theory.
5. Define consumer attitudes in your own words.
6. Discuss how marketers of female perfumes should take the components of attitudes
into account when creating a TV advertisement.
7. Distinguish between the various functions of attitudes.
8. Explain the means by which attitudes are formed.
9. Indicate how a car tyre retailer could change the three components of consumer
attitudes about the quality of its tyres. Be practical in your approach and illustrate
how various media types could be used.
10. What factors that influence attitude change could a marketer consider? Illustrate
your answer with practical examples.
23 8.10 REFLECTION
248.11 SUMMARY
In this study unit we discussed facets of consumer motivation to determine

why consumers behave in a certain way when they are in the process of buying
or choosing a product or service. We also highlighted psychographics to
understand the importance to the marketer of the way people can be grouped
according to similar lifestyles. In the last section of this study unit we looked
at consumer attitudes. This involved a discussion of consumer attitudes and
their formation. It is important for marketers to understand consumer attitudes
and how to influence or change them.
In the next study unit we discuss the consumer decision-making process and
family or household decision-making.
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Topic 4
CONSUMER Decision-making AND
DIFFUSION OF INNOVATION
AIM
To help you develop an understanding of the nature of consumer decision-making and
organisational buyer behaviour. In order to understand the nature of consumer decision-
making, it is necessary to gain insight into the individual consumer decision-making
process, family decision-making and diffusion of innovation, as well as the consumer
adoption process.
Learning outcomes

• demonstrate an understanding of the consumer decision-making process and the role
of family decision-making in influencing the consumer
• explain and illustrate the diffusion of innovation and the consumer adoption process
topic CONTENT
Study unit 9: C
onsumer decision-making process and family decision-making/household
decision-making
Study unit 10: Diffusion of innovation and the consumer adoption process
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Study unit 9
CONSUMER Decision-making PROCESS AND
FAMILY OR HOUSEHOLD Decision-making
INTRODUCTION
Decision-making is part of every person’s daily life. As a future marketer you need to
know that successful marketing begins with an understanding of why consumers buy and
what process they follow in making purchasing decisions. Decision-making is a complex
process that begins with the realisation that you have a need or want, for example the
need for shelter. This realisation will lead you to research the market in order to obtain
information on available housing. You will subsequently evaluate the available options
according to your requirements (eg buying, renting, space). Once you have identified the
best option you can make a decision according to your needs and wants. After having
weighed up the options, you may, for example, decide to buy a house in Sandton. Once
you have bought the house, you will undergo a process of post-purchase behaviour to
check whether your expectations have been met or not.

This study unit deals with decision-making, which in this context, is a process that entails
individual as well as family decision-making. In basic terms, decision-making refers to the
process consumers follow when making a decision and involves questions such as: How will
a decision be made? What factors influence decision-making? These are typical questions
a marketer has to ask when the company’s marketing strategy has to be formulated.
• the process consumers follow when engaging in decision-making

• the reasons why consumers engage in decision-making
• the five stages of consumer decision-making
• the influence of the family or household structure on decision-making
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Introduction
Key concepts
9.1 Consumer analysis
9.2 Consumer decision-making process
9.3 Buying situations
9.4 Stages of the decision-making process
9.5 Family decision-making or household decision-making
9.6 Assessment
7.7 Reflection
9.8 Summary
This study unit unfolds as follows:
Decision-
making Consumer analysis
process
Consumer decision-making process
Buying situations
Stages of the decision-making process
Family decision-making or household decision-making
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Key concepts
concepts:
• consumer analysis
• decision-making process
• problem recognition
• information search
• evaluation of alternatives
• buying
• post-buying evaluation
• family/household
• functions of a family/household
• roles in family decision-making
• family life cycle
9.1 Consumer analysis
Marketers have to conduct a consumer analysis to enable them to

develop an in-depth profile of their target market. This analysis enables
them to better understand the complex activities in which consumers
engage when making a decision. A consumer analysis consists of
the following four interrelated elements that have to be evaluated:
cognition, behaviour, environment, and marketing strategy.
You need to understand that these four elements do not operate in isolation; there are
other stimuli that also play major roles. The availability of disposable income will mainly
influence the consumer analysis process. Pay special attention to Figure 12.1 in the
prescribed book, which is a visual representation of the consumer analysis process. This
figure makes it easier to understand the complex process.
The consumer analysis process encompasses the internal thought processes of a consumer
when making a decision and it is very important to consider this before looking at the
decision-making process, since it is influenced by external variables. Can you apply this
figure to a buying situation other than buying a sandwich?
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9.2 Consumer decision-making process
In this section, you need to fully understand how consumers make

decisions. Decision-making is easier to understand if you remember
that it is similar to problem solving, because a decision or a solution
is a course of action that provides a desired result. It is of the utmost
importance that marketers understand the process their consumers
undergo when making a decision. Although the process entails a
structured cycle of activities, the stages in the process do not necessarily follow on each
other in strict order, and during some decisions (stages) the consumer may even omit
a few activities. The decision to buy a product or rather save the money is influenced
by internal variables (motivation, perception, learning, personality and attitudes) and
external variables (reference groups, culture, social influences, family, economic demands,
marketing influences and the marketing environment). Think of when you needed to buy
something; which internal and external variables influenced your decision?
9.3 Buying situations
When buying products, there are certain situations that influence the decision-making
process. These situations are the result of circumstances, time and location and they affect
the consumer decision process. For example, buying a new cellphone when you upgrade
is a different buying experience to buying a new cellphone after yours has been stolen
in a smash-and-grab incident. These factors can affect a buyer during any stage of the
decision-making process and can influence him or her to skip some of the stages of the
decision-making process or the process as a whole. In a normal buying situation, you
will first obtain and internalise information from the external environment and combine
it with your needs, motives, perceptions and attitudes. These may be influenced by the
past, the act of recalling and personality factors, as well as your surrounding environment.
9.4 Stages of the decision-making process
Making a consumer decision consists of the following five stages: problem or need
recognition; information search and processing; evaluation of alternatives; buying decision;
and post-purchase response (as illustrated in Figure 12.2 of the prescribed book). You must
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be able to discuss the stages in the decision-making process and give relevant examples.
When looking at this process remember the following points:
• The actual act of purchasing is just one stage in the process and usually not the first one.
• Although we indicate that a purchase occurs, not all decision processes lead to a
purchase; individuals may end the process at any stage.
• All consumer decisions do not always include all five stages (it depends on whether
the decision-making is extended, limited or habitual).
9.5 Family decisionsmaking process/household

decision-making process
It is difficult to formulate a definition of the term family in South Africa because of the
rapid cultural and environmental changes affecting family composition and structure. The
traditional definition is two or more persons related biologically though marriage or by
adoption and who reside together. In most societies the married couple is the most basic
structure (husband and wife). The nuclear family (husband, wife, one or more children) is
still predominant although this form is under pressure and has led to many versions of a
family, such as a single-parent family (one parent and at least one child). In South African
society, the predominant structure is the extended family, which is the nuclear family plus
other relatives, such as grandparents, uncles, aunts, and parents-in-law.
• Functions of the family/household
Members of the family perform a variety of functions within the family structure. These
functions contribute to the wellbeing of society and the individuals in the family and
include the following: socialisation of family members; contributing to the economic
wellbeing of family members; providing emotional support; and shaping the lifestyles of
family members. All of these have implications for marketers in terms of family members’
purchasing behaviour in the marketplace.
• Roles in family (household) decision-making
The roles that family members play in a purchase decision are complex and the number
and identity of family members who take on these roles will vary from one family to the
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next and from one product to another. The following eight distinct roles are identifiable:
influencers, gatekeepers, deciders, buyers, preparers, users, maintainers, and disposers.
These roles are described in more detail in the prescribed book. Make sure that you can
identify them in a buying situation.
• Family life cycle/household life cycle
The characteristics of a family are not static but change gradually. The family life cycle
depicts the stages that the family progresses through over time, and is a composite
variable containing sub-variables such as marital status, size of family, age of family, and
employment status of the head of the family.
4
1 2 3 5
Post
Bachelorhood Honeymooners Parenthood Dissolution
Parenthood
The traditional family (household) life cycle consists of the following five basic stages:
These five stages are explained in more detail in the prescribed book. A more realistic view
of the life stages are reflected on Table 13.1 in the prescribed book, where the traditional
model has been adapted to modern situations, such as single-parent families. Where are
you in the family life cycle at the moment? Who do you take into consideration when
making a decision?
Activity 9.1
Answer the following questions after studying the consumer decision-making process
(section 12.4 in the prescribed book), as well as the part on family decision-making (section
13.4 in the prescribed book):
• You are considering buying an expensive product, such as your first car. How would
you go though the stages of the consumer decision-making process?
• When you leave home, your parents, who still have to look after your three-year-old
brother, decide to invest in a new family car. Both your parents work and they will pay
jointly for the car. Which roles would your family members adopt in terms of this family
buying decision?
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10Feedback
•• This is how you may have progressed through the stages of the consumer decision-making
process. (Given the nature of the purchase, it is also worth noting that extended decision-
making would be more appropriate here.)
i. Need or problem recognition
Need or problem recognition occurs when the buyer becomes aware of a difference
between a desired or an ideal situation and an actual situation. The difference should
be big enough to trigger a decision. This can be as simple as realising that you need your
own car, since your parents will not be able to drive you around anymore. Marketers or
salespeople can activate the process. For example, an advertisement for a small affordable
car could stimulate problem recognition because it emphasises the affordability of a car
for first-time buyers. Problem recognition may vary widely, depending on the following:
the information stored in the individual’s memory; individual differences; environmental
influences; and social influences. Note that problem recognition can take place during
all stages of the decision-making process. Most consumers’ problems arise as a result of
internal and external barriers, assortment inadequacies, new information, expanded
desires, and expanded or reduced means.
ii. Search for, and processing of, information
After recognising the problem or need, buyers do research and obtain information on
products to help them resolve the problem or satisfy their need. The internal search involves
a buyer scanning his or her memory for previous experiences or knowledge, which may
be insufficient. Then external sources need to be consulted. This type of search is affected
by individual differences (consumer resources, motivation, involvement, knowledge,
attitudes, personality, lifestyle, and demographics) and environmental influences. You
would probably tap the following information sources:
- personal sources (friends and relatives)
- public sources (eg a comparative evaluation consumer report published by a product-
testing organisation)
- marketer-dominated sources (eg CD player advertisements or CD player demonstrations
in shops that sells CD players when you want to buy a CD player)
From the information gathered from different sources, you would then narrow down
your options to an evoked set or consideration set, for further evaluation. At this stage,
the following factors also need to be looked at:
- Consumer involvement in decision-making
When consumers make purchases in order to solve their problems, they engage in different
problem-solving processes. The effort, both mental and physical, that buyers expend on
these processes varies considerably. A major determinant of the type of problem-solving
process employed is the consumer’s involvement – the consumer’s degree of interest in
a product and the importance he or she attaches to it. Note that high involvement is
associated with products that are expensive and visible, and that could have serious
personal consequences or carry high risk and also reflect on one’s image. Examples of
high-involvement products are cars, health care, stocks and bonds. Low-involvement
products, such as grocery items, on the other hand, tend to be less expensive and carry
less social risk. It is also worth noting that an ongoing and long-term interest is referred
to as enduring involvement, while a situational involvement, by contrast, is temporary
and dynamic and results from a particular set of circumstances. Also take a look at the
types of decision-making process that are discussed in the prescribed book.
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iii. Evaluation of alternatives
To evaluate the products in the evoked set, a buyer of a car establishes certain criteria
by which to compare, rate and rank different products (brands). For example, you may
use two criteria to establish the brands in your evoked set (eg a pricelist under R100 000
and good fuel consumption). The criteria may result in only three models in your evoked
set (eg Volkswagen, Tata and Opel). Note that the perceived risk associated with buying
a product also impacts on the evaluation process, while the evaluation of alternatives
depends on the buyer’s personality (or orientation), for example an economical, passive,
emotional or cognitive individual. Although the evaluation happens in the mind of the
consumer and can therefore not be seen, marketers can try to identify and capitalise on
the types of evaluation criterion to create the best value for money. Evaluation brings a
consumer to the point of making a decision on a specific course of action.
iv. Response or buying decision
Consumers now select products or brands on the basis of the results of the evaluation stage
as well as other dimensions. Buyers choose the seller from whom they will buy the product,
as well as the time to buy. The choice of seller depends on a number of considerations,
such as the terms of sale, past experience with the seller and the service plan offered. For
example, you may choose the second choice brand (Tata) at a dealer with an excellent
service plan (eg Tata Menlyn) over the most preferred car brand (eg Volkswagen) at a
dealership with no service plan (eg Hatfield Volkswagen). Other decisions include the
size of the deposit, payment method (credit) and time (eg when the preferred brand is
on sale).
v. Post-purchase evaluation response
After the purchase, buyers evaluate the product to determine whether its actual
performance meets expected levels. The post-purchase evaluation may result in either
satisfaction or dissatisfaction, a neutral or indifferent behavioural response or post-
purchase dissonance. Look at this step more in detail in the prescribed book.
http://www.youtube.com/watch?v=hpIOWaIzu7Q
View the video clip on YouTube related to the decision-making process that a student created.
It shows a purchase that is not as complex as buying a car. Can you think of other similar
examples?
•• There is a wide variety of roles that each family member can adopt in the decision to
buy a family car. Traditionally, most marketers aimed their marketing messages at the
father in terms of the vehicle product category, but this is no longer the case, because
many cars are in fact purchased by women or women tend to have a major say in the
choice of car. Who did you identify as the decider? When purchasing a car the decision
is often a joint one, in other words, all the family members are involved in the decision.
Who did you identify as the maintainer? Many of you probably identified the father as
the maintainer, but again this would depend on the specific family situation. The ques-
tion is: Who phones the garage to book the car for a service? Family decision-making is
certainly a highly complex process.
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25 9.6 ASSESSMENT
1. Explain the search for and processing of information when engaging in consumer
decision-making.
2. Distinguish between habitual, limited and extended decision-making and give
examples of each of these situations.
3. Describe satisfaction, dissatisfaction, post-buying indifference and cognitive
dissonance with the aid of a flow chart or illustration.
4. Identify categories of buying situation factors and explain how each of these factors
influences buyers’ decisions.
5. Design a study investigating the way in which families make holiday decisions.
Which family member(s) would you interview? What kinds of questions would you
ask?
6. How would you assess the relative role of each family member in making holiday-
related decisions?
7. Discuss the stages of the decision-making process and give examples of each.
26 9.7 REFLECTION
279.8 SUMMARY
We started this study unit by looking at consumer analysis and emphasised

how important it is for marketers to consider it before looking at the decision-
making process. The key topics in this study unit revolve around the stages
of the decision-making process. It is extremely important that you are able to
describe each of these stages and identify them in a buying situation. This study
unit concluded by pointing out that you need to take family decision-making
into account as well, since the individual does not always make decisions on
his or her own.
In the next unit we look at the diffusion of innovation and the consumer
adoption process.
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Study unit 10
DIFFUSION OF INNOVATION AND THE CONSUMER
ADOPTION PROCESS
INTRODUCTION
Consumers differ with regard to their characteristics and behaviour in adopting (accepting)
new products. The time it takes to make a decision and subsequently purchase a product
varies from one individual to another.
For example, some time ago you may have bought a Sony digital camera. What was
the reason for your purchase? Did you buy it straight away or were you influenced by
certain factors, such as product attributes? Did the decision to buy the camera result from
individual or collective decision-making? How long did it take you to make the purchase
and do you remember the steps you followed from product awareness to making the final
purchasing decision. Lastly, how did you make the decision? If you discuss your answers
to these questions with a friend you will realise that the fact that a product is innovative
does not necessarily guarantee its rapid spread and ease of acceptance among consumers.
Consequently, we discuss the diffusion of innovation and the consumer adoption process.
Three questions arise from the above example:
• Why is it important to understand consumer behaviour with regard to innovation?

• How do consumers who purchase innovative products at an early stage differ from
those who purchase them at a later stage?
• How do consumers go about adopting a new product?
We will try to answer these three questions in the following sections. In this study unit we
look at the diffusion of innovation and the adoption process. Once you have studied this
study unit refer to the images below to see whether you understand what they depict
and whether you are able to link them to the topics discussed.
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This study unit deals with the diffusion of innovation and the consumer adoption process.
Consumer needs and preferences change over time and it is, therefore, important that
marketers and organisations keep abreast of these changes. Marketing managers are
faced with the challenge to develop new products or improve products according to
changes that take place in society. As new needs resulting from these changes arise, new
products are introduced to meet the needs and, when that occurs, not all consumers
accept the changes at the same rate.
It is imperative for an organisation to continuously scan the environment in which it

operates in order to monitor consumer changes. These changes may be as a result of
changes in the economic, political or technological environment; of these technology is
the environmental variable that is concerned with innovation and change. Changes in
demographic variables, such as education, income, family life cycle, age and occupation
are reasons why organisations develop innovative ways to satisfy evolving consumer
needs and preferences. Let us take the education variable as an example. Consumers
acquire knowledge and in some instances are promoted to more senior positions; this
means they have more disposable income and may demand increasingly intellectually
stimulating products. However, the fact that they may demand does not necessarily
mean that consumers will purchase the new products developed to meet their needs.
Very often, new developments or changes are not easily accepted and adopted by the
intended target segments. Marketers’ understanding of the diffusion of innovation assists
them in identifying reasons for products having been adopted or rejected.
After working through this study unit, you should understand the following concepts:
• diffusion of innovation
• consumer adopter categories
• factors affecting the diffusion of innovation
• adoption process
You will need approximately fourteen hours to work through this study unit. Make sure
that you understand the topics covered.
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Introduction
Key concepts
10.1 Diffusion of innovation
10.2 Consumer adopter categories
10.3 Factors affecting the diffusion of innovation
10.4 Consumer adoption process
10.5 Steps in the adoption process
10.6 Additional reading
10.7 Assessment
10.8 Reflection
10.9 Summary
Diffusion of
Consumer adopter categories
innovation
Consumer adopter characteristics
Factors affecting the diffusion of innovation
Consumer
adoption Steps in the adoption process
process
Awareness
Interest
Evaluation
Trial
Decision
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Key concepts
After studying this study unit, you should be able to explain/define the following key
concepts:
• diffusion of innovation
• consumer adopter categories
• innovation
• adoption process
• steps in the adoption process
• characteristics of adopter categories
• factors affecting the spread of innovation
10.1 Diffusion of innovation
Study this particular section in this study guide.
Marketers are tasked with communicating and publicising new products in the market
in order to make consumers aware of, and interested in, the products and to persuade
them to make the decision to buy them. You should be able to define and understand
the key elements of the definition of innovation in order to give practical examples and
in order to reflect real-life situations. The application of theory is important to reflect the
understanding of content. This process is defined below:
Diffusion of innovation is defined as a process by which new products are communicated

to members of a society through various channels over a certain time period (adapted
from: Jooste, Klopper, Berndt & Du Plessis 2002).
Let us now look at the four main elements (innovation, communication channels, time
and social system) identified in this definition:
• An innovation is a new idea introduced to society or individuals, for example the first
microwave oven. A new idea does not necessarily have to be new knowledge; it may
simply be an improvement on an existing idea, which we can again illustrate with the
example of the microwave oven: the first microwave oven did not have up-to-date
features such as a touch screen, whereas the new improved ones do.
• Communication channels are responsible for disseminating information on new ideas
and products. Example of channels that are used for this purpose are print media
(newspapers and magazines), broadcast media (radio and television), and new media
(internet).
• Time refers to the amount of time it takes consumers to adopt (accept) a new idea or
product. For example, consumers will become aware of a new Sony digital camera
over a period of time through the marketing message communicated by the various
media channels to which consumers have access. The media channel conveying the
message to the consumer will depend on the consumer’s economic status.
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• Social system refers to members of the society, individuals and groups or organisations
that engage in problem solving to achieve common goals.
Activity 10.1
Define diffusion of innovation by referring to the four elements of the definition and
illustrating them with practical examples.
11Feedback
Your answer should include all four elements of the definition; these are
•• innovation
•• communication channels
•• time
•• social system
If you had difficulty illustrating the definition with practical examples of the four elements,
refer back to the definition and the examples provided there.
Since consumers adopt new products at different rates we can identify different adopter
categories. Let us now discuss, in detail, the five consumer adopter categories and
their readiness in trying out a new product. We will also answer the question, “How do
consumers who purchase innovative products at an early stage differ from those who
purchase them at a later stage?”
10.2 Consumer adopter categories
It is important for marketers to understand how consumers differ from each other in terms
of the rate at which they adopt an innovation or a new product and how they perceive
attributes of innovation. If marketers understand this, it will assist them in developing
targeted strategies to communicate the new idea to consumers. These strategies can
enhance the success rate by increasing the speed of product adoption and decreasing
that of rejection.
Taking the above into account, different adopter categories can be identified. You need
to understand these consumer adopter categories in order to explain each category and
illustrate them with practical examples.
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ADOPTER CATEGORIES
Early
adopters,
visionaries Early Late Laggards,
Innovators,
13.5% majority, majority, sceptics 16%
enthusiasts
pragmatists conservatives
2.5%
34% 34%
Time
Customers want Customers want
technology and solutions and Moore
performance convenience
Figure 10.1: Adopter categories

Source: http://www.icvet.tafensw.edu.au/ezine/year_2008/may/article_innovation2.htm
As stated above, consumers are classified according to their characteristics with regard
to the behaviour they exhibit towards innovative products. Figure 10.1 above identifies
adopter categories in terms of what consumers require from innovation. The bell shape
shows the size of the target market segments in percentages in terms of their categories
in adopting the product.
Five adopter categories and their characteristics:
• Innovators. These people are the first group of consumers to adopt a new product and
they are called the enthusiasts. They are the type of consumers who want advanced
technology and performance, are willing to take risks, and are enthusiastic about
purchasing new products. Innovators amount to 2,5% of the overall population. Their
demographic profile indicates that they are young, educated and have networking
connections and, therefore, fit the characteristics of the South African generation Y.
They obtain information on products and services from impersonal and scientific
sources, such as the internet and niche magazines. For example, if it concerns a health
product, they will read magazines such as Shape (women) or Men’s Health (men).
• Early adopters. These people are termed the visionaries. They account for 13,5% of
the overall target market and only adopt a product once the innovators have used it.
Early adopters form an influential consumer group and are the driving force behind
the acceptability of new products. They spread the message by word of mouth. These
consumers are the opinion-making leaders and an important group for marketers to
take into account as they are held in high esteem by others who follow, accept and
adopt their opinions and recommendations. They also determine whether consumers
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will have a positive or negative attitude towards a product. This consumer group is also
well educated and has self-confidence as it consists of specialists in their respective
fields. They have contact with salespeople, read more magazines and use mass media
as their source of information.
• Early majority. Consumers in this category prefer products that have been tried and
tested, since they avoid risks (psychological, financial and performance). They are
pragmatists who want solutions and convenience from the products they purchase.
Early majorities are middle-class consumers who have contact with opinion leaders,
salespeople and the mass media. This group relies on the recommendations of the
early adopters and they comprise 34% of the target market.
• Late majority. These are pessimistic consumers who do not seek anyone’s opinion
and only use the product once they have been reassured of its benefits and values.
This may be due to the fact that they are less educated, older, financially more
stable and conservative than the previously mentioned group. They use fewer
marketing communication sources to obtain information than the early majority;
instead, they seek information from consumers within their own group. The late
majorities account for 34% of the population.
• Late adopters, laggards or non-adopters. The laggards are termed the sceptics,
since they do not believe in new ideas. Instead, they are suspicious and prefer things
to be done as in the past. They react to the new product or service and its benefits at
a slow rate and account for 16% of the target market. They are older in terms of age
and are in the lower socioeconomic class; they also depend on consumers within the
same categories, such as the late majorities, for advice and information on purchasing
a product.
Activity 10.2
Visit your nearest mobile phone outlet or the Nokia website and search for the Nokia E71
model; have a look at the phone and its features. Using the different adopter categories,
explain how you would expect the adoption of this product to progress.
12Feedback
You should have mentioned the five adopter categories and illustrated how the adoption of
this phone would progress. Let us now discuss this by using the product features observed:
•• Innovators. Innovators are the risk takers and are enthusiastic about purchasing new
products, as they want advanced technology and performance. Given the product fea-
tures, these young, educated consumers, who have networking connections, will be the
first to purchase the product. The impersonal, scientific sources they will use to obtain
information would be the Nokia website and magazines which they need to subscribe
to, such as Wired, and Stuff, which are niche-market magazines.
•• Early adopters. These are consumers who adopt innovation once the innovators have
taken the risk. An example of a social risk is when a consumer’s self-esteem is tarnished
by identifying and using a particular product. Early adopters are the opinion leaders
who spread word-of-mouth communication and recommend, for example, a particular
cellphone to other consumers. They are self-confident, educated and have contact with
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salespeople, such as representatives from Nokia or consultants at the major service pro-
viders (eg Vodacom, MTN, CellC). They also gather information from the mass media,
such as television and the internet.
•• Early majority. These consumers are pragmatists who purchase the products once the
innovators and early adopters have used them. They will, for example, purchase the
product once opinion leaders, such as doctors, lawyers and managers, have convinced
them that there are no financial risks with regard to the quality of the product and that
the benefits are worth the price of the product. These are middle-class consumers, such
as teachers, policemen and nurses, who will purchase the cellphone by signing a contract
with the service provider.
•• Late majority. These are consumers who are suspicious of innovation. They will only use
the product once they are satisfied with the value and the benefits the item offers, such as
110 MB of internal memory and a cellphone navigator. They rely on information provided
by their peers and do not rely on opinion leaders’ and early adopters’ views. These are
consumers who are older, less educated, retired and financially stable.
•• Later adopters, laggards or non-adopters. These consumers prefer things to be done
as they were in the past and are disbelievers. They tend to be senior citizens in the lower
socioeconomic class and would rather use normal cell phones than the new advanced
products and might even prefer traditional landlines.
As we have defined innovation and discussed the adopter categories, we can now look
at the factors that affect the spread (diffusion) of innovation among the adopters.
10.3 Factors affecting the diffusion of innovation
According to Rogers (2003:3) there are five factors that affect the diffusion (spread) of
innovation. However, other sources have identified ten factors (Jooste et al 2002:86).
Factors affecting the spread of innovation can also be termed attributes or characteristics
of innovation or the spread of innovation. Make sure you are able to discuss and illustrate
these factors with practical examples. The following is a brief discussion of these factors:
• Complexity. This factor refers to the degree of difficulty in terms of the level of
understanding and the use of the new product. Products that are complex and difficult
to use and understand tend to spread slower in the market. Let us take Moirs’s two
custard products as an example. Moirs instant custard is easy to make and ready to
eat within a minute, as consumers only need to add milk and stir. When using Moirs
custard powder, on the other hand, consumers have to warm the milk first, measure
and add the custard power carefully and add sugar while stirring to reach the right
consistency. If done incorrectly the custard’s consistency may be too thin or too thick.
Consumers will adopt the instant custard easily, since it is easy to prepare and does
not require much effort.
• Compatibility. This factor refers to whether the product is compatible with the
consumers’ values, beliefs and objectives regarding its purchase and use. Let us take
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religion as an example. Muslims and members of the Zion Christian Church (ZCC) are
not allowed to eat pork as it is against their beliefs. This means that new food products
(eg Escort polony), which contains pork, will be adopted at a slow rate or may not
even be adopted at all.
• Relative advantage. This factor relates to consumer needs, which are met by
innovation, such as reduced costs or new methods of doing things. For example, First
National Bank (FNB) has introduced cellphone banking to perform transactions such
as payments and purchases. This innovative service is cheaper than the traditional
over-the-counter transactions and consumers do not have to physically go into the
bank. They also have an in-contact service that informs consumers of account activity
via SMS. Consumers will adopt this innovative banking service quickly, owing to its
convenience and the difference in bank charges.
• Observation. This factor deals with the extent to which the potential adopter has
had the opportunity to monitor the positive effects of the product or service when
accepting the innovation. If the adopter has had an opportunity to see the use and
benefits of the product, the possibility of a more rapid diffusion is feasible. For example,
a consumer can see how a Phillips vacuum cleaner functions by observing an in-store
demonstration by a salesperson. A Phillips washing machine, on the other hand, cannot
be demonstrated in store and the salesperson can only explain the use and function
of the machine. Consequently, consumers who buy the washing machine can only
observe the use of the machine once they have purchased the product. Consumers
will, therefore, adopt the vacuum cleaner quicker than the washing machine owing
to the fact that they were able to see the benefits offered.
• Trial. The easier it is to have a low-cost or low-risk trial of the innovation, the more
rapid its diffusion. An example of this is the introduction of a new flavour of Jacobs
Kronung coffee, where consumers are given sample sachets in order to try out the
product. In trying out the product, consumers run no risk of losing money as the trial
sachets are free. This increases the speed of diffusion as consumers can taste the new
product and will purchase it if they are satisfied.
• Perceived risk. Should the risk of trying out the innovative product or service be
high, diffusion will be slow. These risks can be psychological or financial. Financial
risk occurs when the product is expensive and consumers cannot be refunded. A
product that involves high financial risks is, for example, the purchase of a luxury car
(eg Mercedes-Benz). Once the consumer drives it out of the showroom it loses value
and the money the consumer paid for it will not be refunded and it can only be resold
or traded in at a lower value. The same applies when purchasing a less expensive
car, such as a Toyota Corolla, where consumers are still faced with the financial risk,
although this is less in comparison to a Mercedes-Benz, as the purchase price is lower.
The speed with which the Toyota will be adopted will, therefore, be faster compared
to the Mercedes-Benz.
• Marketing effort. The marketing mix consists of 7 Ps, which are activities executed by the
organisation to influence the rate of diffusion. Marketers are expected to communicate
product attributes, such as features, quality and benefits to consumers, using, for
example the 7 Ps: price, place (eg CNA), promotion (eg TV, magazines), product (eg
Nintendo WII), people (eg teenagers, young adults and the internal staff), process and
physical evidence (eg layout, displays in store) to communicate the Nintendo WII, for
example, to the target market to increase the spread of innovation.
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• Type of group. The target market determines the rate at which innovation will be
diffused, as some groups are more accepting than others. The young, affluent and
highly educated market segments tend to accept change and new products eagerly
and will, therefore, buy the Nintendo WII, unlike the older generation which may be
sceptical about the new product.
• Type of decision. Decisions are made collectively or individually. Collective decisions
are those made by more than one consumer, for example, family members (mothers,
fathers and children). Collective decisions may result in slow rates of diffusion, since
family members may not have the same opinion about buying a new product, such
as a Nintendo WII or a Sony play station. Individual decisions are only made by the
actual buyer, who does not have to deliberate with other consumers, such as family
members or friends. The speed of diffusion in such a case is, therefore, more rapid
because less decision-making consultation is required.
• Fulfilment of perceived need. When the satisfaction that will be derived from the
innovation is obvious in terms of meeting the need, the diffusion is more rapid. For
example, the Nintendo WII offers features such as powerful new motion-sensing
controllers and uses Bluetooth, as opposed to other game stations, such as the Sony
playstation. Consumers will, therefore, perceive the Nintendo WII as more capable of
satisfying their needs and it will be adopted quicker by the consumers.
The diffusion of innovation, consumer adopter categories and factors affecting the
spread of innovation have been discussed in detail in terms of the two questions: “Why
is it important to understand consumer behaviour with regard to innovation?” and “How
do consumers who purchase innovative products at an early stage differ from those who
purchase them at a later stage?”
As consumers, we purchase products once we are aware of them. In order for awareness
to occur there has to be cues that communicate the products to us. What made you aware
of the Nokia N97 model in the market? Was it a television commercial or a magazine
advertisement? What action did you take when you became aware of the product?
Let us now look at the steps that consumers take from the time they become aware of
the product to the time they actually use the product, thereby answering the question:
“How do consumers go about adopting a new product?”
10.4 Consumer adoption process
When new or improved products are introduced on the market, consumers tend to vary in
terms of their levels of awareness of the products. Let us define the term adoption process.
The adoption process is defined as the development of consumers’ awareness of a product,

which ranges from being aware of the existence of the product to the time they actually
use the product regularly.
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Adoption refers to the level of awareness of the product, while diffusion refers to the
speed with which the innovation is spread through society. Psychologically, individuals
negotiate the various steps to adoption differently, since they do not all adopt a new
product at the same rate or speed.
The consumers who adopt the innovative product first, that is, the innovators, take the
steps quickly, while other adopters take longer as they deliberate on their purchases.
However, the innovation can be rejected at any stage of the adoption process. It is therefore
important to know and understand the steps in their chronological order and to explain
them by providing practical examples from your or other consumers’ experience.
Awareness Interest Evaluation
Confirmation Decision Trial
Figure 10.2: Consumer adoption process

Source: adapted from Jooste et al 2002.
10.5 Steps in the adoption process
Individual consumers take the following specific steps in adopting a new product:
• Awareness. The potential consumer has some knowledge of the product but does
not have all the information. At this stage, the consumer may not know how the
product works or what it can do. The consumer becomes aware of the product
via communication channels, such as the broadcast media (radio and television) or
print media (magazines and newspapers).
or
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Have you noticed that magazines and newspapers do not usually tell you how the
product works? For example, beauty products, such as the new Lux Touch Me beauty
soap, are advertised in magazines, but these advertisements generally give a visual
image and some information on what the product does; they do not explain exactly
how it works.
• Interest. The consumer knows about the product but still lacks information. If
consumers become interested they will try to obtain information on the product.
This information may be obtained from secondary sources, such as magazines and
articles. For example, information on Lux beauty soap may be obtained from magazines
such as You and Huisgenoot. Information may also be obtained in store by asking the
assistants in shops such as Clicks.
• Evaluation. Consumers evaluate the product on the basis of their past experiences.
For example, when using other beauty soaps, such as Lux Creamy Perfection or the
Dove Cream Bar, the consumer compares them to other beauty soaps he or she has
used in the past. When using a product, consumers use their intellectual capital to
evaluate it in terms of its benefits.
• Trial. At this stage, the consumer may buy the product to determine if it meets his or
her needs, for example a smooth, clear skin. It is important for marketers, especially
those who market fast consumable products, such as food and skin care, to have
samples available for consumers. An example of a sample would be a small 50 g bar of
Lux beauty soap included in a magazine or handed out during an in-store promotional
display which would encourage consumers to buy the product. The new product could
also be introduced to consumers as a promotional offering at a discount as part of a
package deal with another company product, for example a deodorant. Consumers
do not easily experiment with expensive products and marketers need to ensure that
the products are available to encourage trial and adoption.
• Decision. Once the product has been tested, the consumer decides to adopt or reject
the new product. Consumers adopt a new product if they are satisfied with it and
value its benefits and may, consequently, even become regular users.
If consumers are satisfied that they are, for example, not allergic to Lux Rose Velvet
beauty soap and that it has the silky effect they want from it, they may buy the 125 g
or 200 g bars. Consumers may then even buy the soap on a regular basis.
• Confirmation. The consumer searches for more information pertaining to the product
they have purchased. This may be done by speaking to other consumers who use the
soap, or by reading magazines and articles to get a clear understanding of the use
and benefits of the product. Subsequently, the consumer conducts a post-purchase
evaluation to decide whether or not he or she will purchase the product again.
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10.6 ADDITIONAL READING
Read this particular section in this study guide.
The following additional reading material will assist you in understanding how the
content of this study unit applies to the market. The discussion on this link is based on
the Porsche brand, which has introduced standard utility vehicles (SUVs), and the Diesel
brand (a story based on personal experience). The focus is on early adopters’ reaction to
the mass media’s acceptance of a new brand. This group of early adopters tends to react
negatively and become critical when a brand to which they are loyal is usurped by mass
consumption. The reasons for this take over and its effects, as well as the strategies that
can be implemented to counteract it, are also discussed in the additional reading material.
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2189
28 10.7 ASSESSMENT
1. Discuss the adopter categories and their characteristics.

2. Define diffusion of innovation and highlight the key words in the definition.
3. Explain the factors affecting the diffusion of innovation and give an example of
each.
4. Discuss the steps consumers take in adopting an innovative product.
2910.8 REFLECTION
Before you continue with the next study unit, reflect on the following questions:
30 10.9 SUMMARY
In this study unit we defined the term diffusion of innovation and examined the
key elements of the definition. The types of consumer adopter were discussed
and we also considered the factors affecting the spread of innovation. In
conclusion we looked at the adoption process.
Make sure that you understand consumer behaviour in terms of the adoption
categories, as well as the time and processes involved in adopting a new
product, and the factors affecting the adoption. An understanding of consumer
behaviour in this regard ensures that appropriate marketing strategies and
activities are implemented for the success of diffusion and the adoption of
innovation.
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In the following study unit, we focus on communication and persuasion as
marketing activities directed at influencing consumer behaviour.
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Topic 5
MARKETING ACTIVITIES DIRECTED AT
INFLUENCING CONSUMER BEHAVIOUR
AIM
To help you develop an understanding of the marketing activities directed at influencing
consumer behaviour. To understand these activities, it is necessary to gain insight into
communication and persuasion, market segmentation, factors influencing consumer
loyalty, ways of building relationships with consumers and the value of e-commerce in
consumer behaviour.
Learning outcomes
After studying this section; you should be able to

• explain the influence of communication and persuasion on consumer behaviour
• discuss the role of market segmentation in consumer behaviour
• explain factors that influence consumer loyalty
• discuss the process that is followed in building relationships with consumers
• explain and illustrate the value of e-commerce in consumer behaviour
topic CONTENT
Study unit 11: Communication and persuasion
Study unit 12: Market segmentation
Study unit 13: Factors that influence consumer loyalty
Study unit 14: Building relationships with consumers
Study unit 15: Value of e-commerce in consumer behaviour
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Study unit 11
COMMUNICATION AND PERSUASION
INTRODUCTION
Communication enables companies to create awareness and provide useful product and
service information to a particular target market or the general public. It also enables the
target market and the general public to respond in a particular way. However, marketers
have to communicate their message effectively in order to ensure that it is clearly conveyed
and understood. Marketing managers develop communication strategies which are
directed at consumers to inform them about a company’s products and services, and to
influence them to the extent that they react to what is communicated to them.
Our ability to communicate has been greatly enhanced by the changes that have occurred
in the technological environment, which have meant that our options for communication
media are ever expanding. From cell phones and fax machines to e-mail and video
conferencing, communication devices are related to the way we do business, now more
than ever before.
Consumers are persuaded to use communication vehicles, such as television, radio,

magazines, newspapers and internet. The pictures above show various methods of
communication, as well as a Unilever advertisement used to communicate one of its beauty
products. Can you recall the last advertisement that you saw or read? Let’s use an example
of a McDonalds advertisement. Were you able to understand what was communicated?
What was your response to the advertisement? Would you say the communication
strategy was effective and why was it effective? If not, why? Communication is a two-way
process. Were you aware when you answered the questions that, by going to McDonalds
and buying the McFeast meal that you had seen in an advertisement, you had actually
responded to the message?
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As the title of this study unit implies, this unit deals with communication and persuasion.
The environment in which consumers live is filled with elements of communication that
persuade them to take action, whether it is buying a product or searching for more
information. In your own neighbourhood, think about the messages about products
or services that companies communicate on billboards and posters. Such products and
services may be new or existing; in the case of existing products the company’s aim is to
remind consumers of the product. Either way, the company’s aim is to inform its consumers,
arouse awareness and persuade them to make a purchasing decision.
The purpose of this study unit is twofold: firstly, to discuss communication in detail,
including the elements of communication and the communication process. The second
objective is to explain persuasion and the role it plays in communication. Two questions
consequently arise here:
• What is communication and why is it important for marketers?

• How are consumers persuaded to respond to what is communicated to them?
We will attempt to answer these questions in the sections that follow. In this study unit
we will look at communication and persuasion. Once you have studied this study unit,
refer to the images above to see whether you view them in a different light.
After working through this study unit, you should understand the following concepts:
• communication
• marketing communication mix (MCM)
• persuasion
• elements of persuasion
You will need approximately fourteen hours to work through this study unit. Make sure
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Introduction
Key concepts
11.1 Communication
11.2 Elements of communication and the communication process
11.3 Marketing communication mix (MCM)
11.4 Elements of the marketing communication mix
11.5 Persuasion
11.6 Elements of persuasion
11.8 Assessment
11.9 Reflection
11.10 Summary
Communi-
Elements of communication and the communication process
cation
Marketing communication mix (MCM)
Elements of the marketing communication mix
Persuasion Elements of persuasion
100
Key concepts
concepts:
• communication
• marketing communication mix (MCM)
• persuasion
• communication process
• elements of communication
• elements of the marketing communication mix
• elements of persuasion
11.1 Communication
This section seeks to define communication in order to have a clear understanding of

the process, before taking a look at the elements of communication and a holistic view
of communication. Let us now define communication:
Communication is defined as a process whereby participants, collectively, create meaning

through the exchange of symbols.
This definition emphasises four major points: communication as a transaction; people

(participants) working collectively; creation of meaning; and an exchange of symbols. Let
us now look at these points independently:
• Communication as a transaction. A transaction involves two or more people that

engage in creating meaning. Remember earlier on when you had to recall the last
advertisement you saw or read? The two or more people referred to are you, the
consumer, and the marketers via the advertisement.
• People working collectively. This emphasises the importance of the participants
working together. The advertisement draws your (the consumer’s) attention and your
attention is demonstrated by your action to purchase the product. The participants
develop mutual expectations and this results in both parties being influenced.
• Creation of meaning. Words have no meaning in themselves; their meanings are
created through the values, norms and culture of society. This means that in different
cultures and countries words carry different connotations.
• Exchange of symbols. The exchange of symbols enables people to create meaning.
Such symbols may be in verbal, non-verbal or graphic form. Verbal symbols are words
that are said or written, while non-verbal symbols include body language that takes
the form of a gesture or facial expression. Graphic symbols, on the other hand, can
be pictures, icons or diagrams. Follow the link below. This is a video clip that explains
non-verbal communication with the aid of examples. Make sure that you observe and
take note of the various ways the actors communicate. There are also other links on
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the left-hand side of the page with more examples of non-verbal communication:
http://www.youtube.com/watch?v=VfDWQG47pAQ
To be able to understand and define communication, it is important to focus on the major

points of communication. Now that we have defined communication, let us look at the
elements of communication.
11.2 Elements of communication and the

communication process
Study this particular section in this study unit.
The figure below demonstrates communication as a process, with communicator A

referring to the advertising company, and communicator B referring to the company’s
target market.
h Message
e wit in Re
o d e ce
Enc nguag medium int ive a
la er p nd
et
Communicator A Communicator B
Re
ce
int ive a h
er p nd
e wit
et Message o d e
in Enc nguag
la
medium
Figure 11.1: Communication process

Source: http://davis.foulger.info/research/unifiedModelOfCommunication.htm
Figure 11.1 illustrates the communication process, whereby the communicator (in this
case Unilever) encodes a message in its advertisement using symbols, images or words
using a media vehicle such as television. The message is decoded (interpreted) by the
recipient, that is, the target audience (target market).
Communication is a process and, in order to understand how this process flows, you need
to understand the following elements of the process:
• Sender. This refers to the person who is conveying the message; let us use Unilever
as an example.
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When Unilever advertises a Magnum ice cream it is the sender as it is communicating
its product.
• Message. The message it that which is being conveyed. Unilever’s message might
focus on the “use” of the product. For example, the product could be used by health-
conscious consumers for children’s parties, since it is low in carbohydrates and is sugar
and lactose free.
• Receiver. This refers to the target consumers at whom the message is aimed, that is,
the people to whom the message is being conveyed. In this case, the receiver would
refer to the children, parents and party planners.
• Feedback. This is the response from the target market, and refers to how the message
was received. The target market may respond by purchasing the product or inquiring
about the price from the manufacturer (Unilever) or intermediaries (retail stores that
carry the product).
• Medium. The message is sent through different media vehicles, including print media,
such as magazines or newspapers, or broadcast media, such as television and radio.
There are also new media vehicles, such as the internet, multimedia message service
(MMS), smart cards and interactive TV.
• Context. The context is the situation or setting within which communication takes
place.
• Noise. During communication there may be forces that interfere with the communication
process. The main interference is usually noise. Physical noise refers to, for example,
background noise, such as people talking loudly, and psychological noise, which refers
to the distracting thoughts one may have while listening to the message.
• Code. Code can be in the form of words, images, sounds or symbols and is used
to communicate the message. For example, the advertisements for and the packaging
of Magnum ice cream use the word “Magnum” and an image of the Ola logo.
It is important to know and understand the elements of the communication process and
you should be able to provide practical examples of each element. These elements assist
marketers to develop effective messages for the different target markets.
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Activity 11.1
This is a group activity. You should form a group of three to four members.
Above is an advertisement for Castle Lite beer. Look at the advertisement
and, in your group, discuss it in terms of the elements of the communication
process, providing practical examples on how they influence consumer
behaviour in the case of this advertisement.
13 Feedback
The elements of the communication process you may have mentioned include the following:
•• Sender. The sender is the SABMiller company brand manager who is responsible for
communicating the product on offer.
•• Message. The focus of the message is on the benefits that result from consuming this beer,
as it is lighter and has a lower alcohol content compared to other alcoholic beverages.
•• Receiver. The receivers are the young, affluent, educated, health conscious consumers.
•• Feedback. The feedback comprises the information, which indicates where consumers
can buy the product, for example at Tony’s Liquor Store or Solly Kramers.
•• Medium. The media SABMiller uses for marketing this product includes broadcast media
(TV), new media (their website), and print media (magazines).
•• Context. The context conveyed by the message is the fact that this is a social beverage.
•• Noise. The psychological noise that could occur is when consumers think of other things
while watching the advertisement, while the physical noise could refer to background
noise caused by, for example, family members or friends laughing or talking loudly while
the advertisement is being aired.
•• Code. The codes used by SABMiller are the product logo “Castle”, the colours used, which
have aesthetic value, and the information label, which forms part of packaging for the
product is a secondary package.
Log onto the SABMiller website to view the full advertisement: http://www.sablimited.co.za/
sablimited/view/sablimited/en/page1
Activity 11.2
In terms of the advertisement used in Activity 11.1 above, identify the target market and
the message that is being communicated.
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14 Feedback
You probably realised that this is an advertisement for one of SABMiller’s prime product
offering. The target market for this product is consumers who prefer a light, low-alcohol beer.
The target market segments are young, educated, affluent, brand-conscious consumers with
a high disposable income.
11.3 Marketing communication mix (MCM)
Read the relevant section in this study unit.
Advertising Publicity
Sales promotion Sponsorship
New media marketing Public relations
Direct marketing Personal selling
Figure 11.2: The marketing communication mix (MCM)
11.4 Elements of the marketing communication mix
According to Du Plessis et al (2003:3), marketing communication involves techniques that

are initiated by marketers and directed at the target market with the aim of influencing its
attitudes and behaviour. The marketing communication mix (MCM) entails eight elements
that are used by marketing managers to communicate and achieve their communication
objectives, such as the regular purchase and use of a product. Let us now discuss the
MCM in detail:
• Advertising. This is a paid form of communication using media vehicles, such as

magazines or television, depending on the company’s marketing budget and the image
of the product the company wants consumers to perceive. This form of communication
has the advantage that the communicator is able to control what is communicated
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to the target audience. A company such as Nestlé would advertise both on TV and in
magazines such as True Love.
• Publicity. This is a form of communication that focuses on company matters and
activities. There are two types of publicity: marketing publicity, which focuses on
persuading consumers to purchase a product; and public relations publicity, which is
concerned with convincing consumers that a social responsibility project is worthy.
An example is the “take a girl child to work day” project, which is a Cell C initiative.
• Sales promotion. This is aimed at improving the declining sales of products that are
in the mature stage of their life cycle. This form of communication has short-term
objectives. Let us take Edgars as an example: they discounted an old range of Reebok
sneakers as their sales were low and this action enabled them to stock the latest range
of Reebok sneakers.
• Sponsorship. This is one of the oldest forms of communication as it dates back to the
late 1800s and early 1900s. The sponsor provides resources to the sponsored company
or brand for developing its communication strategy and, in return, gets certain
sponsorship rights.
One example is Telkom’s sponsorship of the PSL Charity Cup, during which they clearly
communicate their brand by explicitly stating “official sponsor of the Charity Cup”.
• New media marketing (e-communications). This form of communication has come about
as a result of advanced technology. Such communication technologies include the
internet, the world wide web (www), MMS, iTV, touch screens, cyber marketing and
smart cards. We will not, however, discuss these technologies in detail here.
• Public relations. The aim of public relations (PR) is to influence the opinion of the public
or the society within which the company operates. PR is responsible for conveying
news of developments and happenings in their clients’ companies. The public tend
to perceive messages conveyed via this channel as credible as it is not a paid-for form
of communication.
• Direct marketing. This is a two-way form of communication between the marketer and
consumers. Marketers customise an advertisement and ask their target audience to
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respond via SMSs or a direct call line within a certain time period. One example is a
Glomail vacuum cleaner advertisement, where the audience is given 30 minutes to
take advantage of a special offer. Go to the following link and click on the video icon
to view the way in which Glomail does its direct marketing advertisement. Take special
note of the selling line “call now”: www.glomail.co.za/products_liquid_grout.asp
• Personal selling. The seller and the buyer communicate on a one-on-one basis. This is
a personal and paid-for form of communication. The seller identifies the consumer’s
needs, as the objective is to meet these needs. The sales personnel of Old Mutual, for
example, would go to their target market’s workplaces to establish their consumers’
specific needs and subsequently assist them by customising their life assurance needs
as far as possible.
The MCM is important because marketers may use a combination of these elements to
communicate their message effectively to the target audience and also take advantage
of the benefits that the elements of the MCM offer them.
Activity 11.3
What elements in the MCM could Tiger Brands use to communicate its different types
of Albany bread?
15 Feedback
A company may choose to use a single one or a combination of the communication elements
in communicating with its target market. You should have identified the following elements:
Advertising. The company is well established and, therefore, has the marketing budget to
advertise on television and radio.
Publicity. It could communicate its social responsibility projects to show good corporate
citizenship.
Sales promotion. This is a short-term strategy aimed at increasing the consumer awareness
of a product. Moreover, by putting this particular product on the market it is competing with
its competitors.
Sponsorship. It could provide bread for school feeding schemes in the communities in which
it operates.
E-communication. This takes place through advertising on the internet and on Tiger Brands’
website.
Public relations. The benefits of making use of public relations include credibility since today’s
consumers are well-informed.
Personal selling. This takes place when sales personnel liaise with the retailers, owners of
township stores and spaza shops that carry the company’s products.
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11.5 Persuasion
Persuasion is another form of communication; it is audience based and could influence

consumers with differing opinions, as well as those who are neutral, since it is an intentional
strategy that includes verbal and non-verbal communication. Let us now define the term
persuasion:
Persuasion is an attempt to convince others using the persuader’s credibility, logical

arguments, appeal and representation.
Persuasion uses media as a tool (vehicle) to communicate. The media used to persuade
the target audience include, for example, TV, radio, newspapers and the internet. The
communication carried by these media is intended to result in behavioural changes, which
may be internal or external. Internal behaviour refers to consumer values, attitudes and
beliefs, while external behaviour is visible behaviour.
The credibility of the persuader is important and a source of trust. The persuader needs
to consider both his or her audience’s culture and the context of the message.
11.6 Elements of persuasion
You should be able to explain the following five elements of persuasion:
• Intent. This means that what is communicated is intentional, although there may be
situations where this element of persuasion is accidental.
• Coercion. This is to ensure compliance where behaviour is changed.
• Context. Changed behaviour may be confined to a limited context.
• Plurality. This refers to persuasion aimed at more than one person.
• Media. There are different forms of media that can be used as vehicles for communication.
The following additional reading material will assist you in understanding how the content
of this study unit fits into the market. The discussion on this link is based on various
108
marketing advertisements, which use persuasion and appeal to convince consumers to
purchase products.
http://www.wiziq.com/tutorial/62737-Language-of-Persuasion
3111.8 ASSESSMENT
1. Define communication.
2. Discuss the marketing communication elements and illustrate them with practical
examples, using the BMW Company and any car in its range.
3. Companies use the MCM to inform, persuade and arouse consumer awareness
of what they offer. Discuss the MCM and illustrate each element with practical
examples.
4. Discuss the elements of persuasion.
32 11.9 REFLECTION
33 11.10 SUMMARY
In this study unit, communication was defined and the elements in the
communication process were discussed in detail. The MCM was briefly discussed
and illustrated with practical examples. Lastly, the term persuasion was defined
and the elements of persuasion were discussed to highlight its significance in
communication.
In the next study unit we focus on exploring the concept of market segmentation
as it pertains to consumer behaviour.
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Study unit 12
MARKET SEGMENTATION
INTRODUCTION
Businesses need to identify and satisfy the needs and wants of many different people
with different backgrounds, interests, perceptions, attitudes and origins, in order to be
profitable and grow. Owing to consumer diversity, businesses have to identify different
consumer segments in the market. Market segmentation enables businesses to segment
the market successfully into attractive, feasible and profitable groups of consumers with
the aim of satisfying their needs and preferences. To obtain a visual understanding of
the market segmentation concept, look at the images below:

This study unit introduces you to market segmentation with the emphasis on the steps
that have to be taken when segmenting a market. We also look at creating strategies
to target the different consumer segments (groups) effectively and discuss the correct
positioning of products so that they appeal to consumers in the diverse groups.
In this study unit we explain how a market can be segmented by using the different
segmentation bases. You have to understand the role targeting plays in successfully
choosing a target market and selecting marketing strategies for the particular group.
In positioning the offering, it is essential to take the consumer’s mind, as well as the
marketplace, into account. This involves various steps.
This study unit comprises the following main topics:
• the segmenting, targeting, positioning (STP) process, and the concept of market
segmentation
110
• strategies for reaching an identified target group in the market, and the use of
positioning in marketing an organisation’s products
Introduction
Key concepts
12.1 Introduction to market segmentation
12.2 STP process
12.3 Market segmentation
12.4 Targeting
12.5 Positioning
12.6 Repositioning
12.7 Assessment
12.8 Reflection
12.9 Summary
The layout of this study unit unfolds is as follows:
Market Introduction to market segmentation

segmentation
STP process
Market segmentation
Targeting
Positioning
Repositioning
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Key concepts
concepts:
• segmentation
• targeting
• positioning
• segmentation bases
• strategies for selecting target markets
• steps in developing a positioning strategy
• differentiation bases
• positioning methods
• repositioning
12.1 Introduction to market segmentation
In order for a business to be successful its aim should not be to reach every consumer in
the marketplace but rather to target specific consumer markets to promote its products
more effectively. To promote their offerings successfully, marketers need to ask questions
such as: What makes our business unique? How can we promote these unique features
to targeted consumers? This is where the segmentation of markets plays an essential role
in any successful business.
Segmenting the market involves establishing consumers’ requirements. Are consumers

looking for quality, low prices and convenience or do they have certain unique needs to
fulfil? It is critical for businesses to identify customers’ needs and wants and the benefits
they require from a product or service and to subsequently create the product or service to
meet that particular need. The same applies when consumers want two or more benefits
from a product or service. Knowing what consumers need and want is fundamental to
successful marketing.
By reading the introduction you probably thought of the many ways in which the market
differs in terms of consumers’ tastes, needs, attitudes, motivations and lifestyles and how
environmental changes allow consumer needs to change. This proves how important the
correct segmenting and targeting of groups are to businesses.
Activity 12.1
Think of the factors that have the potential to change future markets, and that will lead
to segmenting consumers into different groups based on their unique needs.
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16 Feedback
•• Population changes, such as increasing numbers of older people, increased diversity in

the population, increasing numbers of younger people and increasing numbers of women
in the working environment
•• Disposable income resulting from employment changes in the labour market and a
decrease in the unemployment rate
•• Supply of natural resources, such as energy and water
•• Laws, such as child restraint systems in cars, speed limits and legal age of consent
•• Environmental factors, such as weather and global warming threats
•• Consumer tastes and preferences
•• Increase in competition resulting from the development of technology and an increase
in its availability
•• Dual-income households and changing family structures
All these factors are bases for segmentation, which classifies consumers into groups based on
specific needs or wants.
12.2 STP process
Instead of approaching marketing in an unfocused way, a business must concentrate on

satisfying certain consumer needs. This process begins by, firstly, segmenting the market
into distinct groups that differ in terms of needs and preferences. The next step is to
target one or more of these specific groups by selecting one or more identified market
segments, and lastly, positioning the product or service in such way that it communicates
benefits to consumers. The following sections will look at this interrelated process in
more detail. For example, before 1960, the Coca-Cola Company produced only one soft
drink and aimed it at the entire soft drink market. Today, Coca-Cola offers over a dozen
different products (soft drinks) to a variety of market segments based on diverse consumer
preferences, such as flavour and calorie and caffeine content, as well as the demand for
alternative soft drinks.
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12.3 Market segmentation
Study this topic in the prescribed book. Also study additional information in
this section of the study guide.
Market segmentation is the process by which a total market is divided into groups
consisting of consumers who have relatively similar characteristics and product needs. For
example, Markhams is one of the largest men’s fashion retailers in South Africa, whereas
Foschini is the largest women’s fashion retailer. These shops appeal and sell to different
target customers.
Women’s dress Men’s shirt
It is essential for marketers to understand that segmentation refers to aspects of the

consumer and not the product or service.
Market segmentation offers distinct advantages:
• It helps to define and satisfy consumer needs more accurately.

• It makes more effective use of scarce resources.
• It provides opportunities for building long-term relationships with customers.
• It helps to set more accurate goals and objectives, which enhance performance
assessments.
There are certain criteria necessary in order for segmentation to be feasible and effective.
Segments must have enough profit potential to justify developing and maintaining a
marketing strategy. Consumers must have heterogeneous (different) needs, and segmented
consumer needs must be homogeneous (similar). It is also essential for a business to reach
a certain segment with a marketing strategy.
Activity 12.2
Consider the way in which the media has changed as a result of certain demographic shifts
and the subsequent need for marketers to reach these changed demographic groups.
How do marketers reach children by using various media vehicles?
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17 Feedback
•• Animation programmes on Saturday mornings on SABC television

•• Animation channel and Disney channel on DSTV
•• Cereal boxes
•• Cartoon strips in magazines, such as You and the Sunday Times magazine
12.3.1 Steps in market segmentation

This section identifies and discusses the four steps involved in segmenting the market.
Step 1: Identify product-related need sets
Most products satisfy more than one need and, therefore, marketing opportunities
increase when customer groups with varying needs and wants are identified. Marketers
can make use of the following segmentation bases:
• Usage or behavioural segmentation

The market can be divided into segments according to regular users, potential users and
non-users, as well as heavy, moderate or light users. It is essential for businesses to apply
frequent user incentives in order to get heavy and regular users to continuously purchase
their products, since it is up to five times more expensive to attract a new customer than
it is to satisfy existing customers.
• Demographic segmentation
Marketers often segment markets on the basis of demographic information because it is
widely available and often related to consumers’ buying and consuming behaviour. This
divides the market into segments according to age, sex, fertility rates, migration patterns,
mortality rates, ethnicity, income, education, occupation, family life cycle, family size,
religion and social class. For example, children between the ages of four to twelve have
a big influence on family consumption of products and services such as toys, beverages
and movies.
• Lifestyle and psychographic segmentation

Marketers must be aware of changing lifestyles, social class, personality, activities, interest,
opinions and motives and should market products accordingly. SABMiller is a South African
company that uses psychographic and lifestyle segmentation particularly well to guide
its entire marketing strategy. It has identified the following seven personality segments:
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-- Belongers – drink Castle Lager (positioned as the beer of the people)
-- Reclusives – drink Castle Milk Stout
-- Intellectuals – drink Castle Lite
-- Macho braves – drink Carling Black Label
-- Feminists – drink Redds
-- Cool egocentrics – drink Redds
-- Home makers – are the beer drinkers’ wives and girlfriends and are concerned about
family issues
• Geographic segmentation
This form of segmentation divides the market into segments according to geographical
location and includes elements such as countries, regions, rural, urban, climate, terrain,
natural resources, population density, sub-cultural values and different population
growths in different areas. For example, a more regional approach allows consumer goods
companies to react quicker to competition. Uniliver concentrates on rural areas for some
of its product categories. Employees marketing Omo in these regions go on “roadshows”
to demonstrate the use of this specific washing powder.
• Needs or benefits segmentation

When applying this kind of segmentation, marketers divide consumers according to their
specific needs or the benefits they require from a product or service.
When it comes to segmenting consumers it is essential to know how they differ. Is it

geographic area, demographic characteristics, social class, the stage in family life cycle,
personality, or required benefits, such as convenience, saving time and simplifying chores?
Marketers must also look at the regularity of purchases, number of purchases, brand
loyalty, attitudes, payment with cash, debit or credit cards, and whether the consumer
has a need to form a relationship with the business.
Activity 12.3
Create a customer profile form to identify potential target markets and decide which
bases you could use to obtain more information about your consumers’ needs.
18Feedback
Remember to ask questions that are important to your business interests and think carefully
about what you would like to know about your consumers. The information you obtain is
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important and enables you to make decisions regarding store location, store hours and choice
of advertising to reach your target market.
A customer profile form may include the following questions:
Age (18–24, 25–35, 36–49, 50–65 and over 65)

Approximate income (less than 4 999, 5 000–7 999, 8 000–10 999, 11 000–14 999, more than
15 000)
Gender (female/male)
Occupation (clerical, professional, retired, unemployed)
How the customer learnt about the business (newspaper, direct mail, word of mouth, chance)
Children at home (under 6 years, 6–12, 13–18, over 18)
Current status (student, married, employed outside the home)
Lifestyle (sports enthusiast)
Step 2: Group consumers with similar needs
Using the bases for segmenting the market, the next step is to group consumers with
similar need sets. For example, sports cars appeal to many young single individuals, young
couples with no children, and middle-aged couples whose children have left home. These
consumers can be grouped into one segment as far as product features, and perhaps
product image, are concerned.
Step 3: Describe each group
Once consumers with similar need sets have been identified, they should be described
in terms of their demographic location, lifestyle and media usage. In order to design an
effective marketing programme, it is necessary to have a complete understanding of the
potential consumers.
Step 4: Select an attractive segment to serve
Once they have a thorough understanding of each segment, marketers must select
the target market, which is a segment of a larger market on which they will focus their
marketing effort.
12.4 Targeting
Study this topic in the prescribed book. Also study the additional information
given in this section of the study guide.
A target market is a group of consumers for whom businesses design, implement and
maintain a marketing mix in order to satisfy the target market’s needs. Consumers in
this group have the ability, willingness and authority to purchase the product or service
offering.
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In the following section we look at the criteria that are used by marketers in evaluating
whether a segment will or will not be beneficial for the organisation.
12.4.1 Five criteria for evaluating market segments (refer to your

prescribed book for more detailed information on these criteria)
• Measurability
• Substance
• Accessibility
• Differentiability
• Actionable
Effective programmes can be designed to attract and serve identified segments.
12.4.2 Strategies for selecting target markets

• Undifferentiated targeting
This strategy views the market as one big market in which consumers have similar needs,
and the business uses a single marketing mix for the entire market. This entails one pricing
strategy and promotional programme, a single product with little or no variation and
one distribution system aimed at the entire market. Examples include staple foods such
as sugar and salt. The original Coca-Cola soft drink was marketed to everyone and the
focus was on what consumers have in common rather than how they differ.
• Concentrated targeting
This strategy focuses on the needs of a single segment and develops a highly specialised
marketing mix. This allows a business to specialise and focus all its energy on satisfying
one particular group’s needs. One example is Rolex watches, which aims its product at a
single-market segment, more specifically consumers in the upper social class category.
Rolex male watch
• Multisegment targeting
This strategy serves two or more well-defined segments and develops a distinct marketing
mix for each. This approach combines the best attributes of undifferentiated marketing
and concentrated marketing, for example Marriott International is a company in the
leisure industry that offers the following to its customers: Marriott Suites for permanent
vacationers, Fairfield Inn for economy lodging, Residence Inn for extended stay and
Courtyard hotels for business travellers. The core product is the same but the company
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uses different brand names, pricing and advertising to differentiate between the target
groups.
12.5 Positioning
Study this topic in the prescribed book. Also study the additional information
given in this section of the study guide.
Positioning refers to the image a product or brand conjures up in consumers’ minds and
consists of a set of beliefs, images and feelings about the particular product or brand.
Before a decision can be made on the positioning strategy to be followed, a marketer

needs to obtain information on the consumer’s perception of the product or service as
well as the attributes of the product in as far as it meets consumer’s needs and wants. In
addition, the marketer should carry out an assessment of competing product attributes
and benefits.
12.5.1 Developing a positioning strategy

The following is a seven-step approach that can be used by an organisation to position
its products or services:
Step 1: Identify a relevant set of competitive products or services
• Identify and evaluate the competition in terms of the number of competitors, as well
as their size, location, strengths and weaknesses.
• Decide how to overcome competitors’ strengths and take advantage of their weaknesses.
• Constantly review marketing strategies to determine if consumer needs are being met
by analysing sales trends, consumer comments, the number of returns, requests for
unavailable merchandise, and repeat customers. This will assist a business in deciding
whether to offer new products, seek new markets or penetrate current markets.
Step 2: Identify differentiation variables
Offer a product with competitive advantages and select variables that will help consumers
to differentiate between competitive offerings. The bases for differentiation include the
following:
• Product differentiation. Distinguish own products from competitors’ products by means

of features such as performance, durability, reliability, reparability, style, brand and
availability.
• Differentiation based on services accompanying the product. Products that cannot be
differentiated can make use of superior service delivery in terms of delivery, installation,
consumer training, consulting services and repairs.
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• Personnel differentiation. Staff can be selected and trained to be more competent
than competitors’ staff by exhibiting not only competence, but courtesy, credibility
and reliability as well.
• Image differentiation. Used to attract and satisfy customers.
Step 3: Determine consumers’ perceptions
As soon as the marketer has determined the differentiation variables, he or she needs
to find out how consumers perceive various products or services based on the variables
selected. A lot of research needs to be done to establish consumer perceptions.
Step 4: Analyse the awareness level of a product or service
In this instance, the marketer has to establish the intensity of awareness of the particular
product or service in the marketplace.
Step 5: Analyse a product’s or service’s current positioning
In this step a positioning map is developed to identify how strongly a particular product
or service is associated with a variety of determinant variables. The positioning map has
to graphically display the two dimensions the product or service is measured against. It
also displays the psychological distances between products or brands and is an extremely
useful tool for developing a positioning strategy.
Step 6: Determine the most preferred combination of attributes
To do this marketers have to look at the factors that relate to the position of a product or
service that appeals to consumers.
Step 7: Select a positioning strategy
This step involves the decision to select a positioning strategy that will reflect consumer
preferences and the positioning of competitive products or services. The following are
various positioning methods that can be used (see the prescribed book for more detailed
information):
• attribute positioning
• benefit positioning
• price and quality positioning
• use or application positioning
• product-user positioning
• product-class positioning
• competitor positioning
• origin positioning
In the next section we look briefly at the repositioning of a product or service. This
usually happens when the current positioning strategy does not adequately address
the changing needs of consumers or when a product’s original personality is altered to
appeal to a different market segment.
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12.6 REPOSITIONING
It is important to consider the following factors as possible reasons for an organisation

to consider a repositioning strategy:
• The original positioning strategy is inappropriate.

• Consumers’ demands have changed.
• Service provider wants to build on its strengths.
• Own brand competition exists.
• There is an overemphasis on attributes.
34 12.7 ASSESSMENT
1. Define market segmentation.

2. Describe how market segmentation, targeting and positioning are interrelated.
3. Discuss the various bases for segmenting markets and illustrate your answer with
practical examples.
4. Explain the criteria for effective segmentation and apply them to a product of your
choice.
5. Explain three strategies used to target markets and give a practical example for
each.
6. Discuss the steps involved in developing a positioning strategy.
12.8 REFLECTION
35
3612.9 SUMMARY
We began this study unit by focusing on a description of market segmentation
and then proceeded to look at the STP process in consumer behaviour. We
also examined, in detail, the concept of market segmentation and targeting. In
the last section of this study unit we looked at positioning and repositioning
as they pertain to consumer behaviour.
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In the following study unit we look at factors that influence consumer loyalty.
It is essential for businesses to encourage first-time users to make repeat
purchases. In order to do so, they have to know which factors can positively
influence consumer loyalty.
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Study unit 13
FACTORS THAT INFLUENCE CONSUMER LOYALTY
INTRODUCTION
Consumer loyalty is a powerful competitive advantage for any business. Loyal customers
actively look for a particular brand, store or business and are prepared to go out of their
way to purchase a particular offering. Look at the two photographs below to see how
they communicate the store and brand image. Loyal customers are a huge asset for a
business and serve as promoters of the brand or store in conversations with their friends,
colleagues and families and may even defend the product if it is criticised by others. Refer
to these photographs again once you have studied this study unit to see whether you
can relate them to the topic and if you understand how they visually depict the influence
of consumer loyalty.

In this study unit we look at consumer loyalty and the factors that influence brand loyalty.
We firstly take a look at brand and store loyalty, and then we discuss how loyalty can be
created by building relationships with customers. Before we start with the discussion,
think of the brand and store that you are loyal to, the brands you purchase regularly and
the stores at which you buy regularly. What are the elements that influence you to buy
at a particular store or purchase a particular brand?
This study unit consist of the following main topics:
• the nature of consumer loyalty and the factors that influence consumer loyalty
• the stages of brand loyalty and strategies that will influence consumer loyalty
understand the topics that are covered.
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Introduction
Key concepts
13.1 Introduction to consumer loyalty
13.2 Brand loyalty
13.3 Formation of brand loyalty
13.4 Influence of brand names on product preference
13.5 Brand image
13.6 Brand loyalty and repeat buying behaviour
13.7 Complex decision-making and brand loyalty
13.8 Brand loyalty and vulnerability
13.9 Stages of brand loyalty
13.10 Brand loyalty and brand segmentation
13.11 Brand loyalty correlates
13.12 Models of brand loyalty
13.13 Determining the loyal brand segment
13.14 Consumer behaviour and brand types
13.15 Store loyalty
13.17 Assessment
13.18 Reflection
13.19 Summary
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The layout of this study unit is as follows
Consumer Brand loyalty

loyalty
Formation of brand loyalty
Influence of brand names on product preference
Brand image
Brand loyalty and repeat buying behaviour
Complex decision making and brand loyalty
Brand loyalty and vulnerability
Stages of brand loyalty
Brand loyalty and brand segmentation
Brand loyalty correlates
Models of brand loyalty
Determining the loyal brand segment
Consumer behaviour and brand types
Store loyalty
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Key concepts
concepts:
• brand loyalty
• brand image
• brand preference
• repeat buying behaviour
• behavioural loyalty
• attitudinal loyalty
• store loyalty
• store image
13.1 Introduction to consumer loyalty
Read this topic in the prescribed book.
It is essential for businesses to understand why certain consumers are loyal to certain brands
and what factors influence these loyalties. Marketing managers have the very important
task of motivating buyers to become repeat purchasers by increasing consumption,
attracting consumers from competitive brands and preventing consumers from switching
to alternative brands or stores. Consumer loyalty entails a committed supporter who is
a repeat buyer at a specific store, or of a specific brand. Loyal consumers demonstrate
loyal behaviour by informing friends, family and colleagues of the positive aspects of a
specific store or brand.
13.2 Brand loyalty
Brand loyalty is expressed through consumer behaviour when making a conscious or

unconscious decision to repeatedly purchase a specific brand on a regular basis. However,
brand loyalty is more than just repeat purchasing. There are many consumers who buy
a product regularly but are not truly loyal to the brand; they repurchase the offering out
of mere habit, lack of alternatives or because it is convenient. Real brand loyalty occurs
because the consumer has the perception that the particular brand offers the right product
features, image or quality at the right price.
For businesses to create brand loyalty, they must break consumer habits and assist
consumers in developing new ones. Businesses must subsequently reinforce consumers’
newly acquired habits by reminding them of the value of their purchase and encouraging
them to continue purchasing these particular products in future. This type of loyalty can
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be a great asset to a business, since such consumers are willing to pay higher prices, cost
less to serve and can bring new customers to the business.
For example, if a consumer has brand loyalty to Company X he or she will purchase
Company X’s products even if Company B’s are cheaper or of better quality. All products
have core benefits for all the consumers who buy the products, for example, watches tell
the time, CD players play CDs, toothpaste helps prevent tooth decay, and garages sell
petrol. Consumers are not prepared to pay a premium for products or services that simply
deliver core benefits. Successful brands are those that deliver added value to their core
benefits. This added value enables the brand to differentiate itself from the competition.
With the above example in mind, go to the following link: http://www.consumerreports.
org/cro/video-hub/money/shopping/brand-loyalty/14037627001/1830105070/. The video
explains the concept of brand loyalty with reference to consumer behaviour and includes
the results of a study conducted on brand loyalty.
Activity 13.1
A consumer may be looking for reassurance or a guarantee of quality in a situation where

he or she is unsure about what to buy. Other consumers may be looking for a brand to
add meaning to their life in terms of lifestyle or personal image. Can you think of some
brands in your environment that meet these needs?
19Feedback
Brands such as Mercedes-Benz, Sony and Microsoft can offer such reassurance or guarantee.
Brands such as Nike, Porsche and Lacoste convey the message in terms of personal image.
13.3 Formation of brand loyalty
Consumers become brand loyal in different ways. The prescribed textbook lists some
factors essential for this development. Consumers’ perceived value, brand trust, product
or service satisfaction, repeat purchase behaviour and commitment are the main factors
influencing brand loyalty.
Below is a Coca-Cola company advertisement for a “my coke rewards” competition they
are running to encourage and form brand loyalty:
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“My coke rewards” is a consumer loyalty marketing campaign for Coca-Cola soft drinks
where consumers have to enter the codes that are found on specially marked packages
of Coca-Cola products on its website. Codes can also be entered by sending SMSs. These
codes are converted into points, which can in turn be redeemed for various prizes.
The programme was first launched in 2006 and has been so successful that it was later
extended. By November of that year, more than one million prizes had been redeemed
and product sales had doubled. Let us now look at the way brand names influence
product preference.
13.4 Influence of brand names on product preference
Brands offer convenience and guaranteed levels of quality and reduce the risk of purchasing
a defective product, as consumers will reject unacceptable brands. Brand names on
products such as toothpaste, jeans, deodorants, beer, cell phones and cars have a strong
effect on brand preference.
Example 1: Think about the Blackberry brand in the introduction section of this study
unit. Does the brand name influence your product preference? If yes, why? If no, why?
Your answer probably relates to the quality and guarantee factors that are associated
with the product, specifically when you compare it to other brand names, such as Nokia,
Samsung and Motorola.
Example 2: A study of ice-cream was conducted by a researcher who presented his subjects
with 12 of the leading ice cream products on the German market. He wanted to establish
if consumers purchase differently when the purchase is based on tasting the product, as
opposed to knowing the brand name. In the first blind test, subjects did not know the
brands and in the second test they were aware of the brand. The results in the two tests
were vastly different. In the second brand-connected test some of the best-known brands
got the highest scores, although the exact same brands received average scores in the
first taste-only test. A valuable conclusion can be drawn from this exercise: brand names
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definitely influence product preference and purchasing. Now that we have looked at the
influence of brand names on product preference with the aid of examples, we need to
dicuss brand image, which is dealt with in the next section.
13.5 Brand image
In this section, take note of how brand image is defined and explained. Brand image
provides a product with a unique character and appeal, and can be a business’s main
source of competitive advantage. The challenge for all businesses is to avoid a negatively
perceived brand image and to create a brand image that is more than just an identity but
represents personality. In designing a successful brand image, a business must develop
powerful images and reinforce them using communication channels. Consumers do not
just buy a product, but also the image associated with the product, such as power, wealth,
sophistication, identification and association with other users of the brand.
Some ways to reinforce brand images are through communication channels, such as
packaging, advertising, promotion, customer service and word-of-mouth messages.
A brand such as Mercedes-Benz has a strong public image because of its sensory and
physical characteristics, as well as its price. This image is not inherent in the brand name
but is created through advertising.
Activity 13.2
You are a consumer who wants to purchase a new car and you are faced with the challenge
of choosing between a BMW M6 and a CLS Mercedes-Benz. You assess the cars in terms
of the image they communicate. Looking at the two pictures above, what image is
conveyed by the two cars?
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20Feedback
Your answer probably reflected that the BMW’s advertisement communicates an environmentally
friendly and fuel-efficient car with emphasis on its aerodynamic feature. BMW’s tag line is “Joy
is future proof”. With reference to the Mercedes-Benz, you probably identified the pre-collision
safety system, which means they use this feature as a competitive advantage. Mercedes-
Benz’s tag line is “Engineered to move the spirit”. Both brands are targeted at the upper social
class target market that is not price sensitive and these two companies continue to generate
satisfactory sales even in times of economic recession.
13.6 Brand loyalty and repeat buying behaviour
As mentioned previously, repeat purchases may not necessarily reflect brand loyalty or
brand preference.
For example, think of a spaza shop or a convenience store such as a 7 Eleven in your
neighbourhood. Do you buy there because you are brand loyal? I am sure most of you
would have answered “No”. The reason may be that the spaza and the 7 Eleven are
conveniently located and their operating hours may be convenient too. This illustrates
the fact that a repeat purchase is not necessarily as a result of brand loyalty.
Businesses have to create commitment and psychological attachments between the brand
and the consumer. When consumers make a purchasing decision, especially when having
to buy complex products such as electronic goods, they go through a decision-making
process, which impacts on the brand they choose and to which they become loyal. Let
us now look at complex decision-making and brand loyalty.
13.7 Complex decision-making and brand loyalty
Brand loyalty is seen as a reflection of the degree of involvement the consumer has in
purchasing a product. Figure 15.4 in the prescribed book, indicates the difference between
high and low involvement. An example of low involvement products is staple food, such
as bread, although it can be argued that today’s consumers are brand conscious even on
this level, since they may still prefer certain brands such as Albany or Sasko. On the other
hand, high involvement products are durable goods, such as refrigerators and cars. Let
us now look at an explanation of the term vulnerability with reference to consumers and
brand loyalty.
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13.8 Brand loyalty and vulnerability
It should be noted that consumers exhibit different patterns of loyalty as well as varying
degrees of loyalty. This difference is better expressed by the term vulnerability. Vulnerability
is used to differentiate loyal consumers, that is, those who both buy and like the brand
from those consumers who buy a brand but like other brands equally well or better. As
a result a certain section of these consumers is vulnerable to other brands, which then
results in varying patterns of brand loyalty. You should now have an understanding of
what is meant by consumers being vulnerable.
Before continuing with the next sections do the following activity:
Activity 13.3
Imagine you own a business. Draw up a number of questions in order to find out more
about your consumers and to build up loyalty.
21Feedback
•• What are the expectations of our consumers and what will it take to exceed their
expectations?
•• What differentiates our business from our competitors’ in the eyes of our consumers?
•• To what extent can we grow our business with our existing consumers?
•• How do our interactions with our consumers influence their satisfaction and buying
behaviour?
•• How loyal are your consumers and how can we improve their loyalty?
In the next section we look at the stages of brand loyalty. You should be able to discuss
these stages in their correct sequence and illustrate them with practical examples. Let
us now briefly discuss the stages:
13.9 Stages of brand loyalty
Stage 1: Brand awareness
The consumer becomes aware of a product or brand as a result of a company’s promotional

efforts. Brand awareness is used by marketers to arouse consumer needs and interest
by using cues transmitted by the various marketing communication vehicles, such as
television or SMS.
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Stage 2: Brand trial
The consumer decides to try out the product. A business can assist the consumer in this
step by offering free samples or a discount in order to persuade customers to try the
product. Below are images of coupons and products samples that are distinguished by
their size and which marketers use to encourage brand trials. Sample products are normally
smaller than the normal size of the product, for example; Nivea cream is packaged in the
following sizes: 30 ml, 50 ml and 60 ml. When marketers provide consumers with product
samples of Nivea cream the size of the samples will be 60 g each.
Stage 3: Brand image
The consumer forms a brand image from messages and experience of the brand. Refer
to Activity 13.2, which is based on brand image. The answers provided for the activity
are based on the impression one has of the brands.
Stage 4: Brand preference
The consumer becomes familiar with a particular brand and chooses it from a set of
alternative brands. The brand that the consumer chooses above others is the brand to
which he or she has a positive attitude.
Stage 5: Brand habit
The consumer purchases the brand habitually, meaning that the consumer purchases the
brand regularly. An example of brand habit is when a customer who regularly purchases
Stimorol chewing gum, buys his or her next best brand, such as Dentyne or Eclipse
chewing gum when Stimorol is not available.
Stage 6: Brand loyalty
The consumer is now committed to the brand and displays repeat purchase behaviour.
Consumers who are loyal to the brand are those who will wait for the product to be
available if it is out of stock.
It is important for brand managers to understand the stages of brand loyalty in order to
develop strategies for creating consumer loyalty that are relevant to each stage.
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13.10 Brand loyalty and brand segmentation
Brand-loyal consumers can be identified by marketers as a market segment; in fact, they

are a defined segment already as they purchase similar products. They are also a useful
group for analysing market segmentation. Market segmentation refers to a group of
consumers with similar needs and consumption patterns and, by identifying a segment,
marketers are able to customise products to suit the needs of the particular group.
13.11 Brand loyalty correlates
You have to understand the relationship between brand loyalty and consumer buying
habits, shopping patterns and market structure characteristics. These are important
factors to keep in mind when developing strategies to build brand loyalty and sustain
loyal consumers.
13.12 Models of brand loyalty
Two models are used to understand brand loyalty, namely the deterministic and the
stochastic model. A deterministic model explains the process consumers go through
from choosing the brand to being brand loyal. The stochastic model, on the other hand,
is based on the following two philosophies:
The first philosophy involves variables that are internal and external to the individual and
determine the outcome of behaviour. The second philosophy is based on the promise that
the model of market response and the actual consumption process are both stochastic,
and not just the model.
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13.13 Determining the brand-loyal segment
After working through this section you should be able to discuss the behavioural approach
and the cognitive approach to brand loyalty, as well as the combined behavioural and
attitudinal approach.
To influence loyalty a business must understand consumer attitudes and behaviour.

Attitudinal loyalty includes a positive attitude towards a brand, business or establishment,
which is generated through an internal evaluation process. Behavioural loyalty refers to
the degree of purchase repetition that an individual maintains with a brand or business.
Positive attitudes do not always lead to loyal behaviour and loyal behaviour does not
always imply positive attitudes.
Let us now look at the different types of brand. You need to be able to distinguish between
the different types by using practical examples. The different brand types are dealt with
in the next section.
13.14 Consumer behaviour and brand types
There are three types of brand name consumers recognise before they decide to purchase
an offering:
• Manufacturer brands
Manufacturer brands are created by manufacturers and their products depict their brand
name. Below are examples of manufacturer brands:
Manufacturers are responsible for marketing their brand and they can capitalise on
widespread distribution of the product and build customer loyalty when retailers want
134
to sell their brand. Many successful clothing designers have licensed their manufacturer’s
brand name beyond the clothing category to include cosmetics, perfume and jewellery.
• Store brands
Store brands are specific to retail and chain stores and the producers of these products
are unknown to consumers. Store brands are also known as private brands, and include
PicknPay No Name Brand, Shoprite’s house brand and Edgars’ house brand.
• Generic brands
Generic brands are distinguished by the absence of a specific brand name and are identified
by product characteristics. They are usually lower priced than store-brand products sold
by supermarkets and imitate more expensive brands, but their pricing is very competitive
and they are usually sold in supermarkets as well.
13.15 Store loyalty
Store loyalty involves the customer’s commitment to shop at a particular store and is
influenced by factors such as the store’s location and shopping hours, relationship with
staff, service delivery, variety and range of products offered, price, promotions and
competitions, store ambience, payment methods and availability of credit.
An example of store loyalty resulting from promotions is the cash card system, which
Edgars provides to its customers. This initiative and their convenient shopping hours,
especially when they stay open until 22:00 during the festive season, encourage their
customers to shop at Edgars. Store loyalty refers to the tendency to shop repeatedly at
the same store.
Figure 15.8 in the prescribed book indicates stages of store loyalty:
• store awareness
• store patronage
• store image
• store preference
• store habit
• store loyalty
Store patronage, in particular, can be expressed in behavioural terms by looking at

consumer purchase behaviour. The management of a shop can ask themselves the
following questions:
• Does the consumer shop exclusively at Store X?

• Does the consumer spend a large percentage of total expenditure at Store X?
• Does a large percentage of total shopping trips to similar stores happen at Store X?
135 MNM2605/1
• Does the consumer buy a larger percentage of items at Store X?
• Are the consecutive trips made to Store X significantly more than consecutive trips to
other similar and competing stores?
Figure 15.9 in the prescribed book shows the evaluative criteria used in determining store
patronage and store loyalty, such as product offerings, physical factors, psychological
factors and aesthetic factors.
The following additional reading material will assist you in understanding how the content
of this study unit fits into the market. The discussion on the link below is based on the
automotive industry. It focuses on how industries strategise to develop and sustain brand
loyalty with reference to customer experience. Satisfied customers tend to have positive
attitudes towards brands with which they have had good customer experiences.
http://www.oracle.com/ocom/groups/public/@ocompublic/documents/webcontent/
018915.pdf
3713.7 Assessment
1. Explain the influence brand names have on product preferences.

2. A brand manager who offers frequent deals and product coupons assumes that
consumers who repeatedly buy the brand are loyal purchasers. What is wrong with
this assumption?
3. Explain the terms brand loyalty and brand image.
4. Name and explain the stages of brand loyalty.
5. Explain the two different approaches to brand loyalty and their implications for a
business.
6. Explain the different types of brand and give practical examples.
7. Define and discuss the factors that play a role in forming store loyalty.
38 13.18 Reflection
136
39 13.19 SUMMARY
Knowledge of the factors that influence consumer loyalty is an essential

prerequisite for businesses in order to analyse their consumers’ mindset and
gain a competitive advantage. Retailers should also provide their staff with an
understanding of factors that influence consumers and resources within the
business should be reallocated more effectively. This will impact positively
on relationships with consumers and will result in repeat purchase behaviour,
which again leads to loyalty.
This study unit has highlighted businesses’ need to continually find and keep
new customers, and the importance of understanding the ways consumers
function, since each interaction with a business is equally important and leads
to an increase in sales. This idea leads us to the following study unit, which
focuses on building relationships with consumers. By knowing what motivates
a first-time shopper to become a loyal, long-term and committed customer,
marketers can use various strategies to build and foster relationships with them.
In the next study unit we look at building consumer relationships. The focus of
this study unit is on relationship marketing, the prerequisites for implementing
customer (consumer) relationship management (CRM) and relationship loyalty.
137 MNM2605/1
Study unit 14
BUILDING RELATIONSHIPS WITH CONSUMERS
INTRODUCTION
Building consumer loyalty is a complex task. Businesses can use many methods to build
a relationship with consumers and these are usually a combination of carefully selected
marketing strategies and excellent consumer service that will keep a consumer loyal.
Building and sustaining consumer relationships is one of the ways to gain loyal consumers
and the focus should be on satisfying consumers’ needs in order to have their long-term
support.

One of the best ways to keep your business profitable and to keep existing consumers
is to build a strong relationship with them. Everyone likes to feel appreciated and this
applies to consumers as well. Consumers want to feel as if the business recognises them,
that their needs are met and that they play an important role in the business’s existence.
There are a few ways to build a strong relationship with consumers and these will not
only ensure the survival and profitability of the business, but will also lead to growth by
word of mouth.
• relationship marketing and its influence on consumer behaviour

• strategies for building consumer relationships and building relationships with
stakeholders
You will need approximately eight hours to work through this study unit and ensure that
138
Introduction
Key concepts
14.1 Introduction to building relationships
14.2 Traditional marketing approach
14.3 Relationship marketing
14.4 Prerequisites for implementing CRM
14.5 Technology: the facilitator of CRM
14.6 Relationship loyalty
14.7 Limitations of implementing CRM
14.8 Individual customer approach
14.9 Developing CRM strategies
14.10 Relationships with all stakeholders
14.11 Assessment
14.12 Reflection
14.13 Summary
139 MNM2605/1
Building
relationships Introdution to building relationships
with
consumers
Traditional marketing approach
Relationship marketing
Prerequisites for implementing CRM
Technology: the facilitator of CRM
Relationship loyalty
Limitations of implementing CRM
The individual consumer approach
Developing CRM strategies
Relationship with all the stakeholders
Key concepts
concepts:
• transaction marketing
• relationship marketing
• consumer (customer) relationship management (CRM)
• consumer loyalty
• consumer retention
• lifetime value
140
14.1 Introduction to building relationships
Owing to environmental changes, stronger competition and more informed consumers,

it is imperative for businesses to improve in their approach to managing their customers.
It has been ascertained that attracting a new customer costs five times as much as
retaining an existing one. As a result, there has been a shift from transaction marketing
to relationship marketing.
In transaction marketing the focus is on enticing consumers to buy and such transactions
are viewed as single transactions. The focus in relationship marketing is on building and
continuously fostering relationships with consumers.
For example, in 2010 the SABC embarked on improving the quality of its TV productions,
specifically for the 2010 Soccer World Cup, in order to keep viewers’ attention and support
in light of the popularity of satellite TV with channels, such as Super Sport and suchlike.
14.2 Traditional marketing approach
Transaction marketing focuses mainly on the marketing mix. The marketing mix consists of
the four Ps, which are the important elements or ingredients of a marketing programme.
The four Ps are the following:
Product. Something or an item produced by a business, for example toothpaste.
Price. The amount charged for the product, for example R20.
Promotion. Communication activities aimed at consumers, for example advertising and

sales promotion.
Place. The location or area where the product is sold, for example retailers and wholesalers.
141 MNM2605/1
14.3 Relationship marketing
Relationship marketing is an integrated effort to identify, build and maintain a relationship

with individual consumers, and continuously reinforce that connection to the benefit of
both parties through interactive and individual contact that contributes to added value
over an extended period.
Relationship marketing can, therefore, provide consumers with benefits, which handicap
the competition and may increase loyalty levels.
Consumer or customer relationship management (CRM) is beneficial since it improves

consumer retention and loyalty, which lead to reduced cost of sales, higher profitability
and lower costs in attracting consumers.
Relationship marketing is, therefore, the new marketing paradigm. Refer to the prescribed
book for more information on the traditional view on marketing’s four Ps, and to find out
how these four Ps need to be adapted in terms of relationship marketing.
Activity 14.1
Knowing what marketing relationships entail, one of the best practical ways for businesses
to build a strong relationship with their customers is to address them by name. A business
owner who knows his or her customers’ names will make the customers feel recognised
and appreciated. Customers will perceive this personal touch positively. Can you think
of other ways to show customers you care about them?
Feedback
22
•• Converse with customers to show them that you view them as individuals and not merely
as a source of income.
•• Offer incentives from time to time to regular customers; for example, you are the owner
of a restaurant, offer your regular consumers a dessert or drink on the house. This will
give them the feeling that you appreciate their patronage.
•• Always offer the best service because no matter how nice you are or how many incentives
you offer your customers, if you fail to offer superior service it can be the downfall of your
business relationship.
•• Pay attention to customers’ comments and stay in touch by asking your customers if
there is anything you should consider changing to make your business meet their needs
better. This is another way to really build a good relationship with customers and to keep
them coming back.
142
14.4 Prerequisites for implementing CRM
Before CRM can be implemented in any business, a total transformation of the business
is required, particularly regarding the following:
• teamwork and processes

• support at executive level
• consumer service
• technology
For example, a leading retail bank wanted to boost the effectiveness of its activities and
was particularly interested in identifying and reaching out to consumers who could benefit
from higher-value products, such as accounts, credit cards and home loans. Management
decided to transform its marketing policy and changed from transaction marketing to
relationship marketing. It implemented a CRM programme that would get results within
three to six months.
The CRM programme was implemented as follows: Management liaised with consumers
to understand their consumer segment groups and the historic preferences each segment
had. It worked in teams to develop consumer profiles based on its assessments and
profitability analysis, which resulted in listing opportunities.
Management then developed support tools for frontline staff and each product type
was tailor-made. The focus was on the specific needs of the different consumer groups
and employees were appropriately briefed and trained to deal with customers in a
satisfactory way. Employees who had to phone consumers were given a script to use,
strategies for professional and effective conversations with consumers were developed
and implemented and a tracking system to record contact rates and rates of follow-up
appointments were all part of the transformation policy. The team held meetings every
week with area and branch managers where they shared results, discussed the best
practices and provided support. The business made use of the latest state-of-the-art
technology to better understand its customers and attend to their needs.
14.5 Technology: the facilitator of CRM
It is important to note that technology on its own cannot solve consumer service problems
that the organisation may be experiencing; instead it helps to facilitate the implementation
of CRM in conjunction with service employees.
143 MNM2605/1
14.5.1 Crucial role of technology
By today’s standards an organisation that wants to survive needs to be equipped with
the latest technology to ensure successful implementation of relationship marketing.
Technology is essential for building customer relationships and more specifically to
• enhance customer care and service

• identify the best customer
• establish the product or service that needs to be provided
• enhance capabilities
• manage costs and value of relationships
• function as a control mechanism
• customise products
• customise communication and interaction
Technology today also serves as a CRM enabler. Understanding customers and their buying
behaviour is essential and by using the latest technologies powered by the internet they
hold many advantages for businesses. This includes online marketing to advertise the
business and to increase its ability to reach potential customers.
14.6 Relationship loyalty
In order to understand relationship loyalty better, the following concepts will be discussed:
consumer loyalty, consumer retention and lifetime value of consumers.
• Customer loyalty
As discussed in the previous study unit, a common goal businesses share is to gain loyal
consumers through an occasional purchase of a brand. This occasional purchase has the
potential to result in a repeat purchase if the customer is satisfied. Customer loyalty is
of value to businesses since it is easier to retain a satisfied and content customer and it
requires less marketing effort than attracting a new customer. Businesses with a large,
loyal customer base are, therefore, more profitable, since they attract more consumer
spending, and loyal customers are cheaper to serve than non-loyal customers.
• Customer retention
Customer loyalty is achieved by developing strategies directed at consumer retention.
However, in order to design and implement loyalty strategies effectively it is important to
know which aspects customers perceive as benefits that they get from their established
relationship, since this will have a positive influence on customer loyalty. The key to
customer retention is customer satisfaction. A highly satisfied customer stays longer,
buys more, accepts newly introduced products, talks favourably about the business,
144
pays less attention to competitive brands and advertisements and costs less to serve
than new customers.
Some businesses require salespeople to write a report on each customer who they have
lost to enable them to take appropriate steps to restore customer satisfaction.
• Lifetime value
Customer lifetime value presents the future profit that a company expects to make from
a customer’s lifetime purchases. A CRM mindset is, therefore, essential in building long-
term relationships with customers. Another essential element in building a relationship
with a customer is to speak his or her language. For example, if you are targeting African
consumers, you are likely to receive a favourable response if you speak to them in their
mother tongue, because not only will they understand you better, but it will also give
them a sense of belonging. The segmentation bases discussed in study unit 12 focus
on individual characteristics, such as culture, social and psychological factors and are
essential elements to consider when creating and implementing a marketing programme
specifically aimed at consumer needs.
14.7 Limitations of implementing CRM
Thorough research is essential for successful CRM implementation. Factors that can
complicate such implementation are low added value; insufficient lifetime value; high
investment costs related to product design and development; and the inability to
implement CRM.
14.8 The individual customer approach
In CRM the focus is on individual customers and the aim is to develop loyalty strategies
within each of the various categories that profitable customers are divided into.
For example, JetBlue airways in the travel and retail industry knows the meaning of
consumer service and acted quickly to try and save its reputation on Valentine’s Day
2007 when a storm left its planes stranded on icy runways and its consumers furious. The
CEO promised consumers that this would not happen again and outlined a “consumer’s
bill of rights” in a video clip posted on the JetBlue website. The company undertook to
reimburse customers according to the length of time their flights had been delayed and
issued them with vouchers ranging from $25 to full reimbursement of tickets. Some CRM
analysts applauded JetBlue for its consumer service approach.
145 MNM2605/1
14.9 Developing CRM strategies
Businesses develop appropriate loyalty strategies for different consumer groups. Before
strategies can be formulated the business has to know how much it will cost to serve
each customer and the lifetime value that can be generated.
As soon as the organisation has analysed the customer lifetime value and the projected
duration of the customer’s relationship, the organisation can place various consumer
groups or segments into one of the following categories or quadrants: butterflies, strangers,
true friends and barnacles.
These four quadrants help the business to formulate appropriate CRM strategies. A brief
description of each category or quadrant is as follows:
• Butterflies
These customers have high-profit potential, but not too much should be invested
into this relationship category in the long term if the profitability of such customers
does not improve.
• Strangers
Any investment in this type of relationship should be avoided and a transactional
approach should be used, since these customers are not profitable.
• True friends
Effort should be made to retain this group and increase its profitability, since it consists
of the best customers who must be rewarded with special loyalty programmes and
excellent service.
• Barnacles
Effort should be made to look at the transactions of the customers in this group
to determine whether they could become more profitable, since customers in this
category need to be nurtured in order to make them more profitable or properly
managed.
14.10 Relationships with all stakeholders
CRM includes building relationships with all other stakeholders, such as employees,
suppliers, intermediaries, investors and the community. For example, in order to strengthen
the relationship between the business and the community, the business can support the
community by providing bursaries, building schools and sponsoring sporting events.
146
40 14.11 ASSESSMENT
1. Differentiate between transaction marketing and relationship marketing.

2. Explain how the four Ps need to be adapted for relationship marketing.
3. Define CRM and its role in a business.
4. Discuss important prerequisites for implementing CRM.
5. Explain the role of technology in CRM.
6. Define customer loyalty, customer retention and lifetime value.
7. Discuss the development of CRM strategies.
14.12 REFLECTION
41
42 14.13 SUMMARY
This study unit illustrated the importance of CRM and discussed ways for
businesses to develop and implement CRM programmes in their organisations.
A good relationship between a business and its stakeholders is very important for
the growth and survival of the business in the dynamic marketing environment.
For businesses to be successful, they have to address and stay up to date with
changes in the environment and should implement loyalty programmes to
ensure and increase loyal customers. Businesses should make CRM a priority
and part of their daily activities and performance.
In the next study unit, we discuss the value of e-commerce in consumer

behaviour.
147 MNM2605/1
Study unit 15
VALUE OF E-COMMERCE IN CONSUMER BEHAVIOUR
INTRODUCTION
The business-to-consumer (B-to-C) online market has grown rapidly and has flourished
over the past few years. Buying online has become more acceptable for many people
and businesses because of the tremendous benefits of the internet and its applications.
The major benefit for the consumer is the convenience of web shopping; it saves time,
information is readily available and free of charge, and it is easy to compare prices and
product features, plus all this can be done in the comfort of the customer’s home or office.
For marketers, the most useful feature of the internet is that it brings them in touch with
the consumer, which allows them to access new markets and market segments nationwide.
By reaching their consumers, marketers can personalise their market offering. However,
one should always bear in mind that consumer behaviour exhibited online differs from
consumer behaviour in the traditional marketplace.
Visit the PicknPay website to see how online shopping works in practice: https://www.
pnponline.co.za/.

This study unit deals with the value of e-commerce in influencing consumer behaviour.
The internet and consumer behaviour are discussed with specific reference to online
consumer behaviour.
• the internet and the world wide web (www); technologies used in e-commerce; and
the role of technology in consumer decision-making during online shopping
148
• the features that differentiate between online consumer behaviour and consumer
behaviour in the traditional marketplace
You need approximately four hours to work through this study unit. Make sure you
Introduction
Key concepts
15.1 Introduction to the internet
15.2 Internet and consumer behaviour
15.3 Online consumer behaviour
15.4 Assessment
15.5 Reflection
15.6 Summary
This study unit unfolds as follows:
Value of
e-commerce Introduction to the internet
in consumer
behaviour
Internet and consumer behaviour
Online consumer behaviour
149 MNM2605/1
Key concepts
concepts:
• internet
• e-commerce
• world wide web
• online consumer behaviour
15.1 Introduction to the internet
When you study this section in the study guide, take note of the
significant development in technology in terms of the internet, the
significant impact this development has had on consumer behaviour,
and what consumers’ expectations are of online marketing. In
terms of consumer behaviour, the applications of new technologies
have increased the development, distribution and consumption of
products and services, which have improved consumers’ quality of life and companies’
service offerings.
The internet is commonly defined as a globally interconnected network of computer

networks. It enables the transfer of messages and transactions between connected
computers worldwide. The internet is the physical network that links computers across
the globe. It is a vast, global web of computers with no central management or ownership.
The world wide web is a way of viewing and organising the information on the internet.
The web consists of pages that are linked by using hyperlinks. Several web pages that
are linked together and have a common subject area are referred to as a website. The
first page of a website is called the home page.
The internet and the web can be useful tools for organisations to reach their target markets
and for consumers in their decision-making process. The advantages to organisations
applying the web to facilitate consumer decision-making are discussed in detail in section
17.3.1 of your prescribed book.
Now that we know what the internet and world wide web are, note their definitions, and
the importance of the three main features of the internet as discussed in your prescribed
book.
150
• Internet, web and e-commerce
The key point that you need to understand in this section is that there is a link between
the definitions of e-commerce, the internet and the web. Also note the advantages of
the web as a business tool. Pay attention to the information in your prescribed book on
other technologies, which are also relevant in online consumer behaviour, but are not
mentioned or discussed in this study unit. Can you think of any of these technologies off
the top of your head?
15.2 Internet and consumer behaviour
The importance of creating consumer-centred service, which will be of

life-long value to an organisation, is discussed in the relevant section
in the prescribed book. This section also highlights the paradigm shifts
that organisations need to make as a result of the nature and functioning
of the internet. The following are some of these paradigm shifts (see
detailed information in section 17.4.2 of the prescribed book):
• disintermediation and reintermediation

• personalisation and customisation
• shopping on demand
• consumers as coproducers
• blurring boundaries between consumer and business markets
• power shift towards consumers
• automation of consumption
As mentioned above, there are certain advantages to using the internet and other
technologies that facilitate the consumer decision-making process. Figure 17.4 in the
prescribed book illustrates the way in which the internet facilitates consumer decision-
making, while section 17.4.3 discusses the process in detail.
Activity 15.1
Do the following exercise and compare your answer with the feedback given in the table
below:
151 MNM2605/1
Identify the possible internet applications/tools that can facilitate and guide the online
consumer’s decision-making process, stating possible e-commerce applications/tools
applicable to each step.
23Feedback
The table below briefly explains how e-commerce can facilitate and guide the consumer
decision-making process:
Steps in the decision- Description of the Possible e-commerce applications/tools

making process step
Problem recognition Consumers need assis Discussions in newsgroup

tance in finding out
what they need Placing banners on other websites to create
awareness
Example: Visit the following website to view the website banners on the right-hand side that create
awareness: http://www.funplacestofly.com/images/bannersWeb.jpg
Information search Consumers try to find External search engine and virtual catalogue
relevant information
on their needs
Example: Visit the Edgars website to view an example of a virtual catalogue: http://www.edgars.
co.za/Edgars/
Alternative evaluation Consumers try to com Comparing product offerings on websites

pare information on
hand
Example: Visit the Nokia website to select and compare different phones and to find out how
comparing product offerings on a website works: http://mea.nokia.com/find-products-en/devices
Buying Consumers’ actual Electronic wallet and virtual banking

decision to buy some-
Logistics arrangement
thing
Payment methods
Example: Visit the PayPal website to view an example of an online payment method and to learn
more about online payment methods: https://www.paypal.com/za
Post-buying experience Customer’s feeling after Support by e-mail communication and

buying experience response and newsgroups
Online helpdesk and online complaints form
Example: Visit the Nedbank website to view an example of an online complaints form: https://www.
nedbank.co.za/website/content/Forms/form.asp?FormsId=200
152
Since the online world differs from the physical world, we need to focus more on online consumer
behaviour. In the next section, we examine the role the internet plays in consumer behaviour.
15.3 Online consumer behaviour
Understanding online consumer behaviour is an important part of the online marketing

process, since many organisations shape their consumer behaviour in the online marketing
environment according to the traditional marketing environment.
Consumers visit websites for different reasons and there are various types of online
consumer as can be seen from the table below:
Types of online users Description
Focused information Consumers who know exactly what they want.

seekers
Unfocused information Consumers who are just browsing the internet.

seekers
Directed buyers Consumers who know exactly what to buy and what they
are prepared to pay.
Bargain hunters Consumers who are actually looking for a good bargain.
Entertainment seekers Consumers who take pleasure in the time they spend
online “surfing the net”.
Having looked at the table above, we can see there are some similarities between online
consumers and traditional marketplace consumers. In the traditional marketplace we also
have bargain shoppers who are on the lookout for sales and goods at low prices; there
are window shoppers who physically browse through shops to entertain themselves;
and consumers who actually know what they want to buy. However, there are some
features that are unique to online consumer behaviour. Refer to the relevant section in
the prescribed book for detailed information on the following key concepts:
• online shopping, isolation and integration

• abbreviated attention span
• instant gratification
• monitors
• shopping agents
• information availability
153 MNM2605/1
After studying this section of the work, it would be a good idea to visit a number of online
stores’ websites. You will be able to see how they use technological tools, such as the
internet and its applications, for example personalised web pages, chat rooms, e-mail
and automated response, to support consumers in their decision-making process and
behaviour, as discussed in this section of the work. Do not limit yourself to the major retail
chain stores’ websites; visit a number of smaller independently owned stores’ websites
as well. Here are some websites to get you started, but look at other websites as well:
www.kalahari.net
www.jump.co.za
4315.4 ASSESSMENT
1. Explain the terms internet and world wide web.

2. Discuss the advantages of using the web to facilitate marketing decision-making.
3. Discuss the factors affecting online consumer behaviour that marketers should
keep in mind.
4. Discuss the paradigm shifts that companies need to make in order to use the internet.
5. Identify and discuss three appropriate technologies and channels that could be
used to support online consumer behaviour at a retail shop of your choice.
6. Discuss the role of technology in the online consumer decision-making process.
44 15.5 REFLECTION
Before you continue let us reflect on the following questions:

45 15.6 SUMMARY
This study unit started with a brief introduction to the internet. We focused
on how the internet facilitates consumer decision-making.
The key concepts in this study unit revolved around the value of e-commerce in
consumer behaviour. We examined online consumer behaviour and discussed
the advantages of using the internet to facilitate decision-making. We also
discussed the paradigm shifts that companies need to make in order to use
the internet and we concluded the study unit with a brief look at the various
unique features that affect online consumer behaviour.
It is extremely important for you to be able to describe each of the online

technologies available, and to discuss how these technologies affect online
154
consumer behaviour. The study unit concluded by pointing out that you need
to think beyond the traditional physical store and consider online consumer
behaviour issues related to non-store retailing, since many companies are
doing business online.
That concludes this module on consumer behaviour. We wish you all the best for the
examination. Should you feel uncertain about any part of the work, feel free to contact
your lecturer for assistance.
LIST OF REFERENCES
Du Plessis, F, Bothma, N, Joordan, Y & Van Heerden, N. 2003. Integrated marketing
communication. South Africa, Maitland: Clyson Printers.
http://davis.foulger.info/research/unifiedModelOfCommunication.htm
http://www.sablimited.co.za/sablimited/view/sablimited/en/page1
Jooste, CJ, Klopper, HB, Berndt, A & Du Plessis, G. 2002. Product management. Maitland,
South Africa: Clyson.
Kotler, P, & Keller, KL. 2009. A framework for marketing management: Integrated with
PharmaSim. 4th ed. Upper Saddle River, NJ: Pearso Prentice Hall.
Rogers, EM. 2003. Diffusion of innovation. 5th ed. New York: Free Press.
155 MNM2605/1

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Topic 1: INTRODUCTION TO CONSUMER BEHAVIOUR 1

Study unit 1: Nature of consumer behaviour 2

Study unit 2: Creating market value for consumers 11

Topic 2: EXTERNAL AND GROUP FACTORS THAT INFLUENCE CONSUMER

Study unit 3: Market characteristics 17

Study unit 4: Culture and subculture 23

Study unit 5: Reference groups and social class 32

Topic 3 INTERNAL AND INDIVIDUAL FACTORS THAT INFLUENCE

Study unit 6: Personal characteristics, personality and self-concept of consumers 41

Study unit 7: Consumer perception and learning 52

Study unit 8: Consumer motivation and attitudes 62

Topic 4: CONSUMER Decision-making AND DIFFUSION OF INNOVATION 73

Study unit 9: Consumer decision-making process and family or household decision-

Topic 5: MARKETING ACTIVITIES DIRECTED AT INFLUENCING CONSUMER

Study unit 11: Communication and persuasion 98

Study unit 12: Market segmentation 110

Study unit 13: Factors that influence consumer loyalty 123

Study unit 14: Building relationships with consumers 138

Study unit 15: Value of e-commerce in consumer behaviour 148

1. AIM OF THIS MODULE

• explain the nature of consumer behaviour

3. OVERVIEW OF THIS MODULE

Topic 5 focuses on and highlights marketing activities directed at influencing consumer

5. THE APPROACH TO LEARNING AND TEACHING IN THIS

5.1 Suggestions on how to approach your studies for this module

5.2 I mportance of completing activities, assignments and self-assessment

• reflect on work covered

5.2.3 Assessment questions

5.2.4 Assessment of the module

6.1 Prescribed material

• The examination paper comprises two sections.

7. KEY CONCEPTS IN ASSIGNMENTS AND EXAMINATIONS

• Knowledge: This is essentially memorisation and the recall of information. At its

Key concepts. The Key Concepts icon draws your attention to

Learning outcomes. The Learning Outcomes icon indicates

Study. The Study icon indicates which sections of the prescribed

Activity. The Activity icon refers to activities that you must

assessment. The Assessment icon means that you will be

feedback. The Feedback icon indicates that you will receive

Time-out. The Time-out icon indicates that you should take a

reflection. The Reflection icon requires you to reflect on the

Summary. The Summary icon requires you to summarise the

• Study the prescribed study material conscientiously according to the guidelines

Your lecturers for Consumer Behaviour

TOPICS STUDY UNITS

1. Nature of consumer behaviour

11. Communication and persuasion

12. Market segmentation

13. Factors that influence consumer

15. Value of e-commerce in

On completion of this topic, you should be able to

Study unit 2: Creating market value for consumers

Toothpaste buying behaviour

When trying to understand their market, researchers of consumer behaviour want to

OVERVIEW OF THIS STUDY UNIT

Topic 1: INTRODUCTION TO CONSUMER BEHAVIOUR 1

Study unit 1: Nature of consumer behaviour 2

Study unit 2: Creating market value for consumers 11

Study unit 3: Market characteristics 17

Study unit 4: Culture and subculture 23

Study unit 5: Reference groups and social class 32

Study unit 6: Personal characteristics, personality and self-concept of consumers 41

Study unit 7: Consumer perception and learning 52

Study unit 8: Consumer motivation and attitudes 62

Topic 4: CONSUMER Decision-making AND DIFFUSION OF INNOVATION 73

Study unit 11: Communication and persuasion 98

Study unit 12: Market segmentation 110

Study unit 13: Factors that influence consumer loyalty 123

Study unit 14: Building relationships with consumers 138

Study unit 15: Value of e-commerce in consumer behaviour 148

5. THE APPROACH TO LEARNING AND TEACHING IN THIS

5.1 Suggestions on how to approach your studies for this module

5.2 I mportance of completing activities, assignments and self-assessment

7. KEY CONCEPTS IN ASSIGNMENTS AND EXAMINATIONS

12. Market segmentation

13. Factors that influence consumer

15. Value of e-commerce in

1.3 The applications of knowledge of consumer

3.3 Developing trends that influence consumer