CONSUMER BEHAVIOUR PROBLEM RECOGNITION

Problem Recognition is the very first stage of the long process of consumer decision making and is important for several reasons. Firstly, it provides an initial clue as to why a buyer buys what he or she intends to. Secondly, it gives a definite direction to his or her subsequent purchase behaviour stages like information search and evaluation of alternatives: Finally, it provides marketers with an immense scope for using their influence in how the buyers may or may not recognize their needs.

Need or problem recognition can be both simple and complex configurations, subject to associated conditions. Simple problem recognition refers to needs that occur frequently and can be dealt with almost automatically. Complex problem recognition however, is that state in which a problem recognition develops slowly but distinctly over a long time. At a certain time, the desired state of consumer mind is distinctly apart from the actual state. This causes him to recognize the need.

Prepared By Rekha Menon For the 3rd semester MBA, DCMS, 2013-14

CONSUMER BEHAVIOUR

The existing consumer position reflects how a consumer feels presently about his consumption or non-consumption of a given product. The desired consumer situation refer to his expectations and anticipations from the, consumption or non-consumption of a given product and service. However, natural factors such as the stock-out or the organic growth or financial-growth cause the difference between the two sates of mind rather slowly. Hence, on most occasions, the gaps between the current and desired states of mind are accelerated or heightened by various marketing stimuli or efforts. These marketing efforts influence either the current state of mind or the desired state or both. At the current state of mind, marketers may `induce' dissatisfaction in the consumers for the current stock of products and services. The marketers may also convince the buyers how obsolete the products have become. The efforts of markets in respect of existing or current state of consumption are however, quite limited. They are somewhat negative in nature too. Hence, most efforts are made by the marketers to condition the `desired' state of mind of consumers. The desired consumer position is achieved by advertising newer uses of the current products, or, by introducing newer features in the products.
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CONSUMER BEHAVIOUR

THRESHOLD LEVEL IN PROBLEM RECOGNITION

The threshold level refers to "the minimum amount of tension, energy or intensity which is necessary for the feeling to occur". Thus, marketing efforts are directed not only towards creating a gap between the current and desired states of mind of consumers but they are also towards increasing the tension level where need recognition is ensured.

Many times, marketers increase the tension among consumer just by comparing consumers with whom that have bought their product. The tension increases leading to need recognition.

PURCHASE PROCESS & POST-PURCHASE BEHAVIOUR

Consumers make two types of purchases. Trial purchase and repeat purchases. `If a consumer purchases or is induced to purchase for the first time, a smaller quantity than usual, and with a certain degree of hesitancy', this is termed as a product trial. Thus, a trial purchaser could remain or drop out of purchasing the product after the experience. In any event, the trial is the phase of purchase behaviour where intention is to evaluate a product through use. Repeat purchase on the other hand, indicates commitment on the part of the customer towards the product, company and others. It is closely related to concept of development of brand loyalty and signifies that the product has met with the consumers' expectations. These decisions are influenced by two major sets of forces. While the first set of forces relates to buying intentions, the second set comprises situational influences.

Prepared By Rekha Menon For the 3rd semester MBA, DCMS, 2013-14

CONSUMER BEHAVIOUR

Physical Surroundings:

Physical surroundings are the most readily visible features of a purchase situation because they include geographical and institutional location, decor, sounds, aromas, lighting, weather and visible configurations of merchandise or other material surroundings in the purchase process. These stimuli influence the choice process through sight, hearing, touch, smell and taste of consumers.

Social Surroundings:

The social surroundings mainly refer to the presence of other people and their effect during purchase or usage of a product. while shopping with friends, a consumer is likely to make more unplanned purchases and visit more stores,

selling to unaided buyers is easier than to those accompanied with advisers, compliance to group views is there even though the buyer knows that others are wrong with reference to a given product choice.

Prepared By Rekha Menon For the 3rd semester MBA, DCMS, 2013-14

CONSUMER BEHAVIOUR
Task Definition:

The motives decide both the content and direction of a purchase process. These buying purposes are what we call as task definition in the present context. Task definition influence the purchase process in the following ways: : The purpose of purchase may alter the purchase outcome. If for instance, the product being purchased, is meant for a gift to a close friend, the expected reaction of that friend, will define the purchase task. The use situation of the product will determine the task definition. A public consumption of products in such gatherings as wedding and social get-togethers etc. will place higher emphasis on purchase of a product than in a private consumption of the same product.
Temporal Factors:

Temporal factors affect the purchase in the following ways: Availability of time will decide the purchase strategy for a given product. Higher the amount of available time, greater will be the information search. Time, when accompanied with other variables (like, hunger or happiness) can produce a more visible effect. Time-compression, a device in which marketers use time effectiveness for maximum impact, can be used by marketers.
Antecedent States:

Physical states, and thoughts too have a bearing on purchase situation.

STEPS TO BENEFIT FROM SITUATIONAL INFLUENCES

Identify the relevance of each situational factor on his buying process; Determine the impact of relevant situational variables through appropriate research; Consider appropriate segmentation and positioning based on the findings; Develop an appropriate marketing mix, incorporating the above; Remember the general findings and hypothesised relationships between situational variables and purchase process.

Prepared By Rekha Menon For the 3rd semester MBA, DCMS, 2013-14

CONSUMER BEHAVIOUR

DEVELOPING AN ATTITUDE TO POST-PURCHASE BEHAVIOUR

If purchase represents customers consumption motives and purposes, the post-purchase behaviour indicates whether or not those purposes and motives have been achieved. Thus, purchase activity is the means while post-purchase is an evaluation.

The formation of satisfaction or dissatisfaction is, however, a function of many factors. These factors are: Use, occasion of Product/Brand Cost/Investment involved in choice making Number of outcomes and their desirability Prior experience of product/brand Personal expectations and norms Group expectations and norms Cultural forms Outcome endurance - the duration for which the outcome persists Time lag between the choice and use of the product

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CONSUMER BEHAVIOUR

There is no all-accepted definition of consumer satisfaction or dissatisfaction.

In many cases, while presence of a particular factor may cause dissatisfaction, the avoidance of it may not necessarily= lead to satisfaction. Satisfaction/Dissatisfaction arises' out of a cumulative effect of many factors. The individual impact of each is quite difficult to isolate. Although consumer dissatisfaction is all pervasive, it is unlikely to result always in complaint making

Prepared By Rekha Menon For the 3rd semester MBA, DCMS, 2013-14

CONSUMER BEHAVIOUR

MARKETERS' RESPONSE STRATEGIES

Monitor Regularly the Consumer Reactions

A marketer should initiate and encourage a regular monitoring of consumer reactions towards itself, its product range and a particular brand.
Bring product Quality under Marketing Responsibility

Quality control will upgrade itself from being an isolated function of production department to a joint mission of marketing and manufacturing departments.
Handle Complaints Quickly and Responsibly

They should be taken up at the earliest opportunity and action notified to the complaint without delay. Even acknowledgement of the receipt of complaint contributes to reducing dissatisfaction.

Be a Courteous and Helpful Host Most of consumer dissatisfaction is attributable to poor service at the point of purchase.
Marketers may note that even in standard products, considerable differentiation and competitive edge can be generated by being a courteous and 'helpful host to visiting customers.

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CONSUMER BEHAVIOUR

State only Realistic Product Claims Factual promotion-executed with creativity, brings about lasting customer loyalty and goodwill. Help Consumer on Product Use Adequate instructions or information could be given to reduce potential consumer dissatisfaction. Sell `Solution' instead of Product Thus, promotional attempts should focus on the solution or performance of product rather than the product. Assure Even after the Purchase is Over Marketers must assure the buyers, even after the purchase is concluded of their commitment to customers' satisfaction.

EARLY MODELS

ECONOMIC MODELS:
Micro economic models The micro economic theory of consumer decision making was based on the following assumptions: a) Being unlimited, consumer needs and wants can never be fully satisfied. b) As consumer resources are limited, he would allocate the available money in a way that maximises the satisfaction of his needs and wants. c) Consumers have complete knowledge about the utility of each product and service i.e. they are capable of computing the exact satisfaction that each item is likely to produce. d) As more units of the same item are bought, the marginal utility or satisfaction provided by the next unit of the item will keep on decreasing, according to the law of diminishing marginal utility. e) Price is used as a measure of sacrifice in obtaining the goods and/or services. f) The overall objective of the consumer, is to, in a very rational manner, maximise his satisfaction out of the act of purchase.

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CONSUMER BEHAVIOUR

LIMITATIONS Research shows that consumers for most purchases seek adequate levels and not maximum levels of satisfaction Consumers are not rational in all their purchases. They use a variety of variables to assess the `sacrifice' or cost they will bear while purchasing goods and services in addition to the 'price'. In some cases, high prices may actually be preferable, when in absence of other available cues, the consumer uses the price as an indicator of quality.

Macro, economic perspective Two inputs from the Macro economic field are important for our understanding of consumer behaviour. These are the relative income hypothesis and the permanent income hypothesis. The relative income hypothesis contends that as peoples' consumption standards are more influenced by their social groups and peers, the proportion of the families income relative to others is likely to change only when the rise in income is significant enough to put the family in a different social setting. The permanent income hypothesis on the other hand explains that consumers are influenced by their own perception of some average amount that can be consumed without disturbing their accumulated wealth rather than using the estimate of "actual" income in a given period to determine the level of their consumption expenditure.

THE PSYCHOLOGICAL MODEL

The model suggests that human behaviour is based on some central concepts - the drives, stimuli, cues, responses and reinforcements which determine the human needs and needs satisfying behaviour. Individually - a drive is a strong internal stimulus which compels action. - stimuli are inputs which are capable of arousing drives or motives. The way a person responds to a given stimulus would depend upon the. Configuration of cues. Cues is a sign or signal which acts as a stimulus to a particular drive. The way an individual reacts to the stimuli is known as his response. If the response to a given stimulus is "rewarding", it reinforces the possibility of similar response when faced with the
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CONSUMER BEHAVIOUR
same stimulus or cues. Applied to marketing if on an informational cue like advertising, the buyer purchases a product (response), the favourable experience with the product increases the probability that the response would be repeated the next time the need stimulus arises (reinforcement). The model provides useful insights in the behaviour of the consumer by showing that human needs are a result of the interplay of drives, stimuli, responses etc. The marketer utilizes this knowledge to build up the demand of a product by associating it with strong drives and providing positive reinforcement. The above model however does not deal adequately with phenomenon such as percep-tion, the subconscious and inter-personal influeoae, which were later found to be important determinants of behaviour.

THE PSYCHOANALYTIC MODEL

The researchers, states that the human behaviour is result of both- his conscious and subconscious mind, try to probe the latter by using projective techniques in order to be able to furnish reasons underlying overt behaviour. The most important marketing implication of the model is that since buyers' needs operate at several levels of consciousness, he is concerned not only with. the functional aspect ,of the product, the symbolic aspect may also hold substantial meaning for him and motivate him to a buying decision. He may therefore respond to a- stimulus to both his conscious and subconscious, since his behaviour is a product of both. THE COGNITIVE DISSONANCE 1. The existence of dissonance (a state of imbalance in the cognitive structure) is psychologically uncomfortable and will lead the person to reduce dissonance and achieve consonance (i.e. balance) 2. Whenever dissonance exists, the person, in addition to trying to reduce it will also actively try to avoid situations and information which add to dissonance. A disharmony (disso-nance) may result from purchasing a product; after using it or receiving adverse reports about the product, especially if the product is an expensive one. The buyer in this situation will try to reassure himself by seeking information to support his choice; and also by avoiding sources of information which would reduce his buying confidence.
Prepared By Rekha Menon For the 3rd semester MBA, DCMS, 2013-14

CONSUMER BEHAVIOUR
He may, in addition, collect information which projects the rejected alternatives disadvantageously. Being selective in his perception, therefore, the buyer may select the information supporting or favourable to his choice and avoid or distort unpleasant information.
The marketing implication of the theory lies in the fact that since dissonance (and reassurance) motivate buyer action, the effort to dispel dissonance should be embodied in the product package, its advertising and word of mounth publicity as also in its after sale services. The advertising and promotion function should be enlarged to include the reassurance aspect to lend support to the buyers choice decision.

SOCIOLOGICAL MODEL
Several social researchers confirmed this and reiterated that the purchase by individuals of various kinds of goods and services is likely to be strongly influenced by group norms of the, group to which they belong or aspire to belong. The major source of influence on individual behaviour are the family, the culture and the subcultures that surround the individual, the reference group to which he belongs or aspires to belong and social class.

The Howard Sheth model

Through the model, Howard and Sheth, tried to explain buyer rationality while making purchase decisions even in conditions of incomplete information. While they differentiated between three levels of decision making, EPS, LPS and RPS, the model focuses on repeat buying/purchase.
This are the three levels of decison making:

1. Extensive problem solving - early stages of decision making in wich the buyer has little information about brands and has not yet developed well defined and structured criteria by wich to choose among products. 2. Limited problem solving - this is a more advance stage, choice criteira are well defined but the buyer is still undecided about wich set of brands will best serve him. Thus the consumer still experiences uncertainty about wich brand is best. 3. Routinized response behaviour - buyers have well defined choice criteria and also have strong predispositions toward the brand. Little confusion exists in the consumer's mind and he is ready to purchase a particular brand with little evaluation of alternatives.
The model has four major components, viz., stimulus inputs (input variables), hypothetical constructs, response outputs (output variables), and, exogenous variables.

a) Stimulus inputs (Input variables):

Prepared By Rekha Menon For the 3rd semester MBA, DCMS, 2013-14

CONSUMER BEHAVIOUR
- Significative stimuli: The product/brand information that the marketer provides, comprises the significative component; it deals essentially with the brand characteristics.

- Symbolic stimuli: this is the psychological form with which a buyer perceives the product and service offering (brand) -Social stimuli: this is the information about the product or service offering that comes from the social environment viz. family, groups, society and culture at large.
b) Hypothetical constructs: Howard and Sheth classified the hypothetical constructs into two major groups, viz., perceptual constructs and learning constructs. - Perceptual constructs: The perceptual constructs deal with how a consumer obtains and processes information received from the input variables. Once the buyer is exposed to any information, there is an attention; this attention towards the stimuli depends on the buyers sensitivity to information in terms of his urge and receptivity towards such information. Not all information would be processed and the intake of information is subject to perceived uncertainty and lack of meaningfulness of information; this is referred to as stimulus ambiguity. This reflects the degree to which the buyer regulates the stimulus information flow. Stimulus ambiguity occurs when a consumer does not understand the message from the environment; it could trigger off a need for a specific and active search for information and thus lead to an overt search for information. The information that is gathered and processed may suffer from perceptual bias if the consumer distorts the information received so as to fit his/her established needs/beliefs/values/experiences etc. - Learning constructs: The learning constructs relate to buyer learning, formation of attitudes and opinions, and the final decision. The motives refer to the goals that a buyer seeks to achieve through a purchase and the corresponding urge towards action or the purchase activity. The brand comprehension is the knowledge and information that the buyer has about the various brands in his evoked set. The buyer forms an order of preference for the various brands; this order of preference is based on the choice criteria (decision mediators). The decision mediators are the evaluative criteria and the application of decisions rules by the buyer to the various purchase alternatives. Based on the choice criteria, the attitudes are formed for the varying brands. The attitudes reflect the predisposition of the buyer; preference toward alternative brands; and, feelings of like/dislike towards the offerings. Satisfaction, another learning construct, involves the post purchase evaluation (whether expectation from an offering matches the performance) and resultant impact (positive/negative) on brand comprehension.

Prepared By Rekha Menon For the 3rd semester MBA, DCMS, 2013-14

CONSUMER BEHAVIOUR
c) Response outputs (output variables): The output variables refer to the buyers action or response to stimulus inputs.

- Attention refers to the degree or level of information that a buyer accepts when exposed to a stimulus. It reflects the magnitude of the buyer's information intake. - Comprehension is the amount of information that he actually processes and stores; here, it refers to brand comprehension which is buyers knowledge about the product/service category and brand. - The attitude is the composite of cognition, affect and behavior towards the offering; the attitude reflects his evaluation of the brand and the like/dislike based on the brand potential. - Intention refers to the buyers intention to buy or not to buy a particular offering. - Purchase behavior refers to the actual act of buying. The purchase behavior is a cumulative result of the other four constituents. d) Exogenous variables: The Howard and Sheth model also comprises certain constant exogenous variables that influence some or all of the constructs explained above, and thereby impact the final output variables. These are explained as Inhibitors or environmental forces that restrain the purchase of a favored brand; eg., importance of the purchase, price, financial status of the buyer, time at the disposal of the buyer, personality traits, social pressures etc.

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

RECENT DEVELOPMENTS IN MODELLING CONSUMER BEHAVIOUR

While explained models are quite comprehensive, their crucial tests are the tests or validity based on live empirical data. Such tests reveal that the predictability of brand choice, the basic stated purpose of the model, is quite low.

CLASSIFICATION OF CURRENT MODELLING EFFORTS:

These attempts can be classified into different categories according to following main criteria: The objective of modelling. Support of basic disciplines. Support of analytical techniques. Basic unit of consumer behaviour modelled.

a) Nicosia's Model of Consumer Decision Process This model elaborates the decision making steps that the consumers adopt before buying goods or services.

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CONSUMER BEHAVIOUR

i) Marketer's Communication affecting consumers attitude : Here the marketing communications include not only mass media and personal communications but products, price and even distribution aspects, too. After processing the inputs from marketer, the consumer forms his attitudes as the inputs for the next field. ii) Consumer's search and evaluation: This step occurs before consumer becomes motivated to purchase the product. He seeks more information and evaluates the relative merits of competing products' attributes. The criteria for evaluation do also evolve with consumers past experiences and the marketer's inputs in the form of marketing mix. iii) Purchase action: This is the field 3 of the Nicosia model. Here, after getting motivated to buy the brand, the customer actually shops for the product. The choice of actual retailer does also take place here.

IV)

Consumption experience and feedback: After purchasing the product, the experience with its consumption can affect the consumers in many ways. The
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CONSUMER BEHAVIOUR
negative experience may block his future purchase and lower his attitude and evaluations of the product. The positive experience may motivate him further to be loyal to the product. Nicosia's model may appear to be simple and obvious at the first glance. But its value lies in the integration of the body of knowledge in the area of consumer behaviour existing till its time of formulation. It does also provide insights about how the non-action kind of variables present in the environment and related to the consumers trigger actions at the consumers end.

BETTMAN'S INFORMATION PROCESSING MODEL OF CONSUMER CHOICE

In this model the consumer is seen in the center of a host of information processing activities i) Processing Capacity: Each individual has a limited capacity to process information. This capacity can vary across individuals to some extent. ii) Motivation: Motivation provides the intensity and direction for the choice process to the consumer in this model.

iii) Attention and Perceptual Encoding: The perceptual encoding helps the consumer in ntegrating the acquired information to his perceptual network. It also helps the consumer in deciding how and ow much to process the information received from the marketer.

iv) Information Acquisition and Evaluation: Within the scope of heuristics, the consumer also decides about the nature and amount of information that would be necessary and sufficient for decision making. If the available information is found to be insufficient but necessary, he goes for acquiring further information through external search. This new information is again evaluated in the light of decision at hand. This process continues till the consumer is satisfied with the balance achieved between the utility of information and the sacrifices required to acquire them.

ci)

cii)

Memory: Consumer memory comprises of short term memory and long term memory. In the short term memory the acquired information is stored for less than two minutes. The consumer evaluates the impinging stimuli and decides whether the information is worth transferring to long term memory or may be forgotten. If it goes to long term memory, it is stored for ever. Decision Process: These decision processes work on the acquired and evaluated information as well as the perceptions of the consumer. The situational factors (like

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CONSUMER BEHAVIOUR
time pressure, moods and company of other individuals etc.) do also influence these decision processes. ciii) Consumption and Learning Processes: The experience gained through the consumption of products as well as the process of decision making are stored by the consumers.

Scanner and Interrupt Mechanisms: Whenever the consumer decides that he does not have sufficient information for decision making internally, he scans the environment for acquiring the necessary information. On the other hand, whenever he finds that he has sufficient information or acquiring more information is not worth the decision at stake, he shall interrupt the information search process. The Bettman's consumer behaviour model focusses entirely on the information processing. The research attempts to validate it are also focussing upon the information handling by consumers. Consumers are encouraged to share the protocol that they mentally" go through, while taking decisions. These methods are rich in providing consumer insights but difficult to administer practically.

Prepared By Rekha Menon For the 3rd semester MBA, DCMS, 2013-14

CONSUMER BEHAVIOUR

Prepared By Rekha Menon For the 3rd semester MBA, DCMS, 2013-14

CONSUMER BEHAVIOUR

Prepared By Rekha Menon For the 3rd semester MBA, DCMS, 2013-14

CONSUMER BEHAVIOUR

Prepared By Rekha Menon For the 3rd semester MBA, DCMS, 2013-14

CONSUMER BEHAVIOUR

Prepared By Rekha Menon For the 3rd semester MBA, DCMS, 2013-14