Tribhuvan University Kathford International College of Engineering and Management BBA/Seventh Semester/MKM 201: Buyers' Behavior First Term-

Examination- 2014 Group A

Brief answer questions:

1. What do you understand by buyers' behavior?

[10X1=10]

The behavior that buyers (consumers and Institutional Buyers) display in searching, purchasing, using, evaluating and disposing of products, services or ideas. 2. What is stereotypes, explain main factors that can trigger stereotypes? Individuals tend to carry biased pictures in their mind of the meaning of various stimuli, which are termed as stereotypes. Main factors that trigger it are physical appearance, descriptive terms, first impression and the halo effect. 3. What do you understand by advertising wear out? Overexposure to repetitive advertising that causes individuals to become satiated and their attention and retention to decline. 4. Differentiate viral marketing and guerilla marketing? The practice of encouraging individuals to pass on an email message to others or over various social networking sites, thus creating the potential for exponential growth in the message's exposure and influence is viral marketing. Guerilla marketing is unconventional kind of marketing. 5. What are the steps in consumer buying process? i. Need Identification ii. Search information iii. Evaluation of alternatives iv. Purchase v. Post purchase behavior 6. List psychological fields that influence consumer decision making process. i. Motivation ii. Personality iii. Learning iv. Attitude v. Perception 7. Define normative reference group.

A group that influences the general values or behavior of an individual, like parents in family is normative reference group. 8. List socioeconomic variables, as expression of status that is used by marketers to measure social class. i. Occupation ii. Income iii. Social prestige 9. What are three major components of Tricomponent attitude model? i. A cognitive (Knowledge) component. ii. A affective (Feeling) component iii. A conative (Doing) component 10. Differentiate absolute threshold and differential threshold in the light of consumer perception. The lowest level at which an individual experience a sensation is absolute threshold. The minimal difference that can be detected between two stimuli, also known as JND (Just noticeable difference) is differential threshold. Group B Short answer questions: 11. Explain organizational buying process. [6X5=30]

Below figure lists the eight stages of the business buying process. Buyers who face a new task buying situation usually go through all stages of buying process. Buyers making modified or straight rebuys may skip some of the stages

1. Problem Recognition

2. General Description 3. Product Specifications

4. Supplier Search 5. Acquisition and Analysis 6. Supplier Selection 7. Selection of 8. Performance Review
Problem recognition: Problem recognition can result from internal or external stimuli. Internally company may decide to launch a new product that requires new production equipments and materials. Or a machine may break down and need new parts. Perhaps, a purchasing manager is unhappy with current suppliers' product quality, services or prices. Externally buyers may get some new idea at a trade shows, see an advertisements, or receive a call from suppliers who is offering a better product or at lower price. General Need Description: Once a need is recognized, the purchasing department works with the buying group to define what is needed by asking: What is the extent of the problem? What alternatives can solve the problem? Where can the solution be purchased?

Each small decision ultimately helps define the product specifications. Sometimes the supplier is involved if the supplier influences the sale (i.e., the supplier makes the buyer aware of the need). Product Specification:

Buying organization next develops the item's technical product specification, often with the help of a value analysis engineering team. Value analysis is an approach to cost reduction in which components are studied carefully to determine if they can be redesigned, standardized or made by less costly methods of production. The team decides on the best product characteristics and specifies them accordingly. Supplier Search: Buyers now conducts supplier search to find the best vendors. Buyer can compile a potential list qualified suppliers by reviewing trade directories, doing computer search, or phoning other companies for recommendations. Proposal Solicitation (acquisition & analysis of proposal): Now buyer invites qualified suppliers to submit proposals. In response, some suppliers will send only a catalog or a salesperson. However, when a item is complex or expensive, the buyer will usually require detailed written proposal or a formal presentation from reach potential supplier. Supplier Selection: At this point, negotiation includes not only prices, but also:

Quantities Delivery times Level of service Warranties Payment schedules And a host of final details that determine selection

Selection of order routine: Here buyers writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties. Performance review: Here buyers continuously monitors the performances of supplier and decides to continue, modify or drop the agreement. 12. How can the principles of a) classical conditioning and b) instrumental conditioning be applied to the development marketing strategy? Classical condition theory calls for a function of repetition that advocates automatic response to a situation built up through repeated exposure of certain stimuli.

Strategic application of classical conditioning: Repetition Stimulus discrimination Stimulus generalization

Repetition: it increases the strength of the association between a conditioned stimulus and unconditioned stimulus and slows the process of forgetting. However there is a limit to the amount of repetition that aids to retention. Excessive repetition may cause advertising wearout. Repetition of exposure of marketing communication with cosmetic variation or substantive variation results to no monotonous or boring to viewers. One way to make repetition function effective is three hit theory; first to make consumers aware of products, second to show relevance of product and finally third to remind. While others think that 11 to 12 repetitions are needed to achieve above three objectives. Stimulus discrimination: learning does not only take place through repetition but also on the ability of individual to generalize. This function explains why some imitative "me too" products succeeds in market. Consumer get confused with the original products they have seen advertised. Applications of stimulus generalization are: iv. Product line extension Family Branding ii. Product form extension iii. Category extension iv.

Stimulus discrimination: It is opposite of stimulus generalization. Product positioning or differentiation strategies are designed to distinguish product or brand from that of competitions on the basis of an attribute that is relevant, meaningful and valuable to consumers. Instrumental Conditioning: Here theorists believe that learning occurs through a trial and error process, with habit formed as result of reward received for certain response or behaviors. If a restaurant offers free treat or some scheme to regular customers, so that case it reinforces positively towards those customers. Sometime negative reinforcement is applied to encourage a specific behavior like toothpaste help you prevent tooth decay. Consumer satisfaction and relationship marketing are strategic application of instrumental conditioning. Marketers must deliver functional and emotional value in return of cost or spend or investment of customers in all forms of money, time, energy. Non product reinforcement is also applied by marketers to develop a close personalized relationship with customers. 13. What are the efforts that marketers practice for reducing possible consumers' cognitive dissonance? Also explain tactics that consumers also apply to reduce post purchase dissonance. Any discomfort occurs when a consumer holds conflicting thoughts about a belief or an attitude object is cognitive dissonance. It normally happens when consumers develops conflict after

purchase of any product or services in relation of actual performances or perception in reference to expectation developed earlier. Marketers attempt to help consumers reduce their cognitive dissonance by following means: a. Employing expert sales personal to better convince and educate consumers. b. By placing strategic product differentiation to help how product is different, unique and superior to competitors'. c. By executing testimonial advertisements to ensure and bring credential about products. d. By endorsing star cast or celebrities. e. By providing warranties and guarantees. f. With the help of efficient customer service system. Same time consumers use variety of tactics to reduce post purchase dissonance by rationalizing the decision as being wise, seek out advertisements that supports the choice, while avoiding dissonance creating competitive ad, trying to sell on the positive features of the brand (ie consumer as sales agents), or look to known satisfied owners for reassurance. 14. Altering consumer attitude is a key strategy consideration for most marketers. Explain strategies of attitude change. Market leader brands are fortunate enough to enjoy significant amount of customer goodwill and loyalty. Their goal always remains to make customers stick to positive attitude towards brand and not go influenced by competitors' special offers and other inducement designs. Still competitive brands or products attempt to change the attitudes of the market leaders' customers and win over them. Attitude change strategies are: i. ii. iii. iv. v. Changing customers' basic motivational function Associating product with an admired group or event Resolving two conflicting attitudes Altering component of the multi attribute model Changing consumers' belief and competitors' brands

Changing customers' basic motivational function Changing motivation is called functional approach. According to this attitudes can be classified into four functions: a. The utilitarian function 1. People hold attitude because of brands utility 2. Attitude towards brands or products are favorable when they are useful in the past 3. The application of the brand or product has to be conveyed frequently to the

consumers 4. Not only primary benefits all the other benefits and features needs to be clearly communicated 5. This will create new attitudes and beliefs among the consumers. b. Ego defensive function 1. People desire to protect their self image from all the doubts that come to their mind 2. Always try to build up their inner sense of self security and inner confidence 3. Advertisements to assure people of their lost self ego or self image. c. Value expressive function 1. Consumer's general values, lifestyles and point of view are mostly the attitudes they hold 2. Concentrating on target consumers lifestyle and belief will be useful as they reflect their attitudes towards certain brands and products 3. If the consumers hold a positive attitudes or negative attitudes toward the values or beliefs, that will be depicted by the products and brands they buy d. The knowledge Function 1. The consumers always have a strong need to know about the particular brand and product 2. Marketers should make the consumers aware of all the important advantages of particular brands and products over their competitive brands 3. Consumers should be educated on all the details of the product sand brands so they will secure to buy that particular brand or product 4. A strong convincing to the consumers on the benefits will be useful for most of the brands Associating product with an admired group or event Attitudes are related, atleast in parts, to certain groups, social events or causes. Its is possible to later attitudes towards companies and their products, services and brands by pointing out their relationship to particular social groups, events or causes. For example, Surya Tobacco associate with social cause event called Asha. Or standard chartered bank make association with Living with HIV and Seeing is believing (Cataract operation). Resolving two conflicting attitudes 1. CONSUMER IS CONFUSED BETWEEN TWO CONFLICTING ATTITUDES (NEGATIVE AND POSITIVE) 2. THE ATTITUDE CHANGE STRATEGIES CAN CHANGE THESE CONFLICTS 3. IF CONSUMER HAVE NEGATIVE ATTITUDE TOWARD A PARTICULAR BRAND OR PRODUCT AND THAT CONFLICT WITH ANOTHER POSITIVE ATTITUDE THEY HAVE, THIS MAY CONFUSE THE CONSUMER 4. THIS STRATEGY CHANGES THE MIND OF THE CONSUMER TO MOVE FROM THE NEGATIVE ATTITUDE TO POSITIVE ATTITUDE OF THE PRODUCT OR THE BRAND

Altering component of the multi attribute model 1. 2. 3. 4. changing relative evaluation of brand attributes changing brand belief adding an attribute changing the overall brand rating

Changing consumers' belief and competitors' brands Its about changing belief about attributes of the competitive brands. For example, some chewing gum brand offers "it will help you avoid bad breath. Some other competitor brand going a step ahead attempt to change consumer attitudes towards earlier brand, it not only help you avoid your bad breath but also help you kill germs. 15. People do not experience the numerous stimuli they select from environment as separate and discrete; rather, they tend to organize them into groups and perceive them as a unified whole. Explain this phenomenon. There is a most basic function of perceptual organization that allows individual to perceive stimuli into group and unified whole: a. figure and ground b. grouping c. closure Figure and Grounds People have tendency to organize their perceptions into figure and ground (ie background) relationship. Advertisers should plan their ads making sure stimulus they want noted is seen as figure not as ground. Figure should be more clearly perceived and ground should be supporting and therefore less important. Grouping Individuals tend to group stimuli so that they form a unified picture or impression. The perception of stimuli as groups or chunks of information, rather than as discrete bits of information, facilitates their memory and recall. Grouping can be used advantageously by marketers to simply certain desired meanings in connection with their products. Closure Individuals have a need for closure. They express this need by organizing their perceptions so that they form a complete picture. If the pattern of stimuli to which they are exposed is incomplete, they tend to perceive it, nevertheless, as complete; that is, they consciously or subconsciously fill in the missing pieces.

16. Discuss consumer behavior in the light of different consumer buying situations. It is not only products differ. Even the buying situation differs. Each time the buyer is to take a purchase decision, it may or may not be the same as the previous one. The differentiation between the two buying situations may be caused by the absence of any or all of the following factors. 1. Awareness about competing brands in a product group. 2. Customer has decision criteria and 3. Customer is able to evaluate and decide on his choice. Viewed against these parameters, one may observe that it is not the product that differentiates one buying situation from another; rather it is the time that the buyer spends in learning and evaluating the alternatives or finally selecting one of them. 1. Routinised response behavior 2. Limited problem solving and 3. Extensive problem solving.

Routinized Response Behavior or Straight Re buy This is a buying situation characterized by the presence of all the above three criteria for differentiation .In other words, here the customers is aware of his or her choices, knows what he is looking for, as his or her decision is based on personal experience of either self or others. Generally, the customers spend little or no time choosing an alternative .Brand loyalty is relatively higher here. Moreover, this is a buying situation where a customer perceives a low risk in buying the product and/or the brand. Consider the typical shopping behavior of a housewife .She goes to the grocer or a supermarket and spends much less time in selecting her toiletries, beverages like tea or coffee and other food products. For each time she goes to buy her family requirements, she generally ends up buying the same brand.

Limited Problem Solving or Modified Re buy This is a buying situation with a difference .This could be for example, introduction of a new brand or product often requiring a change in the customer decision criteria. Continuing the example of the housewife ,assume that in her next shopping cycle ,she sees a new liquid toilet soap which promises to keep her skin soft and moisturized .the brand also promises to give vitamin E, which the manufacturer claims is required in temperate conditions. The liquid toilet soap brand is available in four fragrances .The pack can be refilled every time the soap gets fully consumed .Now this introduction is likely to change her decision and may be

the choice criteria. If she spends some time in evaluating the liquid toilet soap against the normal bar soap and then decides to try it, we conclude that for her it was a limited problem solving situation. As can be seen, this buying situation will often lead to a trial purchase. The customer may even decide to continue with her current product selection. Generally it has been observed that brand extension strategy help the customer to reduce the element of newness in the purchase decision. Like, for example Unilever deciding to introduce liquid toilet soap under its most popular brand name lux. It may be remembered that customer perceives moderate risk in this situation.

Extended Problem Solving (EPS) - High degree if complexity - Often occurs with expensive items or can be fuelled by doubts and fears - All 7 consumer decision making stages are often used (need recognition, search for information, pre-purchase evaluation of alternatives, purchase, consumption, post-consumption evaluation and divestment) - Dissatisfaction often leads to negative word of mouth - A longer time is taken to decide