Consumer Behaviour for Quick Revision

Consumer Behaviour for Quick Revision

1. What is Consumer Behaviour?

Definition: Study of how individuals meet their needs by selecting, securing, and consuming products or services.
Process: Involves recognizing needs, making decisions to satisfy them, and evaluating the outcomes.
Importance: Helps businesses understand consumer needs, leading to better communication and marketing strategies.

2. Importance of Consumer Behaviour

Better Communication: Knowing consumer needs helps tailor messages.
Boosts Sales: Understanding customer preferences increases product appeal.
Informed Marketing: Guides strategic marketing planning and execution.
Competitive Edge: Allows companies to meet consumer expectations better than competitors.

3. Key Questions in Consumer Behaviour

Why do consumers buy? (e.g., lifestyle, group acceptance)
What influences their decisions? (e.g., internal factors like beliefs; external factors like social connections)
Where do they prefer to buy?
When do they buy? (influenced by lifestyle and family structure)
How do they decide? (decision-making process with internal and external influences)

4. Micro and Societal Perspectives

Micro Perspective: Focus on understanding consumers to aid business goals.
Societal Perspective: Examines consumer impact on economic and social conditions, influencing resources and lifestyle.

5. Applications of Consumer Behaviour

Market Opportunity Analysis: Identifies unmet consumer needs (e.g., mosquito repellents).
Target Market Identification: Segments markets based on specific needs (e.g., single-use shampoo sachets).
Marketing Mix Decisions: Helps define product, price, promotion, and distribution strategies.
Social and Non-Profit Marketing: Guides campaigns like family planning, AIDS awareness.

6. Marketing Strategy and Consumer Behaviour

Customer Value: Balancing total benefits vs. total costs of products.
Competitive Advantage: Understanding customer expectations and competing by adding unique value.

7. Market Analysis

Consumers: Recognize consumer desires using market research.
Company: Assess own capabilities (e.g., finance, product innovation).
Competitors: Understand rivals' strengths and strategies.
Conditions: Consider economic, technological, and regulatory factors that influence consumer preferences.

8. Market Segmentation

Steps in segmentation:

Identify product-related needs.
Group similar customers.
Describe each group.
Select target segments.

9. Consumer Decision Process

Influenced by marketing, culture, and personal preferences.
Low-Involvement: Quick decisions, often influenced by promotions or price.
High-Involvement: Detailed evaluation, often for significant purchases.

10. Models of Consumer Decision-Making

Howard-Sheth Model: Explores complex buying behavior.
EKB Model: Differentiates high and low involvement in decisions.

Summary

Consumer behaviour influences all aspects of marketing and product development.
It starts before a purchase and continues post-purchase, affecting future consumer choices and business strategies.

2.1 Consumer Involvement

Definition:
Consumer involvement is the level of concern or interest a consumer exhibits during the purchase process, influenced by financial, social, physical, and psychological risks.

Types of Involvement:

Low Involvement:
Routine purchases with minimal effort (e.g., buying groceries).

Example: Regularly buying toothpaste without researching brands.

High Involvement:
Decisions requiring research due to high risks or cost (e.g., buying a car or house).

Example: Evaluating multiple models and brands before purchasing a car.

Factors Affecting Involvement:

Personal Relevance:
A product that aligns with an individual’s needs or values.

Example: A fashion enthusiast investing time in choosing a trendy outfit.

Financial Risk:
Higher involvement when the purchase involves significant expenditure.

Example: Buying a house.

Social Risk:
Concern about social judgment.

Example: Choosing an elegant dress for a wedding.

Physical Risk:
Impact on health or safety.

Example: Selecting quality tires for a car.

Psychological Risk:
Internal conflict with values.

Example: Avoiding products not aligned with environmental ethics.

2.2 Nature of Involvement

Definition:
Involvement is the interest generated by the perceived relevance of a product/service, influenced by the intensity and persistence of the decision-making process.

Properties:

Intensity:
Level of effort and research involved.

High: Thorough research (e.g., luxury watches).
Low: Minimal effort (e.g., snacks).

Persistence:
Duration of concern during decision-making.

Short-term: Temporary (e.g., buying a movie ticket).
Long-term: Enduring (e.g., choosing an insurance plan).

Focus on Marketing Mix:
Consumers may focus on:

Product features.
Price comparisons.
Brand reputation.
Promotional offers.

2.3 Antecedents of Involvement

Definition:
Factors influencing the level of consumer involvement before the decision-making process.

Antecedents:

Personal Factors:
Individual traits like lifestyle, values, and social class.

Example: A health-conscious person researching organic products.

Product Stimuli:
Features, benefits, and risks of the product.

Example: Higher involvement in choosing between brands of electronics with varying features.

Situational Factors:
The context or occasion for the purchase.

Example: Being more cautious when buying gifts for a close friend vs. routine shopping.

Social Influences:

Peer Pressure:
Shopping with friends or colleagues can raise awareness about brand/image.

Example: Buying premium gadgets to match social expectations.

Social Visibility:
Higher involvement when a product will be publicly used.

Example: Choosing an outfit for an important business meeting.

Decision-Making Continuum

Routine Response:

Low involvement.
Familiar products require minimal research (e.g., snacks).

Limited Problem Solving:

Moderate involvement.
Some research needed for unfamiliar brands.
Example: Buying fashion items based on trends.

Extensive Problem Solving:

High involvement.
Significant research and evaluation.
Example: Choosing a university for higher studies.

2.4 Effect of Involvement on Decision Making

2.4.1 Information Search

Definition: Consumers look for additional information after identifying a need.
Process: May involve heightened attention (e.g., noticing ads) or active searching.
Example: A person exploring car options by watching ads, visiting showrooms, or discussing with friends.

2.4.2 Information Processing

Definition: Transforming and analyzing information to make it useful for decision-making.
Explanation: Includes any observable change, like comparing product features.
Example: A consumer comparing laptop specifications (e.g., RAM, processor speed) online.

2.4.3 Information Transmission

Definition: Sending processed information from one person or place to another.
Methods: Can be ancient (verbal communication) or modern (emails, social media).
Example: A company sharing product details through emails or advertisements.

2.4.5 The Purchase Decision

Definition: Mental process leading to the selection of a product or brand.
Types:

Routine purchases: Less critical (e.g., toothpaste).
High-stakes purchases: Major impact (e.g., buying a house).

Example: Deciding between iPhone and Samsung after evaluating pros and cons.

2.4.6 Post-Purchase Behaviour

Definition: Thoughts, feelings, and actions after a purchase.
Key Focus: Ensuring satisfaction to encourage repeat purchases.
Example: A customer feeling satisfied after buying a high-quality product, leading to brand loyalty.

2.5 Levels of Involvement

Continuum of Involvement:

High Involvement (Extensive Problem Solving - EPS)

Details: High effort, internal & external information sources, and consideration of multiple brands/sellers.
Example: Researching extensively before buying a car.

Moderate Involvement (Limited Problem Solving - LPS)

Details: Moderate effort with limited information search.
Example: Buying a mid-range phone after a quick comparison.

Low Involvement (Routine Problem Solving - RPS)

Details: Minimal effort, habitual decisions, often based on brand loyalty.
Example: Purchasing daily-use items like milk or bread.

Key Points:

Effort Required: High in EPS, moderate in LPS, low in RPS.
Brand Loyalty: High in RPS, lower in EPS.
Cognitive Dissonance: Strong in EPS, minimal in RPS.
Product Types:

High involvement: Specialty goods (e.g., luxury cars).
Low involvement: Convenience goods (e.g., snacks).

3.1 Consumer Behaviour Models

Overview: Researchers classify consumer decision-making into four perspectives that influence market strategy:

Economic Perspective: Consumers make rational decisions by evaluating costs and benefits.

Example: Choosing a brand based on its cost-effectiveness.

Cognitive Perspective: Consumers act as problem-solvers, gathering and processing information.

Example: Comparing features of laptops before purchasing.

Emotional Perspective: Decisions are driven by feelings or emotional triggers.

Example: Buying chocolates during a sale due to happiness-inducing advertising.

Behavioural Perspective: Responses are influenced by external stimuli like promotions.

Example: Purchasing a product due to a "Buy 1, Get 1 Free" offer.

3.2 Consumer Decision-Making Process

Steps in Decision-Making:

Problem Recognition: Realizing a need or want.

Example: Running out of toothpaste.

Information Gathering: Searching for options.

Example: Reading online reviews for a new smartphone.

Alternative Evaluation: Comparing choices based on features or benefits.

Example: Choosing between iPhone and Android based on usability.

Purchase Decision: Deciding when, where, and what to buy.

Example: Buying a laptop from a store offering a discount.

Post-Purchase Behaviour: Evaluating satisfaction and addressing concerns like cognitive dissonance.

Example: Feeling uncertain after buying a car but reassured by good after-sales service.

3.3 Problem Recognition

Definition: Identifying a gap between the current and desired state.

Example: A child wanting a bicycle after outgrowing a tricycle.

Types of Problems:

Threshold Level: Minimum tension required for a need to manifest.

Example: Feeling the urge to upgrade a slow computer.

Active Problems: Known issues requiring attention.

Example: Needing a new phone after the old one stops working.

Inactive Problems: Problems the consumer is unaware of.

Example: Realizing the benefits of a smartwatch after seeing an advertisement.

Activating Problem Recognition:

Marketers highlight the gap between current and desired states.

Example: Ads emphasizing fuel efficiency to promote car upgrades.

Methods:

Enhancing urgency with offers (e.g., credit card discounts).
Encouraging comparisons with peers.

Situational Examples:

Forgetting to buy emergency medicine when ill.
Needing insurance after an accident.
Marketers preemptively address these issues through proactive solutions like home delivery or pre-emptive advertisements.

4.1.1 INFORMATION OVERLOAD

Too much information confuses the consumer, leading to bad decisions.
Example: Seeing hundreds of similar options for headphones online can overwhelm and delay decision-making.

4.1.2 FACTORS LEADING TO HIGH INFORMATION SEARCH

Greater Benefit:

More research happens if the payoff is high.
Example: Buying a home instead of daily groceries.

High Interest:

When the consumer is passionate about the product.
Example: A photographer thoroughly researching a camera.

Love for Shopping:

Some people enjoy exploring options.
Example: Spending hours comparing clothes.

Available Time:

Free time encourages more research.
Example: Window shopping on weekends.

Mobility:

Ability to visit stores or websites.
Example: Visiting multiple showrooms for furniture.

Ease of Understanding:

Clear product descriptions motivate search.
Example: Reading easy-to-digest smartphone reviews.

Many Features:

Complex products need detailed evaluations.
Example: Analyzing features of gaming laptops.

High Risk:

Greater risk pushes for more research.
Example: Choosing health insurance.

Product Differences:

When products vary greatly in features and price.
Example: Luxury cars vs. economy cars.

4.2 EVALUATION OF ALTERNATIVES

Evoke Set:

Brands consumers are considering.
Example: Deciding between iPhone, Samsung, and OnePlus.

Inept Set:

Brands outright rejected.
Example: Ignoring an outdated phone model.

Inert Set:

Brands known but not actively considered.
Example: Being aware of a phone brand but not considering it due to lack of relevance.

4.3 PURCHASE PROCESS

Consumers follow steps: Need → Info Search → Evaluate → Decide → Use.
Example: A consumer realizes their old TV isn’t working well, researches online, compares smart TVs, decides on a brand, buys it, and uses it at home.

4.4 POST PURCHASE

Satisfaction leads to loyalty; dissatisfaction leads to complaints or switching.
Dissatisfaction outcomes:

Stop Purchasing: Avoiding the brand in the future.

Example: Stopping buying a detergent due to poor quality.

Switch Brands: Choosing competitors.

Example: Moving to a different phone brand.

Negative Word of Mouth: Sharing bad experiences.

Example: Telling friends about a bad restaurant.

Complaint: Filing grievances formally.

Example: Writing to consumer forums about a defective product.

5.1 Concept of Motivation

Motivation is the process that drives goal-oriented behavior, influenced by biological, emotional, social, and cognitive factors.

Example: Drinking water to quench thirst or reading to gain knowledge.

5.1.1 Features of Motivation

Internal Sensation: Motivation arises from within.
Example: Feeling motivated to study for self-improvement.
Need-Based: It stems from unsatisfied needs.
Example: Working hard for financial stability.
Continuous Process: Human needs never end.
Example: Learning new skills after achieving a job.
Positive or Negative: Motivation can encourage (reward) or discourage (punishment).
Example: Promotion vs. fear of losing a job.
Planned Process: Motivation differs for individuals.
Example: Some prefer praise; others prefer tangible rewards.

5.1.2 Importance of Motivation

High Efficiency: Enhances productivity by unlocking potential.
Example: Motivated employees perform better.
Better Image: Creates a positive workplace image.
Example: Attracting talented employees due to growth opportunities.
Eases Changes: Reduces resistance to new policies.
Example: Employees support organizational changes.
Improved Relations: Increases job satisfaction, reducing conflicts.
Example: Motivated teams cooperate better.
Optimal Resource Use: Motivated workers utilize resources efficiently.
Example: Employees strive to reduce waste.

5.2 Types of Motivation

Intrinsic Motivation: Driven by personal goals or growth.
Example: Learning a skill to aid others.
Extrinsic Motivation: Influenced by external rewards.
Example: Working hard for a bonus.
Attitude Motivation: Focused on improving mindsets.
Example: Inspiring colleagues with positivity.
Achievement Motivation: Focus on accomplishing tasks.
Example: Starting a business for personal satisfaction, not profit.
Psychological Motivation: Based on internal drives.
Example: Seeking safety or love per Maslow’s hierarchy.
Social Motivation: Driven by belonging and acceptance.
Example: Joining a club to feel connected.

5.3 Theories of Motivation

5.3.1 Maslow’s Hierarchy of Needs

Physiological Needs: Basic survival needs like food and shelter.
Example: Employees prioritize salaries for necessities.
Safety Needs: Economic and physical security.
Example: Workers seek stable jobs.
Social Needs: Desire for relationships and belonging.
Example: Preferring teamwork over solo tasks.
Esteem Needs: Respect and recognition.
Example: Seeking promotions for validation.
Self-Actualization: Realizing one’s potential.
Example: Pursuing meaningful work after meeting other needs.

5.3.2 Herzberg’s Two-Factor Theory

Motivators: Drive satisfaction (e.g., recognition, responsibility).
Hygiene Factors: Prevent dissatisfaction (e.g., salary, work conditions).
Example: Poor salary causes dissatisfaction, but improving it doesn’t guarantee satisfaction.

5.3.3 McGregor’s Theory X and Theory Y

Theory X: Employees are lazy and need control.
Example: Strict supervision ensures work.
Theory Y: Employees are self-motivated and creative.
Example: Allowing autonomy boosts productivity.

5.3.4 Vroom’s Expectancy Theory

Motivation depends on:

Expectancy: Belief in achieving performance.
Instrumentality: Belief in reward linkage.
Valence: Value of the reward.
Example: Employees work harder when rewards are desirable.

5.3.5 Adam’s Equity Theory

Employees compare input-output ratios to others for fairness.
Example: Feeling demotivated if a peer earns more for the same work.

5.3.6 Locke’s Goal-Setting Theory

Specific and challenging goals enhance motivation.
Example: Aiming to increase sales by 10% motivates action.

5.3.7 Alderfer’s ERG Theory

Existence Needs: Basic material needs.
Relatedness Needs: Social connections.
Growth Needs: Personal development.
Example: Balancing work relationships and self-improvement.

5.3.8 McClelland’s Theory of Needs

Achievement Need: Desire for success.
Affiliation Need: Desire for relationships.
Power Need: Desire for influence.
Example: Leaders with a high power need excel in management.

5.4 Applications of Motivation

Workplace Motivation: Boosts employee productivity.
Example: Recognition programs improve morale.
Education: Motivates students to excel.
Example: Setting rewards for achieving grades.
Personal Goals: Drives self-improvement.
Example: Setting fitness goals for better health.

6.1 INTRODUCTION TO PERCEPTION

6.1.1 Definition of Perception

Explanation: Perception is the process of organizing and interpreting sensory input to make sense of the environment.
Example: Employees perceive their workplace as positive due to factors like good pay and understanding management, though perceptions vary widely among individuals.

6.1.2 Sensory Inputs and Cognitive Processes

Senses Involved: Touch, sight, hearing, taste, smell, and proprioception (awareness of body position).
Cognitive Role: Helps in recognizing familiar faces or smells.
Example: Recognizing a friend's face in a crowd.

6.1.3 FACTORS INFLUENCING PERCEPTION

The Perceiver: A person’s feelings, experiences, and expectations shape their perceptions.

Example: Expecting authority in police officers may lead to perceiving them as strict.

The Target: Characteristics of the object or person being observed.

Example: Quiet individuals are less noticeable in groups.

The Situation: Contextual factors like time, location, and environment.

Example: Noticing someone in formal attire at a casual party.

6.1.4 COMMON SHORTCUTS IN JUDGING OTHERS

Selective Perception: Seeing only what aligns with our interests or expectations.

Example: A sales executive focusing solely on sales in a business case.

Stereotyping: Generalizing characteristics based on group affiliation.

Example: Assuming all teenagers are careless.

Halo Effect: Forming an overall impression based on a single trait.

Example: Assuming a punctual person is also hardworking.

Contrast Effect: Evaluating based on comparisons with others.

Example: Judging a student as average when placed next to a high-performing peer.

6.2 INDIVIDUAL DIFFERENCES

6.2.1 Personality

Explanation: Traits like conscientiousness and self-esteem influence decisions.
Example: Highly driven individuals may overcommit to avoid failure.

6.2.2 Gender

Explanation: Women tend to ruminate more, leading to overthinking.
Example: Women may rethink decisions excessively, leading to regret.

6.2.3 Mental Ability

Explanation: Intelligence aids in avoiding some biases but not all.
Example: Smart people may still fall victim to overconfidence or escalation of commitment.

6.2.4 Cultural Differences

Explanation: Cultural background affects problem selection, logic application, and decision-making styles.
Example: Egyptian managers take a more methodical approach compared to American managers.

6.3 ASPECTS OF PERCEPTION

Key Points

Selective Attention: Focusing on specific stimuli based on needs and interests.
Integration of Past and Present: Perception involves organizing past experiences with current information.
Change Sensitivity: Noticing deviations from the norm.

Example: Spotting a change in weather.

6.4 PRODUCT POSITIONING

Definition

Positioning a product to stand out in a market segment.

Key Concepts

Stimulus Discrimination: Differentiating a product from competitors.

Example: Saturn emphasizing customer service for market differentiation.

Contextual Use: Associating products with specific situations.

Example: Ads showing coffee as an energizer for mornings.

Remaining Topics

6.5 Social Perception: How individuals form impressions of others based on appearance, behavior, and interaction.

Example: First impressions in job interviews.

6.6 Attribution Theory: Explains how people assign causes to behaviors (internal vs. external factors).

Example: Attributing a colleague’s success to luck vs. hard work.

6.7 Perceptual Errors in Organizations: Biases like the recency effect and self-serving bias affecting workplace judgments.

Example: Managers rating employees higher for recent achievements.

6.8 Enhancing Perception: Strategies to reduce biases, like training and awareness.

Example: Structured interviews to minimize halo effects.

7.1 Introduction

Definition: An attitude is a long-lasting structure of a person's thoughts, feelings, and actions toward objects or environment components.

Key Idea: Learned predisposition—positive or negative.
Examples: Preference for a TV program, a product, or a retail store.

Marketing Influence: Attitudes significantly impact consumer choices.

7.1.1 Attitude Components

Cognitive Component

Beliefs and Knowledge about a product.
Example: Mountain Dew is popular among youth for its caffeine content and affordability.
Evaluative Features:

Low sodium in Quaker Oats is healthier (evaluative benefit belief).

Multi-attribute Attitude Model:

Positive beliefs → Positive attitudes.

Behavioral Component

Action Intentions: Reflects a person's tendency to act.
Examples:

"I want to drive a convertible."
"Smokers should avoid the library."

Affective Component

Emotions associated with the object.
Examples:

Love for babies due to cuteness.
Hate for smoking due to health risks.

7.2 Tri-Component Attitude Model

Definition: Attitude arises from interlinked components:

Cognitive: Decision-making based on beliefs.

Example: Choosing McDonald's based on past positive experiences.

Affective: Emotional attachment.

Example: Favoring KFC for its philanthropic activities.

Conative: Behavioral intentions.

Example: Buying brands with good reviews.

7.2.3 Models of Attitudes

Attitude-Toward-Object Model

Focus: Beliefs about specific product attributes.
Example: Positive attitude toward a brand with desirable features like durability.

Attitude-Toward-Behavior Model

Focus: Attitude towards actions related to an object.
Example: Choosing to recycle due to environmental concerns.

Theory of Reasoned Action

Components: Cognitive, affective, and conative.
Includes subjective norms:

Example: Buying eco-friendly products because friends support it.

Attitude-Toward-the-Ad Model

Process: Emotions and evaluations triggered by ads influence brand perception.
Example: A humorous ad increases a positive attitude toward the brand.

7.2.4 Elaboration Likelihood Model (ELM)

Purpose: Explains how persuasion changes attitudes.
Key Pathways:

Central Route Processing

Logical and fact-based persuasion.
Example: Buying a laptop after comparing specs.

Peripheral Route Processing

Emotional or indirect cues.
Example: Choosing a product endorsed by a celebrity.

7.2.5 Ideal Point Model

Concept: Consumers evaluate a product based on how closely it aligns with their ideal attributes.
Key Idea: A product must approach perfection to achieve a high rating.
Example: Among two facial tissue brands with similar price, scent, and texture, the chosen one may have a fragrance resembling the buyer’s favorite perfume.

7.2.6 Theory of Reasoned Action (TRA)

Origin: Derived from social psychology, explaining behavior through intentions influenced by attitudes and subjective norms.
Key Formula: Behavioral Intention=Attitude+Personal Standards+Intent to Behave\text{Behavioral Intention} = \text{Attitude} + \text{Personal Standards} + \text{Intent to Behave}Behavioral Intention=Attitude+Personal Standards+Intent to Behave
Core Concepts:

Attitudes: Based on beliefs and evaluations of consequences.
Subjective Norms: Judgments of what significant others think one should do.
External Variables: Indirectly influence behavior through attitudes and norms (e.g., task features, organizational structure).

Example: Buying eco-friendly products due to peer encouragement and belief in environmental benefits.

7.3 Attribution Theory

Purpose: Explains how individuals interpret behavior and events to find causal links.
Two Types:

Dispositional Attribution: Behavior attributed to internal traits (e.g., personality, motivations).

Example: Assuming someone is late because they are lazy.

Situational Attribution: Behavior attributed to external circumstances.

Example: Blaming traffic for being late.

Key Insight: People often misjudge behavior due to the fundamental attribution error, overemphasizing dispositional factors.

7.4 Cognitive Dissonance

Definition: Psychological discomfort from conflicting beliefs, values, or actions.
Symptoms: Anxiety, regret, embarrassment, and efforts to reduce inconsistency.
Causes:

Forced Compliance: Acting against personal values due to external pressure.
New Information: Learning something that contradicts prior beliefs.
Decisions: Rationalizing a choice to reduce post-decision regret.

Impact:

Emotional effects: Stress, shame, low self-esteem.
Behavioral effects: Adopting new beliefs, avoiding conflicting information, or justifying actions.

Example: Feeling discomfort after purchasing a car that later receives poor reviews, leading to rationalizing its value or ignoring negative feedback.

8.1 INTRODUCTION

Personality Definition: Personality is the dynamic organization within an individual of psychophysical processes that shape distinctive responses to the environment (Gordon Allport). It refers to an individual’s complete psychological system and the sum of responses and interactions with others.
Measuring Personality:

Personality tests are used for recruitment and predicting job suitability.
Self-report surveys are popular but can be inaccurate due to self-deception or manipulation, especially when used for recruitment.
Observer-rating surveys can offer a more accurate measure of personality, especially in the workplace.
Combining self-reports and observer-reports is the most accurate method.

Personality Determinants:

Hereditary Factors: Genetics play a significant role in determining personality traits like appearance, temperament, and reflexes.
Studies on identical twins reared separately show that personality traits have a genetic component.
Personality can evolve with age and responsibilities, but the overall rank or standing remains stable throughout life.

Personality Traits: Traits like shyness, aggression, ambition, and loyalty help define personality. Consistency and frequency across different situations give these traits significance.

8.2 THE FREUDIAN THEORY

Freud’s Influence: Freud’s psychosexual stages are central to his theory of personality development.
Psychosexual Stages:

Oral (0-1.5 years): Focus on the mouth; issues here can lead to oral habits.
Anal (1.5-3 years): Toilet training; unresolved conflicts can lead to issues with orderliness.
Phallic (3-5 years): Focus on the opposite-sex parent; unresolved conflicts can cause complex emotions.
Latent (5-12 years): Dormant sexual feelings.
Genital (12+ years): Healthy sexual development.

Levels of the Mind: Freud divided the mind into three parts:

Superego: Represents moral standards and societal expectations.
Ego: Mediates between the desires of the id and the constraints of reality.
Id: Operates on the pleasure principle, seeking instant gratification.

8.3 KAREN HORNEY’S THREE PERSONALITY GROUPS

Fundamental Anxiety: Horney proposed that childhood trauma can exacerbate neurosis, caused by factors like overprotection, neglect, or unresolved parental conflicts.
Neurotic Needs:

Affection and Approval: People seeking constant validation and acceptance.
Power and Control: Leads to antisocial behavior and detachment.
Independence and Autonomy: Results in rebellion and harsh behavior.

8.4 ALFRED ADLER: HUMANS SEEK VARIOUS RATIONAL GOALS

Adler’s Theory: Adler emphasized the importance of social connections, community, and personal goals in personality development.

He believed human conduct is goal-oriented and therapy can help individuals find new perspectives and develop healthier habits.
Therapeutic Techniques:

Active listening, empathy, encouragement, and helping patients understand and identify their strengths.
Memory analysis to gain insights into past behaviors.

8.5 HERBERT HARRY STACK SULLIVAN INTERPERSONAL THEORY

Sullivan’s Theory: Focuses on the role of interpersonal relationships and social experiences in personality development and psychopathology.
Development Stages:

Infancy (0-18 months): Basic need fulfillment.
Childhood (18 months-6 years): Delayed gratification.
Juvenile (6-9 years): Developing social belonging.
Preadolescence (9-12 years): Same-sex connections.
Early Adolescence (12-14 years): Formation of identity.
Late Adolescence (14-21 years): Formation of lasting personal relationships.

Self-Concept:

The "Good Me": Positive self-image.
The "Bad Me": Self-awareness of negative traits.
The "Not Me": Repressed or unknown aspects of the self.

8.6 PERSONALITY & CB (Consumer Behavior)

Personality & Targeting:

Personality traits influence how consumers respond to marketing strategies.
Digital platforms allow brands to target consumers more precisely, enhancing engagement and customer satisfaction.
In the age of digital communication, brands must be more attuned to consumer personalities to connect authentically.

Audience of One Concept:

Marketers need to recognize that consumers are increasingly aware of their personal identities, influenced by both brands and their social environments.
"Audience of One" refers to treating each consumer as an individual with unique personality traits and preferences.
Brands must adjust their marketing strategies to align with these individual characteristics rather than trying to force consumers to adapt to the brand.

Digital Environment Influence:

In today’s connected world, even minor inconsistencies in a brand's personality or messaging can be exposed instantly.
Consumers seek authenticity from brands, aligning with those that reflect their own self-image.

Adaptation vs. Change:

Brands cannot force consumers to change their personalities, but they can tailor their messaging and interactions to resonate with consumers' inherent traits.

8.7 SELF & SELF-IMAGE

Self-Concept:

Self-concept refers to an individual's perceptions, beliefs, and evaluations of themselves.
Baumeister (1999) defines it as "the individual’s belief about themselves, which includes both traits and the concept of the self."

Formation of Self-Concept (Lewis, 1990):

Existential Self: The realization of being distinct from others and the awareness of consistency over time and space. This begins as early as 2-3 months old in infants, who start to understand they are separate individuals.
Conceptual Self: Once the child recognizes their distinctiveness, they begin to understand that they are an object that can be described by properties (e.g., tall, small, etc.).

Self-Image:

Self-Image: How individuals perceive themselves, which may or may not align with reality. For example, someone with anorexia may perceive themselves as overweight despite being underweight.
Influenced by various factors like family, peers, and media.

Kuhn's Twenty Statements Test (1960):

Method: Respondents describe themselves in 20 statements answering "Who am I?"
Responses categorized into two main groups:

Social Roles: External identifiers like "son," "teacher," or "friend."
Personality Traits: Internal characteristics like "gregarious" or "impatient."

Self-Description Categories (Kuhn, 1960):

1. Physical Characteristics: E.g., "I am tall, have blue eyes."

2. Social Roles: E.g., "I am a student, mother, or team member."

3. Personality Traits: E.g., "I tend to worry a lot, I’m impulsive."

4. Existential Statements: Abstract self-descriptions like "I am a child of the cosmos" or "I am a spiritual being."

9.1 Economic Model

The economic model of consumer behavior assumes that consumers act rationally to maximize utility. Key concepts include:

Rationality: Consumers analyze decisions based on personal benefit, cost, performance, and quality.
Law of Declining Marginal Utility: As consumption increases, the additional satisfaction (utility) decreases, influencing purchasing decisions.
Factors Influencing Purchase:

Cost of acquisition
Current consumption level

Effects Influencing Consumer Behavior:

Price Effect: Consumers buy more when prices drop (Price Elasticity).
Substitution Effect: Consumers switch to alternatives if there's a significant price difference.
Income Effect: Higher income typically leads to increased spending.

Limitations of the Economic Model:

Assumes consumers are always rational and predictable, ignoring individual differences like age, gender, and preferences.
Doesn't account for emotional or irrational purchasing behaviors.

9.2 Learning Model

This model explains how consumer behavior evolves as they satisfy basic needs and then move on to learned desires (e.g., comfort vs. luxury).

Consumers prioritize fulfilling basic needs (e.g., food) before pursuing learned wants (e.g., fashionable items).
Businesses can improve customer experience by guiding customers through essential items first.

9.3 Psychoanalytic Model

Freud’s theory explains consumer behavior through three components:

Id: The unconscious mind seeking pleasure.
Ego: The rational part of the mind.
Superego: The moral conscience.

In marketing:

Unconscious Influence: Brands position themselves in consumers' minds, affecting purchasing behavior (e.g., brand loyalty, product preferences).
Brand Personality: Consumers align with brands that resonate with their own personality (e.g., Harley Davidson, Decathlon).
Marketing Colors: Colors influence consumer perception (e.g., green for freshness, red for passion).

9.4 Sociological Model

This model examines how social factors influence consumer behavior, focusing on three components:

Psychological: How we think about products.
Structural: The social roles products play in society.
Political Economy: Economic resources' impact on purchasing decisions.

Types of Social Groups:

Primary: Close groups (family, friends, coworkers).
Secondary: Broader society influences (e.g., media, peer groups).

Social Learning Theory:

Consumers learn behaviors through experience, peer influence, and societal norms, which shape their purchasing behavior. Key factors include:

Socialization: Emotional and social influences on behavior.
Group Processes: Peer pressure and family influence.
Familiarity: Desire to belong to a group.
Attitude: Beliefs and knowledge that affect purchasing.

9.5 Black Box Model

The Black Box Model explains consumer behavior by focusing on how external stimuli (from the company and environment) interact with internal factors (such as the consumer’s beliefs, preferences, and past experiences) to influence purchasing decisions.

Key Components:

Environment:

External Stimuli: Influences from the market (e.g., promotions, ads) and broader environment (e.g., social, economic factors) impact the consumer.
Marketing Stimuli: The company’s efforts, such as product features, pricing, and promotions, try to influence consumer decisions.

Example: A company’s advertising campaign promoting a new product offers incentives like discounts and bundled offers, stimulating consumer interest.

Buyer’s Black Box:

Internal Factors: Consumers’ past experiences, attitudes, and perceptions (often unconscious) affect how they process external stimuli. The buyer’s mental processes and decision-making mechanisms are considered part of the “black box” because these factors are not always clear.

Example: A consumer may feel loyal to a brand due to past positive experiences, affecting their future purchasing choices without fully understanding why.

Buyer’s Responses:

Purchase Decision: The consumer’s final decision is influenced by their interpretation of the external stimuli and internal factors.
Post-Purchase Evaluation: Consumers assess the product post-purchase, and if dissatisfied, may experience buyer’s remorse or regret, affecting future decisions.

Example: After purchasing a smartphone, a customer might experience satisfaction or dissatisfaction based on the product’s performance. A negative experience can lead to a decline in repeat purchases.

Application:

Marketing Insight: Marketers must understand the buyer's mindset to influence purchasing decisions effectively. By addressing both external stimuli (promotions, ads) and internal factors (emotions, loyalty), businesses can enhance customer engagement and satisfaction.

Example: A successful campaign not only highlights product features but also appeals to consumers’ emotions, making them feel connected to the brand.

9.6 Nicosia Model

The Nicosia Model (1966) focuses on the interaction between the company and potential customers, illustrating how marketing communications influence consumer attitudes and decisions.

Key Components:

Field 1: The Company and the Consumer:

Company’s Marketing Environment: The marketing efforts of the company, including advertisements, promotional messages, and competitive environment.
Consumer’s Perception: The consumer forms an attitude towards the product based on how they interpret the company’s marketing messages.

Example: An advertisement highlighting the eco-friendliness of a product may shape a consumer’s positive attitude towards the brand.

Field 2: Search and Evaluation:

Consumer Research: After forming an attitude, the consumer may search for additional information and evaluate the product against competing brands.

Example: A consumer may compare the eco-friendly product with other similar products before deciding which brand aligns best with their values.

Field 3: Purchase Decision:

Decision to Buy: The consumer, after evaluation, makes a decision to purchase based on perceived value.

Example: After comparing options, the consumer decides to buy the eco-friendly product because it is deemed superior in terms of quality and price.

Field 4: Feedback:

Post-Purchase Evaluation: Feedback from both the company (sales data) and consumer (experience with the product) influences future interactions and brand perceptions.

Example: If the consumer is satisfied, they may promote the product to others or become a loyal customer.

9.7 EKM Model (Engel, Kollat, Blackwell Model)

The EKM Model describes consumer behavior in a detailed, step-by-step process from information gathering to post-purchase evaluation.

Key Components:

Information Input Stage:

Sources of Information: Consumers gather information from both marketing (advertisements, promotions) and non-marketing sources (family, friends).

Example: A consumer may learn about a new product from a commercial (marketing source) and a friend’s recommendation (non-marketing source).

Information Processing:

Exposure, Attention, Perception, Acceptance: The consumer is exposed to the information, pays attention to it, perceives its meaning, accepts it, and remembers it.

Example: A consumer notices a commercial for a product, focuses on its unique features, and remembers it when making a decision.

Decision-Making Process:

Five Stages:

Problem Recognition
Search for Alternatives
Evaluation of Alternatives
Purchase Decision
Post-Purchase Evaluation

Example: The consumer recognizes the need for a new phone, compares options, and purchases a specific model, then evaluates it after use.

Variables Affecting Decision-Making:

Internal and External Influences: Individual traits (motives, personality) and social influences (family, culture) affect decision-making.

Example: A consumer’s decision to buy a specific brand might be influenced by cultural factors or peer recommendations.

9.8 Howard-Sheth Model

The Howard-Sheth Model (1969) is a comprehensive model that combines psychological, social, and commercial factors to explain consumer decision-making.

Key Components:

Three Levels of Decision-Making:

Complex Problem Solving: No prior knowledge of the brand, consumer explores all available options.

Example: A consumer researching a new product category (e.g., buying a car for the first time).

Limited Problem Solving: The consumer has some knowledge and preferences, collects information to compare brands.

Example: A consumer looking for a new TV and comparing various models based on features.

Habitual Decision-Making: The consumer already knows the brands and makes decisions based on past experiences and familiarity.

Example: A consumer consistently purchasing the same brand of cereal.

Stimuli:

Input Factors: Information from the environment, such as advertisements, product features, and peer recommendations, influence the consumer’s decision.

Example: Advertisements (symbolic stimuli) and product features (significant stimuli) provide input to guide decisions.

Perception and Learning:

Psychological Factors: Perception and learning processes help consumers interpret marketing messages and form brand knowledge.

Example: A consumer might develop a positive perception of a brand after repeated exposure to its ads, learning about its quality over time.

Outputs:

Consumer Response: Based on perception and learning, the consumer’s response includes attention, attitude, purchase intention, and eventual purchase.

Example: After learning about a product's quality and value, the consumer may intend to purchase it and ultimately make the purchase.

Exogenous Variables:

External Factors: Factors such as social influences (family, peers), situational variables (time constraints, urgency), and personal characteristics (personality) also affect decision-making.

Example: A consumer's purchase decision might be influenced by the urgency to buy a gift for an occasion or family preferences.

10.1 Family & Consumer Behaviour

A family is a social group where members influence each other, especially in decisions related to the acquisition of goods and services for collective consumption. This dynamic is influenced by the role each member plays, their life cycle stage, and the relationships between them.

Key Roles in Family Buying Decisions:

Influencer: Shares information about a product/service.
Gatekeeper: Controls the flow of information.
Decider: Has the authority to make the purchase decision.
Buyer: The person who actually makes the purchase.
Product Preparer: Prepares the product for use.
User: The individual who consumes or uses the product.
Maintainer: Ensures the product's ongoing usability.
Disposer: Responsible for disposing of the product.

Influence of Family on Consumer Behavior:

Family dynamics influence consumption, such as a child learning about products by observing older siblings or parents.
Families are crucial units for marketers, as they decide on significant purchases like homes, vehicles, and vacations.

Family Life Cycle & Consumption:

Families, consisting of immediate and extended relatives, are the primary units for household consumption.
Marketers need to understand how family roles and consumption patterns evolve over time.
For example, a nuclear family may make decisions about household purchases together, while extended families may have different dynamics in decision-making.

10.2 Family Supportive Roles

Family plays a significant role in influencing purchasing decisions throughout one's life. From childhood to adulthood, family members affect choices such as toys, gadgets, and even the preferred fashion.

Impact of Family Cohesion on Buying:

Families with strong emotional ties tend to make collective purchasing decisions, while families with weak ties may have more individual preferences.
The family’s power structure also influences decision-making. For instance, the amount of freedom children have may determine their role in purchases.

Example:

A teenager might influence parents to purchase a new phone, while a child’s preferences may guide parents' choices in toys.
Advertisers target different family roles based on specific needs, such as new mothers or parents buying family-oriented products.

Family’s Financial Impact:

The family’s income and financial stability impact purchasing decisions, as larger households or those with more earners can make bigger purchases.
Marketers tailor their strategies according to these factors, as families with limited discretionary spending prioritize necessities.

10.3 Family Decision-Making Roles

In family decision-making, various roles are played by different members:

Influencers: Inform family members about products, e.g., a child suggesting a new restaurant.
Gatekeepers: Control the flow of information and influence what product information is shared with the family.
Deciders: Have the authority to make the final purchasing decision, often based on their financial influence.
Buyers: Carry out the actual purchase, e.g., a mother buying groceries.
Product Preparers: Prepare the product for consumption, such as cooking a meal or assembling a toy.
Users: The person who consumes or uses the product. For example, the entire family might use a refrigerator, car, or TV.

Example:

In a family, a mother might act as the decider and buyer for groceries, while also preparing meals for the family, while the father might be the decider for bigger purchases like a new car.

Understanding these roles helps marketers target family members more effectively based on their role in decision-making.

Here’s a breakdown of family member roles in consumer behavior, explained with examples:

11.1 FAMILY MEMBER ROLES

Family and Its Influence on Consumer Behavior
Families act as a key unit in decision-making and consumption because they shape buying habits, brand preferences, and saving tendencies. This influence occurs through collective decision-making and the roles each family member plays.

11.1.1 USE FAMILY CONCEPTS IN MARKETING

Marketers must consider the unique roles family members play in purchasing. Depending on the product category, decisions may rest with a specific family member or involve multiple members.

Examples:

Husbands may take the lead on purchasing cars or insurance policies, as these often involve high financial stakes and technical details.
Wives may dominate decisions related to grocery shopping, kitchen appliances, or home décor, as these are traditionally aligned with household management.
Children influence family purchases for snacks, toys, and gaming consoles due to their preferences and emotional appeals.
Joint Decisions occur for items like vacations, family electronics (e.g., TVs), or home furniture, where the decision impacts all members.

11.1.2 FAMILY AND HOUSEHOLD DEFINED

A family refers to individuals connected by blood, marriage, or adoption living together, while a household encompasses all individuals sharing living quarters, regardless of their relationship.

Examples:

Family Household: A nuclear family of four (parents and two children) deciding on a family car.
Non-Family Household: Two college roommates sharing an apartment purchasing groceries collectively.
Single-Person Household: A young professional living alone making independent purchasing decisions for home essentials.

11.1.3 TYPES OF FAMILY

Family of Orientation or Consanguine Family
This refers to the family into which a person is born, shaping their basic values, attitudes, and behaviors.
Example: A child raised in a vegetarian family is likely to show a preference for vegetarian products.
Conjugal Family or Family of Procreation
This is the family a person creates after marriage, focusing on mutual goals and lifestyle changes.
Example: A newly married couple deciding on buying furniture or setting up a joint savings account.

11.2 FAMILY LIFE CYCLE

The family life cycle outlines the progression of a family through various stages, influencing their purchasing needs.

Stages of the Family Life Cycle with Examples

Unattached Adult:
Individuals focus on independence and self-reliance.
Example: A college student renting an apartment buys inexpensive furniture and ready-to-eat meals.
Newly Married Adults:
Couples focus on setting up their household.
Example: A newly married couple invests in a refrigerator, microwave, or home décor for their first home.
Childbearing Adults:
Parenting shifts the focus to child-related purchases.
Example: A family with a newborn buys diapers, baby food, and a crib.
Preschool-age Children:
Parents adapt to their child’s personality and activities.
Example: Buying educational toys, enrolling in playschools, or purchasing small furniture like child-sized desks.
School-age Child:
Families emphasize education and extracurricular activities.
Example: Parents purchase school supplies, tuition services, or sports equipment for their child.
Teenage Child:
Parents must allow more autonomy while guiding major choices.
Example: A family decides to buy a high-performance laptop for their teenager's academic and entertainment needs.
Launching Centre:
Parents adapt to their children leaving home for college or work.
Example: Parents may downsize their home or focus on travel and hobbies.
Middle-aged Adults:
The couple focuses on retirement planning and personal interests.
Example: Investing in mutual funds, vacation packages, or luxury goods like a high-end car.
Retirement and Elderly Stage:
Families focus on health and relaxation.
Example: Retirees might purchase health insurance, medications, or join leisure clubs.

MARKETING INSIGHTS

Marketers leverage these insights to design campaigns tailored to family roles:

Fast-food brands like McDonald’s appeal to children with toys and family deals, knowing kids influence dining-out decisions.
Home appliance brands market washing machines by showcasing how they make a mother’s role easier.
Life insurance providers focus on fathers and husbands by emphasizing responsibility for family welfare.

12.1 Introduction

Role of Social Classes:
Social classes are groupings that significantly influence an individual's behavior, ideals, and purchasing patterns. People within the same social class often share similar:

Lifestyles
Values
Decision-making processes

Impact on Marketing:
Marketers must understand the purchasing tendencies of different social classes to design effective strategies.

Example:

A lower-income consumer may focus on affordability when buying groceries, while a higher-income consumer may prioritize organic or premium-quality options.
A luxury car brand will market differently to an affluent group than a budget car brand targeting middle-income groups.

Aspiration and Influence:
People may also be influenced by groups they aspire to join.

Example:

A student buys a high-end smartphone not out of necessity but to fit in with peers who own similar devices.
A middle-income individual purchases branded clothing to project an image of affluence.

Consumer Roles in Purchases:
The decision-making process in purchases involves multiple roles:

1. Initiator: Proposes the idea of buying a product.

Example: A child suggests buying a new toy.

2. Influencer: Encourages the purchase by highlighting benefits.

Example: A friend recommends a specific phone model for its superior features.

3. Decision Maker: Finalizes the purchase decision after evaluating pros and cons.

Example: A parent decides to buy a specific laptop model for their child after researching options.

4. Buyer: The individual who actually purchases or uses the product.

Example: A parent who buys and uses household groceries.

12.2 Social Class and Consumer Behaviour

Social Stratification:
Social stratification, or the division of society into classes, is universal. While some countries (e.g., China) have attempted to eliminate these divisions, they remain persistent.
Unique, Common, and Excluded Behaviors:

Unique Behavior:
Each social class exhibits distinct behaviors based on its resources and values.

Example:

Higher classes might spend on luxury vacations or premium brands.
Lower classes might focus on affordable alternatives or essential goods.

Common Behavior:
Behaviors shared by all classes.

Example: Purchasing basic food items or clothing is common across all classes.

Excluded Behavior:
Certain actions or choices avoided by specific classes due to social norms.

Example:

Wealthy individuals may avoid shopping at discount stores.
Lower-income individuals may avoid exclusive golf clubs.

Class Characteristics:

Bounded:
Clear boundaries determine inclusion or exclusion in a class based on education, occupation, or lifestyle.

Example: A CEO is likely in a higher class compared to an entry-level employee.

Ordered:
Classes adhere to hierarchical arrangements, often reflecting power or status.

Example: A celebrity's endorsement might resonate more with the upper-middle class than the working class.

Mutually Exclusive:
Individuals belong to only one class, but mobility is possible in open systems.

Example: A tech entrepreneur from a middle-class background may rise to the upper class due to wealth accumulation.

Exhaustive:
Every individual belongs to a social class and is recognized within that framework.
Influential:
Classes influence preferences, behavior, and decisions, leading to varied consumption patterns.

Example: Upper classes may dine at five-star restaurants, while lower classes may prefer budget-friendly eateries.

Classifications of Social Classes:

Higher Class: Wealthy elites with luxurious lifestyles.

Example: Regular purchases of high-end goods like designer clothing or luxury cars.

Middle Class: Professionals and salaried workers focusing on quality and value.

Example: Buying mid-range electronics or branded apparel during sales.

Working Class: Individuals between middle and lower classes, often budget-conscious.

Example: Shopping at discount stores for household essentials.

Lower Class: Individuals with limited income prioritizing affordability.

Example: Opting for second-hand products or government-subsidized programs.

13.1 CULTURE

Definition:
Culture refers to the shared beliefs, values, and norms that guide individuals' behavior in a society. It teaches people how to adapt to environmental, biological, psychological, and historical contexts.

Beliefs & Values:

Beliefs: Personal understanding and opinions (e.g., "I believe honesty is important").
Values: General principles that guide behavior (e.g., "Honesty is the best policy").
Role: Help people make decisions and form attitudes.

Customs:

Culturally approved ways of behaving, passed down generations.
Example: Bringing gifts—wine in Canada (opened immediately), sweets in India (saved for later).

Importance of Culture in Communication:

Determines how people communicate and perceive behavior.
Marketers must understand cultural nuances to connect effectively with consumers.

Key Aspects of Culture:

1. Adaptability: Culture evolves (e.g., adopting technology like text messaging).

2. Collaboration: Shared experiences shape culture.

3. Accumulation: Knowledge builds over time (e.g., blending old fishing techniques with modern tools).

4. Patterns: Shared habits and behaviors create cultural norms.

13.2 CULTURE NORMS

Definition:
Cultural norms are shared traditions, values, and behaviors that influence how people act in a society.

Impact on Consumer Behavior:

Culture shapes buying habits, preferences, and behavior.
Influencing factors: attitudes, family, career, values, and reference groups.

Marketers' Role:

They can attract customers but can’t control them as external factors (like culture) play a role.
Understanding local traditions and values is key to creating effective marketing strategies.

Example:

Thanksgiving in the U.S.: Cultural tradition of eating turkey helps poultry producers anticipate increased demand.

13.3 CULTURE & CONSUMER NEEDS

Global Impact:

Different cultures = different consumer behaviors.
Lack of cultural knowledge is a major obstacle in international trade.

Success Factors:

Products succeed when aligned with local culture and consumer demand.
Tailored marketing strategies ensure better acceptance in new markets.

Examples:

Jaffa Citrus Fruit (Israel): Successful in Europe due to marketing tailored to local preferences (e.g., focusing on aesthetics for French consumers).
Christmas Marketing: Countries like Canada see 50% of toy sales during Christmas; however, Christmas products are mostly manufactured in non-Christmas-celebrating countries like China and Indonesia.

13.4 INDIAN CORE VALUES

Diversity in Culture:
India has over a billion people with varied traditions, religions, languages, and societal structures.

Ethnic & Linguistic Composition:

Two main groups: Indo-Aryan (North) and Dravidian (South).
Languages:

22 major languages (e.g., Hindi, Tamil, Telugu, etc.).
English is widely used for official purposes.

Language is a major identity marker.

National Identity:

Colonial Influence: British rule reshaped India’s political, cultural, and economic landscape.
Partition (1947): Division into India and Pakistan caused lasting tensions among Hindus, Sikhs, and Muslims.
Challenges: Balancing religious and cultural diversity while fostering national unity.

Efforts to Promote Equality:

Affirmative action programs support marginalized groups (e.g., women, lower castes, tribal communities).
These efforts aim to reduce social disparities despite occasional tensions.

Key Points for Exam:

Culture: Guides behavior and decision-making; evolves over time through shared experiences.
Beliefs & Values: Personal (beliefs) vs. societal (values) principles that influence actions.
Consumer Behavior: Strongly influenced by cultural norms, traditions, and external factors.
Global Marketing: Success depends on understanding cultural preferences and tailoring strategies.
Indian Values: Highlight diversity, linguistic identity, and efforts toward equality.

Here's a detailed explanation with examples for better understanding:

14.1 ECONOMIC INFLUENCE ON CONSUMER BEHAVIOR

Economic factors significantly influence consumer behavior, as they determine a person's ability and willingness to spend on goods and services. Let’s break this down:

1. Personal Income

Definition: Personal income refers to an individual's earnings after deducting taxes and other obligations.
Types:

Disposable Income: Money available for spending after taxes.

Example: If a person earns ₹50,000 per month and pays ₹10,000 in taxes, they have ₹40,000 as disposable income. With more disposable income, they might buy more groceries or upgrade gadgets.

Discretionary Income: Money left after meeting basic needs (food, housing, etc.).

Example: If a person spends ₹30,000 on necessities from their ₹40,000 disposable income, they have ₹10,000 for discretionary spending on luxuries like a branded watch or vacations.

Impact: Higher discretionary income leads to higher spending on non-essential items, improving the standard of living.

2. Family Income

Definition: Total income earned by all family members combined.
Impact:

Larger family income allows for purchasing luxury or durable goods.
Example: A family with a combined income of ₹1,00,000 might afford a new car or premium appliances after covering necessities.

3. Income Expectations

Definition: Future income expectations influence current spending.
Example: If someone expects a salary hike, they may spend on a new smartphone or invest in a long-term subscription. Conversely, if they fear a job loss, they might cut back on shopping or entertainment.

4. Consumer Credit

Definition: Access to credit, like loans or EMIs, affects purchasing decisions.
Example: If a store offers a 12-month EMI for buying a ₹60,000 refrigerator, people might find it easier to buy, even if they don't have the entire amount upfront.

5. Liquid Assets

Definition: Assets easily converted to cash, like savings or investments.
Example: A person with ₹5,00,000 in liquid assets might purchase a luxury car or high-end furniture without financial stress. If liquid assets are low, they avoid such expenditures.

6. Savings

Definition: The habit of setting aside money impacts spending decisions.
Example: If someone saves 30% of their income for retirement, they might cut back on luxury purchases or vacations today.

14.2 POLITICAL INFLUENCE ON CONSUMER BEHAVIOR

Political ideologies shape consumers’ preferences, choices, and responses to brands or policies.

1. Polarization Drives Consumer Activism

Definition: Political beliefs influence consumers to support or oppose brands.
Example:

Liberals may boycott companies harming the environment or exploiting workers. They supported Nike's Colin Kaepernick campaign, which highlighted police brutality against minorities.
Conservatives avoided Nike products during the same campaign, emphasizing patriotism and respect for national symbols like the flag.

2. Brand Activism and Market Impact

Impact: Brands taking political stances face risks.

Small Brands: Benefit more as they can target a niche audience.

Example: A local vegan brand supporting animal rights might gain loyal customers among liberals.

Large Brands: Risk losing a broader customer base.

Example: A popular tech company supporting controversial political issues might alienate a section of its users.

3. Ideological Differences in Consumption

Hierarchy Beliefs:

Conservatives prefer products that showcase vertical superiority (status).

Example: Choosing a luxury brand like Ralph Lauren for exclusivity.

Liberals prefer unique, individualistic products (lateral differentiation).

Example: Opting for handmade or customized goods from Urban Outfitters.

Risk-Taking:

Conservatives take financial risks for hierarchy advancement.

Example: Investing in stocks with potential high returns.

Liberals avoid risky investments unless they align with ethical beliefs.

Example: Choosing sustainable but lower-yielding mutual funds.

4. Response to Rules

Definition: Political ideology shapes how consumers react to regulations.
Example:

Conservatives might reject government bans on e-cigarettes, preferring less interference.
Liberals may welcome such regulations if they see societal benefits.

Practical Examples Summarized:

Factor	Explanation	Example
Disposable Income	Money after taxes influences spending.	Higher income leads to upgrading gadgets or buying more groceries.
Discretionary Income	Leftover money after basic needs drives luxury purchases.	Spending on vacations, branded goods, or entertainment.
Political Polarization	Political ideologies influence brand choice.	Liberals boycotting brands exploiting labor; conservatives rejecting campaigns disrespecting traditions.
Risk Preferences	Conservatives take risks for hierarchy; liberals prefer ethical investments.	Investing in high-risk stocks vs. sustainable mutual funds.
Credit Access	Easy loans/EMIs promote luxury purchases.	Buying a car on EMI.

This combination of economic and political influences shows how consumers make decisions based on their resources, expectations, and beliefs.

Search This Blog

NOTESWORLD

Consumer Behaviour for Quick Revision

Comments

Post a Comment

Popular posts from this blog

FINANCIAL managment explain hindi/english

Human Resource Management (HRM) - CH-1

Consumer Behaviour ch-1st , short notes