Month: October 2022

Management Notes

The evolution of the concept of entrepreneurship

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Entrepreneurship has traditionally been defined as the process of designing, launching and running a new business, which typically begins as a small business, such as a startup company, offering a product, process or service for sale or hire. It has been defined as the “Capacity and willingness to develop, organize, and manage a business venture along with any of its risks in order to make a profit”. While definitions of entrepreneurship typically focus on the launching and running of businesses, due to the high risks involved in launching a start-up, a significant proportion of businesses have to close, due to a lack of funding, bad business decisions, an economic crisis or a combination of all of these” or due to lack of market demand. In the 2000s, the definition of “entrepreneurship” has been expanded to explain how and why individuals (or teams) identify opportunities, evaluate them as viable, and then decide to exploit them.

Evolution of Entrepreneurship

The need and the constant necessity for a good leader is one of the many factors that drive the evolution of entrepreneurship. Besides this, there are a few other factors:

  • Trading: With the improvement in communication between the countries and the advancement in transportation, start the process of trading.
  • Advent of stable specialization and communities: When more and more individuals start to settle in secure communities, a huge change was noticed in their lifestyles. Each group had a leader who was qualified and specialized in one task and that helped in speeding the development of leadership skills and innovation.
  • Need of independent career: More and more people are looking for a career path that is totally independent. The majority started to take risks by developing their own businesses in order to achieve maximum benefits.

In the Earliest period, definition of entrepreneurship began as early as the Marco Polo who comes to the Middle East for trade. Marco Polo has signed an agreement with the capitalists to sell their products. In the contract merchant adventurer took a loan at 22.5% rate including insurance. Capitalist was the passive risk bearer and merchant adventurer took the active role in trading, bearing all physical and emotional risks. When the merchant adventurer successfully sold the goods and completed the trip, the profits were divided with the capitalist taking most of them up to 75%, while the merchant adventurer settled for the remaining 25%.

In middle ages, Entrepreneur is described as someone who is involved in the care and control of a large production projects. It is possible to control the project using the resources provided by the government. In this case, the entrepreneur does not bear any risk. Entrepreneurs in this age, is a have control and authority of construction works such as public buildings and churches. A typical entrepreneur in the middle age was the priest.

In 17th century, the evolution of entrepreneurship can be related with the relationship between risk and entrepreneurs. Entrepreneurship is the person who signed the contract agreement with the government to provide a service or supply products that have been determined. The contract price is fixed. Then, the entrepreneurs are fully responsible for the gains and losses of the business.  John law, a Frenchman was one of the entrepreneurs in that period. The founder of the royal bank of France and the Mississippi Company, which had an exclusive franchise to trade between France and the new world. Monopoly on French trade eventually led to collapse of the company.  Richard Cantillion, an economist defines entrepreneurs earlier. In his view, the entrepreneur is risk insurers. Merchants, farmers, craftsmen, and so is an entrepreneurs. They buy things at a certain price and sell it at a price that is uncertain, with the risks.

In the 18th century, the person with capital was differentiated from the one who needed capital. The entrepreneur was distinguished from the capital provider. One reason for this differentiation was the industrialization occurring throughout the world. Eli Whitney was an American inventor best known for inventing the cotton gin. This was one of the key inventions of the industrial Revolution. Thomas Edison, the inventor of many inventions. He was developing new technologies and was unable to finance his inventions himself.  Edison was a capital user or an entrepreneur, not a provider or a venture capitalist.

In 19th and 20th century, Entrepreneurs are not always associated with the management.    According to Merriam-Webster’s online dictionary, an entrepreneur is one who organizes, manages, and assumes the risk of a business or an enterprise. The entrepreneur organizes and manages an enterprise for personal gain. The materials consumed in the business, for the use of the land, for the services he employs, and for the capital he requires. Andrew Carnegie is one of the best examples of this definition.  Carnegie, who descended from a poor Scottish family, made the American Steel Industry one of the wonders of the industrial world.

In the middle of the 20th Century, the function of the entrepreneurs is to recreate or revolutionize the pattern of production by introducing an invention. Innovation, the act of introducing some new ideas, is one of the most difficult tasks for the entrepreneur. For example, Edward Harriman, who reorganized the railroad in the United States and John Morgan, who developed his large banking house by reorganizing and financing the nation’s industries. Besides, the Egyptian who designed and built great pyramids out of stone blocks weighing many tons each, to laser beams, supersonic planes and space stations.

In 21st century, Entrepreneurs are known as a hero for Free Enterprise market. Entrepreneur of the century created many products and services and is willing to face a lot of risks in the business. According to Kuratko & Hodgetts, most people say entrepreneurs are pioneers in creating new businesses. In the year 2005 Hisrich, Peter and Shepherd regarded entrepreneur as an organizer who controls, systematize, purchases raw materials, arranges infrastructure, throw in his own inventiveness, expertise, plans and administers the venture.

The Future of entrepreneurship will be growth with development of technologies. The modern technologies and internet have improved the ways of conduct business. Entrepreneurs now have the luxury of putting their business idea into action through the click of button.

Management Notes

John Kao’s Model on Entrepreneurship

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John Kao has developed a conceptual model of entrepreneurship in his article: Entrepreneurship, creativity and organisation in 1989.

This model has four main aspects:

  1. Entrepreneurial Personality: The overall success of a new venture largely depends upon the skill, qualities, traits and determination of the entrepreneur.
  2. Entrepreneurial Task: It is a role played by entrepreneur in an enterprise. The major task of the entrepreneur is to recognize and exploit opportunities.
  3. Entrepreneurial Environment: It involves the availability of resources, infrastructure, competitive pressures, social values, rules and regulations, stage of technology etc.
  4. Organisational Context: It is the immediate setting in which creative and entrepreneurial work takes place. It involves the structure, rules, policies, culture, human resource system, communication system.
Management Notes

Cognitive Dissonance, Introduction, Meaning, Definition, Features, Causes, Effects, Importance and Ways to Reduce Cognitive Dissonance

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Cognitive dissonance is a psychological state of mental discomfort that occurs when an individual experiences inconsistency between beliefs, attitudes, values, or behaviours. In consumer behaviour, cognitive dissonance commonly arises after a purchase when consumers question whether they made the right buying decision. This feeling of conflict creates anxiety, doubt, and uncertainty, motivating consumers to seek reassurance and reduce the discomfort. The concept was introduced by Leon Festinger in 1957 through the Cognitive Dissonance Theory. Understanding cognitive dissonance is important because it influences consumer satisfaction, brand loyalty, repeat purchases, and post-purchase behaviour.

Meaning of Cognitive Dissonance

Cognitive dissonance refers to the mental tension or psychological discomfort experienced when a person’s beliefs, attitudes, or actions conflict with one another. Consumers attempt to reduce this discomfort by changing their attitudes, seeking supportive information, or justifying their decisions.

Definition of Cognitive Dissonance

According to Leon Festinger: “Cognitive dissonance is a state of psychological discomfort arising from inconsistency between two or more cognitions, beliefs, attitudes, or behaviours.”

Examples of Cognitive Dissonance

Example 1: Smartphone Purchase

A consumer buys a smartphone but later sees another model with better features at a lower price. This creates doubt and regret about the purchase decision.

Example 2: Car Purchase

After purchasing a car, a consumer reads negative reviews about the vehicle’s maintenance costs, leading to anxiety and uncertainty.

Example 3: Online Shopping

A customer orders clothing online but worries about quality and fit before receiving the product.

Features of Cognitive Dissonance

  • Psychological Discomfort

The primary feature of cognitive dissonance is psychological discomfort. Consumers experience feelings of tension, anxiety, stress, confusion, and uncertainty when their beliefs or decisions conflict with one another. This discomfort arises because individuals naturally seek consistency between their attitudes and actions. After making a purchase, consumers may question whether they selected the best option, creating mental uneasiness. The greater the importance of the decision, the stronger the discomfort. This emotional tension motivates consumers to seek reassurance and reduce the conflict. Therefore, psychological discomfort is the most fundamental characteristic of cognitive dissonance in consumer behaviour.

  • Arises from Conflicting Beliefs and Attitudes

Cognitive dissonance occurs when consumers hold two or more contradictory beliefs, attitudes, or opinions simultaneously. For example, a consumer may believe they purchased a high-quality product but later discover information suggesting that another product would have been a better choice. These conflicting thoughts create internal conflict and mental tension. Consumers often struggle to reconcile these opposing viewpoints, leading to uncertainty and doubt. The conflict may involve product quality, price, brand reputation, or personal values. Therefore, inconsistency between beliefs and attitudes is a defining feature of cognitive dissonance and a major source of consumer discomfort.

  • Common After Purchase Decisions

A significant feature of cognitive dissonance is that it frequently occurs after a purchase has been made. Consumers often evaluate their decisions after buying a product and compare it with alternatives they did not choose. During this post-purchase evaluation, they may question whether they made the correct decision. Such doubts are especially common in expensive, important, or high-risk purchases. The finality of the purchase increases concern about potential mistakes. Therefore, cognitive dissonance is closely associated with post-purchase behaviour and plays a major role in shaping customer satisfaction and future buying decisions.

  • More Intense in High-Involvement Purchases

Cognitive dissonance is generally stronger when consumers make high-involvement purchases involving significant financial, social, or personal risk. Products such as houses, cars, smartphones, and expensive appliances require careful consideration and substantial investment. Because consumers invest considerable resources in these purchases, they become more concerned about making the right choice. Any uncertainty or negative information received afterward can create intense mental conflict. Low-cost routine purchases usually generate minimal dissonance because the perceived risk is lower. Therefore, the intensity of cognitive dissonance often increases with the importance and complexity of the purchase decision.

  • Motivates Consumers to Seek Reassurance

Consumers experiencing cognitive dissonance actively seek reassurance to reduce their discomfort. They may search for positive reviews, consult friends and family, read product testimonials, or seek confirmation from experts. This behaviour helps justify their purchase decision and restore confidence. Consumers often focus on information that supports their choice while ignoring information that contradicts it. Businesses can assist by providing follow-up communication, customer support, warranties, and positive feedback from other customers. Therefore, the desire to seek reassurance and validate decisions is a key feature of cognitive dissonance in consumer behaviour.

  • Influences Consumer Attitudes and Behaviour

Cognitive dissonance significantly influences consumer attitudes and future behaviour. To reduce discomfort, consumers may change their attitudes toward a product, adjust their beliefs, or alter future purchasing decisions. Some consumers may become more loyal to a brand after successfully justifying their choice, while others may develop negative perceptions and switch brands. The way consumers manage dissonance affects satisfaction, trust, and long-term relationships with businesses. Therefore, cognitive dissonance not only creates temporary discomfort but also influences future consumer behaviour and purchasing patterns in meaningful ways.

  • Can Be Reduced Through Justification

Another important feature of cognitive dissonance is that consumers attempt to reduce it through justification. They may convince themselves that the chosen product offers the best value, has superior features, or was the most practical option available. Consumers often emphasize the positive aspects of their purchase while minimizing its weaknesses. This self-justification helps restore mental balance and reduce feelings of regret. Businesses can support this process through effective after-sales communication and reinforcement of product benefits. Therefore, the tendency to justify decisions is a natural response to cognitive dissonance and an important characteristic of consumer behaviour.

  • Affects Customer Satisfaction and Loyalty

Cognitive dissonance has a direct impact on customer satisfaction and brand loyalty. If consumers successfully resolve their doubts, they are more likely to feel satisfied with their purchase and remain loyal to the brand. However, unresolved dissonance can lead to dissatisfaction, complaints, negative reviews, and brand switching. Customer satisfaction depends not only on product performance but also on how consumers feel about their purchase decisions. Businesses that effectively address post-purchase concerns can reduce dissonance and strengthen customer relationships. Therefore, the influence on satisfaction and loyalty is one of the most significant features of cognitive dissonance.

Causes of Cognitive Dissonance

  • High-Involvement Purchases

High-involvement purchases are a major cause of cognitive dissonance. Products such as cars, houses, laptops, and expensive smartphones require significant financial investment and careful decision-making. Because these purchases involve considerable risk, consumers often worry about making the wrong choice. After the purchase, they may question whether another brand or model would have provided better value. The greater the investment, the stronger the concern about potential mistakes. This uncertainty creates mental conflict and psychological discomfort. Therefore, high-involvement purchases frequently trigger cognitive dissonance because consumers seek assurance that their important decisions were correct.

  • Availability of Attractive Alternatives

Cognitive dissonance often arises when consumers become aware of attractive alternatives after making a purchase. They may discover another product with better features, higher quality, lower prices, or additional benefits. Such comparisons create doubts about whether the selected product was the best option available. Consumers may regret not choosing the alternative and begin questioning their decision. The abundance of information available through the internet and social media makes these comparisons common. Therefore, the presence of appealing alternatives increases uncertainty and creates conflicting thoughts, making it a significant cause of cognitive dissonance.

  • Conflicting Information After Purchase

Receiving conflicting information after a purchase can lead to cognitive dissonance. Consumers may encounter negative reviews, unfavorable news, expert criticism, or complaints from other users about the product they purchased. This information may contradict the positive beliefs they held before making the purchase. As a result, consumers experience internal conflict between their decision and the new information. The contradiction creates anxiety and doubt about whether they made the right choice. Therefore, exposure to conflicting information after purchasing a product is a common cause of cognitive dissonance in consumer behaviour.

  • Unmet Expectations

Unmet expectations are a major source of cognitive dissonance. Consumers develop expectations based on advertising, product descriptions, recommendations, and previous experiences. When the actual performance of a product fails to match these expectations, disappointment and mental conflict occur. For example, a product promoted as highly durable may not perform as expected during use. Consumers then struggle to reconcile their positive expectations with the disappointing reality. This inconsistency creates psychological discomfort and regret. Therefore, the gap between expected and actual product performance is an important cause of cognitive dissonance among consumers.

  • Social Influence and Criticism

Social influence can create cognitive dissonance when friends, family members, colleagues, or social groups criticize a consumer’s purchase decision. Consumers often seek approval from others, and negative opinions can make them question their choices. Even if they were initially satisfied, criticism may create doubts about the product’s quality, value, or suitability. Social media comments and online discussions can further intensify these concerns. Consumers experience mental conflict when their personal beliefs about the product differ from the opinions of others. Therefore, social influence and criticism are significant contributors to cognitive dissonance.

  • Impulse Buying Decisions

Impulse buying frequently causes cognitive dissonance because such purchases are made without careful planning or evaluation. Consumers often buy products spontaneously due to emotions, attractive displays, limited-time offers, or promotional discounts. After the excitement of the purchase fades, they may question whether the product was necessary or worth the money spent. This realization creates feelings of regret and uncertainty. Since impulse purchases involve minimal information search and comparison, consumers are more vulnerable to post-purchase doubts. Therefore, impulsive decision-making is a common cause of cognitive dissonance in consumer behaviour.

  • Lack of Adequate Information

Insufficient information before making a purchase can lead to cognitive dissonance. Consumers who fail to research product features, quality, pricing, or alternatives may later discover information that changes their perception of the purchase. Realizing that they lacked important knowledge during the decision-making process creates uncertainty and regret. Consumers may feel they could have made a better choice if they had gathered more information. This feeling of missed opportunity contributes to psychological discomfort. Therefore, inadequate information and limited product knowledge are important causes of cognitive dissonance among consumers.

  • Personal Values and Beliefs Conflict

Cognitive dissonance can occur when a purchase conflicts with a consumer’s personal values, beliefs, or ethical principles. For example, a consumer who values environmental sustainability may feel uncomfortable after purchasing a product from a company known for harmful environmental practices. Similarly, a health-conscious consumer may regret buying unhealthy products. The conflict between personal values and actual behaviour creates mental tension and emotional discomfort. Consumers often attempt to justify their decisions or change their attitudes to reduce this conflict. Therefore, inconsistency between personal beliefs and purchasing behaviour is a significant cause of cognitive dissonance.

Effects of Cognitive Dissonance

  • Buyer Remorse

One of the most common effects of cognitive dissonance is buyer remorse. After making a purchase, consumers may begin to question whether they selected the right product or brand. They compare their choice with alternatives and worry about potential mistakes. This feeling of regret creates emotional discomfort and dissatisfaction. Buyer remorse is especially common in expensive or high-risk purchases where consumers invest significant time and money. If not addressed, it can reduce confidence in the purchase decision. Therefore, cognitive dissonance often leads directly to buyer remorse, making it a significant aspect of post-purchase consumer behaviour.

  • Customer Dissatisfaction

Cognitive dissonance can reduce customer satisfaction by creating doubts about a purchase decision. Even if the product performs adequately, conflicting thoughts may prevent consumers from feeling fully satisfied. They may focus on perceived disadvantages or compare the product unfavorably with alternatives. This dissatisfaction affects the overall customer experience and may reduce trust in the brand. Businesses that fail to address consumer concerns risk losing customer confidence. Since customer satisfaction is essential for repeat purchases and long-term success, cognitive dissonance becomes an important challenge for marketers. Therefore, dissatisfaction is a major consequence of unresolved cognitive dissonance.

  • Product Returns and Refund Requests

Consumers experiencing strong cognitive dissonance may attempt to reduce their discomfort by returning the product or requesting a refund. They may believe that reversing the purchase will eliminate feelings of regret and uncertainty. High return rates can increase operational costs for businesses and negatively affect profitability. Product returns also indicate that consumer expectations were not fully met. Companies must provide accurate information and effective after-sales support to minimize such situations. Therefore, cognitive dissonance often contributes to increased product returns and refund requests, making it a significant concern for businesses and retailers.

  • Brand Switching Behaviour

Cognitive dissonance frequently encourages consumers to switch brands in future purchases. When consumers experience doubts and dissatisfaction after buying a product, they may lose confidence in the brand. To avoid repeating the same experience, they seek alternative brands that appear more reliable or attractive. Brand switching reduces customer retention and weakens long-term relationships between consumers and businesses. Companies must address post-purchase concerns and reinforce positive aspects of the product to maintain loyalty. Therefore, cognitive dissonance significantly influences future purchasing decisions and increases the likelihood of consumers choosing competing brands.

  • Negative Word-of-Mouth Communication

Consumers affected by cognitive dissonance often share their concerns and dissatisfaction with others. They may discuss their negative experiences with friends, family members, colleagues, or online communities. Such negative word-of-mouth communication can influence potential buyers and damage the brand’s reputation. In the digital age, social media and review platforms allow dissatisfied consumers to reach large audiences quickly. Negative feedback can reduce consumer trust and discourage future purchases. Therefore, cognitive dissonance not only affects individual consumers but also has broader implications for a company’s public image and market performance.

  • Reduced Brand Loyalty

Brand loyalty depends on trust, satisfaction, and positive consumer experiences. Cognitive dissonance weakens these factors by creating doubts about the purchase decision. Consumers who experience mental conflict may become less committed to the brand and less willing to make repeat purchases. They may explore competing products and become more price-sensitive in future buying situations. Reduced loyalty affects long-term profitability because retaining existing customers is generally less expensive than acquiring new ones. Therefore, cognitive dissonance can significantly weaken customer relationships and reduce the likelihood of long-term brand loyalty.

  • Increased Information Search in Future Purchases

Consumers who experience cognitive dissonance often become more cautious in future purchasing decisions. To avoid repeating the same mistake, they spend more time gathering information, comparing alternatives, reading reviews, and seeking recommendations. This increased information search reflects a desire to reduce uncertainty and improve decision quality. Although more research may lead to better choices, it can also make the purchasing process longer and more complicated. Businesses must provide clear and reliable information to assist consumers in this process. Therefore, cognitive dissonance encourages more extensive information search and careful evaluation in future purchases.

  • Lower Consumer Confidence

Cognitive dissonance can reduce a consumer’s confidence in their ability to make effective purchasing decisions. After experiencing regret or uncertainty, consumers may become hesitant and indecisive when shopping. They may question their judgment and rely more heavily on external opinions and recommendations. Reduced confidence can make future purchasing decisions more stressful and time-consuming. Consumers may avoid making important purchases altogether due to fear of making another mistake. Therefore, cognitive dissonance not only affects a specific transaction but also influences overall consumer confidence and decision-making behaviour.

Importance of Cognitive Dissonance in Consumer Behaviour

  • Helps Understand Post-Purchase Behaviour

Cognitive dissonance is important because it helps explain consumer behaviour after a purchase has been made. Consumers often evaluate their decisions and compare them with alternatives they rejected. This evaluation may create feelings of doubt, anxiety, or satisfaction. Understanding cognitive dissonance enables marketers to identify why consumers experience regret or uncertainty after purchasing products. Businesses can then develop strategies to reassure customers and improve their experiences. By analyzing post-purchase reactions, organizations gain valuable insights into consumer decision-making patterns. Therefore, cognitive dissonance is an essential concept for understanding post-purchase behaviour and consumer satisfaction levels.

  • Improves Customer Satisfaction

Understanding cognitive dissonance helps businesses improve customer satisfaction by addressing consumer concerns after a purchase. When organizations recognize the causes of post-purchase doubts, they can provide support, guidance, and reassurance to customers. Follow-up communication, product assistance, and responsive customer service help reduce feelings of uncertainty. Consumers who feel confident about their decisions are more likely to remain satisfied with their purchases. Higher satisfaction leads to positive experiences and stronger relationships with the brand. Therefore, understanding cognitive dissonance is important because it enables businesses to reduce dissatisfaction and enhance overall customer satisfaction.

  • Strengthens Brand Loyalty

Cognitive dissonance plays a crucial role in developing and maintaining brand loyalty. Consumers who successfully resolve post-purchase doubts are more likely to trust the brand and continue purchasing its products. Businesses can strengthen loyalty by providing quality products, warranties, after-sales support, and positive reinforcement. These actions reassure consumers that they made the right choice. Loyal customers contribute to stable revenue and positive recommendations. Conversely, unresolved dissonance can lead to brand switching. Therefore, understanding cognitive dissonance is important because it helps organizations build long-term customer loyalty and strengthen brand commitment.

  • Enhances Marketing Effectiveness

Knowledge of cognitive dissonance helps marketers design more effective marketing strategies. Businesses can create realistic advertisements, provide accurate product information, and communicate benefits clearly to reduce post-purchase doubts. Understanding consumer concerns enables marketers to develop messages that reassure customers and reinforce positive attitudes toward products. Marketing campaigns can also focus on highlighting customer satisfaction and success stories. Effective communication reduces the gap between expectations and actual experiences. Therefore, cognitive dissonance is important because it helps businesses create marketing strategies that improve consumer confidence and enhance overall marketing effectiveness.

  • Supports Customer Relationship Management

Customer relationship management depends on maintaining positive interactions with consumers throughout the buying journey. Understanding cognitive dissonance allows businesses to identify and address customer concerns before they develop into dissatisfaction. Follow-up communication, personalized support, and quick problem resolution help consumers feel valued and appreciated. These efforts strengthen trust and improve long-term relationships. Effective customer relationship management also increases customer retention and loyalty. Therefore, cognitive dissonance is important because it provides insights into consumer emotions and helps businesses build stronger and more meaningful relationships with their customers.

  • Reduces Product Returns and Complaints

Cognitive dissonance often leads to product returns, refund requests, and customer complaints. Understanding the factors that create post-purchase doubts enables businesses to take preventive measures. Accurate information, realistic expectations, quality products, and strong customer support reduce the likelihood of dissatisfaction. When consumers feel confident in their decisions, they are less likely to return products or file complaints. Reduced returns lower operational costs and improve profitability. Therefore, understanding cognitive dissonance is important because it helps businesses minimize returns and complaints while enhancing customer satisfaction and operational efficiency.

  • Assists in Product Improvement

Consumer experiences of cognitive dissonance provide valuable feedback for product improvement. Complaints, concerns, and post-purchase doubts often reveal weaknesses in product design, quality, performance, or functionality. Businesses can use this information to identify areas requiring improvement and develop products that better satisfy customer needs. Continuous improvement reduces future dissatisfaction and strengthens brand reputation. Understanding cognitive dissonance also helps organizations anticipate consumer expectations and deliver greater value. Therefore, cognitive dissonance is important because it serves as a useful source of information for enhancing product quality and overall customer experiences.

  • Increases Long-Term Business Success

Managing cognitive dissonance effectively contributes to long-term business success. Satisfied consumers are more likely to make repeat purchases, recommend products to others, and remain loyal to the brand. Reduced dissatisfaction, fewer complaints, and stronger customer relationships improve profitability and market competitiveness. Businesses that understand consumer psychology can better respond to customer needs and adapt their strategies accordingly. Cognitive dissonance provides valuable insights into consumer decision-making and post-purchase behaviour. Therefore, understanding and managing cognitive dissonance is important for achieving sustainable growth, maintaining customer trust, and ensuring long-term organizational success.

Ways to Reduce Cognitive Dissonance

  • Provide Accurate Product Information

Providing accurate, complete, and transparent product information helps consumers make informed decisions before purchasing. When customers clearly understand product features, benefits, limitations, pricing, and usage conditions, the possibility of unrealistic expectations decreases. Accurate information reduces uncertainty and prevents misunderstandings that may lead to post-purchase doubts. Honest communication also builds trust between consumers and businesses. When the actual product performance matches the information provided, consumers feel more confident about their decisions. Therefore, businesses should avoid misleading advertisements and ensure that all promotional messages accurately represent the product to minimize cognitive dissonance.

  • Offer Warranties and Guarantees

Warranties and guarantees provide consumers with a sense of security and confidence after making a purchase. These assurances reduce perceived risk because customers know that they can receive repairs, replacements, or refunds if the product fails to perform as expected. Such policies reassure consumers that the company stands behind its products and values customer satisfaction. This confidence helps reduce anxiety and post-purchase uncertainty. Warranties are particularly important for expensive and high-involvement products where consumers are more likely to experience doubts. Therefore, offering strong warranty and guarantee programs is an effective way to reduce cognitive dissonance.

  • Maintain Effective After-Sales Service

Effective after-sales service plays a crucial role in reducing cognitive dissonance. Consumers often require support, guidance, or technical assistance after purchasing a product. Prompt responses to customer inquiries and problems help reinforce confidence in the purchase decision. Good after-sales service demonstrates that the company cares about customer satisfaction and is committed to resolving issues. It also helps consumers maximize the value of their purchases. When customers feel supported, they are less likely to experience regret or dissatisfaction. Therefore, strong after-sales service is essential for reducing cognitive dissonance and strengthening customer relationships.

  • Follow Up with Customers

Following up with customers after a purchase helps businesses reassure consumers and address concerns before they develop into dissatisfaction. Follow-up communication may include thank-you messages, product usage tips, feedback requests, or customer support calls. These interactions show that the company values its customers and is interested in their experience. Such communication helps reinforce the consumer’s belief that they made the right decision. It also provides opportunities to resolve problems quickly. Therefore, regular follow-up activities are an effective strategy for reducing post-purchase doubts and minimizing cognitive dissonance.

  • Encourage Positive Reviews and Testimonials

Positive reviews and testimonials provide social proof that supports consumer decisions. After purchasing a product, consumers often seek confirmation that others have had satisfactory experiences with the same product. Reading favorable reviews reassures customers and strengthens confidence in their choices. Testimonials from existing users highlight product benefits and reinforce positive perceptions. Businesses can encourage satisfied customers to share their experiences through review platforms and social media channels. This creates a supportive environment that reduces uncertainty and regret. Therefore, positive reviews and testimonials are valuable tools for minimizing cognitive dissonance among consumers.

  • Deliver Consistent Product Quality

Consistent product quality is one of the most effective ways to reduce cognitive dissonance. Consumers expect products to perform according to the promises made by the company. When products consistently meet or exceed expectations, customers feel satisfied and confident about their purchase decisions. Reliable performance reduces doubts and eliminates concerns about having made the wrong choice. On the other hand, poor-quality products increase dissatisfaction and mental conflict. Businesses should focus on quality control, continuous improvement, and customer feedback to maintain high standards. Therefore, delivering consistent quality significantly reduces cognitive dissonance and enhances customer trust.

  • Offer Easy Return and Exchange Policies

Flexible return and exchange policies help consumers feel more secure about their purchases. Knowing that they can return or exchange a product if it does not meet their expectations reduces perceived risk and anxiety. Such policies provide consumers with a sense of control and confidence during the buying process. Easy returns also demonstrate that the business is committed to customer satisfaction and fairness. Consumers are less likely to experience strong cognitive dissonance when they know they have options available. Therefore, customer-friendly return and exchange policies are important tools for reducing post-purchase discomfort.

  • Strengthen Customer Education and Awareness

Educating consumers about product usage, maintenance, and benefits helps reduce cognitive dissonance. Well-informed customers are more likely to use products effectively and appreciate their value. Educational materials such as user manuals, tutorials, FAQs, videos, and training sessions enhance product understanding and reduce confusion. Better knowledge helps consumers feel confident in their purchase decisions and minimizes the likelihood of disappointment. Customer education also improves satisfaction by enabling consumers to obtain maximum benefits from their purchases. Therefore, strengthening customer awareness and product knowledge is an effective way to reduce cognitive dissonance.

Management Notes

Post Purchase Behaviour

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All the activities and experiences that follow purchase are included in the post purchase behavior. Usually, after making a purchase, consumers experience post-purchase dissonance. Post-purchase behavior is a customer’s reaction or feeling after the sale. It boils down to one of two sentiments: satisfaction vs. dissatisfaction. They sometimes regret their decisions made. It mainly occurs due to a large number of alternatives available, good performance of alternatives or attractiveness of alternatives, etc.

The marketers sometimes need to assure the consumer that the choice made by them is the right one. The seller can mention or even highlight the important features or attributes and benefits of the product to address and solve their concerns if any.

A high level of post-purchase dissonance is negatively related to the level of satisfaction which the consumer draws out of product usage. To reduce post-purchase dissonance, consumers may sometimes even return or exchange the product.

It’s vital to understand your customers’ post-purchase behavior because it gives your insight into how you can create a positive customer experience. With this insight, you can influence them to make the decisions you want them to make:

  • Repeat purchases
  • Positive reviews
  • Brand evangelism

It also gives you a chance to position your brand as a trusted guide and friend. Investing in your customers after you’ve collected their money demonstrates to them you’re committing to their satisfaction.

This level of engagement influences their post-purchase behavior, but it also positively affects your bottom line.

Steps to Improve:

Refund policy

Send an email to remind customers they can get a full refund if they aren’t happy with their purchase. And let them know the time limit on refunds.

This helps to reduce post-purchase anxiety. Knowing that the option for a refund is there helps the customer relax and enjoy the product.

Returns process

Another key message to include in your post-purchase emails is your returns process.

Sometimes the idea of returning a product can seem stressful. This adds to a customer’s anxiety and dissatisfaction, if they have decided not to keep an item.

By sending an email that clearly explains your returns policy, you remove this anxiety. This helps your customer to see your brand in a positive light.

Complementary product recommendations

Now your customer has bought from you, you’re in a position to curate personalised product recommendations for them.

Send an email with recommendations for complementary products so your customer can make the most out of their purchase.

Product satisfaction feedback

Post-purchase is the perfect time to get feedback on your products and customer service. This helps you get to know your customer to improve your customer experience.

Loyalty programme

Show your customers you value their custom by inviting them to become part of your loyalty programme.

Email them with an invitation to join that lays out how it will benefit them. Tempt them with exclusive offers, bonus points on purchases, and first looks at new lines.

Management Notes

Role of Consumer Involvement

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Involvement too is an internal state of mind which a consumer experiences. It makes one analyze and rationalize his/her choice. Involvement of consumers can be induced by external sources and agencies. Involvement is the embodiment of time, effort, consideration given and the enjoyment that is derived by consumer while choosing a product or service.

The involvement theory holds that there are low and high involvement purchases. Consumers’ involvement depends on the degree of involvement of purchase to a consumer. For example, while buying a loaf of bread, the consumer does not feel very much involved. It is because the life of the product is very short. Once it is consumed, it gets exhausted. If the consumer is not satisfied with the particular bread brand, he will purchase some other brand next time.

It is an inner urge that creates within an individual an interest/desire to hold certain product/service offerings in greater relevance/importance.

Involvement possesses certain properties:

a) It has a level of strength and intensity that determines the degree of involvement that a consumer possesses. This could be high or low. A highly involved consumer would actively search for information and collect facts, compare the various brands against each other on the basis of the information, assess differences and similarities between the various alternatives and finally make a choice. In other words, they collect process and integrate information very intensely, and finally arrive at a decision regarding the brand choice. On the other hand, a consumer low on involvement would not make so much of effort in collecting and processing information about varying alternative brands and taking a decision.

b) The length of time that the consumer remains in this heightened state determines the level of persistence. It could be short term and situational interest in the product/service category; or it could be long term and enduring.

c) It is directed towards any or all of the elements of the marketing mix. A person may show involvement towards the product (its features/attributes and benefits), the price, the store or the dealer or even the promotional effort (advertisement/sales promotion etc).

A mechanism underlies the very process of involvement. As a process, involvement is impacted by certain “antecedents” that get restrained by “moderating factors,” and finally affect its degree of intensity and level of persistence.

Depending on whether the involvement is short term or long term, consumer involvement could be of two types, viz., situational and enduring.

Situational involvement: This is a state of arousal directed towards attaching relevance to a person/object/situation for a short term. As an affective state, it creates a level of involvement when a person thinks about a particular person/object/situation. It is specific to a situation and is thus temporary in nature. It could vary from low to high, depending upon the situational factors.

For example, a middle aged lady suddenly decides to gift a laptop to her son on his birthday. She is not techno savvy and has little interest with the product category. She goes to the electronics mall and visits the various stores that sell computers and laptops. She collects information on the product features, prices, etc and finally takes the help of her middle aged neighbor to reach a final decision. Her involvement with the purchase activity would be regarded as a situational involvement.

Enduring involvement: When the level of involvement towards the product/service category extends over a period of time across situations, it is referred to as enduring involvement. The person shows a high-level of interest in the product category and spends time collecting and processing information and integrating it within his memory.

For example, a person desires to buy a laptop for his son to be gifted to him when he goes to college, which would be three years later. The father plans well in advance, tries to collect information through advertisements, brochures, trade journals, visits to dealers, and word of mouth from peers and colleagues. Within this period he gets involved with the product category and after three years is in a position to take a decision based on the facts that he has collected. This is referred to as enduring involvement.

Enduring involvement with a product category often gives birth to an opinion leader. An opinion leader is a person who holds interest in a particular product/service category, and becomes a specialist; he makes efforts to gather all information about the category, the brand offering etc.; he talks about and spreads the information and the knowledge that he possesses. When a person wants to make a purchase, he seeks the advice and guidance of such an opinion leader who helps him make a decision. Opinion leaders are product specific. In the example above, if the lady approaches her neighbour and takes his advice/guidance because the neighbour is young, techno savvy and knows a lot about electronics and in particular laptops, she would actually be taking help of what is known as an “opinion leader”.

Types of consumer involvement in buying

Certain factors affect the degree of involvement of buyers in making purchase decisions. These include their level of knowledge, information, psychology, culture, lifestyle, social system, etc. Even for the same product or service the degree of involvement of an individual may vary depending upon the circumstances. There are five types of involvement.

Commitment: Commitment is another important form of involvement. When a member of the family falls sick, the other family members are committed to arrange medical treatment for the suffering members. Similarly, functions like marriages entail the commitment of the entire family.

Ego involvement: Ego involvement is intended to satisfy one’s ego. For example, all the members of the family involve themselves in purchasing a product for a single member belonging to that family. Wife involves herself in the purchase of garments for her husband and husband involves himself in the purchase of cosmetics for his wife. Sons and daughters of the family significantly influence the purchase of laptop, TV, car, household furniture, etc. The ego of each family member is satisfied by consulting him/her before the purchase.

Communication in involvement: Communication involvement signifies sharing the available information with others in the family or organization. If one member has some information on the subject matter of decision, he should communicate it with the other members before arriving at a decision.

Purchase importance: Involvement of individuals depends upon the degree of importance of purchase. Suppose e flat costing lakhs of rupees is purchased, then the purchase decision assumes a great deal of importance in respect of location and area of the flat. The title deeds should be free from encumbrance.

Extent of information: Once the consumer recognizes the need, he then engages in a search process. Search means acquisition of information from the environment. The extent of information search is part of purchase importance. When the purchase is important, information is sought from all possible sources. But in the case of routine purchase of products and services, information search will be rather minimum.

Management Notes

Situational Influences

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Situational influences are temporary conditions that affect how buyers behave whether they actually buy your product, buy additional products, or buy nothing at all from you. They include things like physical factors, social factors, time factors, the reason for the buyer’s purchase, and the buyer’s mood. You have undoubtedly been affected by all these factors at one time or another. Because businesses very much want to try to control these factors, let’s now look at them in more detail.

The Consumer’s Physical Situation

Have you ever been in a department story and couldn’t find your way out? No, you aren’t necessarily directionally challenged. Marketing professionals take physical factors such as a store’s design and layout into account when they are designing their facilities. Presumably, the longer you wander around a facility, the more you will spend. Grocery stores frequently place bread and milk products on the opposite ends of the stores because people often need both types of products. To buy both, they have to walk around an entire store, which of course, is loaded with other items they might see and purchase.

Environmental Implications of Products

Environmental factors such as lighting, music, noise and aroma can either encourage or discourage the purchase of a product. A study by North, Hargreaves and McKendrick is a perfect example of how the choice of music affects purchase behavior. When French music was played in a store, the retailer saw a spike in the sale of French wine. Switching to German music saw sales increase for German wine. But atmospheric elements in the retail environment aren’t the only environmental influencers. Spatial factors also play a role. For example, the way in which a product is displayed can make it more desirable, while a crowded store or a long line at checkout can suddenly make that same product less compelling.

Purpose for Shopping Trip

The goal of a shopping trip is yet another theory involving situational influencers. A consumer searching for a birthday present, for instance, is in a store for a different purpose than someone casually shopping for a new outfit. The reason for shopping dictates the types of products customers are willing to interact with at that time and may cause them to bypass certain products they would normally interact with on another shopping trip. The same can be said for a trip to the grocery store. A customer out of milk will interact with different products than someone on her weekly shopping trip.

Social Aspects of Shopping

The social aspect of a purchase also involves situational influencers. Consumers unconsciously adjust their behavior to conform to the behavior of those in their company, and marketers have no way of changing this situation. A consumer is more apt stop to look at certain products when in the company of a friend as opposed to a parent, thereby influencing the potential of a purchase. Social aspects also can alter price point. A consumer may be persuaded to purchase a more expensive product when in the company of a colleague or potential partner than he would when with a friend or spouse.

Timing of Purchases

Much like the purpose of a purchase, timing also can influence consumer behavior. Someone in a rush will inevitably interact with fewer products than a consumer with hours to shop. Even if the two people are looking for the same type of product, the one in a hurry may end up with the most accessible product, while the leisurely shopper has time to interact with more products, giving her time to weigh the price and quality of the offerings.

State of Mind at Time of Interaction

Another situational factor known to influence behavior is state of mind. Someone feeling sad interacts differently with products than a shopper feeling happy. The interaction inevitably affects the opinion on a product and, in turn, the purchase behavior. But state of mind goes beyond mood or emotion and can entail personal conditions. Someone who’s sick interacts with different products than someone who’s healthy. The same can be said for someone who’s fatigued versus someone’s who’s full of energy.

There are two main correlations to remember here:

  • Situations can influence an individual’s personality.
  • An individual’s personality paired with the situation can help to predict behavior.

Companies can use these correlations to create stronger and more efficient teams. While unique circumstances may arise, understanding personality traits is the first step in developing a strong organization.

Management Notes

Compensatory decision rule, Conjunctive decision rule, Lexicographic rule, affects referral, disjunctive rule

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Compensatory decision rule

A compensatory decision-making strategy weighs the positive and negative attributes of the considered alternatives and allows for positive attributes to compensate for the negative ones.

The number of options is the primary factor that determines what strategy people will use. That’s because this number determines the amount of effort necessary to sift through them.

When we evaluate just a handful of alternatives (around 5–7), comparing the attributes of each is a feasible task. By thoroughly reviewing these attributes, we can determine whether certain aspects are more important to us than others, and then allow the positive values to outweigh negative ones when assessing each alternative this is the compensatory strategy.

However, when there are many options, it would be daunting if not completely unreasonable to comprehensively compare the pros and cons of each alternative. In these situations, we turn to the non-compensatory strategy of eliminating any alternative that does not meet some key criterion. This approach allows us to narrow down the set of options quickly and easily, at the expense of not fully considering each.

Conjunctive rule:

A minimally acceptable cut off point is established for each attribute. The brands are evaluated, and, the brand that falls below the minimally acceptable limit on any of the attributes is eliminated/ rejected.

The conjunctive decision rule establishes minimum required performance standards for each evaluative criterion and selects the first or all brands that surpass these minimum stan¬dards. In essence, you would say: “I’ll consider all (or I’ll buy the first) brands that are all right on the attributes I think are important.”

Because individuals have limited ability to process information, the conjunctive rule is frequently used to reduce the size of the information processing task to some manageable level. It first eliminates those alternatives that do not meet minimum standards. This is often done in the purchase of such products as homes, computers, and bicycles; in the rental of apartments; or the selection of vacation options. A conjunctive rule is used to eliminate alternatives that are out of a consumer’s price range, outside the location pre¬ferred, or that do not offer other desired features. Once alternatives not providing these features are eliminated, another decision rule may be used to make a brand choice among those alternatives that satisfy these minimum standards.

The conjunctive decision rule is commonly used in many low-involvement purchases as well. In such a purchase, the consumer evaluates a set of brands one at a time and selects the first brand that meets all the minimum requirements.

If the conjunctive decision rule is used by a target market, it is critical to surpass the consumers’ minimum requirement on each criteria. Since the first brand the consumer evaluates that does so is often purchased, extensive distribution and dominant shelf space are important. It is also necessary to understand how consumers “break ties” if the first satisfactory option is not chosen.

Lexicographic rule:

The various attributes are ranked in terms of perceived importance. First, the brands are evaluated on the attribute that is considered the most important. If a brand ranks considerably high than the others on this attribute, it is selected. In case the scores are competitive, the process may be repeated with the attribute considered next in importance.

Sometimes the application of one rule may not be enough; and another may also be applied to reach a final decision.

The lexicographic decision rule requires the consumer to rank the criteria in order of importance. The consumer then selects the brand that performs best on the most important attribute. If two or more brands tie on this attribute, they are evaluated on the second most important attribute. This continues through the attributes until one brand outperforms the others. The consumer’s thinking is something like this: “I want to get the brand that does best on the attribute of most importance to me. If there is a tie, I’ll break it by choosing the one that does best on my second most important criterion.”

The lexicographic decision rule is very similar to the elimination-by-aspects rule. The difference is that the lexicographic rule seeks maximum performance at each stage while the elimination-by-aspects seeks satisfactory performance at each stage. Thus, using the lexicographic rule and the data from the elimination-by-aspects example above would result in the selection of Gateway, because it has the best performance on the most important attribute. Had Gateway been rated a 4 on price, it would be tied with Dell. Then, Dell would be chosen based on its superior weight rating.

When this rule is being used by a target market, the firm should try to be superior to the competition on the key attribute. This competitive superiority should be emphasized in advertising. It is essential that the product at least equal the performance of all other competitors on the most important criteria. Outstanding performance on lesser criteria will not matter if a competitor is superior on the most important attribute. If a competitive advantage is not possible on the most important feature, attention should be shifted to the second most important (assuming equal performance on the most important one). If it is not possible to meet or beat the competition on the key attribute, the firm must attempt to make another attribute more important.

The ad shown in Illustration 16-6 emphasizes the ability of this Columbia parka to protect the wearer from bad weather. No other attributes are mentioned. This ad is appropriate for those consumers whose decision rules place primary importance on this attribute.

Affects referral

A type of decision rule where selections are made on the basis of overall impressions or affective summary evaluation of the various alternatives under consideration.

Disjunctive rule:

A minimally acceptable cut off point is established for each attribute. The brands are evaluated, and, the brand that falls above the cut-off point on any of the attributes is selected.

The disjunctive decision rule establishes a minimum level of performance for each important attribute (often a fairly high level). All brands that surpass the performance level for any key attribute are considered acceptable. Using this rule, you would say: “I’ll consider all (or buy the first) brands that perform really well on any attribute I consider to be important.”.

When the disjunctive decision rule is used by a target market, it is critical to surpass the consumers’ requirements on at least one of the key criteria. This should be stressed in advertising messages and on the product package. Since the first brand the consumer evaluates that exceeds one of the requirements is often purchased, again extensive distribution and dominant shelf space are important, as is understanding how consumers “break ties” if the first satisfactory option is not chosen.

Management Notes

Consumer Behaviour Characteristics, Scope, Relevance, Need

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A consumer behavior analysis helps you identify how your customers decide on a product or a service. To study their behavior you need a mix of qualitative and quantitative data from customer surveys, customer interviews, the information gathered from observation of their behavior in-store and online.

  • According to Engel, Blackwell, and Mansard

‘Consumer behaviour is the actions and decision processes of people who purchase goods and services for personal consumption’.

  • According to Louden and Bitta

‘Consumer behaviour is the decision process and physical activity, which individuals engage in when evaluating, acquiring, using or disposing of goods and services’.

Consumer buying behavior is the sum total of a consumer’s attitudes, preferences, intentions, and decisions regarding the consumer’s behavior in the marketplace when purchasing a product or service. The study of consumer behavior draws upon social science disciplines of anthropology, psychology, sociology, and economics

Characteristics

  • Process

Consumer behaviour is a systematic process relating to buying decisions of the customers. The buying process consists of the following steps;

  • Need identification to buy the product.
  • Information search relating to the product.
  • Listing of alternative brands.
  • Evaluating the alternative (cost-benefit analysis)
  • Purchase decision.
  • Post-purchase evaluation by the marketer.

 

  • Influenced by Various Factors

Consumer behaviour is influenced by a number of factors.

The factors that influence consumers are: Marketing, Personal, Psychological, Situational, Social, Cultural etc.

  • Different for All Customer

All consumers do not behave in the same manner. Different consumers behave differently. The difference in consumer behaviour is due to individual factors such as nature of the consumer’s life style, culture, etc.

  • Different for Different Products

Consumer behaviour is different for different products. There are some consumers who may buy more quantity of certain items and very low/no quantity of some other items.

  • Region Bounded

The consumer behaviour varies across states, regions and countries. For instance, the behaviour of urban consumers is different from that of rural consumers.

Normally, rural consumers are conservative (traditional) in their buying behaviour.

  • Vital for Marketers

Marketers need to have a good knowledge of consumer behaviour. They need to study the various factors that influence consumer behaviour of their target customers. The knowledge of consumer behaviour enables marketers to take appropriate marketing decisions.

  • Reflects Status

Consumers buying behaviour is not only influenced by status of a consumer, but it also reflects it. Those consumers who own luxury cars, watches and other items are considered by others as persons of higher status.

  • Consumer behavior has a spread effect.

The buying behaviour of one person may influence the buying behavior of another person. For instance, a customer may always prefer to buy premium brands of clothing, watches and other items etc.

This may influence some of his friends, neighbours, colleagues. This is one of the reasons why marketers use celebrities like Shahrukh Khan , Sachin to endorse their brands.

  • Standard of Living

Consumer buying behaviour may lead to higher standard of living. The more a person buys the goods and services, the higher is the standard of living.

  • Keeps on Changing

The consumer’s behaviour undergoes a change over a period of time depending upon changes in age, education and income level. Etc, for instance, kids may prefer colorful dresses, but as they grow up as teenagers and young adults, they may prefer trendy clot

Scope

  • Marketing Management

Effective business managers know the importance of marketing towards the success of the business. Understanding consumer behaviour is essential for the long-run success of any marketing program. A better understanding of consumer needs and wants helps the business to plan and execute the marketing strategies accordingly.

  • Demand Forecasting

Consumer behaviour helps in the forecasting of the demands for the business. Every business identifies the needs and wants of the customers by understanding their behaviour. Forecasting helps them to find out the unfulfilled demands in the market easily. If the company knows what their consumer wants, they can design and produce the product accordingly.

  • Selecting the Target Market

Consumer behaviour helps in identifying target customers from the market. Study of customer behaviour identifies all customers segments with unique and distinct needs. It helps in segmentation of the overall market into different groups. Grouping of customers and identification of their needs will help business in serving them better. The business will be able to design their products in a better way as per the needs and wants of their customer. It makes clear to businesses who are their target customers and what they want.

  • Educating Customer

Consumer behaviour helps marketers to identify how customers spend on their buying decision. By understanding their behaviour marketers can easily guide their customers about how they can improve their buying decisions. They can suggest ways to save their money and guides them with better options available in the market. Customers get aware of different opportunities available to them as per their behaviour.

  • Market Mix.

Proper development and designing all-important elements like product, price, place, and promotion are essential for every business. It helps them to identify the likes and dislikes of the customers. This allows marketers to design optimum marketing mix plans and improve the effectiveness of marketing strategies. The proper implementation of a marketing mix helps organizations to attract more customers, thereby increasing profit.

  • Assists In Designing Product Portfolio

Designing the right product portfolio is a challenging task for every business. Every business should design such a portfolio consisting of all class of products. Consumer behaviour helps in identifying the class and requirements of peoples. This helps in designing products as per people’s needs and include in the product portfolio of the company. This way business is able to design the optimum product portfolio and able to serve its customers in a better way.

Relevance

  • Know the effect of price on buying

Consumer behavior can help to understanding the effect of price on buying. Whenever the price is moderate on cheap more and more customers will buy the product.

After the time of production, there comes a time in which the company has to decide what the price of our product will be because it helps to divide the categories of the customer and also helps to attain more sales.

  • Innovate new Products

Continuous strive for improvement in success rate largely depends on the innovation in the offered product or services line. To accurately predict and ace innovation, the need for study of Consumer behaviour is a must. Researching the same not only enables to make new products/services satisfying the needs and wants of consumers but also to tweak the present line of offerings to fulfil the consumer’s needs and demands.

  • To design production policies

All of the production policies have designed taking into consideration the consumer preference so that product can be successful in the market.

In every business, the main motive is to enhance the production and as well as sales of the company and to do all these, any company or business has to win the trust of its customers and studying about their tastes, likings, and preferences.

Need for Consumer Behaviour

Consumer behavior is a crucial aspect of marketing and business strategy. Understanding why and how consumers make decisions about what to buy or not to buy is essential for businesses to thrive.

  • Product Development and Innovation:

Knowledge of consumer preferences and needs helps businesses create products and services that align with customer expectations. Understanding consumer behavior can drive innovation by identifying gaps in the market and areas where improvements or new solutions are needed.

  • Marketing Strategy:

Marketers can tailor their messaging and promotional strategies based on an understanding of consumer behavior. This includes selecting the right advertising channels, creating compelling content, and using effective communication techniques. The study of consumer behavior helps in market segmentation, allowing businesses to target specific consumer groups with customized marketing approaches.

  • Brand Building:

Consumer perceptions and attitudes toward a brand are influenced by their experiences and interactions. By understanding consumer behavior, businesses can build and maintain a positive brand image. Recognizing the emotional and psychological factors that influence consumer choices can contribute to the development of brand loyalty.

  • Price and Value Perception:

Consumers don’t just evaluate products based on their price; they also consider the value they receive in return. Understanding how consumers perceive value helps businesses set appropriate pricing strategies. Consumer behavior studies can reveal insights into the pricing sensitivity of different market segments.

  • Customer Satisfaction and Retention:

Knowing what satisfies or dissatisfies customers enables businesses to improve their products and services continuously. Building strong relationships with customers and understanding their post-purchase behavior can contribute to customer retention and repeat business.

  • Market Trends and Forecasting:

Analyzing consumer behavior provides insights into current market trends and helps businesses anticipate future changes. Predicting consumer preferences allows businesses to adapt their strategies proactively, staying ahead of competitors and market shifts.

  • E-commerce and Technology Impact:

In the digital age, where online shopping and e-commerce are prevalent, understanding consumer behavior is crucial for online retailers. This includes optimizing website design, streamlining the purchase process, and utilizing data analytics for personalized recommendations.

  • Policy and Regulation Compliance:

Consumer behavior studies help businesses comply with relevant laws and regulations, ensuring that their products and services meet consumer expectations and legal requirements.

Management Notes

Basic understanding in Dashboard and Storyboard

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A business intelligence dashboard is a data visualization technique that displays the current status and/or historical trends of metrics and key performance indicators (KPIs) for an enterprise. Dashboards consolidate and arrange numbers, metricsand sometimes performance scorecards on a single screen. They may be tailored for a specific role and display metrics targeted for a single point of view or department. The essential features of a BI dashboard product include a customizable interface and the ability to pull real-time data from multiple sources. The latter is important since lots of people think dashboards are only on summarized data which is absolutely not the case.

A Dashboard

A business intelligence dashboard is a data visualization technique that displays the current status and/or historical trends of metrics and key performance indicators (KPIs) for an enterprise. Dashboards consolidate and arrange numbers, metrics and sometimes performance scorecards on a single screen. They may be tailored for a specific role and display metrics targeted for a single point of view or department. The essential features of a BI dashboard product include a customizable interface and the ability to pull real-time data from multiple sources. The latter is important since lots of people think dashboards are only on summarized data which is absolutely not the case; dashboards consolidate data which may be of the lowest grain available! Key properties of a dashboard are:

  • Simple and communicates easily and straight
  • Minimum distractions, since these could cause confusion
  • Supports organized business with meaning, insights and useful data or information
  • Applies human visual perception to visual presentation of information: colors play a significant role here
  • Limited interactivity: filtering, sorting, what-if scenarios, drill down capabilities and sometimes some self-service features
  • They are often “managed” in a sense that the dashboards are centrally developed by ICT, key users or a competence center, and they are consumed by the end-users
  • Offer connectivity capabilities to other BI components for providing more detail. Often these are reports with are connected via query-parsing to the dashboards

A Storyboard

Is there a big difference between a storyboard and a dashboard? Mwah, not too much: they both focus on communicating key – consolidated – information in a highly visualized and way which ultimately leaves little room for misinterpretation. For both the same key words apply: simple, visual, minimum distraction.

The main difference between a dashboard and a storyboard is that the latter is fully interactive for the end user. The interactivity of the storyboard is reflected through capabilities for the end user to:

  • Sort
  • Filter data: include and exclude data
  • Change chart or graph types on the fly
  • Add new visualizations on the fly; store and share them
  • Drill down
  • Add or adjust calculated measures and dimensions
  • Add new data via wrangling, blending or joining
  • Adjust the full layout of the board
  • Create custom hierarchies or custom groupings
  • Allow for basic data quality improvements (rename, concatenate, upper and lower case etc)

Another big difference between dashboards and storyboards is that storyboards are self-service enabled boards meaning the end user creates them him/herself. Opposite to dashboards that are typically “managed” and as such are created centrally by ICT, key users or a BICC, and are consumed by the end user.

Management Notes

Aggregate Functions, Relational Algebra

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Aggregate functions are functions that define an operation which consumes values from multiple records to a produce a single output. Aggregate functions in SQL are typically used in GROUP BY functions. Aggregate functions are similar to scalar functions and function signatures with a small set of different properties.

Aggregate function signatures contain all the properties defined for scalar functions. Additionally, they contain the properties below:

In database management an aggregate function is a function where the values of multiple rows are grouped together as input on certain criteria to form a single value of more significant meaning.

Various Aggregate Functions

1) Count()

2) Sum()

3) Avg()

4) Min()

5) Max()

Id     Name     Salary

———————–

1       A        80

2       B        40

3       C        60

4       D        70

5       E        60

6       F        Null

Count():

Count(*): Returns total number of records .i.e 6.

Count(salary): Return number of Non Null values over the column salary. i.e 5.

Count(Distinct Salary):  Return number of distinct Non Null values over the column salary .i.e 4

Sum():

sum(salary):  Sum all Non Null values of Column salary i.e., 310

sum(Distinct salary): Sum of all distinct Non-Null values i.e., 250.

Avg():

Avg(salary) = Sum(salary) / count(salary) = 310/5

Avg(Distinct salary) = sum(Distinct salary) / Count(Distinct Salary) = 250/4

Min():

Min(salary): Minimum value in the salary column except NULL i.e., 40.

Max(salary): Maximum value in the salary i.e., 80.

Relational Algebra

Relational algebra is a procedural query language, which takes instances of relations as input and yields instances of relations as output. It uses operators to perform queries. An operator can be either unary or binary. They accept relations as their input and yield relations as their output. Relational algebra is performed recursively on a relation and intermediate results are also considered relations.

The fundamental operations of relational algebra are as follows:

  • Select
  • Project
  • Union
  • Set different
  • Cartesian product
  • Rename
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