Category: Management Notes

Management Notes

Consumer Involvement and Decision Making

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The involvement theory is based on the concept that there are low and high involvement con­sumers and there are high and low involvement purchases. According to this theory consumers involvement depends on the degree of relevance of purchase to a consumer. If for instance, consumer wants to buy a packet of tea or food or bread or butter he does not feel very much involved. It is because the life of these products is very short and ones consumed they exhaust. If the experience with the product is not good, next time some other brand can be purchased.

However, this is not true in case of consumer durables and certain services. If one buys an automobile, refrigerator, air conditioner, furniture, or a house he is forced to use it for long period and cannot change early and if he decides to dispose off there is big loss. Hence in these products there is high degree of involvement, therefore, consumer takes a decision after lot of deliberations. In case of insurance policy ones taken one has to live with it.

Based on this hypothesis researchers have developed theories of high relevant/high involvement, low relevance/low involvement. In case of high involvement products the consumer collects all possible information and access it in detail based on his knowledge and makes efforts to get the opinion of family members, relatives and friends and some times even of experts.

If some one decides to buy a car he will consider large number of attributes but in case of daily consumption items, the same consumer will make quick and effortless decision. The involvement is dependent not only on nature of product or service to be purchased but also on the psychology of the consumers. Even for same product involvement is not uniform for all consumers. For instance if a packet of tea or biscuit is to be purchased, there are consumers who take it casually and simply ask the retailer to give a packet without mentioning any brand and everything is left to the retailer.

For such consumers tea is tea and biscuit is biscuit. They are not brand conscious nor make any investigation before purchases. But for same tea or biscuit there is other set of consum­ers who will collect information about various brands available in the market and their attributes. Thus degree of involvement differs not only on the nature of product but also on the psychology of consumers.

Some consumers take risk even for vital services and products. They take decisions without consideration of all attributes. For instance, if some one needs to be admitted into a hospital for treatment of serious injury or fracture there are persons who will take treatment in a near by hospital. But there are other persons who in a similar situation will make lot of inquiry before deciding the hospital for admission.

Thus there are two set of factors which decide the degree of involvement:

  1. The nature of product or service and
  2. The psychology of the consumer

Still it can be generalized that degree of involvement depends upon perceived risks in buying a particular product, the higher the risk, the deeper is the involvement. Based on this generalization there can be three degrees of involvement – high, medium and low depending upon period of impact of purchases. Higher degree of involvement is in a product of long life or in services which have long term impact on consumer. The medium degree of involvement is in items or services which have medium term impact upon life and the low involvement is in product and services which have short life and once used cannot be used again, “a few illustrations are given in Table 1”.

Antecedents of Involvement

The degree of involvement depends upon past history of buyer i.e. on his level of knowledge, information, psychology, culture, life style, social system. Depending upon the circumstance of an individual, his involvement differs even for the same service or product. There is no clear cut and universally acceptable definition of involvement.

According to one view there are five types of involvement namely:

  1. Ego involvement
  2. Commitment
  3. Communication involvement
  4. Purchase importance
  5. Extent of information secured

Accounting to Judith L. Zaichkowsky (conceptualizing) involvement (Journal of Advertising 15 (2) 1986), the involvement theory deals with advertising, with products, and with purchase decisions.

There are other researchers who see the person, product and situation as major important part of involvement. According to David W. Firm in his article on the Integrated Information Response Model in Journal of Advertising (1984) the involvement depends upon purchase situation.

In spite of the fact that there is no unimanity about the concept of involvement, it is an important element of consumer behaviour and purchases of all high value and durable products depend upon it. Similarly services which are vital for life like medical services there is high level of involvement.

Ego involvement is to satisfy ones ego. For instance, if in a family there are five – members husband, wife, two daughters and one son every one would like to be involved in purchase decision not only for a product he consumes directly but also for products consumed by other family members.

Wife would like to be involved in purchase of shaving cream, underwear and garments for her hus­bands. Husband would like to be involved in purchase of cosmetics for the use by his wife and /or daughters. The son and daughters would like to be involved in purchase of TV, Car, house for satisfaction of their ego that they must be consulted before purchase and due importance should be given to their views-likings / disliking’s of a particular brand or model of a brand.

Commitment is another factor of involvement. If wife or son has to be treated for any illness, husband or parents are highly involved in countries like India where there is great attachment in each other. Parents are committed that their children get best education within their means so that they may make good future for themselves.

Communication involvement relates to share the available information with others in the family and /or organization who are involved in buying a product or service. For example, if a right dentist is to be located for treatment and if one member has some information on the subject, he should commu­nicate it to the person who is going to take a decision.

Similarly if some one is going to buy a car and some one has information about one or more models he should communicate to other members. The other side of communication involvement is that marketer must make the information reach the consumer i.e. there should be proper and effective communication between seller and buyer whether it is FMCG or consumer durables or in industrial goods.

The involvement also depends to a great degree on the importance of purchase. If some one needs bypass surgery of heart best possible hospital and heart surgeon will have to be located, thus there has to be high degree of involvement. If an house or flat costing Rs. 10 lakhs to Rs. 50 lakhs or more has to be purchased the location should be healthy, house title should be clear to avoid risk of ownership. Against this if one is buying wheat or sweets there are little risk and so level of involvement is low.

The extent of information search is part of purchase importance. If the purchase is important; information search is intensive from all possible sources. But if the purchase is not important and is of routine nature there is limited information search.

Low Involvement Decision Making

When the stake in an item to be purchased or service to be utilized is not much and the risk of wrong decision is only short lived, decision making involves low involvement. If for instance con­sumer decides to buy X brand washing powder and does not find it suitable it can be rejected and repeat purchase is not made of the same brand. But the loss due to buying decision is limited to the cost of the powder.

If one develops fever and visits near by doctor and he takes longer time than normally required he can be discarded. If some one sends a courier mail from Delhi to Mumbai and it does not reach next day the service can definitely be rejected for next mail but if the mail contains important documents delay may cause loss and so risk is involved.

Thus the low involvement does not depend entirely on the nature of product or service but also on other factors such as its conse­quences. Therefore, even in some low involvement product or service decision making has to depend upon other factors too. However, on the whole generally no or very limited inquiry is done tor low involvement items. Very often some inquiry is made from seller but its attributes vis-a-vis of alternatives are not evaluated.

Unplanned Purchase Behaviour

All purchase by any consumer is not preplanned. When a wife visits a market for planned purchases and if something which was not in the list she likes or finds it a bargain on-spot the short decision is taken for purchase which is called unplanned purchase. The unplanned purchases may be defined those purchase decisions which are taken on the spot without any prior planning.

Such purchase is quite large when one visits an exhibition or visits a religious place or visits mela like Khumbh Mela. One sees many products at these places and makes purchases for oneself, relatives and friends, for gifting or when innovative products are available. Generally when one visits such places he takes money for such purchases but does not know what he is going to buy.

The purchase decision in such circumstances is called unplanned purchase decision. The basic point to observe is that no prior inquiry is made nor prior information is collected. But in such purchases also often alternatives are available and one has to decide which product is better. This depends purely on mood at that point of time and liking or disliking of a particular product or its alternative. It will not be correct to say that all unplanned purchase decision is taken without considering alternatives.

Theory of Low Involvement

Low involvement is applicable when neither performance nor image dimensions are very impor­tant. In such cases there is very vague or shallow impression and product is readily accessible. For instance, if one buys sugar one is not bothered about the name of the factory which produced it because all sugar is alike.

This was the case with wheat flour also till recently but now with a number of brands, the level of involvement is increasing. In India where larger number of products is sold without brands the level of involvement is low. This is particularly true of rural market or poor persons purchases who largely buy a product and not a brand. In such cases use of brain is very limited. For poor person tea is tea and sugar is sugar. He takes decision largely on price consideration because “beggar cannot be chooser”. Thus use of brain is minimal.

According to involvement theory involve­ment depends upon the importance of product in purchase. But this is not always true. In India a person below the poverty line only decision is that he must get a product be it wheat, tea, sugar, bread or milk, because he has little choice to make.

However, theory remains in tact that the level of involve­ment depends upon the product to be purchased and involvement remains low in case of commodities and goes up as the level of purchases relates to branded products. The persons, the product and the situation decides the degree of involvement. Thus a poor person in India has low involvement in purchases. The product of general nature and of daily consumption does not involve much risk and so have low involvement.

The other important factor in low involvement theory is that purchase decision in such cases have little impact of advertisement and consumer tries new brands for experience and adopt them if found suitable. In such cases job of marketer is to make consumer aware about a particular brand so that it may be purchased instead of alternatives.

There must be attractive displays in shops and stores so that it may catch the eye of the customer Packaging also induces customers repeatedly some brand and packaging promotes purchase behaviour in case of low involvement products.

Strategic Implications of Low Involvement Decision Making

In case of low involvement decision making it is more likely that consumer changes the brand if he finds equally good brand in the market or there is bargain sale or discount sale. In products of low I involvement there is class of consumers for whom “brand loyalty” has little meaning. Moreover studies in India suggest that brand loyalty is weakening.

The bargain sales are attracting customers like buy two trousers and get-one free, buy a toothpaste and get tooth brush free, buy Nature Fresh Atta and get a scratch coupon free. There are a number of others who offer 10 to 20 percent extra quantity without extra price.

The consumer purchase decisions are influenced by such bargains because he belongs to none specially in case of low involvement products. The thumb rule in Indian discount bazars is that who gives best deal to buyers thrives. It has been realized by marketers that price value score cover brand.

This trend is most visible not only in garments but also in FMCG. Therefore Lux offered Rs. 5 discount. Good Knight mosquito mats offered free soaps, The management of Shoppers Stops admits that discount sales work well for its store because it sells more and attracts new custom­ers Bombay Dyeing has discount sales every year.

Since Bhilwara group announced 15 to 50 percent discount its sales have doubled. If there is no basic difference in a product consumer decision is based on discount or incentives available. But brand loyalty is continuing in certain items like cosmet­ics and design and quality conscious customers. However, the share of such buyers in total is declining and strategic planners will have to keep this fact in mind.

Now buyers for low involvement products decide on the basis of price and value over brand at least in India where purchasing power of majority of consumers is limited.

Complex Decision Making

In case of high involvement products and services decision making is complex and difficult. If for example some one is seriously ill besides the reliability of a doctor one has to look to his pocket and permanent loss of funds if treatment does not succeed.

The heart operation cost Rs. 3 Lakh in one hospital and Rs. 1 lakh in another hospital. The concern person has to decide whether it is worth spending Rs. 3 lakhs instead of Rs. 1 lakh. In such case psychology, emotion, price, pocket play a part along with reliability. There are social culture inputs consisting of non-commercial influences which are considered. Social class, culture, sub-culture, information, recognition, opinions of users all play apart.

If some one decides to buy a car, it is available from Rs. 2 lakhs onwards going up to Rs. 25 lakhs or more for imported car. The decision to buy a particular model does not depend mearly on technical factors, reliability of operations, trouble free operation but also on non-utility factors.

The buyer considers his status, ego satisfaction, impression on friends and relatives and satisfaction that most of his known persons do not process that high price model. But there are others whose decision is based only on utility.

In that case he has to collect information on all the possible models, compare there technical and non-technical features, narrow down his choice to two or three models before taking the final decision. At this stage friend who have experience of driving that model or who knows about automobiles is consulted.

In any other high involvement item also the process is quite complex. First, one has to collect information on alternative choices, evaluate them not only in term of performance, reliability and durability but also price.

One is required to work out cost benefit analysis and terms of payment. It is difficult to evaluate all these complex factors. When some manufacturer is offering wide range of TV or refrigerator task becomes all the more complex.

Model of Consumer Involvement

There is no one single model of consumer involvement in all situations and in all products but in all cases there are three major components – input, process and output. As an economist Mc Fadden (1981) has described the multinomial logic model based on macroeconomic theories of choice. In contrast, Yellot (1978) has described the same model as a descendent of psychological theories of comparative judgment development in the late 1920.

In figure 2 a taxonomy of theoretical choice model form is given. The economic theory pre­sumes that an individual attempts to maximize utility and thus choice is made in such a manner as to achieve this objective.

Management Notes

Models of Decision Making

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The decision-making process though a logical one is a difficult task. All decisions can be categorized into the following three basic models.

(1) The Rational/Classical Model

(2) The Administrative or Bounded Rationality Model

(3) The Retrospective Decision-Making Model

All models are beneficial for understanding the nature of decision-making processes in enterprises or organizations. All models are based on certain assumptions on which the decisions are taken.

  1. The Rational/Classical Model

The rational model is the first attempt to know the decision-making-process. It is considered by some as the classical approach to understand the decision-making process. The classical model gave various steps in decision-making process which have been discussed earlier.

Features of Classical Model

  • Problems are clear.
  • Objectives are clear.
  • People agree on criteria and weights.
  • All alternatives are known.
  • All consequences can be anticipated.
  • Decision makes are rational

  1. Bounded Rationality Model or Administrative Man Model

Decision-making involve the achievement of a goal. Rationality demands that the decision-maker should properly understand the alternative courses of action for reaching the goals.

He should also have full information and the ability to analyse properly various alternative courses of action in the light of goals sought. There should also be a desire to select the best solutions by selecting the alternative which will satisfy the goal achievement.

Herbert A. Simon defines rationality in terms of objective and intelligent action. It is characterised by behavioural nexus between ends and means. If appropriate means are chosen to reach desired ends the decision is rational.

Bounded Rationality model is based on the concept developed by Herbert Simon. This model does not assume individual rationality in the decision process.

Instead, it assumes that people, while they may seek the best solution, normally settle for much less, because the decisions they confront typically demand greater information, time, processing capabilities than they possess. They settle for “bounded rationality or limited rationality in decisions. This model is based on certain basic concepts.

(a) Sequential Attention to alternative solution

Normally it is the tendency for people to examine possible solution one at a time instead of identifying all possible solutions and stop searching once an acceptable (though not necessarily the best) solution is found.

(b) Heuristic

These are the assumptions that guide the search for alternatives into areas that have a high probability for yielding success.

(c) Satisficing

Herbert Simon called this “satisficing” that is picking a course of action that is satisfactory or “good enough” under the circumstances. It is the tendency for decision makers to accept the first alternative that meets their minimally acceptable requirements rather than pushing them further for an alternative that produces the best results.

Satisficing is preferred for decisions of small significance when time is the major constraint or where most of the alternatives are essentially similar.

Thus, while the rational or classic model indicates how decisions should be made (i.e. it works as a prescriptive model), it falls somewhat short concerning how decisions are actually made (i.e. as a descriptive model).

  1. Retrospective decision model (implicit favourite model)

This decision­-making model focuses on how decision-makers attempt to rationalise their choices after they have been made and try to justify their decisions. This model has been developed by Per Soelberg. He made an observation regarding the job choice processes of graduating business students and noted that, in many cases, the students identified implicit favorites (i.e. the alternative they wanted) very early in the recruiting and choice process. However, students continued their search for additional alternatives and quickly selected the best alternative.

The total process is designed to justify, through the guise of scientific rigor, a decision that has already been made intuitively. By this means, the individual becomes convinced that he or she is acting rationally and taking a logical, reasoned decision on an important topic.

Some Common Errors in Decision-Making

Since the importance of the right decision cannot be overestimated enough for the quality of the decisions can make the difference between success and failure. Therefore, it is imperative that all factors affecting the decision be properly looked into and fully investigated.

In addition to technical and operational factors which can be quantified and analyzed, other factors such as personal values, personality traits, psychological assessment, perception of the environment, intuitional and judgemental capabilities and emotional interference must also be understood and credited.

Some researchers have pinpointed certain areas where managerial thinking needs to be re-assessed and where some common mistakes are made. These affect the decision-making process as well as the efficiency of the decision, and must be avoided.

Some of the errors are

(a) Indecisiveness

Decision-making is full of responsibility. The fear of its outcome can make some people timid about taking a decision. This timidity may result in taking a long time for making a decision and the opportunity may be lost. This trait is a personality trait and must be looked into seriously. The managers must be very quick in deciding.

(b) Postponing the decision until the last moment

This is a common feature which results in decision-making under pressure of time which generally eliminates the possibility of thorough analysis of the problem which is time consuming as well as the establishment and comparison of all alternatives. Many students, who postpone studying until near their final exams, usually do not do well in the exams.

Even though some managers work better under pressures, most often an adequate time period is required to look objectively at the problem and make an intelligent decision. Accordingly, a decision plan must be formulated; time limits must be set for information gathering, analysis and selection of a course of action.

(c) A failure to isolate the root cause of the problem

It is a common practice to cure the symptoms rather than the causes. For example, a headache may be on account of some deep-rooted emotional problem. A medicine for the headache would not cure the problem. It is necessary to separate the symptoms and their causes.

(d) A failure to assess the reliability of informational sources

Very often, we take it for granted that the other person’s opinion is very reliable and trustworthy and we do not check for the accuracy of the information ourselves.

Many a time, the opinion of the other person is taken, so that if the decision fails to bring the desired results, the blame for the failure can be shifted to the person who had provided the information. However, this is a poor reflection on the manager’s ability and integrity and the manager must be held responsible for the outcome of the decision.

(e) The method for analyzing the information may not be the sound one

Since most decisions and especially the non-programmed ones have to be based upon a lot of information and factors, the procedure to identify, isolate and select the useful information must be sound and dependable. Usually, it is not operationally feasible to objectively analyse more than five or six pieces of information at a time.

Hence, a model must be built which incorporates and handles many variables in order to aid the decision makers. Also, it will be desirable to define the objectives, criteria and constraints as early in the decision-making process as possible.

This would assist in making the process more formal so that no conditions or alternatives would be overlooked. Following established procedures would eliminate the efforts of emotions which may cloud the process and rationality.

(f) Do implement the decision and follow through

Making a decision is not the end of the process, rather it is a beginning. Implementation of the decision and the results obtained are the true barometer of the quality of the decision. Duties must be assigned, deadlines must be set, evaluation process must be established and contingency plans must be prepared in advance. The decisions must be implemented whole heartedly to get the best results.

Lucknow University BBA Notes / Management Notes

Consumer Perception

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Consumer Perception is a marketing concept that tells us what Consumer think about a brand or a company or its offerings. It can be positive or negative feelings, perceptions, inhibitions, predispositions, expectations or experiences that a customer has.

A marketing concept that encompasses a customer’s impression, awareness and/or consciousness about a company or its offerings. Customer perception is typically affected by advertising, reviews, public relations, social media, personal experiences and other channels.

If you understand the concept of Consumer perception, you will figure out that it is arguably the most important factor that decides the success of a brand, product or a company as a whole. How a particular brand or company is positioned also plays a vital role in this. The characteristics of a brand and its personality play a big role.

If we look at the company Apple, we can see that the company is positively perceived by most of its customers. In fact, there are die-hard fans of Apple. The reason being that the company has been repeatedly innovative, it has good performing products which make a connect with their customers. As a result, Apple is one of the consistently top performing brands across the world.

Customer Perception decides how much a product sells and how a company is perceived.

Factors deciding customer perception

In general, customer perception can be influence by a lot of factors. Some of the major factors are

(i) Consistency of performance

How has the brand performed in the past and how it is performing currently.

(ii) Emotional Connect

Superb brands know that emotional connection with the customer is critical to brand development.

(iii) Marketing Communications

How the brand communicates with the customers using the various media vehicles.

(iv) Holistic Marketing

A brand cannot be excellent if it has good sales staff but pathetic support staff. A brand has to be a good all rounder and satisfy customers from all its touch points.

Importance of Consumer Perception

When customers buy your products, they purchase much more than physical objects. Successful marketing involves building a brand with sensory and emotional triggers and then working daily to reinforce the image that your brand triggers in the hearts and minds of customers.

The consumer perception that can make or break your brand may be carefully cultivated through clever and effective advertising. Changes in consumer perception of brands can also spring seemingly out of nowhere, as when the Hush Puppies shoe brand became a fad during the ’90s with little engineering from the company itself.

Whether your company has painstakingly fostered customer perception or had the great fortune to unwittingly benefit from it, the importance of your brand’s reputation should never be underestimated.

(i) Importance of Marketing and Action

Successful marketing is a process of reaching out to customers through advertising, selling strategies and the product itself to create an impression that inspires loyalty. However, that impression is unlikely to endure unless you work hard to maintain it. The outdoor apparel company L.L. Bean has a return policy of replacing any product that a customer returns for any reason, regardless of how long it has been worn. This policy surely costs the company extra when unscrupulous customers choose to take advantage and return items that have been worn for a considerable period of time. Over the long term, though, this legendary return policy has worked to the company’s advantage by building trust and extraordinary loyalty.

(ii) Influence of Negative Perceptions

Negative consumer perceptions can be at least as powerful as positive ones especially in the era of social media when stories about companies’ bad behaviors spread quickly and can have devastating repercussions. When United Airlines had a ticketed customer dragged off a flight in April 2017, the story spread through both social and mainstream media, creating a backlash from consumers who boycotted the airline and canceled credit cards affiliated with it. The negative publicity rippled among shareholders as well causing the company’s price to plummet by $1.4 billion.

(iii) The Power of Referrals

Referrals are a powerful way to foster positive consumer perception because they often come about organically through customers telling their friends which products they buy and why they buy them. Because they come from customers rather than from marketing or advertising, referrals give your company genuine credibility. Referrals grow out of brand loyalty and generate additional loyalty to your brand. You can give customers incentives to make referrals such as by offering free products or services, but if you’ve done a good job fostering positive consumer perceptions, you’ll get customer referrals whether or not you reward customers for them.

Your company’s brand isn’t only about what you want customers to see, it’s also about how they already see you. Public perception can make or break a business today, making it the most valuable commodity you have in your sales and marketing arsenal.

The Role of Perception

The idea of perception theory is often capitalized by haunted houses and amusement parks. The visitors are forced to walk into a dark are, which is pretty small and claustrophobic. Visitors are led to a panoply of attractions that look and and sound like like monsters, rodents, and so on. All this to overwhelm our senses. The idea is to stimulate an adrenaline rush, which would then surge through the patrons as they are forced to face their fears. The people who enjoy these things usually love the idea of conquering their fears, and they often find this experience exhilarating. However, this can be turned on its head. If you’re in the wrong neighborhood, attractions in a haunted house could easily attract customers to a haunted house but could easily chase customers away from your storefront.

As a business owner, you want to maximize the amount of time that customers spend in your store. You want them to purchase an item on a whim, and to then go on a spree of impulse buying. You want them to browse your shelves, and walk through your aisles, discovering and exploring with each step. Whether your store is a brick-and-mortar store or an online store, you want them to browse and buy, so that you increase your sales.

As a business owner, you should seek to improve their experience and give them the right perception, no matter what.

Using Customer Perception to Your Advantage

So to get customer perception right, you should look into what turns your consumers on, so to speak, and then to use it to your advantage when you want to attract them. If you wish to attract high-end customers, then make a play on such things as quality, cleanliness and hygiene, lighting, packaging, and general details in the way you present your products and services. Segment your customers into the different consumer groups they fall into, and use these groups to figure what is important to each group and what to show to different categories of customers.

When you make an effort to improve consumer perception of your products, your bottom line will quickly reflect your hard-won effort. You will also make your customers and your community feel as if they are part of your family – and there is no better recipe for brand loyalty than family.

Management Notes

Consumer Attitudes and Changes in Attitude

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Consumer attitudes is a composite of three elements: cognitive information, affective information, and information concerning a consumer’s past behavior and future intentions. In other words, attitude consists of thoughts or beliefs, feelings, and behaviors or intentions towards a particular thing, which in this case is usually a good or service. For example, you may have a very positive view of a particular sports car (for example, you believe it performs better than most), it makes you feel good, and you intend to buy it.

Marketers need to know what are consumers likes and dislikes. In simple explanation, these likes and dislikes or we can say favourable or unfavourable attitudes. Attitudes can also be defined as “learned predispositions to respond to an object or class of objects in a consistently favourable or unfavourable way”.

This means attitudes towards brands are consumers learned tendencies to evalu­ate brands in a consistently favourable or unfavourable way. More formally, an overall evaluation done by consumers for choosing a particular product.

Attitudes help us understanding, why consumers do or do not buy a particular product or shop from a certain store etc. They are used for judging the effectiveness of marketing activities, for evaluating marketing actions ever before they are implemented within the market place.

Changes in Consumer Attitude

Companies may focus on changing consumer attitudes for a variety of reasons. Dropping sales, increased product or service complaints and new, or renewed, competition in the marketplace can all necessitate a hard look at the reasons behind trends related to consumer perceptions and attitudes. Deciphering the cause of negative perceptions requires appropriate planning and the commitment to make the necessary changes to ensure success. For small businesses, analyzing consumer behavior becomes an essential part of developing a targeted marketing and promotional campaign.

  1. Identify consumer perceptions

In order to develop an action plan for changing consumer attitudes, you need to understand current perceptions of products and services. Evaluate captured feedback, such as customer service contact statistics regarding complaints and concerns. Service businesses can leave comment cards for customers to complete and mail back. Utilize surveys, paper and electronic, and focus groups to receive an accurate representation of problems or concerns that may exist.

  1. Compile data for interpretation

Interpretations derived from statistical data can provide immediate feedback related to possible product or service defects. Evaluate survey responses for information related to consumer views and perceptions of the business’s products or services. Focus on repeated or habitual problems experienced by customers. Find the common thread among complaints and negative perceptions. Determine if a negative consumer attitude is the result of employee neglect or product deficiencies.

  1. Create a plan of action

Once you have identified consumer perceptions, develop a plan to improve areas where consumer perceptions reflect a negative attitude toward the company, product or service. This can include improved employee training to handle concerns and help cultivate customer loyalty. Involve product development on needed product improvements. Enlist the help of the marketing department to develop campaigns focused on increasing brand awareness and resolving common concerns.

  1. Share vital information with affected employees

Educate the appropriate personnel on the goals of any new campaigns and promotions. Ensure customer service representatives understand the impact of creating a positive customer environment. Changing consumer attitudes is essential to ensuring future loyalty and creating a secure job environment.

  1. Measure success

Use customer service metrics as one way to measure success. This can include keeping track of incident reports, positive feedback and complaints. Signs of a shift in consumer attitudes include reduced complaints and increased sales.

Components of Attitudes

(a) Cognitive

A person’s knowledge and beliefs about some attitude object reside within the cognitive component. Through marketing research, marketers develop a vocabulary of product at- tributes and benefits.

(b) Affective

The affective component represents a person’s likes or dislikes of the attitude object. Beliefs about them are multidimensional because they represent the brand attributes consum­ers perceive but this component is one dimensional. Consumer’s over all evaluation of a brand can be measured by rating the brand from “poor” to “excellent” or from “least preferred” to “most preferred”.

Brand evaluation is central to the study of attitudes because it summarizes consumer’s predisposition to be favourable or unfavourable to the brand. Brand beliefs are relevant only to the extent that they influence brand evaluations which in turn leads to behaviour.

(c) Conative

The conative component refers to the person’s action or behavouioral tendencies toward the attitude object. This is measured in terms of intention to buy. For developing marketing strategy, this measured buying intent is important. To avoid failures in the market, marketers fre­quently test the elements of the marketing mix like – ads, packages, alternative product concepts or brand names. All this is done to know what is most likely to influence purchase behaviour.

There are important predicting and diagnostic differences among three components and mea­sures when prediction is of prime concern then behavioural intention measures are most appropriate, since they offer the greatest predictive power as shown in Fig. But are limited in their diagnostic power.

This is basically because of their inability to reveal why consumers intend or don’t intend to perform a behaviour. For example – consumer doesn’t want to shop from a particular store for a number of reasons. Intention measures do not reveal these reasons like convenient shopping hours. There­fore, reasons for consumers attitudes and intention can be known by measuring beliefs.

Properties of Attitudes

Attitudes can vary along a number of dimensions or properties. They are:

(i) Favourability

A person may like Coke or Pepsi and dislike others like Fanta, Mirinda, Canada Dry etc.

(ii) Intensity

This means, the strength of liking or disliking. For example, consumer may be liking two brands at a time but he/she may be more positive towards one.

(iii) Confidence

This means, attitude is the confidence with which they are held. Intercity and confidence differ slightly. For example, a person may be equally confident that he/she really likes Pepsi but may be slightly favourable toward Coke.

Management Notes

Consumer Motivation

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Consumer motivation is an internal state that drives people to identify and buy products or services that fulfill conscious and unconscious needs or desires. The fulfillment of those needs can then motivate them to make a repeat purchase or to find different goods and services to better fulfill those needs.

Needs are the core of the marketing concept. The study of Motivation refers to all the processes that drives in a person to perceive a need and pursue a definite course of action to fulfill that need.

What are Needs: Every individual has needs that are required to be fulfilled. Primary needs are food, clothing, shelter and secondary needs are society, culture etc.

What are Wants: Needs are the necessities, but wants are something more in addition to the needs. For example, food is a need and type of food is our want.

What are Goals: Goals are the objectives that have to be fulfilled. Goals are generic and product specific in nature. Generic goals are general in nature, whereas product specific goals are the desires of a specific nature.

Needs and fulfillment are the basis of motivation. Change takes place due to both internal as well as external factors. Sometimes needs are satisfied and sometimes they are not due to individual’s personal, social, cultural or financial needs.

Theories of Motivation

Maslow’s Theory of Need Hierarchy

Based on the notion of a universal hierarchy of human needs Dr Abraham Maslow, a clinical psychologist formulated a widely accepted theory of human motivation. This identifies five basic levels of human need which rank in order of importance from lower level needs to higher level needs.

This theory signifies the importance of satisfying the lower level needs before higher level needs arise. According to this theory, dissatisfaction motivates the consumer.

Following are the levels of human needs

Maslow’s Need Hierarchy Theory

  • Physiological Needs: Food, clothing, air, and shelter are the first level needs. They are known as the basic necessities or primary needs.
  • Safety or Security Needs: Once the first level needs are satisfied, consumers move to the next level. Physical safety, security, stability and protection are the security needs.
  • Social Needs: After the safety needs are satisfied, consumers expect friendship, belonging, attachment. They need to maintain themselves in a society and try to be accepted.
  • Esteem Needs: Then comes esteem needs such as self-esteem, status, prestige. Individuals here in this stage want to rise above the general level as compared to others to achieve mental satisfaction.
  • Self-Actualization: This is the highest stage of the hierarchy. People here, try to excel in their field and improve their level of achievement. They are known as self-actualizers.

Critics to Maslow’s Need Hierarchy Level

(i) Concepts are too general

It is said that hunger and self-esteem are considered to be similar needs but the former is urgent and involuntary in nature whereas latter is a conscious and voluntary type.

(ii) This theory cannot be tested empirically

This means that there is no way to measure precisely how satisfied one need must be before the next higher need becomes active.

Need hierarchy is also used for the basis of market segmentation with specific advertising appeals directed to individuals on one or more need levels. For example- cigarette ads, soft drink ads etc., often stress a social appeal by showing a group of young people sharing good times as well as the product advertised. It is also used for positioning products policies, education and vocational training etc.

Lucknow University BBA Notes / Management Notes

Models of Consumer Behaviour

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  1. BLACK BOX MODEL

The black box model shows the interaction of stimuli, consumer characteristics, decision process and consumer responses. It can be distinguished between interpersonal stimuli (between people) or intrapersonal stimuli (within people).

The black box model is related to the black box theory of behaviourism, where the focus is not set on the processes inside a consumer, but the relation between the stimuli and the response of the consumer.

The marketing stimuli are planned and processed by the companies, whereas the environmental stimulus is given by social factors, based on the economical, political and cultural circumstances of a society. The buyer’s black box contains the Buyer Characteristics and the Decision Process, which determines the buyer’s response.

The black box model considers the buyers response as a result of a conscious, rational decision process, in which it is assumed that the buyer has recognized the problem. However, in reality many decisions are not made in awareness of a determined problem by the consumer. Once the consumer has recognized a problem, they search for information on products and services that can solve that problem.

  1. NICOSIA MODEL (CONFLICT MODEL)

This model focuses on the relationship between the firm and  consumers. The firm communicates with consumers through its marketing messages (advertising), and the consumers react to these messages by purchasing response. Looking to the model we will find that the firm and the consumer are connected with each other, the firm tries to influence the consumer and the consumer is influencing the firm by his decision. The Nicosia model is divided into four major fields:

Field 1: The consumer attitude based on the firms’ messages. The first field is divided into two subfields. The first subfield deals with the firm’s marketing environment and communication efforts that affect consumer attitudes, the competitive environment, and characteristics of target market. Subfield two specifies the consumer characteristics e.g., experience, personality, and how he perceives the promotional idea toward the product in this stage the consumer forms his attitude toward the firm’s product based on his interpretation of the message.

Field 2: search and evaluation The consumer will start to search for other firm’s brand and evaluate the firm’s brand in comparison with alternate brands. In this case the firm motivates the consumer to purchase its brands.

Field 3: The act of the purchase The result of motivation will arise by convincing the consumer to purchase the firm products from a specific retailer.

Field 4: Feedback This model analyses the feedback of both the firm and the consumer after purchasing the product. The firm will benefit from its sales data as a feedback, and the consumer will use his experience with the product affects the individuals attitude and predisposition’s concerning future messages from the firm.

The Nicosia model offers no detail explanation of the internal factors, which may affect the personality of the consumer, and how the consumer develops his attitude toward the product. For example, the consumer may find the firm’s message very interesting, but virtually he cannot buy the firm’s brand because it contains something prohibited according to his beliefs. Apparently it is very essential to include such factors in the model, which give more interpretation about the attributes affecting the decision process.

  1. HOWARD-SHETH MODEL

This model suggests three levels of decision making:

(i) The first level describes the extensive problem solving. At this level the consumer does not have any basic information or knowledge about the brand and he does not have any preferences for any product. In this situation, the consumer will seek information about all the different brands in the market before purchasing.

(ii) The second level is limited problem solving. This situation exists for consumers who have little knowledge about the market, or partial knowledge about what they want to purchase. In order to arrive at a brand preference some comparative brand information is sought.

(iii) The third level is a habitual response behavior. In this level the consumer knows very well about the different brands and he can differentiate between the different characteristics of each product, and he already decides to purchase a particular product. According to the Howard-Sheth model there are four major sets of variables; namely:

(a) Inputs– These input variables consist of three distinct types of stimuli(information sources) in the consumer’s environment. The marketer in the form of product or brand information furnishes physical brand characteristics (significant stimuli) and verbal or visual product characteristics (symbolic stimuli). The third type is provided by the consumer’s social environment (family, reference group, and social class). All three types of stimuli provide inputs concerning the product class or specific brands to the specific consumer.

(b) Perceptual and Learning Constructs– The central part of the model deals with the psychological variables involved when the consumer is contemplating a decision. Some of the variables are perceptual in nature, and are concerned with how the consumer receives and understands the information from the input stimuli and other parts of the model. For example, stimulus ambiguity happened when the consumer does not understand the message from  the environment.

(c) Outputs- The outputs are the results of the perceptual and learning variables and how the consumers will response to these variables (attention, brand comprehension, attitudes, and intention).

(d) Exogenous(External) variables- Exogenous variables are not directly part of the decision-making process. However, some relevant exogenous variables include the importance of the purchase, consumer personality traits, religion, and time pressure.

The Decision Making Process, which Howard-Sheth Model tries to explain, takes place at three Inputs stages: Significance, Symbolic and Social stimuli. In both significant and symbolic stimuli, the model emphasizes on material aspects such as price and quality. These stimuli are not applicable in every society. While in social stimuli the model does not mention the basis of decision-making in this stimulus, such as what influence the family decision? This may differ from one society to another. Finally, no direct relation was drawn on the role of religion in influencing the consumer’s decision-making processes. Religion was considered as external factor with no real influence on consumer, which give the model obvious weakness in anticipation the consumer decision.

  1. ENGEL, BLACKWELL, MINIARD MODEL (OPEN SYSTEM)

This model was created to describe the increasing, fast-growing body of knowledge concerning consumer behavior. This model, like in other models, has gone through many revisions to improve its descriptive ability of the basic relationships between components and sub-components, this model consists also of four stages;

First stage: decision-process stages The central focus of the model is on five basic decision-process stages:

Problem recognition, search for alternatives, alternate evaluation(during which beliefs may lead to the formation of attitudes, which in turn may result in a purchase intention) purchase, and outcomes. But it is not necessary for every consumer to go through all these stages; it depends on whether it is an extended or a routine problem-solving behavior.

Second stage: Information input At this stage the consumer gets information from marketing and non-marketing sources, which also influence the problem recognition stage of the decision-making process. If the consumer still does not arrive to a specific decision, the search for external information will be activated in order to arrive to a choice or in some cases if the consumer experience dissonance because the selected alternative is less satisfactory than expected.

Third stage: information processing This stage consists of the consumer’s exposure, attention, perception, acceptance, and retention of incoming information. The consumer must first be exposed to the message, allocate space for this information, interpret the stimuli, and retain the message by transferring the input to long-term memory.

Fourth stage: variables influencing the decision process  This stage consists of individual and environmental influences that affect all five stages of the decision process. Individual characteristics include motives, values, lifestyle, and personality; the social influences are culture, reference groups, and family. Situational influences, such as a consumer’s financial condition, also influence the decision process.

This model incorporates many items, which influence consumer decision-making such as values, lifestyle, personality and culture. The model did not show what factors shape these items, and why different types of personality can produce different decision-making? How will we apply these values to cope with different personalities? Religion can explain some behavioral characteristics of the consumer, and this will lead to better understanding of the model and will give more comprehensive view on decision-making.

Lucknow University BBA Notes / Management Notes

Consumer Behaviour in India

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Indian consumer durables market is broadly segregated into urban and rural markets, and is attracting marketers from across the world. The sector comprises of a huge middle class, relatively large affluent class and a small economically disadvantaged class. Global corporations view India as one of the key markets from where future growth is likely to emerge. The growth in India’s consumer market would be primarily driven by a favorable population composition and increasing disposable incomes.

Per capita GDP of India is expected to reach US$ 3,273.85 in 2023 from US$ 1,983 in 2012. The maximum consumer spending is likely to occur in food, housing, consumer durables, and transport and communication sectors.

Market Size

  • The growing purchasing power and rising influence of the social media have enabled Indian consumers to splurge on good things. Import of electronic goods reached US$ 53 billion in FY18.
  • Indian appliance and consumer electronics (ACE) market reached Rs 2.05 trillion (US$ 31.48 billion) in 2017. India is one of the largest growing electronics market in the world. Indian electronics market is expected to grow at 41 per cent CAGR between 2017-20 to reach US$ 400 billion.
  • Television industry in India is estimated to have reached Rs 740 billion (US$ 10.59 billion) in CY2018 and projected to reach Rs 955 billion (US$ 13.66 billion) in CY2021.
  • As of FY18, washing machine, refrigerator and air conditioner market in India were estimated around Rs 7,000 crore (US$ 1.09 billion), Rs 19,500 crore (US$ 3.03 billion) and Rs 20,000 crore (US$ 3.1 billion), respectively.
  • India’s smartphone market grew by 14.5 per cent year-on-year with a shipment of 142.3 million units in 2018. India is expected to have 829 million smartphone users by 2022. In 2019, India is expected to manufacture around 302 million handsets.

Investments

According to the Department for Promotion of Industry and Internal Trade, during April 2000 – June 2019, FDI inflows into the electronics sector stood at US$ 2.45 billion.

Following are some recent investments and developments in the Indian consumer market sector.

  • In November 2019, Nokia entered in partnership with Flipkart to enter consumer durables market in India and plan to launch smart TVs.
  • In October 2019, Apple Inc. entered in agreement with Maker Maxity mall, co-owned by Reliance Industries to open its first company-owned iconic outlet in India.
  • In August 2019, Voltas Beko launched India’s first five star washing machine.
  • In July 2019, Voltas Limited entered into partnership with Energy Efficiency Services Limited (EESL) to manufacture and sell 5-star rated Inverter Air Conditioners.
  • In April 2019, TCL Electronic announced its entry into home appliances market in India.
  • Xiaomi became the India’s largest brand network in the offline market, having presence in over 790 cities in the country.
  • Bosch Home Appliances to invest US$ 111.96 million to expand in India.
  • Number of TV households and viewers in India reached 197 million 835 million, respectively in 2018.
  • According to the retail chains and brands, there is 9-12 per cent increase in the sales of consumer electronics in Diwali season in October 2019.
  • The smartphone shipment witnessed a year-on-year growth of 9.3 per cent in July-September 2019 with 46.6 million unit shipped.
  • Consumer durables loans in India increased by 68.8 per cent to Rs 5,445 crore (US$ 780 million) in September 2019.
  • Intex Technologies will invest around Rs 60 crore (US$ 9.27 million) in 2018 in technology software and Internet of Things (IoT) startups in India in order to create an ecosystem for its consumer appliances and mobile devices.
  • Micromax plans to invest US$ 89.25 million by 2020 for transforming itself into a consumer electronics company.
  • Haier announced an investment of Rs 3,000 crore (US$ 415.80 million) as it aims a two-fold increase in its revenue by 2020.

Government Initiatives

  • National Policy on Electronics Policy was passed by the Ministry of Electronics & Information Technology in February 2019.
  • A new Consumer Protection Bill has been approved by the Union Cabinet, Government of India that will make the existing laws more effective with a broader scope.
  • The mobile phone industry in India expects that the Government of India’s boost to production of battery chargers will result in setting up of 365 factories, thereby generating 800,000 jobs by 2025.
  • The Union Cabinet has approved incentives up to Rs 10,000 crore (US$ 1.47 billion) for investors by amending the M-SIPS scheme, in order to further incentivise investments in electronics sector, create employment opportunities and reduce dependence on imports by 2020.
  • The Government of India has allowed 100 per cent Foreign Direct Investment (FDI) under the automatic route in Electronics Systems Design & Manufacturing sector. FDI into single brand retail has been increased from 51 per cent to 100 per cent; the government is planning to hike FDI limit in multi-brand retail to 51 per cent.
Lucknow University BBA Notes / Management Notes

Difference between Consumer Buying and Industrial Buying

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Robinson, Faris & Wind states that when understanding the Industrial Buying Behavior a permanent process of problem solving and decision – making must be taken into consideration. All members in a business who become involved in such a buying process are centered to specify group – These processes and group members may vary when purchasing different kinds of products and services.

An important part of the marketing process is to understand why a Customer or Buyer makes a purchase. Without such an understanding, business finds it hard to respond to the customer’s needs and wants. Marketing theory traditionally splits analysis of buyer or customer behavior into TWO broad group of analysis – Consumer Buying and Industrial Buying.

Consumer Buying

The study of how and why people purchase goods and services is termed as Consumer Buying.

The term covers the decision making processes from those that precede the purchase of goods and services to the final experience of using the product or services.

Models of Consumer Buying Behavior draw together the various influences on the process of the buying decision. They attempt to understand the proverbial “Black box” (Buyer’s mind) of what happens within the consumer between his/her exposure to marketing stimuli and the actual decision to purchase.

Consumer Buying Process

(i) Recognition of need

(ii) Information Search

(iii) Evaluation of Alternatives

(iv) Purchase decision

(v) Post Purchase Behavior

Industrial Buying

Industrial purchasing stands for more than half of the whole economic activity in Industrialized countries. Hardly any consumer has the buying authority as organization and any given end product is made up by many industrial purchase that is important to understand how industries perform buying activities.

Industrial buying behavior is in essence the arrangement of how Industrial Organizations purchase goods and services. This area is essential for the understanding of the consumer needs and must be taken into consideration for successful suppliers.

Industrial Buying Process

(i) Problem Recognition

(ii) General need description

(iii) Product specification

(iv) Supplier search

(v) Proposal solicitation

(vi) Supplier selection

(vii) Order routine specification

(viii) Performance review

Difference between Consumer Buying and Industrial Buying

  • In Consumer Buying, buying is done as required, In Industrial Buying, buying is to be done in bulk or in large potential.
  • In Consumer Buying, product specification takes place. In this there can be at a time buying of products.
  • In this, product specification does not take place because of the large potential revenue of such products.
  • In this at a time buying can never be done.
  • In this no demand or order is to be kept before in advance far the purchase of goods.
  • In this buyers have to make only few simple decisions about the products while making a purchase.
  • In this before buying demand for the products is to be kept forward as an order then only this buying for the products is possible.
  • In this buyers faces many critical decisions in making purchase.
  • In this buyers prefer to buy a total solution to their problem from more than one seller.
  • Consumer buying are those who purchase items for their personal consumption.
  • In this less Dollars & Items are involved in sales.
  • In this buyers prefer to buy a total solution to their problem from one seller. (system buying)
  • Industrial Buying are those who purchase items on behalf of their business or organization.
  • In this more Dollars & Items are involved in sales.
  • Consumer Buying is done in order to satisfy the needs of the consumers.
  • In Consumer buying, purchase volume is small.
  • Industrial Buying can not satisfy the consumer’s need but can satisfy the needs of industrialists. It does the production of those products which can satisfy the needs of consumers.
  • In Industrial Buying, purchase volume is large.
  • In Consumer Buying, the number of customers are many.
  • In Consumer Buying, the location of buyer is Dispersed.
  • In Consumer Buying, the nature of consumer Buying is more personal.
  • In this the nature of buying influence is single.
  • In Industrial buying, the number of customers are fewer.
  • In Industrial buying, location of buyer is Geographically concentrated.
  • In Industrial Buying, the nature of industrial buying is more professional.
  • In this the nature of buying influence is multiple.
  • In Consumer Buying, there are many buyers in the market.
  • In consumer Buying , importance of one person as a buyer is there.
  • Consumer Products are considered as daily used Products.
  • In Industrial Buying, there are fewer potential buyers in the market.
  • In Industrial Buying, there is little importance for one person buying.
  • Industrial Products are not considered as daily used Products.
  • Sales promotion is there.
  • Consumer buying is very quick process. It doesn’t requires any type of data or presentations.
  • In this repeat sale is allowed.
  • Sales promotion is not there.
  • Industrial buying requires more and proper scientific data as well as presentations.
  • In this repeat sale is not allowed.
  • In Consumer Buying individual and family involvement takes place.
  • Consumer buying includes many purchasing procedures.
  • In Consumer Buying the products are standard and with detailed specification.
  • In Industrial Buying group decisions and many buying influences takes place.
  • Industrial Buying includes impulse, planned or experiential
  • In Industrial Buying the products are with technical complexity. They are standard or customized.
  • Consumer products are :- eatable products, usable products etc.
  • Industrial products are :- raw materials, fabrication parts and materials, installation, accessories, equipments etc.

From over all , we conclude that without industrial buying production can not be done. If the production is not done than consumer will not be able to get their wanted and needed things. If they will not get the things, they will not do the buying, i.e. consumer buying will not be done.

Thus we can say that without Industrial buying, Consumer Buying can not be done. As Industrialists always try to fulfill the needs of consumers.

Lucknow University BBA Notes / Management Notes

Nature and Factors Affecting Industrial Buying

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Industrial buying behavior is the pattern of actions by a company involved in manufacturing, processing and other heavy industry. Many of these companies are required to make regular purchases as a means of supplying their businesses. Although each company — and each industry — will have buying behavior affected by its own set of factors, there are several main variables that can affect industrial buying as a whole.

  1. Demand

Perhaps the main driver of industrial buying is demand. The amount of buying that an industrial concern will do is directly depended on the amount of business that the company can expect in the near future. Generally, if a company expects higher demand, then it will stock up on raw materials as a means of ensuring that it will be able to meet consumer demand and maximize revenue.

  1. Price

Buying patterns are also affected by the price of the materials the companies are purchasing. When prices are higher or the company expects a decrease in the near future, the company may choose to hold off making purchases, so as to save money. This can involve some difficult decision making. For example, a company that uses fuel in the production of its products may attempt to guess the direction of oil prices.

  1. Economy

In addition to current demand and the current prices for a product, industrial companies may look to the economy as an indication of the future availability of materials relative to the consumer demand for them. If the economy is trending upward, the company may purchase more based on the expectation of a future rise in sales, while a downward trending economy may push it to the opposite course of action.

  1. Technological Changes

In addition, industrial companies are heavily influenced by changes in technology that affect both the provision of goods and their own requirements. For example, if purchasing a piece of technology means that a raw material becomes cheaper to use, then the company may choose to invest in the new technology. Similarly, the acquisition of new technology will often change the company’s buying habits, as the technology will have different raw material requirements to run.

  1. Political/Legal Factors

Government influence on the Industrial marketing environment. From the time of Jawaharlal Nehru to the time of Mr. Atal Behari Vajapayee there has been major influence of the Government in the industry to protect the Indian industries’ foreign investment or for that matter, foreign participation of any kind has not been allowed in the areas of defence, steel, drugs, fertilisers, machine tools etc.

More encouragement was given to small scale and cottage industry. Even the banks were nationalised, the multinationals which were present in India till about 1980s were engaged in commerce, trade and finance or export of tea. Indian Government felt that in areas where adequate Indian skills and capital are available, there was no need for foreign collaboration.

In fact, in 1977 Coca-Cola was asked to wind up operations in India, and IBM was to dilute equity to stay. Some companies like Alkali Chemicals, Dunlop, Goodyear and Asbestos Cement were allowed to remain as they were operating in non-priority areas. Today the Government having realised the importance has liberalised in many areas.

Still controls the industries do not contribute to an extent the effective and fair functioning of the economy. The Government acts as a regulatory agency in import and export matters. It controls the tax and interest rates. It provides economic stabilisation through control of inflation. It is environmentally and socially conscious. It passes rules, regulations and laws from time to time to ensure that general public interest is not compromised.

The Government has placed a large number of drugs with dubious justification under the scanner. Doubts persist about safety of a host of drugs including CISAPRIDE, the drug for night heart burn, and PPA, an ingredient in certain paediatric preparations. The review of iron preparations containing zinc, amino acids and vitamins decision could be of grave concern to many leading MNCs as these drugs are high margin products.

The Government can also change the marketing environment by making changes to its procedures for example Mr. Chandra Babu Naidu, Ex-Chief Minister of Andhra Pradesh, has decided to experiment with online procurement in four of its government departments.

Lucknow University BBA Notes / Management Notes

Factors Influencing Purchase Decision of a Consumer

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  1. Cultural Factors

Culture is one of the key factors that influences a consumer’s buying decisions. These factors refer to the set of values, preferences, perceptions, and ideologies of a particular community. At an early age, buyers learn to recognize acceptable behavior and choices when selecting products.

For example, it is our culture that teaches us that, as a buyer, we need to make payments and honor contracts, pay on time, observe rules, and assume responsibility when seeking information. Sometimes ‘cultural shifts’, due to the influence of different cultures indicate the need to introduce new products.

Each culture is further divided into various subcultures based on age, geographical location, religion, gender (male/female), etc.

  1. Social Factors

Social factors, which includes the groups to which the customer belongs, and his or her social status, also affect purchase decisions. Human beings are innately social. They need people to interact with, and make decisions. Social groups, like families, can influence the buying decisions of consumers. These factors are further divided into:

  1. Family

Family is one of the most important buying organizations in our society and, is thus, the most influential group. Family has a direct or indirect influence on the behavior and attitude of a buyer. In the traditional setting, it was the wife in a husband-wife model relationship who was responsible for making buying decisions related to product categories such as household products, food, and clothing. However, with more women opting for full-time professional careers, these roles have changed. Today, it may be a man doing the household shopping. So, it is important to have a marketing mix that targets these consumers as well.

  1. Social Status

Social class or status can also influence buying decisions. The members of a social class are one that share similar behavior, values, and interests. Apart from income, people in the same occupation, neighborhood, or educational system can belong to a shared social classes.

  1. Free Shipping

With a contribution of 49%, free shipping is the second most significant factor that influences the consumer decision making process. Free shipping usually attracts customers who purchase very often from online stores and websites. Free shipping helps to keep the customers hooked for a longer period of time.

To avoid bearing the entire burden of shipping costs, you can add a fraction of shipping costs into your products but remember that prices have to be competitive too.

  1. Product and Information Quality

One of the most important factors that influence the consumer’s buying behavior is product quality and product information. Promoting and selling good quality products at the right time and the right platform are vital to a business’s success.

Product descriptions, specifications, product videos, and more can be utilized to influence the consumer’s decision making process.

  1. Easy Returns

Undeniably, a lack of personal touch is something which an eCommerce business suffers from. But, it can overcome this challenge by putting an easy return policy in place. Defined and easy return policies are really very helpful if they are in favor of consumers. In a business where sie or color of the product can mismatch, easy return policy helps you get the consumer’s trust.

  1. Great Navigation

A Great Navigation in the eCommerce website helps in getting positive user experience. It will help the consumers in getting the idea where they are and where to move on. Good navigation includes everything from well-defined categories to site maps. It gives a simple sneak-peek into the list of products that the company offers.

  1. Easy Checkout

The process of checkout must be really simple. If the checkout process is complicated, there are chances that the customer might lose interest in purchasing the product. Ensure a great CX for the consumer buying process.

Pro tip: There are a few things which can make the check out process easy. For example, customers are able to send 2 different products in 2 different states, they are able to apply discount coupons easily, send personalized cards with different products and more.         

  1. New Product

Customers often lookout for new products. Try to add new launches to the product catalog. Consumers always look for something that is new and innovative. Moreover, new products attract more traffic too.

Pro tip: To increase the traffic on your website, it is considered as a good practice (from an SEO point of view) to add a ‘New Products’ section.

With the above seven factors in mind, analyze the business model of your business. Take necessary actions to positively influence your customer’s purchase decision. There are many factors that influence the customer’s decisions. Thereby, analyze the requirements of your business and focus on providing maximum CX to your customers. To keep your business on top of the competition, make sure that you analyze the marketing trends properly and include them in your strategy.

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