Consumer Behaviour

Consumer Behaviour Text and Cases

Ramneek Kapoor Director Kothari Group of Institutions Indore

Nnamdi O. Madichie Associate Professor of Marketing & Entrepreneurship College of Business Administration University of Sharjah (UAE)

Tata McGraw Hill Education Private Limited NEW DELHI McGraw-Hill Ofﬁces New Delhi New York St Louis San Francisco Auckland Bogotá Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal San Juan Santiago Singapore Sydney Tokyo Toronto

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Tata McGraw-Hill Published by the Tata McGraw Hill Education Private Limited, :est Patel 1aJar, 1ew 'elhi Consumer Behaviour: Text and Cases &oSyriJht by Tata McGraw Hill Education Private Limited 1o Sart oI this Sublication may be reSroduced or distributed in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise or stored in a database or retrieval system without the prior written permission of the publishers. The program listings (if any) may be entered, stored and executed in a computer system, but they may not be reproduced for publication. This edition can be exported from India only by the publishers, Tata McGraw Hill Education Private Limited. ISBN (13 digit): 978-0-07-107810-8 ISBN (10 digit): 0-07-107810-X Vice President and Managing Director: Ajay Shukla Head—Higher Education Publishing and Marketing: Vibha Mahajan Publishing Manager—B&E/HSSL: Tapas K Maji Associate Sponsoring Editor: Hemant K Jha Associate Development Editor: Amrita Marik Editorial Researcher: Silvi Dua Executive (Editorial Services): Yogesh Kumar Senior Production Manager: Manohar Lal Senior Production Executive: Atul Gupta Marketing Manager—Higher Education: Vijay Sarathi Assistant Product Manager: Daisy Sachdeva Graphic Designer (Cover Design): Meenu Raghav General Manager—Production: Rajender P Ghansela Manager—Production: Reji Kumar Information contained in this work has been obtained by Tata McGraw-Hill, from sources believed to be reliable. However, neither Tata McGraw-Hill nor its authors guarantee the accuracy or completeness of any information published herein, and neither Tata McGraw-Hill nor its authors shall be responsible for any errors, omissions, or damages arising out of use of this information. This work is published with the understanding that Tata McGraw-Hill and its authors are supplying information but are not attempting to render engineering or other professional services. If such services are required, the assistance of an appropriate professional should be sought. Typeset at The &omposers, , &.$. $pt., Paschim 9ihar, 1ew 'elhi and printed at &over Printer


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About the Authors Prof. Ramneek Kapoor is Director, Kothari Group of Institutions, Indore. Earlier, he was the Principal, Omegan School of Business, Indore. He has been associated with Indian Institute of Management (IIM), Indore as a visiting faculty and has also been actively involved with many other management institutes as visiting and adjunct faculty. He is a Ph. D. examiner with the Department of Business Administration at a prominent Indian university. He is a well-known management trainer and author in the areas of sales, marketing, and soft-skills. Among others, he has authored/co-authored Fundamentals of Sales Management, International Marketing (2nd edition), Services Marketing, Communication for Retail Professionals, and Managerial Skills. He has presented several papers in these areas in various national and international seminars. He has organised leadership training sessions for senior executives in several companies and organizations such as BSNL, LIC, Caparo Group, Nicholas Piramal, Indore Management Association, and Rotary Club. He also has more than 28 years of professional experience with many national and multinational companies in the area of sales and marketing management. Prof. Kapoor¶s pro¿le has been published in the :ho¶s :ho in the :orld 22 (2th Edition). He can be reached at ramnik2kapoor#gmail.com Dr. Nnamdi O. Madichie is Associate Professor of Marketing & Entrepreneurship at the College of Business Administration, University of Sharjah (UAE). He is also Fellow of the Higher Education Academy (UK), Fellow of the Academy of Marketing Science, USA (FAMS) and Editor-in-Chief of the African Journal of Business & Economic Research (AJBER). Prior to his current position in the Gulf region, he was Senior Lecturer and Programme Leader for both the BA (Hons) in Marketing and BA (Hons) in Business Studies at the Business School, University of East London (UK). Dr. Madichie’s research spans complementary areas of marketing (entrepreneurial, sustainable and sports marketing). He maintains an active research agenda in areas of marketing and entrepreneurship and has been recipient of the “Emerald Highly Commended Paper Award 2´ as well as the prestigious “2 Emerald Award for Best Practical Implications Paper.´ Dr. Madichie can be reached at nomadichie#yahoo.co.uk


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Preface Today’s global business has brought into focus the true importance of adopting a customer centric outlook by the marketing ¿rms, because it is a well-known fact that all kinds of marketing begins and ends with the consumer. In fact, the genesis of marketing can be found in the act of determining consumer needs, designing the products, services and strategies to meet those needs, and ¿nally ensuring customer satisfaction by the marketers. A marketer in today’s conditions has to think more like a psychologist. It has to undertake a research into the consumer behaviour in order to understand as to how its consumers can accept, perceive, and respond to its product offerings and other related market activities. The psychological insights so gained into consumer behaviour are then utilised to determine its marketing plan, brand and product positioning, and consumer communication strategy. This book is an attempt to discuss consumer behaviour in an easy to understand manner. It has been divided into chapters for comprehensive discussion of various aspects of the subject. Each chapter deals with an important concept of consumer behaviour and amply explains to the reader that particular concept by taking examples and references from the real world scenario. Rich chapter-end pedagogy including references, additional readings, chapter summary, objective type questions (with answers) and review questions add value to the text for the students of the subject. Each chapter concludes with a case on the theme of the chapter, making the concepts more comprehensible. All the chapters have been so devised, so as to enable the readers to relate the theory of consumer behaviour to the real world practices. :ith its approach and design, we sincerely hope and believe that this book will ¿nd wider acceptance with both²the students as well as the teachers of the subject. :e shall be grateful for feedback and suggestions for further improvement in the book. Ramneek Kapoor Nnamdi O. Madichie


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Brief Contents About the Authors Preface Acknowledgements

ii v vii

1

Consumer Behaviour: An Introduction

2

Models of Consumer Behaviour and Decision-Making

39

3

Consumer Personality

61

4

Consumer Attitude

87

5

Consumer Motivation

112

6

Consumer Learning and Memory

133

7

Consumer Perception

154

8

Influence of Social Classes on Consumer Behaviour

176

9

Group Influences

215

10

Process of Consumer Decision-Making

235

11

Consumer Communication Process

272

12

Relationship Marketing and Consumer Behaviour

311

13

Market Segmentation

341

14

Consumerism and Consumer Movements: A Historical Perspective

374

15

Organizational Customer and Buying Behaviour

402

Index


1

423

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Contents About the Authors Preface Acknowledgements

1

Consumer Behaviour: An Introduction Relevance of Studying Consumer Behaviour 2 Changing Faces of Consumer Behaviour and Decision-Making 3 Concept of Consumer Behaviour 3 Development and Emergence of Consumer Behaviour Concept in Marketing 7 Historical Aspects of Consumer Research and Behaviour 8 The Classical Thought 9 Managerial School of Thought 9 Behavioural School of Thought 10 Process of Consumer Research 11 Signi¿cance of Understanding Consumer Behaviour in Marketing 22 Summary 27 Objective Type Questions 28 Review Questions 29 Activities 29 Reference 30 Additional Reading 30 Case 1: Evaluating the Consumers’ Preferences for Motor Cycles in Rural India 31 Case 2: Use of the Marketing Mix in New Product Launch 32

2

Models of Consumer Behaviour and Decision-Making Traditional Models 40 Contemporary Models 44


ii v vii

1

39

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xii

Contents

Summary 53 Objective Type Questions 54 Review Questions 55 Activities 56 References 56 Additional Reading 56 Case: Taking Recourse to Precaution for Prevention—Selling Preventions the Indus Health Plus Way 57

3

Consumer Personality Meaning and De¿nition of Personality 63 Nature and Properties of Personality 64 Theories of Personality 65 Dimensions of Human Personality and the Consumer Behaviour 69 Applications of Consumer Behaviour in Marketing and Other Fields 72 Understanding the Concept of the Image of Self 73 Summary 74 Objective Type Questions 75 Review Questions 77 Activities 77 References 77 Additional Reading 77 Case: Nike—Retaining Market Leadership in Sports Shoes 79

61

4

Consumer Attitude Attitude Formation 88 Levels of Commitment to an Attitude 88 Theories Propounding Attitude 89 Models of Attitude 93 Learning Hierarchies 99 Attitude Changes 100 Summary 104 Objective Type Questions 105 Review Questions 106 Activities 106 References 107 Additional Reading 108 Case: Online Education in India—An Attitude Problem? 110

87

5

Consumer Motivation Needs and Goals 113 Characterization of Motivation 113 Typology of Needs 115 Theories of Needs 115 Levels of Involvement 119


112

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Contents

Measures of Involvement 122 9alues 123 Measuring 9alues 124 Motivation Research 125 Summary 127 Objective Type Questions 127 Review Questions 129 References 129 Additional Reading 130 Case: Cotton Prices Hit South Asian Markets

6

xiii

131

Consumer Learning and Memory Theories of Learning 134 :hy should Marketers’ Care about Consumers’ Memory" Development of Brand Loyalty and Brand Equity 145 Levels of Involvement 146 Summary 147 Objective Type Questions 148 Review Questions 149 Activities 149 References 149 Additional Reading 150 Case: ICC Cricket World Cup 2011 152

133 143

7

Consumer Perception Process of Perception 155 Perceptual Organization 155 Sensory Systems 156 Perceptual Distortion 159 Concepts Underlying Perception 160 Factors InÀuencing Perception 162 Consumer Image and Marketing Perception 163 Perception of Risk 165 Summary 168 Objective Type Questions 169 Review Questions 170 Activities 170 References 171 Additional Reading 172 Case: Slumdog Millionaire 174

154

8

Influence of Social Classes on Consumer Behaviour Concept of Social Classes 177 Social Strati¿cation and Social Class 178 Concept of Socio-Economic Class 178

176


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xiv

Contents

Process of Social Strati¿cation 180 Social Strati¿cation Systems 181 Factors Responsible for Social Strati¿cation 181 Culture 9ariance 183 Social Class Characteristics 186 Social InÀuence on Consumer Behaviour 187 Group InÀuence and Consumer Behaviour 188 Personal Factors 189 Psychological Factors 191 De¿nition and Meaning of Culture 192 How does Culture Interest a Marketer 193 Constituents of Culture 194 Cultural 9alues 196 Characteristics of Culture 198 Cross Cultural Marketing 200 Challenges Firms Face in Cross Cultural Marketing 203 Strategies for Dealing with Cross Cultural Differences 205 Subculture and Consumer Behaviour 206 Summary 209 Objective Type Questions 210 Review Questions 211 Activities 212 References 212 Additional Reading 212 Case: Chandigarh Housing Board—Categorizing Housing Schemes for Consumers 213

9

Group Influences Factors InÀuencing Reference Groups 215 Types and Nature of Reference Groups 216 Reference Group and Consumer Conformity 218 Bene¿ts of Reference Group Appeals 221 Group InÀuences in Real-:orld Marketing 224 Summary 228 Objective Type Questions 228 Review Questions 229 Activities 230 References 230 Additional Reading 230 Case: Sri Lanka’s Big National Push Towards a Connected Society 232

215

10

Process of Consumer Decision-Making Consumer Decision-making 236 How do Customers Decide to Buy" 236

235


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Contents

xv

Five Stages of Consumer Buying Decision Process 237 Customer Buying Process for New Products 241 Buying Motives 242 Types of Buying Decisions 244 Decision-making Models of Consumer Behaviour 246 Consumer Decision-making in the Households 248 Types of Families 249 Life Cycle Stages of a Family 250 Life Cycle Stages of a Nontraditional Family 251 Decision-making Model in Modern Household 252 Buying Roles 253 Concept and Process of Innovation 255 The Concept of Adoption 259 Opinion Leaders 262 Summary 265 Objective Type Questions 265 Review Questions 267 Activities 267 References 267 Additional Reading 267 Case: The Story of Innovation of a Single Car Key to Replace Multiple Car Keys 269

11

Consumer Communication Process Concept of Communication 272 Technological Advancements and Communication 273 Understanding Communication 273 Communication Establishes Meaning 274 Understanding the Spread of Communication 275 ConÀict and Communication 276 Media and Communications Psychology 277 Human Communication 279 The Concept of Oral Communication 281 Communication Noise 282 Elements of Communication Process 282 Functioning of the Communication Process 283 Elements of Communication 284 Models of Communication 285 Marketing Communication 287 Elements of Marketing Communication 288 Establishing Promotional Strategy as a Communication Tool 299 Summary 303 Objective Type Questions 304 Review Questions 305


272

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xvi

Contents

Activities 306 References 306 Additional Reading 306 Case: Innovative Consumer Communication by Mercedes Benz UK

307

12

Relationship Marketing and Consumer Behaviour Introduction 311 De¿nition of Relationship Marketing 312 Relationship Marketing vs Transactional Marketing 312 Concept of Relationship Marketing 314 Process of Relationship Structure 318 Consumer Relationship Building Strategy in Relationship Marketing 319 Four Level Structures of Customer Relationship Strategies 321 Customer Relationship and Brand Loyalty 324 Building Brand Loyalty Pyramid 326 Customer Relationship and Customer Satisfaction 327 Features that Customers Look for in Establishing a Satisfying Marketing Relationships 329 Customer Relationship Optimization with Effective Communication 332 Summary 334 Objective Type Questions 334 Review Questions 336 Activity 336 References 336 Additional Reading 336 Case: Jet Airways—Establishing Relationship Marketing Through Frequent Fliers’ Programme 337

311

13

Market Segmentation Introduction 341 :hat does Market Segmentation Mean" 342 Objectives of Market Segmentation 343 Process of Market Segmentation 346 Criteria for Selecting Segmentation 351 Methods of Market Segmentation 352 Developing a Target Market Strategy 354 Some of the Common Mistakes of Market Segmentation 364 Summary 365 Objective Type Questions 366 Review Questions 367 Activities 367 References 368 Additional Reading 368 Case: Market Segmentation by Maruti Udyog Limited 369

341


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Contents

xvii

14

Consumerism and Consumer Movements: A Historical Perspective De¿nition of Consumer Culture 374 De¿nition of Consumerism 375 Agencies that InÀuence Consumerism and Consumer Movements 375 Factors Contributing to Consumerism and Consumer Movements 377 Historical Perspective of Consumer Movement in US 381 Historical Perspective of Consumer Movement in India 384 Current Scenario of Indian Consumerism 386 Government’s Role and Responsibility Towards Consumerism 388 Consumer Protection Act, 8 390 The Monopolies and Restrictive Trade Practices Act (MRTP) Act, 393 Advantages of Consumerism 395 Summary 396 Objective Type Questions 396 Review Questions 398 Activities 398 References 398 Additional Reading 399 Case: Active Consumerism Taking Care of the Public Interest in Globalized India 400

374

15

Organizational Customer and Buying Behaviour Business Marketing 402 Organizational Buyers 403 Characteristics of Organizational/Industrial Markets 403 Organizational Buying Decision-making approach and Buying Systems 408 Factors that InÀuence Organizational Buyer Behaviour 409 Organizational Buying Process 411 Importance of Online Buying in Organizational Buying 415 Summary 416 Objective Type Questions 417 Review Questions 419 Activities 419 Additional Reading 419 Case: Negotiation and Value Analysis 420

402

Index


423

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