UNIT 1:

The nature of consumer behaviour can be defined by understanding the dynamics involved in how
individuals and groups select, purchase, use, and dispose of goods and services. Based on the
provided passage, the following key points outline the broad nature of consumer behaviour:

1. Consumer Behaviour is a Decision-Making Process

Consumer behaviour includes both mental decision processes (evaluating options, considering
alternatives, assessing benefits) and physical actions (actually buying, using, or disposing of a
product). It’s not just about buying—it’s about everything that leads to and follows after a
purchase.

2. Consumers vs. Customers

• A consumer is anyone who uses goods or services, whether or not a monetary exchange is
involved.
• A customer is someone who actually purchases the product or service, usually involving a
transaction.
• Consumer is a broader term and includes all users, not just buyers.

3. Multiple Roles in the Buying Process

Different people may play different roles in a single consumer behaviour situation:
• Buyer/Customer: The one who makes the purchase.
• User/Consumer: The one who uses the product/service.
• Influencer: The person who influences the decision.
• Decision Maker: The one who has the final say in what is bought.
Example: A father buying a TV may be the buyer, while the wife and children may act as
influencers. All are users.
Role Description
Initiator The person who determines that some need or want is not being met.
Influencer The person who intentionally/unintentionally influences the decision
to buy the actual purchase and/or use of product or service.
Buyer The person who actually makes the purchase.
User The person who actually uses or consumes the product or service.

4. Influence of Non-Economic Exchanges

Consumer behaviour is not restricted to monetary purchases. It also includes the use of services
from non-profit or voluntary organizations. Even when services are free, consumers still go through
the same decision-making and usage processes.

5. Social and Psychological Factors

Consumer behaviour is influenced by other people, especially in group settings like families.
Preferences, cultural factors, lifestyle, and peer influence play significant roles in how decisions are
made.
6. Situational Contexts
Consumer behaviour can vary based on the situation:
• In a personal context, the buyer may also be the only user.
• In a shared context, like a family purchase, multiple people play different roles.
Conclusion
The nature of consumer behaviour is multi-dimensional, involving complex interactions between
individual decision-making, social influences, and functional roles. It goes beyond just buying—
encompassing everything from evaluation to usage and disposal, and includes both economic and
non-economic contexts.

Scope: The scope of a subject refers to everything that is studied as part of that subject. When we
set out to explain the scope of consumer behaviour we need to refer to all that which forms part of
consumer behaviour. The scope of consumer behaviour has been briefly touched upon in the
previous section wherein it was explained that how consumer behaviour includes not only the actual
buyer and his act of buying but also the various roles played by different individuals and the
influence they exert on the final purchase decision. In this section we shall define and explain the
scope of study of consumer behaviour. To define the scope of a subject it is important to set
parameters or a framework within which it shall be studied. Figure 1.1 presents one such framework
for studying consumer behaviour. This framework is made up of three main sections-the decision
process as represented by the inner-most circle, the individual determinants on the middle Circle and
the external environment which is represented by the outer circle. The study of all these three
sections constitutes the scope of consumer behaviour. Here, we shall dwell on these constituents of
the framework only briefly as they are explained in detail in the following units
Here’s a detailed explanation of the Scope of Consumer Behaviour, perfect for assignments, exams,
or conceptual clarity:
Scope of Consumer Behaviour
The scope of consumer behaviour refers to the various areas, dimensions, and fields it covers. It
goes far beyond simply understanding how and why consumers buy products. It encompasses all
aspects of consumption behavior—from decision-making to usage and disposal.
1. Understanding the Buying Behaviour of Consumers
Consumer behaviour studies why, when, how, and what people buy. This includes:
• What motivates consumers to buy a product?
• How do they compare alternatives?
• What influences their decision (brand, price, reviews)?
• Where do they buy from—online, retail stores, etc.?
2. Analysis of Consumer Needs and Wants
To market successfully, businesses must understand:
• What consumers need (basic requirements).
• What they want (preferences shaped by culture, trends, marketing). Consumer behaviour
helps in identifying these needs and predicting changing preferences over time.
3. Consumer Behaviour in Various Market Segments
Consumer behaviour applies to different types of markets:
• Consumer Markets (e.g., FMCG, electronics, clothing).
• Business/Industrial Markets (B2B purchases).
• Service Markets (healthcare, education, hospitality).
• Non-Profit/Voluntary Sector (NGOs, government schemes).
It also applies to both rural and urban markets, helping marketers to customize strategies.
4. Role of Individuals and Groups
Consumer behaviour is shaped by:
• Individual roles (buyer, user, influencer).
• Group dynamics like family, peer groups, social class. The scope includes studying how group
opinions and roles affect decisions.
5. Consumer Decision-Making Process
Consumer behaviour explores every stage of the decision process:
• Problem recognition
• Information search
• Evaluation of alternatives
• Purchase decision
• Post-purchase behaviour
Marketers use this understanding to guide consumers at each stage.
6. Psychological and Social Influences
It involves deep analysis of internal and external influences on behaviour:
• Psychological: Motivation, perception, learning, attitudes, personality.
• Social: Family, culture, reference groups, status, lifestyle.
Understanding these helps businesses to target the right audience with the right message.
7. Post-Purchase Behaviour and Satisfaction
Consumer behaviour doesn’t end at the sale. It also includes:
• Consumer satisfaction or dissatisfaction
• Feedback, complaints
• Brand loyalty or switching
• Disposal of the product (especially for durable goods)
This helps in improving future offerings and building long-term relationships.
8. Application in Marketing Strategies
Consumer behaviour insights are applied in:
• Product design and features
• Pricing strategies
• Advertising and promotions
• Distribution channels
• Customer relationship management
It is the foundation of consumer-centric marketing.

Application of Consumer Behavior:

1. Analyzing Market Opportunity
Consumer behavior helps identify unmet needs and emerging trends, allowing marketers to spot
market gaps.
• Example: Tata Sky launched HD TV services in India after identifying a growing demand for
better-quality television and increased consumer spending on entertainment. The trend of
technological awareness and rising disposable income led to the creation of HD services.
2. Selecting the Target Market
By studying consumer behavior, marketers can segment the market and focus on groups with specific
needs.
• Example: HUL (Hindustan Unilever) identified a segment of consumers who were budget-
conscious and preferred smaller, affordable quantities of shampoo. They launched Sunsilk
Shampoo sachets, priced economically, to cater to this group who used shampoo
occasionally.
3. Determining the Product Mix
Marketers use consumer insights to decide on the right combination of product features, pricing,
packaging, and additional services.
• Example: Coca-Cola introduced Coca-Cola Zero after studying consumer preferences for
healthier, low-calorie drinks. This was in response to growing health consciousness among
 consumers, demonstrating how understanding behavior leads to the expansion of product
lines to meet diverse needs.
4. Distribution Decisions
Consumer behavior influences decisions regarding how and where products should be distributed to
reach target consumers effectively.
• Example: Eureka Forbes introduced its vacuum cleaner in India by selling it directly through
personal selling at consumers’ homes. Recognizing that the product was new and unfamiliar,
they chose this method to demonstrate its utility, which was more effective than retail
outlets at that time.
5. Promotion Strategies
Marketers need to understand consumer preferences for media and promotional methods to
effectively advertise and increase sales.
• Example: Nike used celebrity endorsements with athletes like Michael Jordan for their Air
Jordan sneakers, leveraging consumer desires for success, performance, and prestige. This
approach helped build the brand's identity and increased consumer engagement.
6. Use in Non-Profit and Social Marketing
Consumer behavior knowledge is also applied in non-profit marketing to influence societal change
or improve public perception.
• Example: The Indian government’s Swachh Bharat Abhiyan (Clean India Mission) used
targeted advertising campaigns to encourage cleanliness. By understanding consumers’
values and national pride, the government motivated citizens to take action toward
maintaining cleanliness in public spaces.

Decision Making Process:

The consumer decision process is a series of steps that individuals go through when making
purchasing decisions. Here’s a simplified overview of the key stages:
1. Problem Recognition: The process begins when a consumer realizes they have an unfulfilled
need. This could be something simple, like running out of toothpaste, or a bigger need, like
buying a new sofa or hiring an accountant for tax planning. The recognition of this need
triggers the next steps in the decision process.
2. Information Search: Once the need is recognized, the consumer searches for relevant
information. For example, if a regular consumer is buying toothpaste, they may already know
the brand, package size, and place to purchase. However, if it's a first-time purchase, the
consumer may seek information from external sources like friends, advertisements, or
shopkeepers.
3. Evaluation of Alternatives: After gathering information, the consumer evaluates different
options to determine which one best satisfies their need. This evaluation can vary based on
personal preferences, price, and other factors.
4. Purchase Decision: Once the evaluation is complete, the consumer makes a choice and
proceeds to purchase the product. At this stage, the consumer also decides where to buy
from, based on factors like convenience, price, and reputation of the retailer.
5. Post-Purchase Behavior: After using the product, the consumer reflects on their purchase. If
satisfied, they feel their decision was correct. If dissatisfied, they may regret their choice and
seek alternatives, starting the decision process again.
Consumer behavior is profoundly influenced by environmental factors, which shape individuals'
preferences, decisions, and purchasing habits. Understanding these influences—cultural, social,
and situational—is essential for marketers to tailor their strategies effectively.

1. Cultural Influences
Culture encompasses shared values, beliefs, customs, and behaviors within a society. It
significantly impacts consumer preferences and purchasing habits.
Key Cultural Factors:
• Language: Affects communication and understanding of marketing messages.
• Religion: Influences dietary restrictions and holiday-related purchases.
• Values and Beliefs: Shape attitudes toward products and brands.
• Rituals and Traditions: Determine the demand for certain products during festivals or
ceremonies.
Example:
McDonald's adapts its menu to local tastes, offering vegetarian options in India and pork-free
items in Muslim-majority countries, demonstrating cultural sensitivity in product offerings.
cite turn0search6
2. Social Influences
Social factors include family, reference groups, and social roles that affect consumer behavior.
Key Social Factors:
• Family: Influences purchasing decisions, especially for household products.
• Reference Groups: Individuals or groups that influence a person's attitudes or behaviors.
• Social Roles: A person's position within a group affects their consumption patterns.
• Peer Pressure: The influence of peers can lead to conformity in purchasing decisions.
Example:
A teenager may choose to buy the latest smartphone model because their peer group values
having the newest technology, demonstrating the influence of reference groups.
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3. Situational Influences
Situational factors are temporary conditions that affect consumer behavior, such as physical
surroundings, time constraints, and emotional states.
Key Situational Factors:
• Physical Environment: Store layout, lighting, and music can impact shopping behavior.
• Time: Time of day or urgency can influence purchasing decisions.
• Mood: Emotional state can affect consumer choices.
• Purchase Task: The reason for the purchase (e.g., gift, personal use) can influence decision-
making.
Example:
A shopper might purchase an umbrella impulsively during a sudden rainstorm, influenced by the
immediate need and situational context. cite turn0search8
Applications of Consumer Behavior in Marketing
Understanding consumer behavior allows marketers to develop strategies that align with
consumer needs and preferences.
Product Development:
• Cultural Sensitivity: Creating products that cater to cultural preferences, such as offering
vegetarian options in regions with a high demand for such products.
Targeted Advertising:
• Social Influence: Designing advertisements that resonate with specific social groups, like
promoting eco-friendly products to environmentally conscious consumers.
Retail Strategy:
• Situational Factors: Adjusting store layouts and atmospherics to enhance the shopping
experience, such as playing soothing music to create a relaxed environment.

UNIT-2
The term "culture" originates from the Latin word cultura, meaning the care or cultivation of the
mind and body. It represents the collective programming of the mind distinguishing members of
one group from another. Culture influences how individuals perceive the world, interact with
others, and make decisions.
Despite its complexity, culture exhibits discernible patterns that can be studied and interpreted.
These patterns manifest in various aspects of life, including communication styles, decision-
making processes, and consumer behavior.

CHARACTERISTICS:
Here’s a detailed summary of the characteristics of culture, with key points and examples
included to enhance understanding—perfect for MST preparation:
1. Acquired
• Definition: Culture is not innate; it is learned or acquired through social interactions.
• How it's learned: From family, teachers, peers, media, and institutions. We pick up language,
gestures, habits, values, and even slangs.
• Example: When someone moves to a new country or joins a new organization, they observe
and adopt the cultural practices there.
• Importance: Helps people adapt to new environments and become more culturally sensitive
and broad-minded.

2. Collective
• Definition: Culture is a shared system; it exists within a group of people, not individually.
• Social Influence: It develops over time as people live, work, and grow together.
• Example: Indian culture promotes joint family systems, while Western cultures may
emphasize individual independence.
• Point to Remember: There’s no "right or wrong" culture—just what's commonly accepted
by a group.

3. Value System
• Definition: Culture shapes and maintains our core values, which guide behavior and
decision-making.
• Trust in Shared Values: Cultural values create a foundation of trust within communities.
• Example: Eastern cultures may value collectivism and respect for elders, while Western
cultures may focus more on freedom and self-expression.
• Impact: It creates a moral compass and shared belief system.

4. Stability
• Definition: Culture tends to be stable and resistant to quick changes.
• Slow Evolution: Although minor aspects can change with trends or globalization, core values
stay intact for long periods.
• Example: Despite modern influences, traditional Indian festivals, attire, and customs still
prevail strongly.
• Implication: Changing cultural norms (e.g., gender roles) requires time and widespread
acceptance.

5. Differentiator
• Definition: Culture acts as a marker of identity, distinguishing one group from another.
• Collective Identity: Even with internal individual differences, group culture creates external
uniqueness.
• Example: Japanese workplace culture is known for discipline and hierarchy, whereas Silicon
Valley's culture promotes openness and creativity.
• Note: Helps us recognize and respect diversity across communities.

6. Contextual
• Definition: Cultural expressions depend on the context or situation in which they occur.
• Misinterpretation Risk: Cultural behaviors can be misunderstood when taken out of context.
• Example: In some cultures, silence shows respect; in others, it may signal disagreement or
disinterest.
• Complexity: Since it lacks a fixed form, culture is dynamic, fluid, and varies in
interpretation.

7. Common Yet Different

• Definition: Cultures can share similarities yet remain unique in certain aspects.
• Cross-cultural overlap: Countries with the same language or religion may still differ in
practices due to history or governance.
• Example: UK and US share the English language but have different etiquette, humor, and
work ethics.
• Learning Point: Cultural understanding requires looking deeper than surface similarities.

Cross-culture refers to the interaction between people from different cultural backgrounds,
where differences in values, beliefs, behaviors, customs, and communication styles are observed,
understood, and respected.
It involves studying and comparing how various cultures operate, especially in contexts like
workplaces, education, international business, or social interactions, to promote effective
communication, reduce misunderstandings, and build stronger relationships.
Definition
Cross-cultural communication is the understanding and adaptation of communication styles
across different cultural backgrounds to ensure effective interaction in organizational settings. It
helps bridge communication gaps and fosters a more inclusive and productive work
environment.
Need for Cross-Cultural Communication
• In today's globalized and competitive world, organizations must understand diverse
communication patterns of employees and stakeholders.
• Cultural differences affect knowledge transmission and behavior, which in turn influence
organizational performance.
• Strong cross-cultural communication improves collaboration, reduces misunderstandings,
and enhances the overall work environment.
Elements of Cross-Cultural Communication
1. Awareness
o Recognizing and understanding cultural differences is key to building mutual respect.
o Awareness leads to more effective motivation and interaction within diverse teams.
2. Preparation
o Being prepared with basic cultural etiquette (like greetings or gestures) shows
respect.
o Small efforts reflect openness and prevent accidental offenses across cultures.
3. Language
o Language, including verbal and non-verbal cues, varies widely.
o Even within a common language (e.g., Hindi), regional expressions can create
barriers.
4. Humour
o Humor doesn’t always translate well across cultures.
o Misinterpreted jokes can lead to conflicts—especially in formal workplace settings.
5. Openness
o Being cautious is okay, but openness encourages better understanding.
o Willingness to seek and offer feedback builds trust and strengthens team bonds.
Here is your expanded and detailed version of the study material for MBA Final Semester (70
Marks), covering the specified topics with deeper insights, frameworks, and additional examples for
better exam preparation:

2. Lifestyle Marketing (Expanded)

Definition:
Lifestyle marketing involves identifying and targeting groups of consumers who share similar
activities, interests, and opinions (AIO), aligning products and messages with their values and daily
lives.
AIO Framework Explained:
• Activities: Day-to-day actions (e.g., work, leisure, exercise, travel).
• Interests: Passion areas (e.g., fashion, home décor, fitness, technology).
• Opinions: Views on society, politics, environment, religion, etc.
VALS Framework (Values and Lifestyles):
This psychographic tool segments consumers into 8 types based on motivation (ideals, achievement,
self-expression) and resources (education, income, innovation):
• Innovators: High resources, leaders, sophisticated tastes.
• Thinkers: Ideals-driven, informed, mature.
• Achievers: Goal-oriented, career-focused.
• Experiencers: Young, enthusiastic, novelty-seeking.
• Believers: Conservative, community-oriented.
• Strivers: Status-driven but fewer resources.
• Makers: DIY, practical, family-oriented.
• Survivors: Low resources, brand-loyal, cautious.
Applications of Lifestyle Marketing:
• Product Design: Products tailored to lifestyles (e.g., eco-friendly goods for environmentally
conscious).
• Advertising: Crafting relatable narratives and imagery.
• Retail Layout: Store design that complements lifestyle themes (e.g., Apple stores for tech-
savvy individuals).
Examples:
• Nike promotes athleticism and empowerment through emotional storytelling.
• Patagonia targets sustainability-focused consumers.
• Starbucks aligns with urban, community-driven lifestyles.

3. Characteristics of Culture (Expanded)

Definition:
Culture encompasses the shared values, norms, behaviors, and artifacts that the members of society
use to cope with their world.
Key Characteristics:
1. Learned: Passed through generations (e.g., language, eating habits).
2. Shared: Common patterns within a society or community.
3. Symbolic: Uses language, gestures, and symbols.
4. Adaptive: Evolves with societal changes.
5. Prescriptive: Provides behavioral norms.
Types of Culture:
• National Culture: Country-level values (e.g., American individualism vs. Japanese
collectivism).
 • Subculture: Religion, region, language groups (e.g., South Indian vs North Indian consumer
behavior).
Hofstede’s Cultural Dimensions (useful for MCQs/short notes):
1. Power Distance – Acceptance of unequal power distribution.
2. Individualism vs Collectivism – Personal achievement vs group goals.
3. Uncertainty Avoidance – Comfort with ambiguity.
4. Masculinity vs Femininity – Assertiveness vs caring.
5. Long-Term Orientation – Future planning vs present focus.
Marketing Implications:
• Adjust branding and communication styles (formal/informal).
• Be culturally sensitive (color, language, values).
• Customize offerings (e.g., McDonald's vegetarian menu in India).

4. Cross-Cultural Understanding (Expanded)

Definition:
Cross-cultural understanding involves recognizing cultural differences in values, communication
styles, and consumer habits to craft effective marketing strategies.
Challenges in Cross-Cultural Marketing:
• Language & Translation Errors (e.g., Pepsi’s “Come alive” slogan misinterpreted in China).
• Symbolism & Colors (e.g., white = mourning in some cultures).
• Norms & Taboos (e.g., alcohol ads are banned in many Islamic countries).
• Consumption Differences (e.g., tea in the UK vs. coffee in the USA).
Key Strategies:
1. Localization – Tailoring product and messaging to local needs.
2. Glocalization – Global strategy + local implementation.
3. Cultural Audits – Analyze culture before entering markets.
Standardization vs Adaptation (Exam-focused Essay topic):
Aspect Standardization Adaptation
Pros Cost-effective, brand unity Cultural fit, higher relevance
Cons Risk of mismatch High cost, complexity
Examples Apple (more standardized) McDonald’s (more adaptive)

5. Nature of Social Class and Consumer Behaviour (Expanded)

Social Class Definition:
A relatively permanent division in a society whose members share similar values, interests, and
behaviors, often ranked hierarchically.
Class Indicators:
• Income, Occupation, Education, Wealth, Family background, Lifestyle
Indian Social Class Context (based on SEC Classification):
• SEC A/B: Upper/upper-middle, professionals.
• SEC C: Middle, semi-skilled jobs.
• SEC D/E: Lower-income, price-conscious.
Consumer Behavior Impact:
• Brand loyalty and status products (Upper class).
• Value-for-money & aspirational purchases (Middle class).
• Price and availability sensitivity (Lower class).
Marketing Implications:
 • Match media usage (luxury – magazines; lower – local newspapers).
• Price strategies (premium vs economy packs).
• Product line extension (e.g., Honda offering both City and Amaze).

1. Personal Influence – Significance & Marketing Implications

Definition:

Personal influence is the effect that individuals exert on the attitudes, opinions, and
behaviors of others through face-to-face communication, word-of-mouth, or digital interaction.

Significance:

• Consumers are more likely to trust personal sources of information than advertisements.

• This influence is most effective in:

o High-risk purchase situations (e.g., electronics, healthcare).

o Products involving status display (e.g., cars, branded clothing).

o New or unfamiliar products.

Types of Influence:

1. Normative (Utilitarian): Conforming to group expectations to gain approval (e.g., buying

premium clothes to match peers).

2. Value-expressive: Adopting behaviors or products to express shared values (e.g., eco-friendly

brands).

3. Informational: Seeking advice from trusted individuals with experience or knowledge.

Models of Personal Influence:

• Two-Step Flow of Communication (Katz and Lazarsfeld):

o Media → Opinion Leaders → General Public.

• Multi-Step Flow: Includes feedback loops and interactions among peer groups.

Marketing Implications:

• Influencer Marketing: Brands collaborate with influencers (e.g., Nykaa with beauty
bloggers).

• Referral Programs: Uber’s friend invites or Dropbox's free storage on referrals.

• Buzz Marketing: Encouraging users to spread the word (e.g., “early access” strategies).

• Product Sampling: Distributing samples to key community figures.

• Social Proof: Customer reviews, ratings, testimonials.

2. Significance of Family in Consumer Behaviour

 Why Family Matters:

• The first and most enduring reference group.

• Shapes long-term brand preferences, lifestyle choices, and values.

• Acts as a decision-making unit where roles are divided.

Types of Family Roles:

1. Initiator: Suggests purchase.

2. Influencer: Persuades or provides information.

3. Decider: Final authority.

4. Buyer: Makes the purchase.

5. User: Consumes the product.

Family Types:

• Joint Families (common in India): Shared decisions, conservative buying, more focus on price
and durability.

• Nuclear Families: Faster decision-making, preference for convenience, brand-oriented.

Cultural Variation:

• In collectivist societies (India, Japan), family approval is crucial.

• In individualistic cultures (US, UK), personal choice dominates.

Marketing Implications:

• Advertise showing family scenes (Amul, Surf Excel).

• Segment products for children, youth, elders (Horlicks Junior, Family Car Insurance).

• Products that reflect emotional bonding (Cadbury “Kuch Meetha Ho Jaaye”).

3. Family Life Cycle (FLC)

Definition:

The FLC is a series of stages a family passes through over time, affecting purchasing decisions
and needs.

Stages & Buying Characteristics:

Stage Characteristics Key Purchases

Bachelo Single, career- Gadgets, bikes, branded

rhood focused wear
 Stage Characteristics Key Purchases

Newly Dual income, no Furniture, travel,

Married kids electronics

Full Children, budget- Baby food, school fees,

Nest I tight healthcare

Full Older kids, rising Home upgrades,

Nest II expenses insurance

Full Higher education, part-

Kids in college
Nest III time work

Empty Travel, self-care, health

Kids moved out
Nest I insurance

Empty Savings, simplified

Retirement
Nest II services

Solitary Medical care, support

Alone, elderly
Survivor services

Marketing Implications:

• Brands like LIC, HDFC Life use life-stage promotions.

• Target “Full Nest” with child-related offerings (school bags, tuition ads).

• Promote “Empty Nest” packages for travel (Thomas Cook, IRCTC Senior Tours).

4. Opinion Leadership Forms

Who Are Opinion Leaders?

• Consumers who have influence due to their knowledge, expertise, or charisma.

• Seen as trustworthy, knowledgeable, and accessible.

Forms of Opinion Leadership:

1. Monomorphic: Influential in a single product domain (e.g., a gamer known for laptop
reviews).

2. Polymorphic: Influential across various domains (e.g., celebrities endorsing clothes, phones,
and food).

Traits of Opinion Leaders:

• High product involvement.

 • Exposed to mass media and trends.

• Sociable and articulate.

• Active in online communities (Reddit, Quora, Instagram).

Diffusion of Innovation (Everett Rogers):

• Innovators → Early Adopters (often Opinion Leaders) → Early Majority → Late Majority →
Laggards.

• Opinion leaders are key in the early adoption phase.

Marketing Strategies:

• Seeding Campaigns: Offering free products to influencers (e.g., tech launches).

• Brand Ambassadors: Virat Kohli for Puma, Deepika Padukone for Tanishq.

• Engaging Social Circles: Referral discounts, affiliate marketing.

• Community Marketing: Cultivating brand advocates in online groups.

1. Howard-Sheth Model of Consumer Behavior

Developed by John Howard and Jagdish Sheth in 1969, this model integrates various social,
psychological, and marketing influences on consumer decision-making.

Key Components:

• Input Variables: Marketing stimuli (e.g., product, price, place, promotion) and environmental
factors (e.g., social, political).

• Perceptual Constructs: How consumers perceive and process information.

• Learning Constructs: Internal psychological variables like motives, brand comprehension,

and attitudes.

• Output Variables: Observable responses such as attention, brand comprehension, attitude,

and purchase behavior.

Decision-Making Levels:

• Extensive Problem Solving: When consumers are unfamiliar with the product category.

• Limited Problem Solving: When consumers have some experience but are not fully
knowledgeable.

• Habitual Response Behavior: When consumers make routine purchases with little
deliberation.

This model emphasizes the sequential nature of consumer decision-making and the interplay
between various influencing factors.

2. Black Box Model of Consumer Behavior

 This model focuses on the internal processes of the consumer's mind (the "black box") and
how external stimuli are transformed into responses.

Structure:

• Stimuli: Marketing efforts and environmental factors.

• Black Box: Consumer characteristics (e.g., attitudes, motivations) and decision-making

processes.

• Responses: Purchase decisions, brand choice, and post-purchase behavior.

The model suggests that while marketers can observe the stimuli and responses, the internal
decision-making process remains opaque.

3. Economic Model of Consumer Behavior

This model assumes that consumers are rational beings who aim to maximize utility based
on their preferences and budget constraints.

Assumptions:

• Rationality: Consumers make decisions to maximize satisfaction.

• Perfect Information: Consumers have complete knowledge of all alternatives.

• Utility Maximization: Choices are made to achieve the highest utility within budget limits.

While this model provides a foundational understanding of consumer behavior, it may not
account for emotional or psychological factors influencing decisions.

4. Psychoanalytic Model of Consumer Behavior

Based on Sigmund Freud's theories, this model suggests that consumer behavior is
influenced by unconscious motives, desires, and fears.

Key Concepts:

• Id: Instinctual desires.

• Ego: Conscious, rational part that mediates between id and reality.

• Superego: Moral standards and ideals.

Marketers leveraging this model aim to tap into subconscious desires, often through
emotional appeals and symbolism in advertising.

5. Sociological Model of Consumer Behavior

This model emphasizes the impact of society and social groups on consumer behavior.

Influencing Factors:
 • Family: Primary influence on buying habits.

• Reference Groups: Friends, colleagues, or celebrities that influence choices.

• Social Class: Economic and social status affecting preferences.

Understanding these social dynamics helps marketers tailor products and messages to
specific demographic groups.

UNIT 3

1. Personality and Self-Concept (Source: personality and self concept.pdf)

Key Concepts: Personality refers to the sum total of an individual's psychological traits, both
inherited and learned, that consistently influence the way they respond to their environment. While
these traits tend to remain relatively stable over time, personality can evolve gradually through
experiences, social influences, and personal growth.

Theories of Personality:

1. Psychoanalytic Theory (Freud):

• Freud proposed that personality is composed of three interrelated systems:

o Id: Operates on the pleasure principle, driven by unconscious desires and instincts.

o Ego: Operates on the reality principle, balancing the demands of the id with the
constraints of the real world.

o Superego: Represents the moral conscience and societal norms.

• Application: Marketing often appeals to these forces; for example, luxury and pleasure-
driven ads (e.g., perfumes, chocolates) appeal to the id, while logical and value-driven
messages (e.g., insurance, savings plans) appeal to the ego.

2. Neo-Freudian Theory (CAD Model):

• This theory classifies consumers based on their interpersonal orientation:

o Compliant: Seek approval and affection; prefer familiar, trusted brands.

o Aggressive: Desire success, admiration, and dominance; choose bold, status-

enhancing products.

o Detached: Value independence and self-reliance; show less brand loyalty or interest
in social influence.

3. Trait Theory:

• Focuses on identifying and measuring specific traits such as:

o Innovativeness

o Materialism

o Extroversion

o Self-consciousness
 o Need for cognition

• These traits help marketers segment and target consumers more effectively, using tailored
communication strategies.

4. Self-Concept Theory:

• Consumers' self-perception plays a major role in their buying behavior:

o Actual Self: How a person currently sees themselves.

o Ideal Self: How a person would like to be.

o Social Self: How a person believes others perceive them.

o Extended Self: Belongings and possessions as extensions of identity (e.g., clothing,

gadgets).

Application in Marketing:

• Brands often adopt human-like personalities to connect emotionally with consumers.

• Consumers are more likely to purchase brands that reflect or enhance their self-image (e.g.,
Nike, Apple, Titan).

• Marketing strategies include lifestyle branding, aspirational advertising, and product

customization.

2. Learning and Memory (Source: learning and memory.pdf)

Learning: Learning is a relatively permanent change in behavior that occurs as a result of past
experience. Consumers learn how to choose products and services through a variety of mechanisms,
both conscious and unconscious.

Learning Theories:

1. Classical Conditioning (Pavlov):

• Involves pairing a neutral stimulus (e.g., brand logo or jingle) with a meaningful stimulus to
elicit a similar response.

• Over time, the consumer begins to associate the brand with certain emotions or
expectations.

• Example: Repeated pairing of "Amul" with the phrase "Taste of India" evokes feelings of
nostalgia, quality, and national pride.

2. Operant Conditioning (Skinner):

• Based on the idea that behaviors are learned through rewards and punishments.

• Positive reinforcement: Providing incentives (e.g., discounts, loyalty points) increases the
likelihood of repeat purchases.

• Negative reinforcement: Removing unpleasant conditions (e.g., odor control in deodorants).

• Example: A loyalty card offering every 5th coffee free encourages habitual behavior.
3. Cognitive Learning:

• Emphasizes internal mental processes. Consumers actively process information, evaluate

alternatives, and make reasoned decisions.

• Example: A consumer comparing mobile phones by reading reviews, analyzing specifications,

and choosing the most suitable one demonstrates cognitive learning.

4. Observational Learning (Modeling):

• Learning occurs by observing the behavior of others and the consequences of that behavior.

• Key conditions:

o Attention: The consumer must notice the model.

o Retention: They must remember what was observed.

o Reproduction: They must be able to replicate the behavior.

o Motivation: They must be motivated to imitate the behavior, often by expected

rewards.

• Example: A consumer sees a celebrity using a skincare product and buys it to achieve similar
results.

• Application: Influencer marketing, product demos, testimonial ads, and lifestyle portrayals
are common forms of modeling.

Memory: Memory plays a vital role in learning and brand recall. It involves three stages:

• Encoding: Information is perceived and processed.

• Storage: Information is retained over time.

• Retrieval: Information is recalled when needed (e.g., during a purchase decision).

Types of Memory:

• Sensory Memory: Temporary storage of sensory data (e.g., smell of a bakery).

• Short-Term Memory: Limited capacity; information is held briefly and can be improved
through chunking.

• Long-Term Memory: Permanent storage achieved through rehearsal and association (e.g.,
brand slogans and jingles).

Marketing Implications:

• Frequent exposure and repetition improve retention.

• Emotional appeals, visuals, and audio (e.g., jingles) aid encoding.

• Strong branding elements (color, logo, mascot) enhance memory cues.

• Associative learning links product to positive experiences, increasing likelihood of recall at

point of purchase.

3. Motivation and Involvement (Source: need and motivation.pdf)

 Motivation: Motivation is the internal drive that compels individuals to take action to fulfill
unmet needs. It initiates goal-oriented behavior that reduces tension caused by need arousal.

Components of Motivation:

• Need: A deficiency that creates tension.

• Drive: The aroused energy or tension to act.

• Goal: The desired end-state or objective.

• Tension Reduction: Satisfaction achieved when the goal is met.

Types of Needs:

• Biogenic Needs: Basic physiological necessities like food, water, air.

• Psychogenic Needs: Social and psychological desires (e.g., power, affiliation).

• Utilitarian Needs: Functional and practical (e.g., efficiency, durability).

• Hedonic Needs: Emotional, sensory, or experiential (e.g., excitement, pleasure).

Theories of Motivation:

1. Instinct Theory:

• Behavior is driven by biological instincts. Now considered outdated due to its lack of
flexibility.

2. Drive Theory:

• Behavior arises from internal tension states caused by unmet biological needs. Individuals
seek to restore balance (homeostasis).

3. Expectancy Theory:

• Focuses on cognitive expectations. Individuals choose behaviors that they believe will yield
the most favorable outcome.

Maslow’s Hierarchy of Needs: A motivational theory that arranges needs in a five-tier

pyramid:

1. Physiological: Food, water, sleep

2. Safety: Security, protection, stability (e.g., insurance)

3. Social: Love, belonging, relationships (e.g., grooming products, social media)

4. Esteem: Status, prestige, self-respect (e.g., luxury brands)

5. Self-Actualization: Self-growth, purpose, and fulfillment (e.g., education, travel)

Motivational Conflicts:

• Approach–Approach: Choosing between two desirable options (e.g., two appealing brands).

• Approach–Avoidance: One option has both positive and negative aspects (e.g., tasty but
unhealthy food).
 • Avoidance–Avoidance: Choosing between two undesirable outcomes (e.g., repairing old car
vs. buying expensive new one).

Involvement: Involvement is the degree of personal relevance or interest a consumer

perceives in a product, message, or decision.

Types of Involvement:

• High Involvement: Involves significant risk, time, or emotional investment (e.g., cars, homes,
laptops).

• Low Involvement: Routine purchases with minimal effort (e.g., soap, pens).

• Purchase Involvement: Concern with the act of buying.

• Message Involvement: Engagement with marketing communication (e.g., interactive ads).

• Ego Involvement: Products tied to one's self-concept or identity.

Strategies to Increase Involvement:

• Use emotional storytelling to evoke empathy or inspiration.

• Employ celebrity or influencer endorsements to boost attention and trust.

• Allow personalization/customization (e.g., Nike ID shoes).

• Launch interactive campaigns or contests to encourage participation.

• Emphasize social or personal relevance in advertising (e.g., eco-friendly packaging, cause

marketing).

Here's a detailed and exam-ready explanation of the remaining topic from your syllabus:

Attitudes in Consumer Behavior

(Source-integrated: textbook theory + PDF-based context)

1. Characteristics of Attitudes

Attitudes are learned tendencies to evaluate things in a consistent way—favorable or

unfavorable. In consumer behavior, attitudes influence brand choice, product preference, and
shopping habits.

Key Characteristics:

1. Learned: Formed through personal experience, marketing messages, and social influence.

2. Enduring: Relatively stable over time but can change with persuasive effort.

3. Consistent: Generally consistent with behavior, though not always perfectly aligned.

4. Targeted: Directed toward specific objects (product, brand, service, etc.).

 5. Multidimensional: Consist of cognitive (beliefs), affective (feelings), and behavioral
(intentions) components.

2. Functions of Attitudes

Attitudes serve different purposes for individuals, helping them deal with their environment
and decisions:

1. Utilitarian Function:

o Helps consumers seek rewards and avoid punishments.

o Example: Choosing a detergent that cleans better and smells nice.

2. Ego-Defensive Function:

o Protects self-image from internal conflicts or external threats.

o Example: Buying branded clothes to avoid criticism or feel socially accepted.

3. Value-Expressive Function:

o Allows expression of personal values and identity.

o Example: Buying cruelty-free or eco-friendly products.

4. Knowledge Function:

o Helps simplify decision-making by categorizing products or brands.

o Example: Believing that "organic = healthier" saves evaluation time.

3. Sources of Attitudes

Attitudes are formed through different inputs that shape a consumer’s perception and
response.

1. Personal Experience:

o Direct interaction with a product or service.

o Example: Tasting a delicious snack builds a positive attitude.

2. Family and Peer Groups:

o Especially influential in early life.

o Example: Using the same toothpaste brand your parents prefer.

3. Marketing Communications:

o Advertisements, influencers, celebrity endorsements.

o Example: Seeing a celebrity use a product can create a positive attitude.

4. Cultural Influences:
 o Social norms, values, and traditions.

o Example: Preferring certain food brands based on cultural taste patterns.

5. Media and Digital Platforms:

o Online reviews, social media, blog posts, and forums.

o Example: Positive YouTube product reviews can change or build attitudes.

4. Theories and Models of Attitude

A. ABC Model of Attitude (Tri-Component Model)

This is the most widely used model in consumer behavior:

• Affective (Feelings): Emotional response or feeling toward a brand or product.

o "I love the design of this phone."

• Behavioral (Intentions): The intention to act in a certain way.

o "I will buy this phone."

• Cognitive (Beliefs): Beliefs or knowledge about the product.

o "This phone has a great camera and long battery life."

B. Multi-Attribute Attitude Model (Fishbein Model)

Evaluates products/brands based on multiple attributes.

• Consumers form attitudes based on:

1. Belief about whether a brand has certain attributes.

2. Evaluation (importance) of those attributes.

Formulaic Insight: Attitude = ∑ (belief strength × evaluation score)

Example: If a consumer highly values "battery life" and believes Brand A scores high on that,
their attitude toward Brand A is more favorable.

C. Cognitive Dissonance Theory

• Explains post-purchase discomfort due to inconsistency between beliefs and actions.

• Consumers may change their attitude to justify the decision and reduce discomfort.

Example: "This phone is expensive... but the features justify the cost."

D. Theory of Planned Behavior (Ajzen)

An extension of the Theory of Reasoned Action.

• Attitude toward the behavior

• Subjective norms (peer pressure/social approval)

• Perceived behavioral control (ease/difficulty)

 These three influence intention, which in turn predicts behavior.

4. Consumer Decision Processes (Source: Unit 12, 13, 14, and 15 PDFs)

A consumer decision process consists of three key phases: pre-purchase, purchase, and post-
purchase. Each stage includes cognitive and emotional evaluations, influenced by internal factors
(motivation, attitudes) and external factors (marketing, environment).

A. Pre-Purchase Process: Information Processing

Information processing refers to how consumers perceive, interpret, and store marketing
stimuli, shaping their buying decisions.

1. Exposure:

o Occurs when consumers come into contact with a stimulus (e.g., ads, banners,
product displays).

o Due to overload of sensory input, consumers are exposed to only a fraction of

available stimuli.

o Selective exposure is common—consumers tend to notice messages relevant to

current needs.

2. Attention:

o The degree to which consumers focus on certain stimuli.

o Grabbing attention requires creativity (e.g., humor, surprise, jingles, celebrities).

o Techniques like contrast, novelty, and size are used to enhance visibility.

3. Comprehension:

o The process of interpreting a message using existing knowledge, culture, and

language.

o Influenced by brand familiarity and societal values (e.g., Patanjali associated with
purity due to Ayurveda).

4. Acceptance (Yielding):

o Occurs when the consumer agrees with or absorbs the marketer’s message.

o Influenced by source credibility, brand trust, and relevance.

o Resistance may occur due to conflicting beliefs or controversial content.

5. Retention:

o Information is stored in memory for future reference.

o Aided by repetition, emotional appeal, and strong brand symbols.

B. Purchase Process: Consumer Decision Rules

 Consumers apply various heuristics or decision rules to evaluate alternatives and make
purchase choices.

1. Extended Problem Solving (EPS):

o High involvement, detailed evaluation (e.g., buying a house or car).

2. Limited Problem Solving (LPS):

o Moderate involvement, use of basic heuristics (e.g., electronics, apparel).

3. Routine Response Behavior (RRB):

o Low involvement, habitual decisions (e.g., toothpaste, milk).

Decision Rules (Choice Heuristics):

1. Conjunctive Rule:

o Minimum threshold for each attribute; brand must meet all to be considered.

2. Disjunctive Rule:

o Select brand with the highest score in any single important attribute.

3. Lexicographic Rule:

o Rank attributes by importance and choose the best on the most important attribute.

4. Elimination by Aspects:

o Drop options that don’t meet criteria one by one.

5. Compensatory Rule:

o Allows trade-offs; a high score in one area compensates for a low score in another.

6. Affect Referral Rule:

o Based on emotional response or brand familiarity rather than detailed evaluation.

C. Post-Purchase Process

This stage evaluates whether the purchase met expectations and influences future behavior.

1. Satisfaction:

o Occurs when product meets or exceeds expectations.

o Leads to loyalty, repeat purchase, and positive word-of-mouth.

2. Dissatisfaction:

o Arises when product underperforms.

o Leads to complaints, switching, or negative word-of-mouth.

3. Cognitive Dissonance:

o Post-purchase doubt; common in high-involvement purchases.

 o Marketers reduce it with warranties, return policies, and reassurance.

4. Product Use and Disposal:

o Marketers need to understand how consumers use and dispose of products (e.g.,
repurposing, recycling).

5. Repeat Purchase Behavior:

o A strong indicator of brand loyalty.

o Influenced by prior satisfaction and overall brand experience.

Consumer Behavior Models

1. Howard-Sheth Model

• Comprehensive model of decision-making under limited information.

• Involves:

o Input variables: Marketing messages, social stimuli.

o Perceptual and learning constructs: Psychological processes like attention,

motivation.

o Output: Brand choice, attitude formation.

o Exogenous variables: Personality, culture, and social influences.

• Suitable for complex, rational buying (e.g., electronics, appliances).

2. Black Box Model

• Simplistic yet powerful model focusing on the stimulus-response relationship.

• Structure:

o Input: Marketing mix (4Ps), environmental factors.

o Black Box: Consumer characteristics + decision process (internal unknowns).

o Output: Buying response (choice, timing, quantity).

• Helps marketers assess impact of external stimuli even without fully knowing internal
thought processes.

3. Economic Model

• Based on the assumption of rational consumers maximizing utility.

• Consumers compare cost vs benefit, and make choices that offer maximum value.

• Assumptions:

o Perfect information

o Rationality

o Budget constraints
 • Criticism:

o Ignores emotional, psychological, and social influences

o Works better for commodities, less effective in real-life behavior

These models, combined, help marketers predict, influence, and evaluate consumer
decision-making in different contexts and product categories.

Unit 5:

5. Customer Relationship Management (CRM) and Consumer Behavior (Source: Extended

theory + case references)

Customer Relationship Management (CRM) refers to strategies, technologies, and practices

used by firms to manage and analyze customer interactions throughout the customer lifecycle,
aiming to improve relationships and drive customer loyalty.

CRM and Consumer Behavior:

• CRM leverages insights from consumer behavior to tailor interactions and build long-term
relationships.

• It helps track buying habits, preferences, and feedback to offer personalized experiences.

• Consumer data is used to segment markets, predict needs, and improve satisfaction.

• Example: Amazon uses browsing and purchasing data to recommend personalized product
options.

Consumer Roles in CRM:

1. User – Uses the product or service.

2. Payer – Makes the payment (may differ from the user).

3. Buyer – Decides on the purchase.

4. Influencer – Affects the decision (e.g., kids influencing toy purchases).

5. Gatekeeper – Controls access to information (e.g., receptionist deciding which brand info
reaches the boss).

CRM identifies and targets each role to create effective strategies.

Market Values and CRM:

• CRM supports the creation of customer-perceived value, not just product utility.

• Core values driving CRM strategies:

1. Trust: Built through consistent service.

2. Commitment: Developed via loyalty programs, regular interaction.

3. Customization: Personalization based on consumer behavior.

4. Retention: Focus on long-term customer profitability, not just transactions.

 • CRM integrates market values into consumer communication (e.g., sustainability, ethics,
affordability).

Case Study Example: Starbucks

• Uses its loyalty app to collect consumer behavior data.

• Sends personalized offers based on time, day, and drink preferences.

• Rewards high-frequency users with exclusive offers and birthday gifts.

• This CRM system helped Starbucks achieve higher customer retention and satisfaction.

Consumer Research: Methods and Techniques Consumer research is the systematic

collection and analysis of data about consumers’ attitudes, preferences, and behaviors. It helps
marketers understand how and why consumers make purchase decisions.

Key Research Methods:

1. Primary Research – Directly collected data

o Surveys/Questionnaires – Quantitative data, large sample

o Interviews – In-depth qualitative insights

o Focus Groups – Group discussion on a product/brand

o Observational Research – Studying consumer behavior in natural settings (e.g., retail

store cameras)

o Experiments/Test Marketing – Controlled testing of marketing variables

2. Secondary Research – Uses existing data (e.g., industry reports, academic journals,
government publications)

3. Ethnographic Research – Observing consumers in real-life contexts, such as home, shopping

or work.

4. Online Research – Using digital tools like web analytics, social media listening, and online
surveys.

Qualitative vs Quantitative Methods:

• Qualitative: In-depth understanding (interviews, focus groups)

• Quantitative: Numerical insights (surveys, experiments)

Reliability and Validity in Consumer Research:

• Reliability: The consistency of results over time or across researchers. A reliable tool yields
similar results if repeated.

o Example: A product satisfaction survey gives consistent results over months.

• Validity: The accuracy of the measurement—whether the tool measures what it intends to
measure.
 o Example: A customer loyalty scale must actually capture long-term engagement, not
just recent purchases.

Generalization:

• Refers to how well research findings can be applied to a broader population.

• Depends on sample size, diversity, and method of selection.

• Marketers must ensure the research findings are not limited to a niche group unless
intentionally focused.

New Developments in Consumer Research:

1. Neuromarketing:

o Uses neuroscience tools like EEG, fMRI to study brain response to marketing stimuli.

o Tracks emotional and subconscious reactions.

2. AI & Machine Learning in Research:

o Predictive analytics to understand future behavior.

o Chatbots for automated consumer feedback collection.

3. Real-Time Analytics:

o Web and app behavior tracking to analyze browsing patterns.

o Used in dynamic pricing, retargeting ads.

4. Social Media Listening Tools:

o Scrape consumer opinions from platforms like Twitter, Instagram, and YouTube.

o Detect emerging trends, complaints, and preferences.

5. Sentiment Analysis:

o AI-based text analysis of customer reviews, comments, and feedback.

o Helps assess brand perception and emotional resonance.

6. Mobile Ethnography:

o Mobile apps used by participants to record their real-time experiences.

o Especially useful for studying Gen Z and digital natives.