Situation

Analysis
Module 2
Learning outcome- This module will enable the
learner to contrast the various consumer behavior
and apply that understanding to the communication
process
Perspective
on Consumer
Behavior w. r.
t. Advertising
AN OVERVIEW OF CONSUMER BEHAVIOR
 Consumer
behavior

• Consumer behavior can be defined as the

process and activities people
engage in when searching for,
selecting, purchasing, using,
evaluating, and disposing of
products and services so as
to satisfy their needs and desires.

This Photo by Unknown author is licensed under CC BY-SA.

• Marketers’ success in influencing purchase
behavior depends in large part on how well
they understand consumer behavior.
• They need to understand how consumers
gather information regarding various
alternatives and use this information to
select among competing brands, and
how they make purchase decisions.
• Where do they prefer to buy a
product?
• How are they influenced by marketing
stimuli at the point of purchase?
• Marketers also need to understand how
the consumer decision process and
reasons for purchase vary among
different types of customers.
Model of Consumer Behaviour
(Stimulus-Response Model)
Factors influencing Buying behavior and
communication

PERSONAL
CULTURAL SOCIAL •AGE AND LIFE PSYCHOLOGICAL
CYCLE STAGE • MOTIVATION
•SOCIAL GROUPS • OCCUPATION •PERCEPTION
• REFERENCE
• CULTURE BUYER
GROUP •ECONOMIC •LEARNING
CIRCUMSTANCES • MEMORY
• SUBCULTURE
• FAMILY • LIFESTYLE
•BELIEFS AND
•ROLES AND •PERSONALITY ATTITUDES
• SOCIAL CLASS STATUSES AND SELF-
CONCEPT
A Basic Model of Consumer Decision Making
Consumer psychology is a specialty area that studies how our
thoughts, beliefs, feelings, and perceptions influence how we buy
and relate to goods and services.

Philip Kotler defines a ‘motive’ as ‘a need that is sufficiently

pressing to direct the person to seek satisfaction.’

Philip Kotler defines ‘perception’ as the process by which people

select, organize, and interpret information to form a meaningful
picture of the world from three perceptual processes, namely
selective attention, selective distortion, and selective retention.

According to Kotler, attitudes describe a person’s relatively

consistent evaluations, feelings, and tendencies toward an object or
idea.

According to Philip Kotler, ‘learning’ refers to the changes in an

individual’s behavior arising from experience and occurs through
interplay of drives, stimuli, cues, responses, and reinforcement.
Problem Recognition
 Problem Recognition
Problem recognition, which occurs when the consumer perceives a need and becomes motivated to
solve the problem

Problem recognition is caused by a difference between the consumer’s ideal state and actual state.

A discrepancy exists between what the consumer wants the situation to be like and what the
situation is really like.

(Note that problem does not always imply a negative state. A goal exists for the consumer, and this
goal may be the attainment of a more positive situation.)
Sources of Problem
Recognition

• Out of Stock
• Dissatisfaction
• New Needs/Wants
• Related Products/Purchases
• Marketer-Induced Problem
Recognition
• New Products
• Out of Stock Problem recognition occurs when consumers use their existing supply of a product and
must replenish their stock. The purchase decision is usually simple and routine and is often resolved by
choosing a familiar brand or one to which the consumer feels loyal.
• Dissatisfaction Problem recognition is created by the consumer’s dissatisfaction with the current state of
affairs and/or the product or service being used. For example, a consumer may think her snow boots are
no longer comfortable or stylish enough. Advertising may be used to help consumers recognize when
they have a problem and/or need to make a purchase.
• New Needs/Wants Changes in consumers’ lives often result in new needs and wants. For example,
changes in one’s financial situation, employment status, or lifestyle may create new needs and trigger
problem recognition. Not all product purchases are based on needs. Some products or services sought by
consumers are not essential but are nonetheless desired. A want is a desire for something one does not
have. Many products sold to consumers satisfy their wants rather than their basic needs.
• Related Products/Purchases Problem recognition can also be stimulated by the purchase of a product.
For example, the purchase of a new iPod may lead to the recognition of a need for accessories, such as a
dock, attachment for the car, or a carrying case. The purchase of a personal computer may prompt the
need for software programs, upgrades, printers, and so on.
• Marketer-Induced Problem Recognition Another source of problem recognition is marketers’ actions
that encourage consumers not to be content with their current state or situation. Ads for personal
hygiene products such as mouthwash, deodorant, and foot sprays may be designed to create insecurities
that consumers can resolve through the use of these products. Marketers change fashions and clothing
designs and create perceptions among consumers that their wardrobes are out of style.
 This Photo by Unknown author is licensed under CC BY-SA-NC.

Examining Consumer Motivations

To better understand the reasons underlying consumer purchases, marketers devote
considerable attention to examining motives—that is, those factors that compel a
consumer to take a particular action.
Maslow’s Hierarchy of Needs
Information
Search
• The initial search effort often consists of an attempt to scan
information stored in memory to recall past experiences and/or
knowledge regarding various purchase alternatives. This information
retrieval is referred to as internal search
• If the internal search does not yield enough information, the consumer
will seek additional information by engaging in external search.
External sources of information include:
• Personal sources, such as friends, relatives, or co-workers.
• Marketer-controlled (commercial) sources, such as information
from advertising, salespeople, or point-of-purchase displays and
the Internet.
• Public sources, including articles in magazines or newspapers and
reports on TV and so on.
• Personal experience, such as actually handling, examining, or
testing the product.
• Determining how much and which sources of
external information to use involves several factors,
including the importance of the purchase decision,
the effort needed to acquire information, the
amount of past experience relevant, the degree
of perceived risk associated with the purchase, and
the time available.
• For example, the selection of a movie to see on a
Friday night might entail simply talking to a friend or
checking the movie guide on the Internet.
• A more complex purchase such as a new car might
use a number of information sources—perhaps a
review of carwale, cardekho or Consumer Reports;
discussion with family members and friends;
conducting an online search; and test-driving of
cars.
• At this point in the purchase decision, the
information-providing aspects of advertising are
extremely important.
Perception process
Perception
• Marketers are particularly interested in
1. how consumers sense external information,
2. how they select and attend to various sources of information,
and
3. how this information is interpreted and given meaning.
• These processes are all part of perception, the process by which an
individual receives, selects, organizes, and interprets information to
create a meaningful picture of the world.
• Perception is an individual process; it depends on internal factors
such as a person’s beliefs, experiences, needs, moods, and
expectations.
• The perceptual process is also influenced by the characteristics of a
stimulus (such as its size, color, and intensity) and the context in
which it is seen or heard.
• Sensation is the immediate, direct response of the senses
(taste, smell, sight, touch, and hearing) to a stimulus such as an ad,
package, brand name, or point-of-purchase display.
• Perception involves three distinct processes
• Sensation is the immediate, direct response of the
senses (taste, smell, sight, touch, and hearing) to a
stimulus such as an ad, package, brand name, or
point-of-purchase display.
• Selecting Information- whether marketing stimuli This Photo by Unknown author is licensed under CC BY-NC.

will be attended to and how they will be interpreted

include internal psychological factors such as the
consumer’s personality, needs, motives,
expectations, and experiences.
• Interpreting the Information Once a consumer
selects and attends to a stimulus, the perceptual
process focuses on organizing, categorizing, and
interpreting the incoming information.
The Selective Perception Process

• Selective perception may occur at the exposure, attention, comprehension, or retention stage of
perception.
• Selective exposure occurs as consumers choose whether or not to make themselves available to
information. For example, a viewer of a television show may change channels or leave the room during
commercial breaks.
• Selective attention occurs when the consumer chooses to focus attention on certain stimuli while excluding
others.
• selective comprehension, interpreting information on the basis of their own attitudes, beliefs, motives, and
experiences.
• selective retention, which means consumers do not remember all the information they see, hear, or read
even after attending to and comprehending it. Advertisers attempt to make sure information will be
retained in the consumer’s memory so that it will be available when it is time to make a purchase.
• Mnemonics such as symbols, rhymes, associations, and images that assist in the learning and memory
process are helpful.
Subliminal Perception
• One controversial tactic advertisers have been accused of using is
appealing to consumers’ subconscious.
• Subliminal perception refers to the ability to perceive a stimulus that
is below the level of conscious awareness.
• Psychologists generally agree it is possible to perceive things without
being consciously aware of them.
• BJP used subliminal advertising in one of it's
government scheme's ad film.
• In the advertisement commercial a school girl
is seen going through the pages of a text book
where she runs her hands though the louts
symbol which is an electoral symbol of BJP.
• To shape the public opinion of voters, political
parties often use subliminal programming to
create desired response from voters.
• In another such case, BJP was accused of using
subliminal marketing where they opted to have
lotus as logo for BRICS India summit.
Alternative Evaluation
• In this stage, the consumer compares the various brands or products and
services he or she has identified
• The evoked set is generally only a subset of all the brands of which the
consumer is aware. The consumer reduces the number of brands to be
reviewed during the alternative evaluation stage to a manageable level.
• Evaluative Criteria and Consequences
• Functional consequences are concrete outcomes of product or service usage
that are tangible and directly experienced by consumers. The taste of a soft
drink or a potato chip, the acceleration of a car, and the speed of the Internet
service provider are examples of functional consequences.
• Psychosocial consequences are abstract outcomes that are more intangible,
subjective, and personal, such as how a product makes you feel or how you
think others will view you for purchasing or using it.
• Product/service attributes and the consequences or outcomes
consumers think they will experience from a particular brand are very
important, for they are often the basis on which consumers form
attitudes and purchase intentions and decide among various choice
alternatives.
• Two subprocesses are very important during the alternative
evaluation stage:
1. the process by which consumer attitudes are created, reinforced, and
changed and
2. the decision rules or integration strategies consumers use to compare
brands and make purchase decisions.
 Learning
Learning- changes in an individual’s behavior arising from experience and occurs through
interplay of:
•Drives
•Stimuli
•Cues
•Responses
•Reinforcement

A drive can be defined as ‘an innate, biologically determined urge to attain a goal or satisfy a
need.’ Drive for buying your favorite brand of instant noodles in our example is hunger and psychological
tiredness.
Stimulus is ‘a thing that arouses activity or energy in someone or something; a spur or incentive.’
Your main stimulus for choosing to buy the same brand of instant noodles as always is the innate pleasure you
receive by eating it.
Stimuli can be both internal and external. While internal stimuli include thirst and hunger, external
stimuli include advertisements, offers, word-of-mouth, etc.
Cues are the stimuli that suggest a specific way to satisfy your motivations. Your cue to repeat
purchase can be the advertisements you see on television or the happiness you want to experience by repeating
purchase.
A response is the consumer’s reaction to a cue. Consumers rely heavily on their previous
experiences with the product or service to decide their response. Your response to the cue is going to the
supermarket to repeat your purchase of the instant noodles.
The last factor is reinforcement. Reinforcement is ‘the reward - the pleasure, enjoyment and
benefits - that the consumer receives after buying and using a product or service.’ Your reinforcement
is the gratification you receive from consuming your favorite brand of instant noodles.
Beliefs and attitudes

Belief- a descriptive thought that a person has about something based on:
•Knowledge
•Opinion
•Faith

Since you are a responsible consumer, you obviously don’t only depend on
advertisements and offers to incentivise you to repeat your purchases.

You must also depend on knowledge you have about your favorite brand of instant noodles,
which might include nutritional information, sustainability of packaging, etc.
You would also hold an opinion that this specific brand of instant noodles is better than its
alternatives because of the price point, portion, packaging, etc. You also have faith that this
brand of instant noodles will fulfill your needs the next time you purchase it just as well as it did
the last time.
Attitudes
Represents an individual’s overall feelings toward or evaluation of an object

Attitudes are important to marketers because they theoretically summarize a consumer’s evaluation
of an object (or brand or company) and represent positive or negative feelings and behavioral
tendencies.

Advertising and promotion are used to create favorable attitudes toward new products/services or
brands, reinforce existing favorable attitudes, and/or change negative attitudes.
Attitude Change Strategies
• Increasing or changing the strength or belief rating of a brand on an
important attribute (AT&T has the widest cell phone network).
• Changing consumers’ perceptions of the importance or value of an
attribute (Michelin tires emphasizing higher gas mileage and safety).
• Adding a new attribute to the attitude formation process (the fact
that the product is environmentally friendly).
• Changing perceptions of belief ratings for a competing brand (GM
showing their cars can compete with anyone’s).
Integration Processes and Decision
Rules
• Another important aspect of the alternative evaluation stage is the
way consumers combine information about the characteristics of
brands to arrive at a purchase decision.
• Integration processes are the way product knowledge, meanings, and
beliefs are combined to evaluate two or more alternatives.
• Analysis of the integration process focuses on the different types of
decision rules or strategies consumers use to decide among purchase
alternatives.
• Sometimes consumers make their purchase decisions using more
simplified decision rules known as heuristics. For familiar products
that are purchased frequently, consumers may use price-based
heuristics (buy the least expensive brand) or promotion-based
heuristics (choose the brand for which I can get a price reduction
through a coupon, rebate, or special deal).
• One type of heuristic is the affect referral decision rule, in which
consumers make a selection on the basis of an overall impression or
summary evaluation of the various alternatives under consideration.
• This decision rule suggests that consumers have affective impressions
of brands stored in memory that can be accessed at the time of
purchase.
• Market leaders, whose products enjoy strong overall brand images,
often use ads that promote the brand by appealing to affect.
Purchase Decision

• At some point in the buying process, the consumer must stop searching
for and evaluating information about alternative brands in the evoked
set and make a purchase decision. As an outcome of the alternative
evaluation stage, the consumer may develop a purchase intention or
predisposition to buy a certain brand.
• Postpurchase Evaluation
• Another possible outcome of a purchase is cognitive dissonance, a feeling of
psychological tension or postpurchase doubt that a consumer experiences after
making a difficult purchase choice.
• Dissonance is more likely to occur in important decisions where the consumer
must choose among close alternatives (especially if the unchosen alternative
has unique or desirable features that the selected alternative does not have)
• Consumers experiencing cognitive dissonance may use a number of
strategies to attempt to reduce it.
• They may seek out reassurance and opinions from others to confirm
the wisdom of their purchase decision, lower their attitudes or
opinions of the unchosen alternative, deny or distort any information
that does not support the choice they made, or look for information
that does support their choice.
• An important source of supportive information is advertising as
consumers tend to be more attentive to advertising for the brand they
have chosen.
• Thus, it may be important for companies to advertise to reinforce
consumer decisions to purchase their brands.
 Henry
Assael 4
buying
behaviour
• Complex buying behavior –Consumers engage in complex buying
behavior when they are highly involved in a purchase and aware of
significant differences among brands. This is usally the case when the
product is expensive, bought infrequently, risky and highly
selfexpressive. The marketer needs to differentiate the brand‘s
features, use print media to describe the brand‘s benefits and
motivate store sales personnel and the buyer‘s acquaintances to
influence the final brand choice. For eg. Automobile, two-wheeler,
consumer durable.
• Dissonance-reducing buying behavior –Sometimes the consumer is
highly involved in a purchase but sees little difference in the brands.
The high involvement is based on the fact that the purchase is
expensive, infrequent and risky. For example, carpet buying.
• Habitual Buying Behavior –Many products are bought under conditions of
low consumer involvement and the absence of significant brand differences.
Consider salt. Consumers have little involvement in the product category .
They go to the store and reach for the brand. If they keep reaching for the
same brand, it is out of habit, not strong brand loyalty. It happens with most
low-cost, frequently purchased products. Marketers find it effective to use
ad repetition, price and sales promotion to stimulate product trial.
• Variety-seeking buying behavior –Some buying situations are characterised
by low consumer involvement but significant brand differences. Here
consumers often do a lot of brand switching. Think about cookies. The
consumer may reach for another brand out of boredom or a wish for a
different taste. The marketer will try to encourage habitual buying
behavior by dominating the shelf space, avoiding out of stock conditions,
sponsoring frequent reminder advertising, offering lower prices, deals,
coupons and free samples.
 Four Types of Buying Behavior
(Henry Assael, 1987)

High Involvement Low Involvement

Complex buying behavior Variety-seeking buying behavior

Significant Differences (Learn-feel-do) (Learn-do-feel )
Between Brands

Dissonance-reducing buying Habitual buying behavior

Few Differences behavior (Learn-do-feel )
Between Brands ( Do-feel-learn)
 Understand
ing
communica
tion
process for
advertising

This Photo by Unknown author is licensed under CC BY.

• Communication has been variously defined as the passing of
information, the exchange of ideas, or the process of establishing a
commonness or oneness of thought between a sender and a
receiver.
• These definitions suggest that for communication to occur, there must
be some common thinking between two parties and information
must be passed from one person to another (or from one group to
another).
A Model of the Communication
Process
Source Encoding
• The sender, or source, of a communication is the person or organization that has
information to share with another person or group of people.
• The source may be an individual (say, a salesperson or hired spokesperson, such as a celebrity,
who appears in a company’s advertisements) or a nonpersonal entity (such as the corporation or
organization itself).
• For example, the source of many ads is the company, since no specific spokesperson or source is
shown. However, many companies use a spokesperson to appear in their ads and to deliver their
advertising messages.
• In some cases, a popular spokesperson can play a very important role in attracting attention to a
company’s advertising and delivering the message, as well as influencing how well it is received
by the target audience.
• For example, the Citizen Watch Company has featured a variety of rising sports stars as
spokespersons in the “Unstoppable” campaign for its Eco-Drive watches which was first launched
in 2003.
• The communication process begins when the source selects words, symbols, pictures, and the
like, to represent the message that will be delivered to the receiver(s). This process, known as
encoding, involves putting thoughts, ideas, or information into a symbolic form.
Message
• The encoding process leads to development of a message that
contains the information or meaning the source hopes to convey.
• The message may be verbal or nonverbal, oral or written, or
symbolic.
• Messages must be put into a transmittable form that is appropriate
for the channel of communication being used.
• In advertising, this may range from simply writing some words or copy
that will be read as a radio message to producing an expensive
television commercial.
• For many products, it is not the actual words of the message that
determine its communication effectiveness but rather the
impression or image the ad creates.
Channel
• The channel is the method by which the communication travels from the source
or sender to the receiver.
• At the broadest level, channels of communication are of two types, personal and
nonpersonal.
• Personal channels of communication are direct interpersonal (face-to-face)
contact with target individuals or groups. Salespeople serve as personal channels
of communication when they deliver their sales message to a buyer or potential
customer.
• Social channels of communication such as friends, neighbors, associates, co-
workers, or family members are also personal channels.
• They often represent word-of mouth communication, a powerful source of
information for consumers.
Receiver/Decoding
• The receiver is the person(s) with whom the sender shares thoughts or
information.
• Generally, receivers are the consumers in the target market or audience
who read, hear, and/or see the marketer’s message and decode it.
• Decoding is the process of transforming the sender’s message back into
thought.
• This process is heavily influenced by the receiver’s frame of reference or
field of experience, which refers to the experiences, perceptions,
attitudes, and values he or she brings to the communication situation
• For effective communication to occur, the message decoding process of
the receiver must match the encoding of the sender.
• Simply put, this means the receiver understands and correctly interprets
what the source is trying to communicate.
Noise
• Throughout the communication process, the message is subject to extraneous factors
that can distort or interfere with its reception.
• This unplanned distortion or interference is known as noise.
• Errors or problems that occur in the encoding of the message, distortion in a radio or
television signal, or distractions at the point of reception are examples of noise. When
you are watching your favorite commercial on TV and a problem occurs in the signal
transmission, it will obviously interfere with your reception, lessening the impact of
the commercial.
• Noise may also occur because the fields of experience of the sender and receiver don’t
overlap. Lack of common ground may result in improper encoding of the message—
using a sign, symbol, or words that are unfamiliar or have different meaning to the
receiver.
• The more common ground there is between the sender and the receiver, the less likely
it is this type of noise will occur.
Response/Feedback
• The receiver’s set of reactions after seeing, hearing, or reading the message is known
as a response.
• Receivers’ responses can range from non-observable actions such as storing
information in memory to immediate action such as dialing a toll-free number to
order a product advertised on television.
• Marketers are very interested in feedback, that part of the receiver’s response that is
communicated back to the sender.
• Feedback, which may take a variety of forms, closes the loop in the communications
flow and lets the sender monitor how the intended message is being decoded and
received.
• For example, in a personal-selling situation, customers may pose questions, comments,
or objections or indicate their reactions through nonverbal responses such as gestures.
• While the ultimate form of feedback occurs through sales, it is often
hard to show a direct relationship between advertising and purchase
behavior. So marketers use other methods to obtain feedback, among
them customer inquiries, store visits, coupon redemptions, and reply
cards.
• Research-based feedback analyzes readership and recall of ads,
message comprehension, attitude change, and other forms of response.
• With this information, the advertiser can determine reasons for success
or failure in the communication process and make adjustments.