Sikkim Manipal University - MBA MK0011 Consumer Behaviour Semester: 3 - Assignment Set: 2

ASSIGNMENT-02 Name : Sanjeev Kaushik Registration No. : 571015350 Learning Center : Sidvin College, BSK, Bangalore Learning Center Code: 2744 Course : Master of Business Administration Subject : Consumer Behaviour Semester : III Module No. : MK0011 Date of submission : 18th Sep 2011 Marks awarded : ____________

Directorate of Distance Education Sikkim Manipal University II Floor, Syndicate House Manipal 576 104

Signature of Coordinator Signature of Center Signature of Evaluator

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Sikkim Manipal University - MBA MK0011 Consumer Behaviour Semester: 3 - Assignment Set: 2

Master of Business Administration-MBA Semester 3 MK0011 Consumer Behaviour - 4 Credits Assignment Set 2 Q.1 Explain the influences of social class and groups on consumer behaviour. Answer. Social class (also referred to as a social standing) means societal rank, which is ones position relative to others on one or more dimensions valued by society. Groups serve as one of the primary agents of consumer socialisation and can be influential enough to induce not only socially acceptable consumer behaviours but also socially unacceptable and even personally destructive behaviours. Social class can be broadly categorised into three categories as discussed in following subsections: Upper class The upper class of most societies is a varied group of individuals who include the aristocracy, the nouveau riche (the new social elite) and the upper-middle class. These consumers are likely to view themselves as intellectual, conservative/liberal, political and socially conscious. They tend to buy items that are known to be high-priced and can be publicly consumed or displayed such as expensive cars, watches and designer dresses. Upper class consumers are also more likely to engage in careful information search before making a purchase decision, are less inclined to view price as an indicator of quality and rely on actual product attributes. Middle class This class is composed of primarily white-collar workers at managerial levels;moderately successful professionals such as doctors, lawyers, professors; owners of medium sized businesses and graduates who are likely to reach occupational-statuslevels within a few years. The motivations of this class focus on achieving success intheir careers, achieving higher income levels and accomplishing advancement on thesocial ladder for themselves and their children. They tend to spend much of their disposable income on autos, clothing, household goods and vacations. In India, middleclass is the largest consuming class. Lower class They are poor people and generally represent a sizable population, particularly in the poorer developing countries. A large number of households in the poor class category live below the poverty line. The exact size of the population and the levels of income would vary from country to country. In some countries, they receive most of their income from illegal activities or from welfare. In some other countries, they represent farm workers, unorganised labour, unskilled workers and casual labour or domestic help. Their living conditions are bad; they are either illiterate or have had very little education. They are fatalistic in their outlook and their entire income is spent on food and shelter. Sources of influence on consumer behaviour can be described as marketer dominated or non-marketer dominated and as delivered by mass media or personally. Often a distinction is made between the terms group and reference group. A group is defined as two or more individuals who share a set of norms, values, or beliefs and have certain implicitly or explicitly defined relationships to one another such that their behaviours are interdependent. A reference group is one whose presumed perspectives or values are being used by an individual as the basis of her/his current behaviour. Sources of group influences are depicted in Figure 1.

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Sikkim Manipal University - MBA MK0011 Consumer Behaviour Semester: 3 - Assignment Set: 2

Figure 1: Sources of Influence

Q.2 Do you think culture plays a role in consumer decision making process or in their behaviour. Mention some instances where culture influences consume behaviour.

Answer. Culture influences consumers through the norms and values established by the society in which they live. It is the broadest environmental factor that influences consumer behaviour. Cultural values are enduring and any attempts to change them generally fail.
The study of culture is concerned with a comprehensive examination of factors, such as language, religion, knowledge, laws, art, music, work patterns, social customs, festivals and food, etc. of a society. In fact, culture includes everything that reflects its personality. Culture does not determine the nature or frequency of biological drives such as hunger or sex; it does influence if, when and how these drives will be gratified. The impact of culture is automatic and almost invisible and its influence on behaviour is usually taken for granted. Sub-cultures are cultures within different cultures. There are numerous values that differ across cultures and affect consumption behaviour. classification, which consists of three broad categories of cultural values: 1. Other-oriented 2. Environment-oriented 3. Self-oriented Their view is that the cultural values which have the most profound effect on consumer behaviour can be put under one of these three categories. Though individual values can Page 3

Sikkim Manipal University - MBA MK0011 Consumer Behaviour Semester: 3 - Assignment Set: 2

influence more than one, their foremost impact is generally in one of the three categories: Other-oriented values are those that represent a society's view of the proper relationships between individuals and groups within that society. For example, if a given society puts more value on collective activity, consumers will most likely tend to consult others for guidance in making a purchase decision and less likely to favour appeals promoting "individualism." Environment-oriented values set down directions concerning a society's relationship to its economic, technical and physical environment. For example, different types of marketing programmes would be appropriate for societies that stress risk-taking, problem-solving and performance-oriented approach to its environment; and the other that is fatalistic, security-oriented and status-oriented in its approach to environment. Self-oriented values are those that reflect the desirable goals and approaches, to life, of individual members of a society and have important implications for marketing. For instance, the acceptance and use of credit or loan facility is very much determined by how much a society values postponement versus immediate gratification of desires. Some instances where culture influences consume behaviour. Religious sub-cultures Religious groups can be regarded as sub-cultures because of traditions and customs that are tied to their beliefs and passed on from one generation to the next. The members of religious sub-cultures make purchases that are influenced by their religious identity, particularly products that are symbolically and ritualistically associated with the celebration of religious holidays, festivals, marriage and birth or death in family etc. For example, the bride in a hindu family is dressed in a traditional deep red dress; the bridegroom wears a sherwani, chooridar and dons a pagri. Consumption of meat, beef, pork and alcohol is also determined by ones religion. Sikh religion does not permit use of tobacco products and shaving of hair. Regional sub-cultures Distinct regional subcultures arise due to climatic conditions, the natural environment and resources, language and significant social and cultural events. Such groups can be identified as having distinct and homogenous needs, tastes, lifestyles and values. Anyone who has travelled across India would have probably noted many regional differences in consumers consumption behaviour, particularly dresses, food and drink. For example, South Indians prefer to drink coffee while most North Indians use tea. Dog meat is considered a delicacy in certain Eastern parts of India, which may shock consumers in other parts of the country. Given such clear differences in consumption patterns, marketers have realised that India is no more a single market for at least some product categories. It is more relevant for marketers to study and understand sub-cultures on a regional basis, particularly language, food habits, festivals, gift giving, customs, etc. Some major Indian sub-cultural groups include Punjabi, Gujarati, Marwari, Marathi, Tamil, Oriya and Bengali etc. Age sub-culture Marketers have attempted to identify age cohorts as sub-cultures because they produce unique shared values and behaviours. A generation or age cohort is a group of persons who have experienced a common social, political, historical and economic environment. Those who are over 55 years of age account for a substantial portion of population in India. They can be targeted with products like chyawanprash, retirement plans, ointments etc. Gender as sub-culture Page 4

Sikkim Manipal University - MBA MK0011 Consumer Behaviour Semester: 3 - Assignment Set: 2

In all societies, males and females are generally assigned certain characteristics and roles. Males are typically thought to be independent, aggressive, dominating and selfconfident in almost all societies. They are viewed as the bread earners. Females, on the other hand, are viewed as gentle, submissive, tender, compassionate, tactful and talkative. Their role is as homemakers with responsibility of taking care of children. The traits of femininity and masculinity represent the ends of a continuum and individuals have varying levels of each trait. Biological males tend to be toward the masculine end of the continuum and biological females towards the feminine end. Gender roles are the behaviours considered appropriate for males and females in a given society.

Q.3 Evaluate Howard Sheth model of consumer behaviour. Answer. Howard-Sheth Model (also called Machine Model) The Howard-Sheth Model represents a major revision of an earlier systematic effort to develop a comprehensive theory of buyer decision-making. This model depicts and creates a distinction among three stages of decision-making. 1. Extensive Problem Solving: This occurs when a consumer has little or no prior knowledge, and any beliefs about the brand do not exist and she/she has no specific brand preference. The consumer seeks information actively about several alternative brands in the category. 2. Limited problem solving: In this situation the consumer has some limited knowledge and beliefs about the available brands. Because of limited knowledge, she/he is not in a position to evaluate brand differences to establish a preference. The consumer seeks some comparative brand information, although the decision criteria are quite likely to be fairly established. 3. 3. Routinised response behaviour: This refers to a situation when the consumer has well-established knowledge and beliefs about the brand and other alternatives in the category and is predisposed to purchase a specific brand.

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Figure 2: Howard-Sheth Model The model has four major sets of variables: 1. Inputs 2. Perceptual and Learning Constructs 3. Outputs 4. External Variables (not shown in the Figure 2) Inputs These variables include three distinct types of information sources (stimuli) present in the consumer's environment: Significative stimuli represent the brand's physical attributes, the marketer provides the symbolic stimuli in the form of brand information and could be visual or verbal, and the third kind of information is furnished by consumer's social environment such as family, reference groups, and social class. All these three types of stimuli furnish information inputs to the potential consumer concerning the product category or the brand. Perceptual and learning constructs The central element in the Howard-Sheth Model includes psychological variables that are assumed to operate when the consumer is involved in decision-making process. These psychological variables are treated as simply ideas, and are not defined operationally or evaluated directly. Some of these variables are perceptual in nature and focus on how the consumer receives and processes information gained from input and other parts of the model. For instance, stimulus ambiguity occurs when the consumer is not sure about the meaning of information gained from the environment. Perceptual bias occurs in case the consumer distorts the received information so that it suits the consumers' established needs, wants, or experiences. Page 6

Sikkim Manipal University - MBA MK0011 Consumer Behaviour Semester: 3 - Assignment Set: 2

Learning constructs perform the function of consumer's concept formation and include her/his goals, information about the brands in the evoked set, criteria for evaluating alternatives, and intentions to buy. The proposed interaction (shown with arrows and solid and dotted lines) between various perceptual and learning variables and the variables in other segments of the model give the Howard-Sheth Model a distinct character. Outputs The model shows a series of outputs that are similar in name to some of the perceptual and learning construct variables that include attention, brand comprehension, attitudes, intentions, and finally the act of purchase. External variables These variables have not been shown in the Figure 2. These variables are not directly involved in the decision-making process. The relevant external variables include importance of the purchase, consumer's personality traits, time pressure and availability of funds. Q.4 a) Identify the different organisational buying roles with examples. b) What are the purchase and demand patterns observed in organisation buying behaviour?

Answer. Organisational Buying Roles Major task of an industrial marketer is to identify those individuals who are in any way involved in purchasing decision process. These decision making units are called buying centers. Buying centers can be an individual, a department or a group of individuals from different departments in the organizations. Buying center has common goals to achieve, which also includes sharing the risks arising from the purchase decision. Its not unusual to encounter groups consisting of 15 to 20 individuals as members of buying centers. These are informal, cross department decision-making units in which the primary objective is the acquisition, import and processing of relevant information. Buying centers play seven roles. Initiators: These are the people who request for something to be purchased. They may be users or others in the work organization. Users: They use the products thus, initiating the purchase process. They report on the product performance e.g. worker. Influencers: Individuals in the organization, influence the decision-making process by providing information on criteria for buying e.g. Research and Development specialists inside the organization and consultants outside the organization. Deciders: Organizational members with decision-making power who decide about the purchase e.g. engineers deciding specifications or vice-president (finance) who decides in favor of the purchase. Gatekeepers: People in the organization who have the power to prevent sellers or information from reaching the members of buying centers e.g. purchasing agents, receptionist, secretaries and telephone operators. Approvers: People in the organization who authorize the proposed actions of deciders or buyers. Buyers: These are the people who have formal authority to select the suppliers and arrange the purchase terms. Buyers help in product specifications, in selection of suppliers and negotiating purchases and include senior people in the purchase department.
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b) What are the purchase and demand patterns observed in organisation buying behaviour? Decision approach and purchase patterns Organisational approach to making purchases and their buying patterns are different compared to final consumers in many ways: 1. Formality: Since many organisational purchases are likely to be complex and technical and financial risks are considerably high, buying behaviour is much more complicated as compared to final consumers. Due to these reasons, there is greater formality in decision- making and often proposals, quotation requests and purchase contracts are involved. 2. Negotiations: In most cases of organisational buying, there are extensive negotiations between buyers and suppliers over a longer period of time. Some of the important reasons for lengthy negotiations include: (1) the product complexity requires that specifications must be carefully spelled and agreed upon (2) the order size tends to be large and purchase price is important and (3) usually many people are involved in reaching a final purchase decision. According to Paul A. Dion and Peter M. Banting, negotiations tend to be a cooperative process between buyers and suppliers. 3. Less Frequent Purchases: Organisations generally make purchases less frequently than do final consumers. Firms might buy capital equipment that will be used directly in the production process for a number of years. Similarly, computers, photocopying machines, printers etc., are infrequently purchased. Even office supplies consumed everyday are purchased at intervals of a month or more. Raw materials and component parts are used continuously in production and replaced frequently but contracts for the sale and supply of these items are likely to be long-term agreements that are negotiated every few years. 4. Reciprocity: Sometimes organisational buying transactions involve an arrangement in which two organisations agree to buy from each other. For instance, a computer software manufacturer might agree to buy computer hardware from a company that is buying its software and computer supplies. 5. Service: In many instances, organisational products must be customised for a specific organisational buyer. Product support activities, such as service, installation, technical assistance and spare parts are critical. Market structure and pattern of demand Business-to-business marketers should appreciate several distinguishing features related to market structure and demand of organisational buyers. Geographical concentration Compared to individual consumers, organisational buyers are generally more concentrated in certain geographic locations. For example, most IT-related companies are located in the southern states of India. Similarly, there is generally concentration of specific industries in different industrial areas specified by almost all the states in India. Fewer but larger buyers The number of organisational buyers is very small unlike individual consumers who are numerous. Organisations place purchase orders for raw materials and supplies etc. that involve substantial amounts of money. There are just a few manufacturers in the auto industry but they buy tyres that involve huge amounts of money. In the consumer market these companies face millions of vehicles needing tire replacements. Branded computer manufacturers are relatively few and buy Intel or AMD processors in large numbers. Independent assemblers of computers are numerous and buy few processors at a time. Derived demand Page 8

Sikkim Manipal University - MBA MK0011 Consumer Behaviour Semester: 3 - Assignment Set: 2

Organisational demand is derived demand because organisations purchase products to be used directly or indirectly, in the production of goods and services to satisfy consumers' demand. Consequently, the demand for products is derived from the demand for consumer products. For example, branded computer manufacturers have demand for processors and other hardware and software to produce home computers because there is demand for computers by consumers. If for any reason, consumer demand for computers takes a nose-dive, the demand for processors and other components from computer manufacturers is also likely to take a nose-dive. Demand is inelastic The demand for many organisational products is inelastic. This means that an increase or decrease in the price of a product will not significantly influence demand for the product. Total industry demand for goods and supplies that they use remains relatively unaffected by changes in price in the short run, unlike consumer demand that shows remarkable elasticity to price changes. For example, if the price for computer hard disks decreases, their demand is unlikely to increase. However, when car manufacturers reduce the price of their models, there is a spurt in sales and as the prices are raised, demand decreases. Joint demand In certain instances, organisational products can be used only in conjunction with other products. There would be joint demand when the sale of one product is dependent on the sale of another. For example, companies producing petroleum require additive products like octane and boron. If the company cannot obtain any one of the two products, it does not need others. Fluctuating demand Compared to consumer demand, organisational demand fluctuates widely. The demand by organisational buyers is closely related to the economic cycle. In case of economic slowdown or reverses, organisational buyers use up the existing inventories and postpone purchases. When the economy is buoyant, organisational buyers may build large inventories of raw material and spares, buy office equipment and other items.

Q.5 Discuss the different personality theories. Answer. Psychoanalytic theory Freuds psychoanalytic theory proposes that every individuals personality is the result of childhood conflicts. These conflicts are derived from three fundamental components of personality: Id, Ego and Superego. According to the theory, the id (or libido) is the source of an individuals strong basic drives and urges such as hunger, sex, aggression and self-preservation. The id operates on what is called the pleasure principle, that is, to seek immediate pleasure and avoid pain. The id is entirely unconscious and not fully capable of dealing with objective reality. Many of its impulses are not acceptable to the values of organised society. A newborn babys behaviour, for example, is governed totally by the id. The ego is the individuals conscious control. It comes into being because of the limitations of the id in dealing with the real world by developing individuals capabilities of realistic thinking and ability to deal suitably with her/his environment. Ego operates on what is called the reality principle. It is capable of postponing the gratification until that time when it will be suitably and effectively directed at attaining the goals of the id in a socially acceptable manner. Page 9

Sikkim Manipal University - MBA MK0011 Consumer Behaviour Semester: 3 - Assignment Set: 2

The superego constitutes the moral part of an individuals personality. It represents the ideal rather than the real, defines what is right and good and it influences the individual to strive for perfection. It operates in the unconscious and often represses certain behaviour that would otherwise occur based on the id, which could disrupt the social system. According to Freud, the ego manages the conflicting demands of the id and the superego. There are several themes based on psychoanalytic theory which are sometimes used by marketers in attempting to influence consumers such as fantasy, wish fulfillment, aggression and escape from lifes pressures (perfume, hair dye, skincare products, dresses, farm houses and motorcycles are some examples of product categories). Social/Cultural (Neo-freudian) theory Freuds understanding of personality focused mainly on observations of emotionally disturbed people. A number of Freuds foremost disciples, particularly Carl Jung and Alfred Adler, disagreed from his view of personality. They believed that social and cultural variables, rather than biological drives, are more important in the development of an individuals personality. They also believed that insights into personality development should also be based on normal persons functioning in their environment and not by focusing on observation of emotionally disturbed people alone. These social theorists, also referred as neo-Freudian school, viewed individuals as striving to win over the feelings of inferiority and searching for ways to gain love, security and relationships. 71 Carl Jung believed that an individuals culture created an accumulation of shared memories from the past such as caring and nurturing female, heroes and old wise men. He called these shared memories as archetypes. It is not unusual to see such archetypes in advertisements that strive to take advantage of positive shared meanings in a particular culture. For instance, a large number of ads show caring mother, devoted housewife, heroes with macho image, rishis and wise grandmother etc. Jung identified a number of personality types, such as sensing-thinking, sensing-feeling, intuiting-thinking and intuitive-feeling etc. 1. Sensing-thinking Personality: Individuals with this personality type make rational, objective decisions. They are logical and empirical in their approach, are inclined to be highly involved, extensive problem solving orientation, weigh economic considerations, are price sensitive and avoid any risks. They identify themselves with material objects or things and have short-term perspective in making decisions. 2. Sensing-feeling Personality: They are moved by personal values rather than logic and believe in personal experience. They follow a subjective orientation in making decisions, are inclined to consider others when making a decision and share risks. They are status conscious and have short-term perspective in decision-making. 3. Intuiting-thinking Personality: Such individuals take a broad view of their own situation and the world. Though they heavily rely on imagination and consider a wider range of options, yet use logic in making decisions. Such individuals are not averse to taking risks while making decisions and their perspective is long-term. 4. Intuiting-feeling Personality: Their view of personal situations or world is broad. They use imagination in considering a wide range of options in making a decision, are quite likely to consider others views and show least sensitivity toward prices. They are also inclined to seek novelty, take risks and time horizon is indefinite in making decisions. Alfred Adler took a separate direction. He was the foremost proponent of social orientation in the development of personality. Instead of emphasising the importance of sexual conflicts like Freud or culturally shared meaning of Jung, he focused on the importance of an individuals striving for obtaining superiority in a social context. Alfred Page 10

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Adler viewed human beings as striving to attain various rational goals, which he referred to as style of life. He also stressed that children develop the feelings of inferiority and as adults their foremost goal is to win over these feelings; in other words, strive for superiority. Another neo-Freudian psychologist, Harry Stack Sullivan, emphasised that human beings perpetually strive to establish significant and rewarding relationships which serves as the fundamental factor in shaping up an individuals personality. He and Karen Horney were particularly concerned with the individuals efforts to reduce tensions, such as anxiety. According to Joel B Cohen, Karen Horney identified ten major needs which individuals acquire as a result of striving to find solutions to their problems in developing personality and dealing with others in society. Based on these ten needs she classified three major approaches individuals adopt for coping with anxiety: Compliant, Aggressive and Detached (CAD). 1. Compliant individuals are those who move toward people and stress the need for love, affection, approval and modesty. Such individuals exhibit empathy, humility and are unselfish. 2. Aggressive individuals are those who move against people and emphasise the need for power, admiration, strength and the ability to manipulate others. 3. Detached individuals are those who move away from others and desire independence, freedom from obligations and self-reliance. They do not develop strong emotional ties with others. Joel B Cohen measured CAD using 35-item inventory and found some tentative relationships between CAD types and product/brand usage. Compliant individuals seemed to prefer known brands and use more mouthwash and toilet soaps; aggressive types used more cologne and after-shave lotion and preferred to use Van Heusen shirts and Old Spice deodorant (because of its masculine appeal?); and detached types seemed to have least awareness of brands, drank more tea. Mark Salama, Terrel Williams and Armen Tashchian have reported that the detached personality type seems to have low-involvement in purchasing than compliant or aggressive types. Trait theory Trait theory states that human personality is composed of a set of traits that describe general response patterns. These theories are relatively recent in origin and use very popular personality concepts to explain consumer behaviour. The orientation, unlike previously discussed theories, is quantitative or empirical. J P Guilford describes a trait as any distinguishing and relatively enduring way in which one individual differs from another. The concept is that traits are general and relatively stable characteristics of personality that influence behavioural tendencies. The concept can be summed up in three assumptions: 1. Behavioural tendencies in individuals are relatively stable. 2. A limited number of traits are common to most individuals. They differ only in the degree to which they have these tendencies. 3. These traits and their relative degree when identified and measured are useful in characterising individual personalities. Trait theorists construct personality inventories (personality tests) and ask respondents to record their responses to many items. Respondents are asked to agree or disagree with certain statements as they please or express their likes or dislikes for certain situations or kinds of people. The responses are then statistically analysed and reduced to a few personality dimensions. Page 11

Sikkim Manipal University - MBA MK0011 Consumer Behaviour Semester: 3 - Assignment Set: 2

Trait theory and consumer behaviour Harold H Kassarjian and Mary Jane Sheffet reviewed more than 300 studies on personality and have concluded that the results are equivocal. Few studies seem to show a definite relationship between consumers personality and behaviour, other studies are indicative of no relationship. Majority of studies indicate that if at all there is any relationship between personality and behaviour, it is too weak to have any practical value to marketers. Despite this, experts still argue that consumers personality is an important factor influencing their buying behaviour. Certain types of personality traits may be more related to consumer behaviour than others, such as Optimal Stimulation Level (OSL), Need for Cognition (NFC), dogmatism, susceptibility to influence and self-monitoring behaviour. Optimal stimulation level Some activities have more potential to provide individuals with some sort of physiological arousal. There are others who prefer a calm, simple and uncluttered life, while some others prefer novel, complex, exciting existence. Research in this area indicates that high optimum stimulation levels are associated with more willingness to take risks; to be innovative, try new products and actively seek purchase related information. P S Raju has reported that OSL seems to indicate an individuals desired level of lifestyle stimulation. Things, which are physically stimulating, emotionally energising, exciting, or novel, have the potential to induce arousal. Research shows that individuals prefer things that are moderately arousing rather than too arousing or not arousing at all. Consumers with high and low levels of need for stimulation differ in their purchase behaviour. If an individuals lifestyle is such that it offers the desired level of stimulation, she/he is quite satisfied. If the level of stimulation falls short of the desired level, such a person is bored. Consumers with high stimulation needs tend to be the first to buy new products, actively seek information about them and engage in variety-seeking buying behaviour. They tend to be curious about the ads they see but are also likely to get bored by them. Interestingly, they are also likely to buy products with greater risk. Need for Cognition Some researchers (John T Cacioppo and Richard E Pettey) have focused on .need for cognition. personality trait. Need for cognition refers to the degree of an individuals desire to think and enjoy getting engaged in information processing. Such individuals tend to seek information that requires thinking. Opposite to this would be those who shy away from such information and focus on peripheral information (ELM model). For instance, a consumer high in Need for Cognition (NC) and looking at an ad for Apple computer is more likely to study and concentrate on the information contained in the ad. On the other hand, a consumer low in need for cognition would be more inclined to look at the beautiful picture of iMac, ignoring the detailed information about the computer model. Research by Curt Haugtvedt, et al. has shown that consumers high in need for cognition were more influenced by the quality of arguments in the ad than those who were low in need for cognition. Further, those low in need for cognition were influenced more by spokespersons attractiveness than those who were high in need for cognition. These results show an interesting aspect of personality, which may have important implications for advertising. Dogmatism Consumers are also likely to vary in terms of how open-minded or closed-minded they are. Dogmatism is a personality trait that indicates the degree of an individuals rigidity Page 12

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toward anything that is contrary to her/his own established beliefs. Apparently, the person is resistant to change and new ideas. One would expect highly dogmatic consumers to be relatively resistant to new products, promotions or advertising. However, they may tend to be yielding to celebrities and experts who present authoritative appeals. On the other hand, consumers low in dogmatism are more likely to accept new and innovative products to established alternatives and be more receptive to ad messages that focus on product attributes and benefits. Susceptibility to influence Consumers differ in terms of their proneness to persuasion attempts by others, especially when these attempts happen to be interpersonal or face-to-face. William O Bearden, Richard G Netemeyer and Jesse H Teel have reported that some consumers possess a greater desire to enhance their image among others and show a willingness to be influenced or guided by them. Consumers with lower social and information processing confidence show more proneness to be influenced by ads compared to those who have higher self-confidence. Self-monitoring behaviour Individual consumers differ in the degree to which they look to others for indications on how to behave. Those persons who are high-self monitors tend to look to others for direction and accordingly guide their own behaviour. They are more sensitive and responsive to image- oriented ads and willing to try such products. They are less likely to be consumer innovators. On the other hand, individuals who are low self-monitors are guided by their own preferences or standards and are less likely to be influenced by others expectations. They pay more attention to ad messages that focus on product features, quality and benefits. Furthermore, they are also likely to try and pay extra for these products and are consumer innovators. Q.6 What is positioning? Explain positioning strategies, approaches and errors. Answer. Positioning is the perception of a brand or product it brings about in the mind of a target consumer and reflects the essence of that brand or product in terms of its functional and non-functional benefits as judged by the consumer. Nestles Maggi noodles has been successfully positioned as the two minute noodle in the minds of target consumers and has created a distinctive brand image. HULs soap Lux is the beauty soap of female film stars and Dettol is the antiseptic for minor nicks and cuts. BMW car is positioned as the ultimate driving machine As markets become more crowded and competitive with similar types of products, consumers rely more on the products image than on its actual characteristics in making their buying decisions. Positioning Maps Products or services are 'mapped' together on a 'positioning map'. This allows them to be compared and contrasted in relation to each other. This is the main strength of this tool. Marketers decide upon a competitive position which enables them to distinguish their own products from the offerings of their competition (hence the term positioning strategy). The marketer would draw out the map and decide upon a label for each axis. They could be price (variable one) and quality (variable two) or Comfort (variable one) and price

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(variable two). The individual products are then mapped out next to each other Any gaps could be regarded as possible areas for new products.

Figure 3: Example of Positioning Map

Figure 3 depicts an example of Positioning Map in which the countries as tourist attractions are positioned on a map. Positioning Strategy Jack Trout and Al Ries suggest that managers should ask themselves six basic questions to create a position for a product or service: 1. What position, if any, do we already have in the prospects mind? (This information must come from the market place, not the managers perceptions.) 2. What position do we want to own? 3. What companies must be outgunned if we are to establish that position? 4. Do we have enough marketing money to occupy and hold the position? 5. Do we have the guts to stick with one consistent positioning strategy? 6. Does our creative approach match our positioning strategy? The brand or product manager must determine which strategy is best suited in a given situation to position the brand or the firm, as the case may be. The exercise to determine the positioning strategy is not easy and could prove to be difficult and quite complex. Six steps need to be taken to reach a decision about positioning: Identify competitors: It may appear simple but it is not. This requires broad thinking. The competing products may not be only those, which come from the same product category with which the brand competes directly. For example, Maggi competes not only with Top Ramon and other noodles, but also with all other products, which are used as snacks. The marketer must consider all likely competitors, various use situations and usage effects on the consumer. Assessment of consumers perceptions of competition: After defining the competition, it is important to determine how consumers perceive the competing products. To do this, a set of product attributes, such as product Page 14

Sikkim Manipal University - MBA MK0011 Consumer Behaviour Semester: 3 - Assignment Set: 2

characteristics, consumer benefits, product uses or product users are chosen for comparison. The task is to identify relevant attributes to avoid any which would be superfluous. Determining competitors position: This exercise is undertaken to reveal how all the competing brands, including the companys own are positioned and what is their relative position in the consumers perceptual map. Which are the competing brands that consumers consider as similar and which are the ones considered dissimilar. Analysing the consumers preferences: The analysis so far discussed would determine where in the perceptual map the product should be positioned. The next step requires the identification of segments or clusters of customers who prefer this product location in the perceptual maps. Customers who value a certain set of attributes or benefits would form a segment. An ideal product would be the one that is preferred over all others. Making the positioning decision: Up to this point, it may become reasonably clear to make some subjective decision as to which position can be appropriate. In many situations, however, it may become necessary to rethink. Positioning usually involves segmenting the market and choosing one or more segments. Monitoring the position: How strongly and advantageously a position is maintained in the market should be monitored periodically by using the tracking studies to measure the image of the brand or the company. Positioning Approaches Marketers manage product positioning by focusing their marketing activities on a positioning strategy. Pricing, promotion, channels of distribution, and advertising all are geared to maximize the chosen positioning strategy. According to C. Merle Crawford, common bases used for positioning include: Features refer to objective physical or performance characteristics and are often used to differentiate products. For example, Amazon.com has a unique I-click ordering facility. Some autos claim Zero to 100 Kph in 6 seconds. This sort of positioning is more common with industrial products. Benefits are directly related to products, such as Volvos emphasis on safety and durability. Sticks in a snap, Fevi Kwick. Fairglow soap is fairness soap. Usage includes end use, demographic, psychographic, or behavioural segments for whom the product is meant. It also includes product popularity. For example, Chayavanprash to build body resistance of children or elders, Farex for small kids, Bajaj Pulsar definitely male for customers of a certain psychographic profile. Parentage means the lineage denoting who makes the product. Buying a car is like getting married. Its a good idea to know the family first, advises The Mercedes S Class model. Companies proudly trumpet their names, such as Sony Vaio, Tata Indica, Fiat Palio, etc. Manufacturing process is often used to position the product. Some expensive watches claim to be hand crafted, an appealing proposition in an age of mass produced artifacts.

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Sikkim Manipal University - MBA MK0011 Consumer Behaviour Semester: 3 - Assignment Set: 2

Ingredients are sometimes highlighted to create a position. For example, some garment manufacturers claim One hundred per cent cotton, or Hundred per cent Merino wool. Endorsements are made either by experts or a common person with whom the target customers are likely to identify. For example, Michael Jordan using Nike shoes, and the unforgettable Lalitaji (a savvy middle class housewife concerned about family budget) and her enduring advice that Surf Ki Kharidari Mein Hi Samajhdari Hai. (Its wise to buy Surf). Comparison with a competitors product is a fairly common positioning approach. Avis compared itself with Hertz, stressing that it tries harder because it is the second-biggest can rental company. Samsung Laser Printer compared itself with HP Laserjet ... and thereby jumped cleverly onto the same platform. Pro-environment approach to positioning aims to show that the company is a good citizen. Canon mentions on its packages, Made from recycled material. Product class, such as freeze-dried coffee shown as a product that is a different one from instant or regular coffee. Dove soap positioned as a moisturiser and not the toilet soap, and Pears as a glycerine soap. Price/quality is a powerful positioning technique. Zenith computers say Multinational quality, Indian price.

Country or geographic area, such as German engineering, Russian vodka, Benarsi silk sari, or Dehradun rice. Repositioning No matter how well a product appears to be positioned, the marketer may be forced to decide on its repositioning in response to new opportunities or threats. The product may be provided with some new features or it may be associated with some new uses and offered to the existing or new markets. Johnson and Johnson repositioned their baby shampoos and lotions for the adult market by changing the promotional and packaging strategy. This was in response to growing opportunities due to lifestyle changes. It is often difficult to reposition a product or brand because of consumers entrenched perceptions and attitudes. Positioning Errors Common errors in positioning are: Underpositioning: This refers to a state of buyers having only a vague idea of the brand and considering it just another me too brand in a crowded product category. The brand is not seen to have any distinctive association.

Overpositioning: In this situation, buyers have too narrow an image of the brand. Thus, buyers might think that Apple makes only very expensive computers when, in fact, Apple offers several models at affordable prices. Confused positioning: Sometimes, attempts to create too many associations or to frequently reposition the brand only serves to confuse buyers. Doubtful positioning: This situation may arise when customers find brand claims unbelievable keeping in view the product features, price or the manufacturer.

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