Consumer Behavior

29 Jun

CASE – 1

Tony the Tiger goes Global

Kellogg Company has distribution in more than 150 countries and yet is still “unknown to half the world’s population.” according to Arnold Langbo, Kellogg’s CEO. Langbo plans to change that.

Kellogg recently built a company—owned cereal plant in Latvia and currently has sales in Poland, Hungary and Czechoslovakia. It has also started construction on a plant in India and is entering China. However international expansion and the development of global brands will not be easy.

To become more international, the firm recently reorganized into four divisions :North America,Latin America, Europe and Australasia. According to Langbo:

The way we used to be organized, we were a US-based Multinational-a company with a big domestic business and, by the way,some international business. That was the way we were thinking; that’s the way the organization was structured.

Today, if you talk to customers in the UK, Canada, or Australia, they think of Kellogg’s as being based in the U.K or Canada or Australia. We’re global in organizational structure and business but also multidomestic.

We now have a number of truly global brands (Frosted Flakes and Corn Flakes, with Froot Loopa and Rice Krispies close, and Frosted Mini-Wheats and Honey Nut loops moving rapidly).There used to be slight variations in our food around the world, but now you’ll recognize the product wherever you go.

Expanding into many markets will involve more than trying to gain share from other cereal marketers. It will require altering long—held traditions:

In Eastern Europe it’s going to he pretty slow because we’re going to have to go in there and literally create the habit—much as we did in Germany 25 years ago or France 20 years ago. Cereal is a whole new breakfast concept for these people. However, they do eat breakfast in those countries, and they eat fairly substantial breakfasts.

In Asia, consumers are used to eating something warm, soft, and savory for breakfast—and we’re going to sell them something that’s cold, crisp, and sweet or bran tasting. That’s quite a difference.

The challenge is made greater by the presence of aggressive competition in many developed or develop-ing markets. Competition is particularly intense in Europe where Nestle and General Mills formed a joint venture called Cereal Partners Worldwide. Langbo characterizes the new competitor this way:

They are a very formidable competitor with Nestle’s distribution strength and knowledge of the European market and General Mills’ technology and cereal marketing expertise.

The result of the entry of the new competitor, which spent an estimated $35 to $50 million in advertising in the top six European markets, and the response of existing firms such as Kellogg was an increase in the growth rate of total cereal sales as well as share erosion among the weaker brands.

Competition is strong even in some countries where consumption is low. For example, in Japan, with consumption at four bowls per year per person, compared to 10 pounds in the United States, there are more than 100 products fighting for shelf space.

According to Langbo, a global brand requires a core position strategy or product benefit that will work in multiple countries and local execution of that idea to reflect local attitudes. The key ideas for three of Kellogg’s global or near-global brands are described by Langbo in the following paragraph

Frosted Flakes

Frosted Flakes is based on the concept of vitality. This idea originated in the United States but is a universal idea that both translates and travels well. Because the product has a special appeal to children, the cultural differences are not so pronounced. Tony the Tiger illustrates the vitality theme in a universally understandable manner. Tony is loved throughout the world symborizing appeals that are truly global. We use Tony and he vitality message everywhere from the United States to Taiwan in Argentina.

Corn Flakes

The basic positioning concept for Corn Flakes is simple, unadulterated food that tastes surprisingly good. This concept also has universal appeal. It is typically the first product we introduce in a new market, It is the foundation of our line, and it is the world’s most popular cereal.

All-Bran

The value proposition for All-Bran is the health benefits of fiber in the diet. This proposition does not have universal appeal without development. The concept of the value of fiber in the diet is new to many countries and is often resisted.

In 1984, we began a massive campaign to countries where the benefits of fiber were not widely accepted. campaign varied across countries due to differences in the attitudes of local medical and nutritional professionals, specific diseases that were most on the minds of the local population, and local restrictions on health claims. However, the basic approach was to educate and support the medical and nutritional community in each country. We would sponsor symposia on dietary fiber. As a country’s experts became convinced of the value of fiber, they told their story in their academic press, the general press, and in public service announcements. Today, despite competition from many other high-fiber cereals., All-Bran is one of the top 15 cereals worldwide.

Questions

1. What type of innovation would cold cereal be to a country not accustomed to this type of food?

2. Conduct an innovation analysis based for cold cereal in China.

3. What values are involved in the consumption of product such as breakfast cereal?

4. What values would support and what values would harm the chances of Kellogg succeeding the cold cereal in the following countries? What other factors would be important?

a) China

b) Mexico

c) Japan

d) France

5. What nonverbal communications factors would be important in developing an advertising campaign for a cold cereal?

6. Develop a marketing program to market one of Kellogg’s cold cereals in the following countries.

a) China

b) Mexico

c) Japan

d) France

7. Why does Tony the Tiger “travel” so well’?

8. Evaluate the communications process Kellogg used to gain acceptance for All-Bran. Could a version of this work for gaining acceptance of cold cereals in China?

 

CASE – 2

You are the Business Development Manager of an Engineering company that has developed a highly advanced machine for packaging of pharmaceutical products. The machine saves a lot of time and cost involved in the packaging as it is faster compared to other machines, it consumes lesser electricity and requires lesser manpower. One of your clients, N.K. Pharma is a 1200 crores pharmaceutical company having its head office in Mumbai. The company has six manufacturing units, one in Tarapur, two at Vapi, one in Nagpur, one in Chennai and the newest one at Baddi in Haryana. Each unit is led by a Factory Manager, who reports to the GM – Production who sits at the head office. The GM – Production, GM – R & D, GM – Marketing, and G.M. HRM report to the COO. The Accounts and Finance functions report directly to the COO. The COO is a 36 year old enthusiastic leader who enjoys immense trust of the MD (who is also the founder of the organization). The company sells through a network of 400 Medical Representatives spread all over India.

Questions

1. Analyze the buying behavior of this organization with respect to your product.

Consumer Behavior

29 Jun

1. Define Perception in context to consumer behaviour? How does perception affect consumer behavior? Discuss three marketing situations where perception influences buying behaviour.

2. What is meant by consumer perception? Explain the factors which affect consumer perception?

3. What is the significance of relationship marketing in the present marketing environment?

4. Write a note on persuasive communication.

5. Explain the characteristics of Organizational buyers? State the factors affecting the same? Please explain the individual consumer buying behavior?

6. Discuss McGuire’s comprehensive scheme of psychological motives.

7. Distinguish between rational and emotional buying motives with the help of examples?

8. Why is the scope of consumer behavior significantly increasing?

Consumer Behavior

27 Jun

A) Explain the characteristics of Organizational buyers? State the factors affecting the same? Please explain the individual consumer buying behavior?

B) Define & explain the following with respect to consumer behavior, with examples

  1. Attitude
  2. Relation between Attitude, belief & behavior

C) Please explain:

  1. Five distinct stages in the buying decision process.
  2. Personal factors affecting behavior.
  3. Buying process.

D) Explain.

  1. Actual Vs. reference price
  2. Semiotics
  3. Functions of attitude

Consumer Behavior

27 Jun

CASE 1                                                                                                                                

Sports marketing strategy: A consumer behavior case analysis in China.  Marketing research that targets consumers’ influences and financial implications is a worthwhile sports marketing effort. To implement effective marketing strategies in a specific country, it is pertinent to understand consumer behavior in that country. In this paper, 11 major findings related to the unique behavior, attitudes, and buying patterns of Chinese sports consumers are highlighted. From the results of questionnaires administered to 2,155 mainland Chinese consumers in 10 selected cities, different economic, social, and personal factors in the China’s environment are determined. The marketing implications of the Chinese culture and lifestyle are also discussed.

With a quarter of the world’s population and a fast-growing economy, China is rapidly turning into one of the busiest market centers in the world. Sports marketing has the potential to emerge not only as an effective vehicle in imitating the development of the Chinese economy, it also affects the Chinese culture and lifestyle.

Since sports marketing in China has not been analyzed or researched, it is appropriate to study the consumer as well as general financial implications. A look at American success in sports marketing will be helpful. However, implementing such strategies in China creates special considerations because of the existence of cultural and economic differences between the two countries. This study attempts to identify the proper marketing strategies in China through an analysis of Chinese consumers’ behavior, attitudes, and buying patterns.

METHODOLOGY

The methodology used in this study consisted of exploratory research of interviewing managers of retail outlets, secondary research of literature review, and primary research of a total of 4,000 questionnaires distributed in 10 selected cities (Beijing, Chendu, Guangzhou, Nanjing, Qindao, Shanghai, Shenzhen, Tianjin, Xian, and Xiamen) in China. Questionnaires were administered to a judgmental quota sample and assigned to one of four age groups with equal males and females. The rate of response was 53.9%; 2,155 questionnaires were returned.

The analysis of the data include editing, coding, analyzing coded observations, and interpreting results for solutions to the research problems. Tabulations and measures of central tendency were used to describe the distribution of characteristics in the subject population. Crosstabulation and chi square statistics were also used to show relationships between consumer segments.

SURVEY FINDINGS

Eleven major factors affecting consumer purchasing emerged from the questionnaire data analysis: 1. purchasing reasons; 2. purchasing experience evaluation; 3. income level relative to the expense level; 4. type of sporting goods purchased; 5. product factors affecting purchasing; 6. people influencing consumer purchasing; 7. sources of information about where and how to purchase;8. influence of advertisements; 9. brands consumers prefer; 10. where goods purchased; and 11. time spent in sports.

Purchasing Reasons: The major reason why people purchased sports products was “for exercise.”

Purchasing Experience Evaluation: Approximately half of the respondents indicated that their purchasing experience was “positive.”

Income Level Relative to the Expenses Level: The Chinese consumers’ income levels range from less than $173 U.S. per year to over $863 U.S. a year. The middle income level accounted for 72% of the respondents.

However, most respondents indicated they spent “less than $40 U.S. per year” on the purchase of sporting goods.

Type of Sporting Goods Purchased: “Shoes” were the No. 1 favorite type of sporting goods for Chinese consumers. Females tended to purchase apparel; males were more likely to purchase all type of sporting goods.

Product Factors Affecting Purchasing: “Quality,” “style,” and “price” were the three most important factors influencing purchasing decisions. People Influencing Consumer.

Purchasing: “Boy-and-girlfriend” had the most important influence in the decision process. “Parents” had the least important influence.

Sources of Information About Where and How to Purchase: The major information channel for Chinese consumers was their “going to a shopping mall” experience.

Influence of Advertisements: Of those responding to the survey, more than half said they either “occasionally” or “rarely” believe advertisements.

Brands Consumers Prefer: Adidas, Asics, Nike, and Reebok were identified by the Chinese consumers.

Where Goods Purchased: Most of those surveyed purchased their sporting goods from either “a sporting goods store” or “a department store.”

Time Spent in Sports Activities: Almost 90% of the Chinese consumers spent “less than 5 hours a week” participating in sports activities. However, three meaningful findings emerged: 1) those who participated “less than 5 hours per week” in sports activities spent more money purchasing sports products than those who participated “over 5 hours” per week in sports activities; 2) those in the income level of “$402 to $863 U.S.” spent more time participating in sports activities; 3) young adults and “unmarried” persons spent more time per week participating in activities than those who were “married” or elderly.

DISCUSSION ON CONSUMER INFLUENCES

The following discussion focuses on economic, social, and personal influences. These three categories have unique Chinese environmental and cultural meanings and thus need to be considered when engaging in marketing in China.

Economic Factors: Unlike the past, when most income was spent on basic necessities such as food and clothing, the current Chinese consumer spends more money on entertainment and durable goods. However, the general tendency of the Chinese consumer to have stronger purchasing power and the fact that their buying decisions reflect creative purchasing beyond bare necessities are not reflected in sports marketing. It could be concluded that not all Chinese consumers are willing to spend a certain percent of their income on sports products. This phenomenon can be explained either by consumers’ lack of sufficient income or too high a price for sports products. On the other hand, however, a great potential exits for marketers who appeal to the Chinese consumers with creative strategies. Those who know desires and needs in specific areas, while being sensitive to economic restraints, may capture a slumbering Chinese market.

Social and Culture Factors: With the implementation of an “open-door policy” in China, the lifestyle of the Chinese people changes constantly. Several social and cultural trends may stimulate marketers to be optimistic about Chinese consumers.

  • The most important trend is growing fitness consciousness. No matter the gender, age, occupation, and education of those surveyed, all tend to tie their purchase of sports products with exercise and entertainment.
  • A second trend the survey revealed is a movement toward use of sports products for casual reasons. Chinese consumers are embracing a more casual and health-conscious lifestyle.
  • There is a growing consumer preference for international products. The Chinese people, especially the younger generation, are very fond of wearing and using brand name sporting goods from around the world. Owning high grade sporting goods seems to be a symbol of wealth and a new fashion for those young consumers.

The social and culture trends just discussed will lead to different pricing, promotional, and distributional strategies.  Since marketing principles are applicable throughout the international arena, what has proved successful in the American market could basically be transferred and applied to the China market.

However, to implement a successful marketing strategy in China, several environmental differences must be taken into account:

1) “Shopping on Sundays” is a hobby for Chinese consumers. Marketers should create an
attractive shopping environment in a prestigious shopping center.

2) Chinese consumers believe what they see rather than what they hear. They know that some
imitation products exist in the market, and dishonesty in advertising is publicized. Marketers
should increase their image by eliminating imitation products and dishonesty advertising.

3) Although consumers’ attitudes toward the international sports products are positive, devotion
or loyalty to brands is subject to rapid change. Marketers should have a strategy to keep
consumers’ loyalty.

4) Non athletes have greater purchasing power than most athletes or sportspersons. Nonathletes
buy sporting goods either to impress others or simply because their friends have those items.
Marketers should consider how to design sports product with attractive sports features.

5) The type of sporting goods desired by the older and younger generations is widely dissimilar.
And a large gap exists between the desire to purchase and the ability to purchase sporting
goods. It causes problems of bringing the right products to the right person and establishing
an appropriate price policy.

6) The purchasing decision of Chinese consumers is heavily influenced by social values and the
social environment. Marketers should establish an educational program to either match or
lead a social value.

Personal Factors: Because of recent social changes, Chinese consumers have learned much from other cultures. They are more independent and more knowledgeable about commerce and business. There are at least three particular changes which may create opportunities for marketers:

1) The nuclear family has become the baic economic unit, and it has more power to make
purchasing decisions. With the implementation of the “one child per family” policy in China,
the nuclear family, consisting of parents with one child, has replaced the traditional clan
family which consisted of two or more generations living as one family.

2) Chinese wives are viewed as decision makers for goods purchased in families. Since wives
control family finances, it is important to target wives.

3) Individuals who live in the urban locations have stronger purchasing power. The Chinese
government predicts that by the end of 1995, people in large urban areas will increase to
30% of the population. This modernization movement will undoubtedly create business
opportunities.

Questions

  1. Discuss the various factor which influences consumer behavior in china?
  2. What should be the target market and what can be the marketing strategy?

 

CASE – 2                                                                                                                              

Consumer behavior: yesterday, today, and tomorrow

THE ECONOMIC PARADIGM

The 1940s view of the consumer in the marketplace was rooted in economic theory. Most scholars of economics probably still hold to the theory of Economic Man. In this paradigm, purchasing decisions are the result of largely “rational” and conscious economic calculations. The individual buyer seeks to spend his income on those goods that will deliver the most utility (satisfaction) according to his tastes and relative prices. This is a normative rather than a descriptive model of behavior, because logical norms are provided for buyers who want to be “rational.”

The model suggests useful behavioral hypotheses, such as: (a) the lower the price of the product, the higher the sales; (b) the lower the price of substitute products, the lower their sales; (c) the lower the price of complementary products, the higher their sales, provided they are not “inferior” goods; and (d) the higher the promotional expenditures the higher the sales. In striving to meet these hypotheses, consumers are not only assumed to be aware of all available alternatives in the marketplace; they are also assumed to be able to rationally rank order the available alternatives by preferences. This is the case of perfect information in the marketplace and unlimited ability of tile consumer.

In applying these assumptions to actual consumption, several problems became apparent. First of all, consumers do not have perfect information in the marketplace. Second, they do not all have the same information about the existing alternatives or attributes of known alternatives. instead, each consumer has fragmented knowledge of his or her own set of known alternatives; as a result, consumers can not always rank a set of alternatives available to them. In addition, preferences often violate utility theory, because different people prefer different styles, have different tastes, and hence make choices built on preferences rather than objective information such as price.

Problems arise with applying economic theories to gifts. Increasing the price of goods may actually make them more desirable, defying basic economic theory. Hence, inverted demand curves reflect products where increasing prices stimulate increasing sales. Perfume is a perfect example of this type of good. Most perfume or cologne is bought as a gift, and the connotations of bringing home a $2 bottle of cologne or a $50 bottle for a loved one are implicit. A relationship may not last upon receipt of the cheaper good. Hence the economic model ignores the fundamental question of how product and brand preferences are formed.

THE IRRATIONAL CONSUMER

After becoming aware that goods have “hidden meaning,” scholars of consumer behavior in the 1950s took to the notion of the consumer as an irrational, impulsive decision maker. Consumers were seen as passive, open, and vulnerable to external influences. This position was an obvious reaction to the “economic man” and also represented a time when business schools were developing. Earlier, faculty trained in economics were the first to be hired, but in the 1950s psychologists were added to the payroll. Their insights from Freud to Maslow, from personality to motivation theory, seemed ever so relevant to our study of the consumer.

The two major psychological theories underlying this era were the Pavlovian learning model and the Freudian psychoanalytic model. The Pavlovian model is based on four central concepts-those of drive, cue, response, and reinforcement. Drive or motives can be primary, such as hunger and sex, or secondary, such as fear. A drive is very general and impels a particular response only in relation to a particular configuration of cues. The Pavlovian model emphasizes the desirability of repetition in advertising. Repetition fights the tendency for learned responses to weaken in the absence of practice and provides reinforcement.

The model also provides guidelines for copy strategy. To be effective as a cue, an advertisement must arouse strong drives in the person. For candy bars, it may be hunger; for safety belts, fear; for hair tonics, sex; for automobiles, status.

In the Freudian psychoanalytic model, the guilt or shame man feels toward his sexual urges causes him to repress them from his consciousness. Through rationalization and sublimation, these urges are denied or become transmuted into socially approved expressions. These urges are never eliminated or under perfect control and they emerge in dreams, in slips of the tongue, or in neurotic or obsessive behavior.

Because of these urges, the consumer’s motivations for behavior are not obvious or deeply understood. As a result, Freudian psychology gave consumer behavior the tool of in-depth interviewing to get at the motives and symbols behind a purchase. If a consumer is asked why lie purchased an expensive foreign sports car, he may reply that he likes its maneuverability and its looks. At a deeper level he may have purchased the car to impress others, or to feel young again. At a still deeper level, lie may be purchasing the sports car to achieve substitute gratification for unsatisfied sexual strivings.

Other Freudian consumer research findings included men wanting their cigars to be odoriferous to prove they were masculine, and women being very serious when baking cakes because unconsciously they were going through the symbolic act of birth. These theories were certainly more interesting reading than the graphs and curves of economics.

One major study of this era (Haire 1950) found that when a shopping list included instant coffee rather than drip grind, the owner of the list was perceived to be a very different person. The owner of the list with instant coffee was lazy, a poor planner, a spendthrift, and a bad wife. Meanwhile, the owner of the list with drip coffee was perceived to be thrifty and a good wife. Fortunately a replication of this study was done in 1970 and housewives were no longer judged by their coffee (Wilkie 1986). However, Haire’s study provided good insight to the fact that products have meaning and significance that go far beyond the physical attributes of the products themselves. Furthermore, these hidden values were thought to be a major influence on consumer decisions. To tap into the consumers’ hidden motives for purchase, more indirect methods of data gathering were necessary.

Toward the end of the 1950s an empirical article started to throw doubt on the heavy reliance on psychological perspectives. A study by Evans (1959) sought to determine the personality characteristics of Ford versus Chevrolet owners. In the 1950s these were the major automobile manufacturers. Wider choice and Japanese imports did not exist. If the differences between the cars were not major, the train of thought was that the personality of the owner must be significantly different and motivate the consumer to buy one brand or the other. A carefully controlled survey of personality characteristics of 1,600 owners of Fords and Chevrolets showed no major significant differences in personality characteristics of the car owners. The importance of this line of behavioral research to consumer products was questioned. By this time, in the early and mid-1960s, business schools were producing their own scholars and faculty. Researchers were trained by business schools rather than only economics and psychology departments. Researchers of consumer behavior gained from this marriage of economics and psychology and began to develop their own theories of the consumer.

THE PROBLEM SOLVER

In the 1960s John Kennedy became president of the United States and gave the consumer elevated status. In his message to Congress on March 15, 1962, he put forth the Consumer Bill of Rights (1963) as a social contract between business and society. Government was tile ultimate guarantor of these rights, which included the right to safety, the right to be informed, the right to choose, and the right to be heard (redress). The government took Kennedy seriously and began an activist role

The marketplace was becoming more diversified. The concept of market segmentation became even more important. Goods that the consumer ted were now being produced, rather than just the goods the manufacturer wanted to make. Choice prevailed for the consumer, and the consumer was recognized by the highest official in the country. Consumers had the right to he informed and protected.

The government poured millions of dollars into departments whose goal was to make sure the consumer had access to information. The Federal Trade Commission flourished. Labels were put on products listing all ingredients. Advertising was regulated and measured; if it was misleading, then corrective advertising was necessary. Information was in great supply to the consumer. Ralph Nader, with his book Unsafe At Any Speed, emerged as the hero of the 1970s, taking on corporate giants in the name of the little man. Consumerism was everywhere.

As a result of this environment, consumer behavior researchers started to see the consumer as a “cognitive man.” The irrational psychotic purchaser of the 1950s and early 1960s was left behind. The consumer was now a problem solver. He or she was receptive to products or services that consciously met his or her needs. Consumers were thought to actively search for information about the products and services they bought. Consumer Reports was born. Consumers were seen as striving to make the best decisions possible given their limitations.

However, consumer researchers told us that even though consumers are given information, they often fail to use it to make decisions. In an initial experiment (Jacoby, Speller, and Kohn 1974) and a follow-up (Scammon 1975), consumers were given objective product information concerning several brands available in the marketplace. The results of the first study showed that consumers felt better about their brand selections with more information, but actually made poorer choices. The study by Scammon corrected for weaknesses in the original study but still found that recall of product attributes decreased with increasing information. Consumers were still limited by the extent of their knowledge about the marketplace and their capacity to store information about the marketplace in short-term memory. Miller’s (1956) rule of seven plus or minus two) pieces of information as cognitive capacity held for the consumer.

The information in the marketplace was not organized for the ease of the consumer. Unit pricing was fine, but comparing prices across brands and sizes for products was quite a challenge. Only when unit prices were posted on one sheet in a simple linear manner by decreasing prices across all sizes and brands did the consumers shift in their decision making toward lower-priced brands. You can imagine the national brand manufacturer’s enthusiasm toward presentation of this information at point of purchase.

The overriding conclusion of consumer research in the 1970s was that people can only attend to limited information at one point in time. The consumers’ existing skills, habits, reflexes, values, and goals shape the way they search and use information to make their decisions. The 1970s told us that consumers’ skills were limited, but at the same time the number of choices available to the consumer kept increasing. More and more choices became available in the 1980s.

THE COGNITIVE MISER

Today’s consumer uses decision-making skills originally developed in the 1970s, but the 1980s consumer went farther than just recognizing man’s cognitive limitations. Researchers have labelled the low-involvement decision maker (or cognitive miser) as unable or unwilling to engage in extensive decision-making activities in many cases and settle instead for “satisfactory” decisions (Olshavsky and Granbois 1979). There is too much choice and not enough discretionary time to engage in extended cognitive effort for purchases. Instead the consumer develops rules of thumb or heuristics to simplify purchase behavior. An in-store study showed that consumers go through almost no brand price comparison behavior (Hoyer 1984). Rules such as “buy the cheapest,” “buy name brands,” or “buy what my friend bought” give the consumer a satisfactory choice in the marketplace that supplants an optimal choice. This is a very adaptive and rational course for the consumer to have taken in the 1980s, given the cluttered choice environment with little time for decision making and virtually no support in information handling. The cost of thinking was recognized as a limiting factor in processing choices.

The 1980s brought a focus on business and conservatism, and many came to feel that governmental regulation was more of a hindrance than a help. This was expressed in the election of Ronald Reagan. As quickly as Kennedy had made the consumer important, Reagan made him unimportant. With strokes of a pen, the FTC experienced a sharp reduction in its budget and influence. Whole departments set up by the government to service the consumer were abandoned. Consumer programs developed for the 1970s folded.

The 1980s were for business. This focus was a result of several factors. First, the “baby boomer bulge” had a greater number of people for a smaller number of jobs. In the early 1970s a college graduate decided what job to take, or perhaps a trip to Europe, then work. In the early 1980s the concern was for getting any job at all. The economy was slow and competition was stiff. Business looked to the MBA to turn companies around. The student was serious and conservative due to the competitive environment. Business and engineering were in; the humanities were out. The marketplace became more competitive, more diversified. Deregulation prevailed.

Too many goods cluttered too many store shelves for the consumer. For example, the average number of products in supermarkets soared from 13,000 in 1981 to 21,000 in 1987. There are said to he 400 different brands of beer available to the American beer drinker. A new car purchaser might have 300 different types of cars and light trucks, domestic and imported, to choose from.

Along with the “over choice” and market diversity of the 1980s came decreased leisure time for the consumer, not more leisure time as predicted in the 1940s. The number of free hours a person possesses decreased from four to one since the 1970s. The reason for this is that the average time spent at work has increased seven to eight hours a week since 1978 (Stern 1987). More than 50 percent of all women are working, so household duties are done after 6 p.m. or on weekends. Single working mothers have virtually no free time and can’t take care of all they want to do. This scenario has led to a demand for convenience products and convenience shopping. Home catalogs, home TV shopping, home computer shopping, and home shopping parties are part of this easier access to goods that will prevail in the 1990s. The efficiency of in-home shopping, especially through direct marketing, is exemplified by the fact that American Express sold 7 percent of all the luggage bought in the U.S. by sending mailings to affluent cardholders whose charge records showed they spent heavily on travel-related merchandise.

This the cognitive miser of the 1980s is a product of decreased time for shopping decisions and increased choice in the marketplace. It is an adaptive strategy to suit the decision-making environment.

THE COLLECTIVE BUYER OF THE 1990s

The focus on individual decision processes for personal purchase of products and services will be replaced by a more collective decision-making style during the 1990s. This will be caused by the changing cultural patterns of North America combined with the decrease in purchasing power of the individual consumer. The culture of North America is changing due to: (1) the rapid increase in the percent of elderly people who are neither healthy nor wealthy; (2) the aging of the baby boomers, causing a shift in values and needs; and (3) increased immigration from Asian cultures with high birth rates to offset the North American decline in population. All three categories of this cultural shift will have to rely on joint decisions for purchase of goods and services, since goods and services will be shifting to a collective consumption style rather than individual consumption in the North American marketplace.

Individuals will combine households in an increasing rate to make life more affordable. The evidence that this joint living may be a trend for the future is exemplified by the fact that 6.2 percent of all employed people are working two jobs, mainly to meet living expenses. When the economy turns down these extra jobs will not be available, and people will have to decrease their standard of living to meet day-to-day expenses. More unmarried people will share apartments, more single-parent families will couple up, and more children will live at home longer. Thus, more people will be sharing consumer goods just due to living arrangements. Also, through the changing face of North American consumers, the marketplace will continue to change and supply more and more services for these groups. The changing face of the consumer will alter the marketplace and the mode of decision making.

Much has been written about the marketing opportunities for the senior segment. Right now approximately 7.3 percent of the population is over 65. By the year 2000, this group will increase by 20 percent, making it the fastest-growing segment of our population. This is one reason why marketers focus on the elderly. However, this group is not all that wealthy or all that healthy. It is estimated that 80 percent of people over 65 have chronic health problems, and 16 percent have severe physical problems. One in five Americans over the age of 85 resides in a nursing home.

The Baby Boomers

A full one-third of the population is bulging at middle age. In the year 2000 they will be 36 to 54 years old and at the middle of peak earnings. They are important to our view of consumer behavior because they will head 44 percent of all households and still account for a majority of purchasing power. Due to the conflicting structure of the population versus the corporate culture, there will be less moving around among this group, and they will be more stable in their jobs. Hence, their values and attitudes will change dramatically to reflect this stability. The collective decision-making style will be based on their stable environment.

Questions

  1. Discuss as to how the consumer behavior has evolved post 1950?

 

CASE – 3                                                                                                                         

Consumer behaviour: Men still major decision-makers
In India, men continue to dominate.

Even today, only 16 per cent of Indian professionals are women. Therefore, consumer decision-making in all areas — ranging from what cars to buy to what clothes manufacturers to patronize — is dictated by men when it comes to the most upscale market segment in India.

‘Horizon 2003’, a study by BBC World, BBC’s 24-hour international news and information channel, using the latest census as a base, gives some startling insights into the attitudes and activities of India’s leading consumers and decision makers.

The research, conducted by market research agency NFO-MBL across six top metros and profiling 380,000 people, will greatly help media planners, agencies and advertisers to understand this particular horizon professional.

Life insurance was found to be the biggest financial investment for most Indians, followed by the stock markets.

Washing machines were the most desirable consumer durable products, followed by cars and desktop computers.

Forty-two per cent of the respondents owned a mobile phone, of which 52 per cent had a Nokia, and 42 per cent of these subscribed to AirTel cellular service.

For example, more than half of the people surveyed (56 per cent) felt that it was all right to give or take bribes to get their work done. A slightly smaller number (40 per cent) thought it perfectly acceptable ‘to make money through underhand means/deals.’

Who decides

  Self Spouse Joint Family Elders Children
Buying a house 25% 5.8% 20.8% 30.1% 14% 0.4%
Child’s marriage 7.7% 5.9% 21.8% 18.7% 11.5% 4%
Own marriage 20.4% 2.5% 6.2% 22.4% 29.7% 0.9%
Child’s education 15.1% 6.6% 34% 12.5% 5.6% 4.6%
Taking a loan 31.4% 5% 24.3% 18.1% 9.2% 0.6%
Fixing monthly budget 24.2% 10.3% 33.3% 18.5% 11.2% 0.6%
Buying entertainment durables, like TVs 21.4% 8.2% 33.4% 26.7% 7.4% 1.6%
Buying durables like washing machines 19.3% 10.7% 33.3% 26.2% 8.2% 1%
Deciding on holiday destinations 20.6% 6.1% 28.4% 31.8% 4.5% 5.6%

“It is very difficult to survey this group by using traditional methods,” says Jeremy Nye, BBC World’s head of research, in the study. “However, it is important to know the tastes of these professionals who will be shaping India’s destiny.”

Adds Dezma De Melo, research manager, BBC World: “All the individuals in this class are rather alike. They have similar opinions, attitudes and beliefs.”

The study showed the emergence of certain definite trends in the area of just who decides what. For example, the person in question seemed to play a major role in deciding the monthly budget or whether to take a loan, but when it came to deciding whom he should marry, it was still the older people in the family who played a key role.

Both, the husband and the wife jointly decided on issues like the marriage of progeny. In a majority of cases, the whole family got together to decide what kind of house to buy where to go for a holiday.

Alcohol consumption habits indicated that 25 per cent drank alcohol, of which 72 per cent were beer drinkers. Most executives drank at bars and pubs, while self-employed professionals drank at friends’ homes. Businessmen preferred parties to have a drink or two at.

The research has an entire section focusing on travellers as a separate target audience. This is the first time that anyone has studied consumer behaviour in this area in such depth.

The study tries to understand the travelling habits — such as the mode of transport, kind of holidays, choice of place and media consumption while travelling — which will be different from normal household viewership.

The survey sets forth several interesting findings in this area. Sixty per cent people take a holiday in India, while 5 per cent take a holiday abroad. Eighteen per cent travel on business within India, while 8 per cent travel on business abroad at least once in a year.

As for international holidays taken in the last one year, people from Mumbai (30 per cent), Bangalore (35 per cent) and Hyderabad (26 per cent) preferred travelling to the United States, while 35 per cent from Kolkata and 41 per cent from Chennai travelled to Singapore.

A quarter of the respondents from Delhi went to Nepal for a holiday.

Among domestic business travellers, Jet Airways (60 per cent) is the preferred airline, followed by India Airlines (53 per cent) and Sahara Airlines (20 per cent). For domestic leisure travel, Jet Airways and Indian Airlines enjoy an equal share.

Among international leisure destinations, Singapore is the favourite with 23 per cent respondents, followed by 22 per cent opting to visit the US. International business travellers prefer the US (24 per cent) followed by Singapore (23 per cent) and the United Kingdom (13 per cent).

Interestingly, people in the six metros surveyed seemed to show entirely different tastes in watching television. The average number of channels watched was five and an average of 100 minutes of television is watched a day, with 30 minutes devoted to news.

News and Sports are the most preferred programme genres, followed by general entertainment. However, 29 per cent of the respondents in Delhi preferred News channels, while only 14 per cent of those surveyed in Bangalore preferred News. Bangaloreans prefer watching Sports with a high of 34 per cent.

“We look forward to Horizon 2003 being a tool for advertisers and planners to get a better understanding of this upscale, influential audience. We have been able to offer better solutions on the channel to advertisers based on the learning of this upmarket audience,” Seema Mohapatra, head of advertising sales for BBC World, says.

The survey also found that 95 per cent of the professionals were proud to be Indians, while 75 per cent believed risks are worth taking.

Questions

Q1) With reference to case above, define the terms below, and justify how they influence consumer behaviour?

Cultural and Cross-Cultural Influences

Subculture and Social Class

Reference Groups and Family

 

CASE-4                                                                                                                       

After its successful launch of local classifieds, Admanya, India’s leading consumer internet portal today announced the launch of a free classifieds matrimony service for its users .Based on user suggestions and requests, Admanya realized the needs of people in India who are extremely busy yet believe in the traditional way of matchmaking. With its network across 500 cities in India, this new functionality of Admanya will also help people from smaller cities in their search for life partners.
Ranjana, a 26 year old software professional from Bangalore says, “Admanya has always been coming up with surprises. With our busy and hectic schedule this is indeed a welcome surprise for us, seeking a simple platform for matrimonial alliances.”
Mr. Jaydeep Bhattacharjee, the founder and CEO of Admanya says, “People in India have always been rooted in tradition and religious beliefs. They believe in arranged marriages rather then romanticized tying of partners. So, we are indeed honoured to extend this free service to our members to make their search for a life partner fast and easy. With no elaborate profiles required posting a matrimonial ad in Admanya will be simple and hassle-free.”
Admanya is not only an online classifieds service that caters to the growing requirements of communities all over the world but is also a place for product reviews, consumer feedbacks and an emerging social community. You can find a job, recruit people, sell your car or buy one, rent your house and do much more through Admanya classifieds.

Questions 

  1. Matrimonial classified has moved from newspaper to online service, how has the consumer behavior changed, what are the factors which had influenced it?

Consumer Behavior

27 Jun

1. Kellogg launched cornflakes as a breakfast food in Indian market, they were not able to penetrate the Indian market effectively, explain what could be the main reason for not able to penetrate Indian breakfast segment effectively, and they made certain changes in product positioning, what are the changes incorporated by them.

2. One of the European company engaged in the manufacture of highly specialized artificial nose (Electronic Smell Sensor), which has varied application in various industries, however they are planning to find out the market opportunity for their product in the food segment in India. Prepare a detailed questionnaire keeping in mind food Industry in mind (Example – Fast food chains to identify quality of the food etc.).

3. An International company that is very well-known for Perfume brands in both the categories of men and women. The company has their own manufacturing unit and marketing team.

a. Discuss the market entry strategy from the point of Indian culture.

b. Make steps you will consider pre-launch- explain each step logically.