Consumer Behavior

Q 1 – Describe the inter-relationship between consumer behavior as an academic discipline and the marketing concept Ans The study of consumer behavior enables marketers to understand and predict consumer behavior in the marketplace; it is concerned not only with what consumers buy but also with why, when, where, and how they buy it. Consumer research is the methodology used to study consumer behavior; it takes place at every phase of the consumption process: before the purchase, during the purchase, and after the purchase.

Consumer behavior is interdisciplinary; that is, it is based on concepts and theories about people that have been developed by scientists in such diverse disciplines as psychology, sociology, social psychology, cultural anthropology, and economics.

Consumer behavior has become an integral part of strategic market planning. The belief that ethics and social responsibility should also be integral components of every marketing decision is embodied in a revised marketing concept—the societal marketing concept—that calls on marketers to fulfill the needs of their target markets in ways that improve society as a whole.

Q 2 – What is the difference between primary and secondary research? Under what circumstance might the availability of secondary data make primary research unnecessary? What are the advantages and limitations of secondary data? Ans – Primary research consists of the collection of original primary data. It is often undertaken after the researcher has gained some insight into the issue by reviewing secondary research or by analyzing previously collected primary data. It can be accomplished through various methods, including questionnaires and telephone interviews in market research, or experiments and direct observations in the physical sciences, amongst others. Primary and Secondary research are the difference in conducting the research.

In Primary research, there is no data available for the researcher, hence the researcher has to start from scratch. This means that the researcher needs to design questionnaires, collect data from respondents and then analyze the result. If you are doing secondary research, the researcher has the necessary data available. These data are made available through other publications or reports, like newspaper or annual reports of companies. If the researcher is doing secondary research, there is no need to start from scratch, he or she uses the data or information done by other organizations or publications. The important thing is that there are advantages and disadvantages for both methods. Primary research is more time consuming and costly. While some secondary research may not suit the researcher’s needs.

With primary research, you are collecting data yourself. i.e. if the question was how many red cars drive past in 1 hour you go out and count the cars but if the question is how many people gave up smoking in 2006 you look at the records, you don’t ask everyone if they gave up somking in 06. Secondry data is not your own research basically.

(b) under following circumstances might the availability of secondary data make primary research unnecessary – THE CIRCUMSTANCES INCLUDE
-data used for developing strategic planning.
-data used for developing corporate planning.
-data used for developing business planning.
-data used for developing marketing planning.
-data used for developing demand forecasting.

If you are launching the same product that is available in the market before, then you don’t need do primary research because in market sufficient information is available. You can use secondary data. Advantages and limitations of secondary data?

Secondary data is the data that have been already collected by and readily available from other sources. Such data are cheaper and more quickly obtainable than the primary data and also may be available when primary data can not be obtained at all. Advantages of Secondary data

1.It is economical. It saves efforts and expenses.
2.It is time saving.
3.It helps to make primary data collection more specific since with the help of secondary data, we are able to make out what are the gaps and deficiencies and what additional information needs to be collected. 4.It helps to improve the understanding of the problem.

5.It provides a basis for comparison for the data that is collected by the researcher. Disadvantages of Secondary Data
1.Secondary data is something that seldom fits in the framework of the marketing research factors. Reasons for its non-fitting are:- a.Unit of secondary data collection-Suppose you want information on disposable income, but the data is available on gross income. The information may not be same as we require. b.Class Boundaries may be different when units are same.

Before 5 YearsAfter 5 Years
2500-50005000-6000
5001-75006001-7000
7500-100007001-10000
c.Thus the data collected earlier is of no use to you.
2.Accuracy of secondary data is not known.
3.Data may be outdated.
Evaluation of Secondary Data
Because of the above mentioned disadvantages of secondary data, we will lead to evaluation of secondary data. Evaluation means the following four requirements must be satisfied:- 1.Availability- It has to be seen that the kind of data you want is available or not. If it is not available then you have to go for primary data. 2.Relevance- It should be meeting the requirements of the problem. For this we have two criterion:- a.Units of measurement should be the same.

b.Concepts used must be same and currency of data should not be outdated. 3.Accuracy- In order to find how accurate the data is, the following points must be considered: – a.Specification and methodology used;

b.Margin of error should be examined;
c.The dependability of the source must be seen.
4.Sufficiency- Adequate data should be available.
Robert W Joselyn has classified the above discussion into eight steps. These eight steps are sub classified into three categories. He has given a detailed procedure for evaluating secondary data. 1.Applicability of research objective.

2.Cost of acquisition.
3.Accuracy of data.
Q 3 – How are market segmentation, targeting and positioning inter-related? Illustrate how these three concepts can be used to develop a marketing strategy for a product of your choice. Ans – Segmentation, Targeting, and Positioning – Building the Right Relationships with the Right Customers Steps in market segmentation, targeting and positioning

Market Segmentation
Identify bases for segmenting the market
Develop segment profiles
Target Marketing
Develop measure of segment attractiveness
Select target segments
Market Positioning
Develop positioning for target segments
Develop a marketing mix for each segment

Market Segmentation – Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes. Segmenting Consumer Markets – Geographical segmentation

Demographic segmentation
Most popular segmentation
Psychographic segmentation
Lifestyle, social class, and personality-based segmentation
Behavioral segmentation

Geographic Segmentation Variables
•World region or country
•U.S. region
•State
•City
•Neighborhood
•City or metro size
•Density
•Climate

Demographic Segmentation Variables
•Age
•Gender
•Family size
•Family life cycle
•Income
•Occupation
•Education
•Religion
•Race
•Generation
•Nationality

Behavioral Segmentation Variables
•Occasions
•Benefits
•User Status
•Attitude Toward the Product
•User Rates
•Loyalty Status
•Readiness Stage

Segmenting Business Markets
Demographic segmentation
Industry, company size, location
Operating variables
Technology, usage status, customer capabilities Purchasing approaches Situational factors
Urgency, specific application, size of order
Personal characteristics
Buyer-seller similarity, attitudes toward risk, loyalty

Segmenting International Markets
Geographic segmentation
Location or region
Economic factors
Population income or level of economic development

Political and legal factors
Type / stability of government, monetary regulations, amount of bureaucracy, etc. Cultural factors
Language, religion, values, attitudes, customs, behavioral patterns Requirements for Effective Segmentation
Measurable
Size, purchasing power, and profile of segment
Accessible
Can be reached and served
Substantial
Large and profitable enough to serve
Differentiable
Respond differently
Actionable
Effective programs can be developed

Target Marketing – Consists of a set of buyers who share common needs or characteristics that the company decides to serve Evaluating Market Segments
Segment size and growth
Segment structural attractiveness
• Level of competition
• Substitute products
• Power of buyers
• Powerful suppliers
Company objectives and resources
Selecting Target Market Segments
Undifferentiated (mass) marketing
Differentiated (segmented) marketing
Concentrated (niche) marketing
Micromarketing (local or individual)

Choosing a Target Marketing Strategy – Considerations include:
Company resources
The degree of product variability
Product’s life-cycle stage
Market variability
Competitors’ marketing strategies
Socially Responsible Targeting
Some segments, especially children, are at special risk
Many potential abuses on the Internet, including fraud Internet shoppers Controversy occurs when the methods used are questionable

Positioning:
The place the product occupies in consumers’ minds relative to competing products. Typically defined by consumers on the basis of important attributes. Involves implanting the brand’s unique benefits and differentiation in the customer’s mind. Positioning maps that plot perceptions of brands are commonly used. Choosing a Positioning Strategy

1.Identifying possible competitive advantages – Differentiation can be based on Products
Services
Channels
People
Image

2.Choosing the right competitive advantage
•How many differences to promote?
Unique selling proposition
Several benefits

•Which differences to promote? Criteria include:
Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Profitable

3.Choosing a positioning strategy
•Value propositions represent the full positioning of the brand
•Possible value propositions:
More for More
More for the Same
More for Less
The Same for Less
Less for Much Less
Developing a Positioning Statement – Positioning statements summarize the company or brand positioning EXAMPLE: To (target segment and need) our (brand) is (concept) that (point-of-difference) Communicating the Positioning – Companies must be certain to DELIVER their value propositions. Positions must be monitored and adapted over time. Case Study – Procter & Gamble

•Sells multiple brands within the same product category for a variety of products •Brands feature a different mix of benefits and appeal to different segments •Has also identified different niches within certain segments •Product modifications are useful: Tide offers seven different product formulations to serve different niches’ needs

Q 4 – Discuss the ethical issues related to the statement ‘marketers don’t create needs, needs pre-exist marketers’. Can marketing efforts change consumers needs? Why or why not? What are the advantages and disadvantages of using Maslow’s need hierarchy for segmentation and positioning applications? Ans – Marketing doesn’t create needs. Needs are what people have before the marketer shows up. Smart marketers identify unmet needs and look for ways to satisfy those needs and make a profit at the same time.

Customers have needs and marketing identifies those needs and based on the company’s capabilities, defines product and/or service characteristics that satisfy some or all of those needs. Then, marketing communicates the product features and benefits to the customers in such a way that they can realize how the product and/or service satisfies their needs and they select and purchase that product. Marketing does not create needs.

One area of confusion on this point is when a company comes out with a “new to the world” product. Since there has been no such product before, how can there have been needs? An example of this is the PC. No one had a computer in their house until the PC was invented. So how can you measure the needs of the customer for a PC. Surely, marketing, in specifying the PC, created a need. This logic is flawed. There were needs that were not met or not met fully before the PC came along – for document creation, games, communications, etc. All of these needs were met via other technological solutions: typewriter, board and card games, telephone and mail. With a little debatability, the PC does in fact better satisty these needs, but the needs where there before.

Marketers must try to understand the target market’s needs, wants and demands. Needs are basic human desires. Wants are shaped by one’s society. Demands are wants for specific products backed by an ability to pay. Marketers do not create needs – needs pre-exist marketers. Marketers, along with society influence wants. There are five types of needs that marketers need to understand:

•Stated needs
•real needs
•unstated needs
•delight needs
•secret needs.

Advantages and Disadvantages of Using Maslow’s Hierarchy of Needs Advantages – Advantages of using Maslow’s Hierarchy of Needs are that, you will not make the mistake of trying to appeal to an audience’s higher needs when their more basic needs are not yet satisfied. Subsequently, understanding where your audience stands on the above list is an important step in creating a presentation that interests your audience. Using Maslow’s Hierarchy of Needs saves you from making a presentation to an audience that is entirely unreceptive to what you have to say. Disadvantages – Disadvantages of using Maslow’s Hierarchy of Needs are that since your audience member is unique, just like everyone else, it is difficult to place him or her in a box.

Also, people can fulfill their higher-level needs when unexpected circumstances may suddenly threaten their much shorter-term needs, furthering complexity. Therefore, such an approach is easier on a small scale than a large group. Q 5 – Describe the personality trait theory. Give five example of how personality traits can be used in consumer research. Ans The Personality Trait Theory is one of the most critically debated in the field of personality studies. Many psychologists have theorized using the trait approach to personality, which advocates the differences between individuals. To better understand the Personality Trait Theory, suppose you are asked to describe your friend’s personality. You may say that he is cheerful, sociable and fun to be with. These traits and more are the main focus of the trait approach. Gordon Allport: Trait Theory

According to Gordon Allport, one English dictionary could provide you more than 4000 words describing or synonymous to a single personality trait. Because of this finding, he was able to categorize traits into three general levels. They include: 1. Cardinal Traits – For sure you have heard the words “Christ-like”, “Freudian” and “Narcissist”. The origins and meanings of these traits are very easy to determine. A person may be called “Christ-like” if he sacrifices his own good for the benefit of others. Cardinal traits, therefore, are the ones that dominate the entirety of a person’s life such that a person carrying such trait may even become famous and have their name become synonymous with these traits. 2. Central Traits – These are general characteristics that you use to describe another person are called central traits. Examples include kind, sincere, cool and jolly. 3. Secondary Traits – These traits are those that only come out under certain situations. For example, you become uneasy when a pop quiz is announced. Raymond Cattell: Sixteen Personality Factor Questionnaire

From Allport’s list of about 4,000 traits, Raymond Cattell decreased the number into 1713 because he believed that uncommon traits should be eliminated. In his research, Cattell eventually narrowed down the list into 16 personality traits. He then developed the Sixteen Personality Factor Questionnaire (16PF), an assessment tool commonly utilized today. The 16 personality traits include: 1. Warmth (A)

2. Reasoning (B)
3. Emotional Stability (C)
4. Dominance (E)
5. Liveliness (F)
6. Rule-consciousness (G)
7. Social Boldness (H)
8. Sensitivity (I)
9. Vigilance (L)
10. Abstractedness (M)
11. Privateness (N)
12. Apprehension/Apprehensiveness (O)
13. Openness to change (Q1)
14. Self-reliance (Q2)
15. Perfectionism (Q3)
16. Tension (Q4)

Hans Eysenck: Three Dimensions of Personality
British psychologist Hans Eysenck developed a model of personality based upon just three universal trails: Unlike Allport and Cattell, theorist Hans Eysenck only included three general traits in his list. They are: 1. Introversion- Extraversion – As in Carl Jung’s personality type theory, Eysenck classified people as either introvert, those who directs focus on inner world, or extravert, those who gives more attention to other people and his environment. 2. Neuroticism-Emotional Stability – This category is synonymous to “moodiness versus even-temperedness”, where in a neurotic person is inclined to having changing emotions from time to time, while an emotionally stable person tends to maintain a constant mood or emotion. 3. Pyschoticism – This dimension refers to the finding it hard to deal with reality. A psychotic person may be considered hostile, manipulative, anti-social and non-emphathetic. The Big Five: Five-Factor Model

As a result of a thorough research on Cattell’s and Eysenck’s personality trait theories, the Big Five theory was formulated. This model states that there are 5 core traits which collaborate in order to form a single personality. These include: 1.Extraversion – tendency to be active, sociable, person-oriented, talkative, optimistic, empathetic 2.Openness to Experience – tendency to be imaginative, curious, creative and may have unconventional beliefs and values. 3.Agreeableness – tendency to be good-natured, kind-hearted, helpful, altruistic and trusting. 4.Conscientiousness – tendency to be hardworking, reliable, ambitious, punctual and self-directed. 5.Neuroticism – tendency to become emotionally unstable and may even develop psychological distress

five example of how personality traits can be used in consumer research – Personality traits are characteristics of certain non-physical aspects of a person that stand out and make that person different from others. Some examples of an almost infinite list are: being shy, nice, friendly, talkative or not, self-centered or selfless, considerate, compassionate, loving, expressive or not, vibrant, antisocial, intelligent, sarcastic, mature or immature, superficial, confident or insecure, and so on. Maybe the term could also include things like skills, talents, likes and dislikes, since they also say a lot about a person.