Consumer Behavior Models

Economic or Marshallian Model

 This theory was first advanced by the economists. They gave formal explanation of buyer behavior. According to this theory the consumers are assumed to be rational and conscious about economic calculations. They follow the law of marginal utility. An individual buyer seeks to spend his money on such goods which give maximum satisfaction (utility) according to his interests and at relative cost. The buying behavior is determined by the income – its distribution and level - affects the purchasing power. The economic factors which affect the buyer behavior are:

1. Disposable Personal Income 

 The economists attempted to establish relationship between income and spending. Disposable personal income represents potential purchasing power that a buyer has. The change in income has direct relation on buying habits. Personal consumption spending tends to both rise and fall at a slower rate than what disposable personal income does. Disposable of personal income depend on various situations such as:

1. Size of family income 

 Size of family and size of family income affect the spending and saving patterns. Usually large families spend more and small families spend less in comparison. 

2. Income Expectation

 The income expected to be got in future has direct relation with the buying behavior. The expectation of higher or lower income has a direct effect on spending plans.

3. Tendency to Spend and to Save

 This is related to the habit of buyers to spend or save out of the disposable income. If the buyers give importance to the present needs, they dispose off their income. And buyers spend less if they give importance to future needs.

4. Liquidity of Funds 

 The present buying plans are greatly influenced by liquidity of assets readily convertible into cash. For example, readily marketable shares and bonds, bank balances come into this category. However, this convertible assets influence offer freedom to buyer, who actually buys with current income. 

5. Consumer Credit

 Facility of consumer credit system - hire purchase, installment purchase etc., plays an important role in purchase decision. A buyer can command more purchasing power. ‘Buy now and pay later’ plays its role effectively in the rapid growth of market for car, scooter, washing machine, furniture, television and so on.

 The economic model of consumer behavior is uni-dimensional. It is based on certain predictions of buying behavior.They are:

• a. Lower the price of the product, higher the sales 
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• b. Lower the size of the substitute product, lower the sale of the product 
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• c. Higher the real income, higher the sales of this product d. Higher the promotional expenses, higher are the sales

 However, ‘lower the price of a product, higher the sales’ may not hold good as buyer may feel that the product is sub-standard one. 

 The behavioral researchers believe that this model ignores all the other aspects such as perception, motivation, learning, attitude and 

personality, and socio-cultural factors. Further, it is also observed that consumer also gets influenced by other marketing variables such as products, effective distribution network and marketing communication. Hence, it is felt that the economic model is inadequate. It assumes that market is homogeneous where markets are assumed to be heterogeneous. 

Learning or Pavlovian Model

 Psychology has contributed lot to the marketers to understand the buyers. It explains how consumers learn about a product and the way they can recall from the memory, and the development of buying habits. All theories of buyer’s behavior have been primarily based on learning, viz., Stimulation-Response or S-R model, this theory of learning is explained as a process of repetition, motivation, conditioning and relationship. Repetition improves learning. For example, when advertisements are repeated, people may be able to understand further about the product. This is aimed at repeated advertisements for drawing the attention and interest of the people. According to stimulus- response theory learning involves the following steps.

a. Drive: It is a strong internal stimulus which impels action and when it is directed towards a drive reducing object, it becomes a motive. A drive thus motivates a person for action to satisfy the need. Drives may be primary-thrust, hunger etc., and secondary - desire for money, pride etc. 

b. Cues: These are weak stimuli. They determine when the buyer will respond. c. Response: Response is the feedback reaction of the buyer. It is an answer given to drive or cue. The individual has to choose some specific response in order to fulfill the drive or the need which was acting as a stimulus. For example, a hunger drive can be satisfied by visiting a shop known through an advertisement and buying the readymade food product. If that experience is satisfactory, this response of satisfaction is strengthened.

Drives, Cues, and Responses

 Thus this learning of links which mean stimulus, cue and response results in habits. Along with this, attitudes and beliefs are also learnt. As it becomes a habit, the decision process for the individual becomes routine affair. Thus, learning model has the following prediction:

a. Learning refers to change in behavior brought about by practice or experience. Everything one does or thinks is learnt.

 b. Product features such as price, quality, service, brand, package etc., acts as cues or hints influencing consumer behavior

 c. Marketing communications such as advertising, sales promotion etc., also act as guides persuading buyer to purchase the product.

 d. Response is decision to purchase.

Psychoanalytical Model

 Sigmund Freud developed this theory. According to him human personality has three parts:

1. The Id, is the source of all mental energy that drives us to action

 2. the super ego, the internal representation of what is social is approved conscience 

3. The Ego, the conscious director of id impulses for finding him satisfaction in socially acceptable manner. 

 The buyer behavior depends upon the relative strength of the three elements in the personal ability. Motivational research has been involved in investigating motives of consumer behavior so as to develop suitable marketing implications accordingly. This approach has been used to generate idea for developing- design, features, advertising and other promotional techniques.

Sociological Model

 According to this theory the individual decision and behavior are quite often influenced by the family and the society. He gets influenced by it and in turn also influences it in its path of development. He plays many roles as a part of formal and informal associations or organizations i.e., as a family member, employee of a firm, member of professional forum, and as an active member of an informal cultural organization. Hence he is largely influenced by the group in which he is a member. For example, the decision may be made by one, actual buying may be done by another, and the product is used by yet another member of the family. Here, a mother takes a decision to buy a tiny cycle for her child, the cycle is purchased by the father and the user is the child. 

Howard - Sheth Model

 The Howard - Sheth model shows the processes and variables influencing the buyer behavior before and during the purchase. It emphasizes three key variables- perception, learning and attitude formation. It explains the way consumers compare available products in order to choose the best which fits their needs and desires. Consumers learn by finding out the relevant information about products through two sources of information:

a. Social sources 

b. Commercial sources

 The gathered information is used for comparison of alternative brands according to various choice criteria. The basic structure of the model is given below

Basic Structure of Buying Behavior

The following predictions can be made about the model

   i. Stimuli or perceived learning occurs and results in output   

ii.  Output occurs on the basis of the perception and learning non- observable variables.

 iii.  Exogenous or outside variables such as social class, financial status etc., are used to predict perception and learning 

This model describes the buying behavior in various stages

 Stage 1: Motives are based on needs demanding satisfaction. They lead to goal directed behavior satisfaction. Motives ignite a drive to search and secure information from alternatives. Stimulus- input variables are marketing programme and social environment. 

Input or stimuli:

I. Product themselves in the market 

II. Commercial information on them, say quality, price, availability and distinctiveness 

III. Product information obtained from friends, acquaintances and reference groups. 

 Thus, a number of products or brands are perceived and considered by the consumers mind. In this manner the resulting perception is selected. 

 Stage 2: While evaluating, many brands are eliminated or left out for further consideration. Now, only few will receive further consideration. Each will have plus / minus points. These choice considerations act as connecting links between motives and selected brands choice consideration which provide a structure to motives and the process of learning and experience. These considerations develop as criteria/rule to decide on the goods that have the prospects of yielding maximum satisfaction. The market must offer a good marketing-mix that is used by the buyer to influence the choice criteria. 

 Stage3: The choice criteria gives rise to predisposition- the relative preference in favour of particular brand. Sudden hindrances may sometimes stop the process. This may be in form of price, inadequate supply of brand, external variables such as financial status, time pressure etc. If they do not occur, the preference results in a response output such as attention, comprehension, attitude, buying intention and preferably actual purchase.

 Stage 4: Feedback of purchase experience is sent to the buyer which shows if the actual satisfaction was equal to the expected satisfaction. Satisfaction leads to repurchase, and repeat orders indicate brand loyalty. The marketer is interested in this outcome. Buying behavior is influenced by motives (rational / emotional curiosity) attitudes, perception, social factors and personal factors. 

Black Box of Buyer behavior

 Thus models of buyer behavior are generally based on certain factors internal to the consumer e.g., learning, personality, attitudes and perceptions. The external factors may be in the form of group, cultural and inter-personal influences and effects advertising and communications. The action of individuals is the result of both internal / external factors and interactions to the consumer decision making processes. The modern concepts of the buying behavior state that the behavior is the result of interaction between people centered factors and situation centered factors

  The marketer is expected to be aware of the person centered factors such as buyer motivation, learning, perceptions, attitudes, values and beliefs. Similarly, marketers must be aware of social environment and internal personal interactions influencing the buyer behavior. 

Howard – Sheth Brand Buyer Behavior Model 

Nicosia Model

 The buyer behavior model is taken from the marketing mans point of view. It is also called systems model as the human is analysed as a system, with stimuli as the input to the system and the human behavior as an output of the system. Francesco Nicosia, an expert in consumer motivation and behavior has developed this in 1966. He tried to explain buyer behavior by establishing a link between the organization and its prospective consumer. Here the messages from the company initially influence the predisposition of the consumer towards the product and service. Based on the situation, the consumer will have a certain attitude towards the product. This may result in a search for the product or an evaluation of the product attributes by the consumer. If this step satisfies the consumer, it may result in a positive response, with a decision to buy the product or else the reverse may occur. 

 The Nicosia model divides the above activity explanation into four basic areas:

 Area 1: Field one has two sub areas-the consumer attributes and the firms attributes. The advertising message from the company will reach the consumers attributes. Certain attributes may develop sometimes depending upon the way the message is received by the consumer. The newly developed attribute becomes the input for area 2. 

 Area 2: This area is related to the search and evaluation undertaken by the consumer of the advertised product and also to verify if other alternatives are variable. If the above step motivates to buy the product / service, it becomes the input for the third area.

 Area 3: This area explains as how the consumer actually buys the product. 

 Area 4: This is related to the uses of the purchase items. This can also be used as an out put to receive feedback on sales results to the firm. 

Summary

 The heterogeneity among people across the world makes understanding consumer buying behavior an intricate and challenging task. Product motives and patronage motives play a crucial role in consumer purchases. Like individuals organizations also make many buying decisions. The major factors that distinguish it from consumer decision are Market structure and Demand, Buyer characteristics, and Decision process and buying patterns. 

The degree of involvement has a lot of impact on search of information, Information processing, and Transmission of information. The various models of consumer involvement help marketers to study purchase behavior across product segments.

 Consumers usually go through five stages in arriving at a purchase decision. In the first stage, the customer identifies an unsatisfied need. In the second stage consumer collect information about the product and brands. In a third stage, the consumer evaluates all the alternatives with the help of available information. Later in stage four, the customer makes a purchase decision. And finally in the fifth stage, consumer experiences post-purchase satisfaction or dissatisfaction. Organizational buyer has different decision making criteria. Decision making rules – Compensatory and Non compensatory – simplify the complex nature of decision making to consumers. 

 Understanding consumer behavior is the basis of the formulation of marketing strategies. Consumer behavior studies help in designing effective marketing strategies like, Marketing-mix Strategy, Market Segmentation Strategy, Product Positioning Strategy, and Marketing Research. As consumer behavior is very complex to understand, consumer models aid marketer to put their effort to understand in right direction. The models –Economic, Learning, Psychoanalytic, Sociological, Howard-Sheth and Nicosia enables marketers to understand and predict consumer behavior in the market place.

Self Assessment Questions

1. Explain the nature of consumer behavior 

2. Justify the statement, “The evaluation of marketing concept from mere selling concept to Consumer-oriented marketing has resulted in buyer behavior becoming an independent discipline.” 

3. Compare and contrast the buying behavior of organization market and retail consumers. 

4. What is Consumer Involvement? Discuss the factors that affect the Consumer Involvement. 

5. How does processing of information affect consumer involvement? 

6. Discuss various consumer involvement models and their suitability to different organizations? 

7. What essential elements are required to understand consumer decision making? 

8. How does decision making change because of change in purchase involvement? 

9. How can a consumer arrive at a decision? Explain various stages in it. 

10.  What is customer value and why is it important to marketers?

 11.   What are the four major marketing implications to understand consumer Behavior? 

12.   List the inputs of various decisions making models and discuss their limitations in the market place. 

13.   How do compensatory and non-compensatory decision rules vary? 

14.   Define extensive problem solving, limited problem solving and routine problem solving.

 What are the differences among the three decision-making approaches? 

What type of decision process would you expect most consumers to follow in their first purchase of a new product or brand in each of the following areas

 (a) Cosmetics

 (b) Computer 

(c) Mobile

 (d) Edible oil 

(e) Air-conditioner. Explain your answers.

Application Activities

1. Conduct a focus group interview to discover the buying motives influencing the purchases of following products and brands

a) Vacuum cleaner  b) Purchases in Hyper-Markets  c) LG Refrigerator  d) Sun Umbrella 

2. Interview 15 students on your campus and determine their internet shopping behaviors. Divide them into appropriate groups such as heavy, moderate, light, and non-shoppers and explain why each group behaves as it does. 

3.   Develop a short questionnaire designs to measure the information search consumers engage in prior to purchasing an expensive recreational or entertainment item or service. Your questionnaire should include measures of types of information sought, as well as sources that provide this Information. Also include measures of the relevant consumer characteristics that might influence information search, as well as some measure of past experience with the products. Then interview two recent purchasers of each product, using the questionnaire you have developed.Analyze each consumers response and classify each consumer in terms of information search. 

4. What are the marketing implications of your results? 

5. Develop a short questionnaire to elicit the evaluative criteria consumer might use in selecting the following. Also have each respondent indicate the relative importance he or she attaches to each of the evaluative criteria. Then, working with several other students, combined your information and develop a segmentation strategy based on consumer evaluation criteria and its importance. Finally develop an advertisement for the members of each market segment to indicate that their needs would be served by your brand.

a) Shaving cream 

b) Stationery

c) Santro Car 

d) Panasonic Mobile

 e) Whirlpool Refrigerator 

f) Durian Furniture

Glossary Attitude: A learned predisposition to behave in consistently favorable or unfavorable manner with respect to given object.

Behavioral Learning Theories: Theories based on the premise that learning takes place as the result of observable responses to external stimuli. 

Brand Loyalty: Consumers consistent preference and / or purchase of the same brand in a specific product or service category

Cognitive Learning: The acquisition of new knowledge about the world. 

Compensatory Decision Rule: A type of decision rule in which consumer evaluates each brand in terms of each relevant attribute and then selects the brand with the highest weighted score

Conditioned Learning: According to Pavlovian theory conditioned learning results when a stimulus paired with another stimulus that elicits a known response serves to produce the same response by itself

Conditioned Stimuli: When new products bear a well known symbol on the belief that it embodies the same attributes with the name it is associated with

Conjunctive Decision Rule: Non-compensatory decision rule in which consumers establish a minimally acceptable cut off points for each attribute evaluated. Brands that fall below the cutoff point on any one attribute are eliminated from further consideration

Consumer Behavior: The behavior consumers display in searching for, purchasing, using, evaluating and disposing of products, services, and ideas.

Consumer decision making: Cognitive and emotional aspects such as impulse, family, friends, advertisers, role models, moods, and situations that influence a purchase

Consumer Decision Rules: Procedures adopted by consumers to reduce the complexity of making products and brand decisions

Consumer Research: Methodology used to study consumer behavior

Consumer Socialization: The process, started in childhood by which an individual first learns the skills and attitudes relevant to consumer purchase behavior

Cues: Stimuli that give direction to consumer motives (i.e., that suggest a specific way to satisfy a salient motive

Customer Life Time Value: Profiles based on the collection and analysis of internal secondary data.

Customer Retention: Providing value to customers continuously so that they will stay with the company rather than switch to another firm

Customer Satisfaction: An individual’s perception of the performance of the product or service in relation to his or her expectation

Customer Value: The ratio between the customers’s perceived benefits and the resources used to obtain those benefits

Differentiated Marketing: Targeting a product or service to two or more segments, using specifically tailored product, promotional appeal, price, and/or method of distribution for each

Disjunctive Rule: A non-compensatory decision rule in which consumers establish a minimally acceptable cut off point for each relevant product attribute; any brand meeting or surpassing the cut off point for any one attribute is considered an acceptable choice 

Emotional Motives: The selection of goals according to personal or subjective criteria (e, g., the desire for individuality, pride, fear etc)

Evoked Set: The specific brands consumer considers in making a purchase choice in a particular product category

Extensive Problem Solving: Decision making efforts by consumers that have no established criteria for evaluating a product category or specific brands in that category or have not narrowed the brands to a manageable subset

Feed Back: The response given by a receiver to the sender of the message

Focus Group: A Qualitative research method in which about eight to ten persons participate in an unstructured group interview focused on a product or service concept

Freud Theory: A theory of personality and motivation developed by the psychoanalyst Sigmund Freud 

Information Processing: A cognitive theory of human learning patterned after computer information processing that focuses on how information is stored in human memory and how it is retrieved

Involvement Theory: A theory of consumer learning which postulates that consumers engage in a range of information processing activity from extensive to limited problem solving depending on the relevance of the purchase

Lexicographic Decision Rule: A non-compensatory decision rule in which consumers first rank product attributes in terms of their importance then compare brands in terms of the attribute considered most important. If one brand scores higher than the other brands it is selected: if not the process is continued with the second rank attribute, and so on

Non-compensatory Decision Rule: A type of consumer decision rule by which positive evaluation of a brand attribute does not compensate for negative evaluation of the same brand on some other attributes

Organizational Consumer: A business, government agency, or other Institution that buys the goods, services, and/ or equipment necessary for the organization to function

Purchase Behavior. Behavior that involves two types of purchases: trial purchases and repeat purchase

Repeat Response Behavior: A habitual purchase response based on predetermined criteria

Word-Of-Mouth: Informal conversations concerning products or services

Consumer Behavior and Market Segmentation

The most important marketing decision a firm makes is the selection of one or more segments to focus their marketing effort. Marketers do not create segments but they find it in the market place. Market segmentation is the study of market place in order to discover viable group of consumers who are homogeneous in their approach in selecting and using goods or services. Since market segment has unique needs, a firm that develops a product focusing solely on the needs of that segment will be able to meet the target group desire and provides more customer value than competitor. For example, right segment for ‘Femina’ magazine is educated urban women. The success of this magazine depends on their understanding of the urban woman. 

Consumer Behavior and Product Positioning

 Product positioning is placing the product, service, company, or shop in the mind of consumer or target group. Through positioning marketers seek the right fit between a product and desired customer benefits. The right positioning means understanding the consumer perception process in general and perception of company’s product in particular. For example, Samsung brand is perceived as premium brand by few customers and value-driven brand by others in the market, but marketer must find out what makes their target market to perceive differently and position it accordingly. 

Consumer Behavior and Marketing Research

 Studying consumer behavior enables marketing researchers to predict how consumers will react to promotional messages and to understand why they make the purchase decision they do. Marketers realized that if they know more about the consumer decision making criteria, they can design marketing strategies and promotional messages that will influence consumers more effectively. The importance of consumer behavior made marketers to think of a separate branch in marketing research - Consumer research, to deal exclusively for consumer related issues. The current focus of consumer research is on study of underlying needs and motives in taking purchase decisions, consumer learning process and attitude formation process.

Consumer Behavior and Non-Profit and Societal Marketing 

 A sound knowledge of consumer behavior can help the organizations that sell ideas and concepts of social relevance. Institutions that promote family planning, AIDS free society, governmental agencies, religion orders and universities also appeal to the public for their support in order to satisfy some want or need in society. The knowledge about potential contributors, what motivate their generosity, how these motives can be effectively appealed is useful for the organizations involved in these activities. 

Consumer Behavior and Governmental Decision Making

 Two major areas where consumer behavior study helps government is in policy making on various services, and in designing consumer protection legislation. The knowledge of people’s attitudes, beliefs, perceptions and habits provides adequate understanding of consumers.

Consumer Decision Making Process

The most important environment in which firms operate is their customer environment because the basic belief of marketing oriented company – that the customer is the centre around which the business revolves. Therefore, marketing people need to understand the processes that their customers go through when making decision.

 The consumer decision making process involves series of related and sequential stages of activities. The process begins with the discovery and recognition of an unsatisfied need or want. It becomes a drive. Consumer begins search for information. This search gives rise to various alternatives and finally the purchase decision is made. Then buyer evaluates the post purchase behavior to know the level of satisfaction. The process is explained below with the help of diagram

1.  Need Recognition

 When a person has an unsatisfied need, the buying process begins to satisfy the needs. The need may be activated by internal or external factors. The intensity of the want will indicate the speed with which a person will move to fulfill the want. On the basis of need and its urgency, the order of priority is decided. Marketers should provide required information of selling points.  

2. Information Search

 Identified needs can be satisfied only when desired product is known and also easily available. Different products are available in the market, but consumer must know which product or brand gives him maximum satisfaction. And the person has to search out for relevant information of the product, brand or location. Consumers can use many sources e.g., neighbors, friends and family. Marketers also provide relevant information through advertisements, retailers, dealers, packaging and sales promotion, and window displaying. Mass media like news papers, radio, and television provide information. Nowadays internet has become an important and reliable source of information. Marketers are expected to provide latest, reliable and adequate information.

3. Evaluation of Alternatives

 This is a critical stage in the process of buying. Following are important elements in the process of alternatives evaluation

a. A product is viewed as a bundle of attributes. These attributes or features are used for evaluating products or brands. For example, in washing machine consumer considers price, capacity, technology, quality, model and size. b. Factors like company, brand image, country, and distribution network and after-sales service also become critical in evaluation. c. Marketers should understand the importance of these factors with regards to the consumers while manufacturing and marketing their products. 

4. Purchase Decision

 Outcome of the evaluation develops likes and dislikes about alternative products or brands in consumers. This attitude towards the brand influences a decision as to buy or not to buy. Thus the prospective buyer heads towards final selection. In addition to all the above factors, situational factors like finance options, dealer terms, falling prices etc., are also considered.

5. Post- Purchase Behavior

 Post-purchase behavior of consumer is more important as far as marketer is concerned. Consumer gets brand preference only when that brand lives up to his expectation. This brand preference naturally repeats sales of marketer. A satisfied buyer is a silent advertisement. But, if the used brand does not yield desired satisfaction, negative feeling will occur and that will lead to the formation of negative attitude towards brand. This phenomenon is called cognitive dissonance. Marketers try to use this phenomenon to attract users of other brands to their brands. Different promotional-mix elements can help marketers to retain his customers as well as to attract new customers.

Consumer Decision Rules

 These are generally referred to as information processing strategies. These are procedures that help consumers to evaluate various options and reduce the risk of making complex decisions by providing the guidelines. Decision rules have been broadly classified into two categories: 

1.   Compensatory Decision Rules:

 Consumers evaluate brand or model in terms of each attribute and computes a weighted score for each brand. The computed score reflects the brand’s relative merit as a potential purchase choice. The assumption is that consumer will select the brand that scores highest among alternative brands. The unique feature of this rule is that it balances the positive evaluation of a brand on one attribute to balance out a negative evaluation on some other attribute. For example, positive attribute like high fuel efficiency is balanced with the negative evaluation of high maintenance cost.

2.  Non-compensatory Decision Rules:

In contrast to the above rule non-compensatory rules do not allow consumers to balance positive evaluation of a brand on one attribute against negative evaluation on some other attribute. There are three types of non-compensatory rules.

 Conjunctive Decision Rule: In conjunctive decision rule the consumer establishes a different, minimally acceptable level as a cut off point for each attribute. In this the option is eliminated for further consideration if a specific brand or model falls below the cutoff point on any attribute.

 Disjunctive Rule: It is the ‘mirror image’ of conjunctive rule. Here the consumer establishes a separate minimally acceptable cut off level for each attribute. In this case if an option meets or exceeds the cut off established for any one attribute, it is accepted.

 Lexicographic Decision Rule: In this rule the consumer initially ranks the attributes in terms of perceived relevance or importance. Later he compares different alternatives in terms of the single attribute that is considered most important. On this top ranked alternative, regardless of the score on any other attribute, if one option scores sufficiently high it is selected and the process ends. 

Levels Of Consumer Decision Making

 The consumer decision making process is complex with varying degree. All purchase decisions do not require extensive effort. On continuum of effort ranging from very high to very low, it can be distinguished into three specific levels of consumer decision making:

1 Extensive Problem Solving (EPS) 

2. Limited Problem Solving (LPS) 

3. Routine Problem Solving (RPS) 

1.  Extensive Problem Solving (EPS): 

When consumers buy a new or unfamiliar product it usually involves the need to obtain substantial information and a long time to choose. They must form the concept 

of a new product category and determine the criteria to be used in choosing the product or brand. 

2.  Limited Problem Solving (LPS): 

Sometimes consumers are familiar with both product category and various brands in that category, but they have not fully established brand preferences. They search for additional information which helps them to discriminate among various brands. 

3.  Routine Problem Solving (RPS): 

When consumers have already purchased a product or brand, they require little or no information to choose the product. Consumers involve in habitual and automatic purchases.

Consumer Involvement

Some consumers are characterized as being more involved in products and shopping than others. A consumer who is highly involved with a product would be interested in knowing a lot about it before purchasing. Hence he reads brochures thoroughly, compares brands and models available at different outlets, asks questions, and looks for recommendations. Thus consumer involvement can be defined as heightened state of awareness that motivates consumers to seek out, attend to, and think about product information prior to purchase. 

Causes of Consumer Involvement

 The factors that influences consumer involvement include personal, product and situational.

• Personal Factors

 Self-concept, needs, and values are the three personal factors that influence the extent of consumer involvement in a product or service. The more product image, the value symbolism inherent in it and the needs it serves are fitting together with the consumer self- image, values and needs, the more likely the consumer is to feel involved in it. Celebrities for example share a certain self-image, certain values, and certain needs. They tend to use products and services that reflect their life style. They get highly involved in purchasing prestigious products like designer wear, imported cars, health care products etc.

• Product Factors

  ➢ The consumer involvement grows as the level of perceived risk in the purchase of a good or service increases. It is likely that consumers will feel more involved in the purchase of their house than in the purchase of tooth paste, because it is a much riskier purchase.

  ➢ Product differentiation affects involvement. The involvement increases as the number of alternatives that they have to choose from, increases.   

➢ The pleasure one gets by using a product or service can also influence involvement. Some products are a greater source of pleasure to the consumer than others. Tea and coffee have a high level of hedonic (pleasure) value compared to, say household cleaners. Hence the involvement is high. 

  ➢ Involvement increases when a product gains public attention. Any product that is socially visible or that is consumed in public, demands high involvement. For example, involvement in the purchase of car is more than the purchase of household items.

• Situational Factors

  ➢ The situation in which the product is bought or used can generate emotional involvement. The reason for purchase or purchase occasion affects involvement. For example, buying a pair of socks for oneself is far less involved than buying a gift for a close friend.  

➢ Social pressure can significantly increase involvement. One is likely to be more self conscious about the products and brands one looks at when shopping with friends than when shopping alone.  

➢ The need to make a fast decision also influences involvement. A consumer who needs a new refrigerator and sees a ‘one- day- only sale’ at an appliances retailer does not have the time to shop around and compare different brands and prices. The eminence of the decision heightens involvement.   

➢ The involvement is high when the decision is irrevocable, for example when the retailer does not accept return or exchange on the sale items. 

 Thus involvement may be from outside the individual, as with situational involvement or from with in the individual as with enduring involvement. It can be induced by a host of personal-product-and situation related factors, many of which can be controlled by the marketer. It affects the ways in which consumers see, process, and send information to others.

Types of Involvement

The two types of involvement are: 

A) Situation

 B) Enduring

• Situational Involvement

 `Situational involvement is temporary and refers to emotional feelings of a consumer, experiences in a particular situation when one thinks of a specific product.

• Enduring Involvement

 Enduring involvement is persistent over time and refers to feelings experienced toward a product category across different situations. For example, holiday- makers renting a resort for their trip are highly involved in their choice, but their involvement is temporary. Whereas involvement of a person whose hobby is bike racing endures overtime and affects his responses in any situation related to pre-purchase, purchase and post- purchase of sport bikes. It is observed that involvement is triggered by special situation in the case of holiday makers, but in the second case, it comes from, and is a part of the consumer.

                               The contrast between situational and enduring involvement is important. When marketers measure involvement they examine the extent to which it can be induced by the product or selling situation. After noticing the type of involvement they are facing, marketers work to control products or selling situations. 

Effects of Consumer Involvement

 Involvement with the product makes consumers process the product-related information more readily. This information is processed thoroughly; hence, it is retained for a longtime. Because of this the consumers become emotionally high and tend to engage in extended problem solving and word- of-mouth communications. These result into three categories: search for information, processing information, and 

information transmission. 

 Customers who are highly involved tend to search for information and shop around more when compared with low involvement customers. For example, the customer who is highly involved with cars and thinks about buying it is likely to gather information. He sees for alternative models to figure the advantages and disadvantages of each. The more they are involved, the more they learn about the alternatives with in that category. To gather the information they use various sources. One such behavior is to shop around, where they visit various outlets and talk to sales people. The customers of this kind should be encouraged buy retailers to visit the outlets to know, and compare various models to meet information needs.

Processing of Information

 Processing of information means depth of comprehension, extent of cognitive elaboration, and the extent of emotional arousal of information as discussed below.

Depth of Comprehension

 Highly involved customers tend to process product information at deeper levels of understanding than the ones with low involvement. For example educated parents in urban areas are highly involved in baby food purchase decisions than rural uneducated parents. They also retain this information for long time. In this case marketers need to provide information cues to help the consumers to retrieve information from memory. But when the target is low involvement consumers, marketers should make the necessary information as accessible as possible at the time of selection and buying of the product. 

Extent of Cognitive Elaboration

 Highly involved customers think more about product choices than consumers with low involvement. Their deep understanding involves support arguments and / or counter arguments. That is, highly involved consumers tend to generate cognitive responses either in support of the product information or against the information provided by the marketers. 

 If we talk of the previous example, marketing baby food products, the product all though effective may have significant side effects like obesity. Educated parents are likely to give this the great deal of thought before giving it to their children. To ensure that the parents generate positive thoughts, the marketers have to mention a quality argument that the product benefits outweigh its negative effects. If the arguments are less informed and not persuasive, it is likely to produce negative thoughts resulting in an unfavorable attitude towards the product.

Level of Emotional Arousal

 Highly involved consumers are more emotional than less involved consumers.

 The highly involved consumers react more strongly to the productrelated information which may act for or against marketers. This is because the negative interpretation is likely to be exaggerated more number of times causing the customers to reject the product.

Information Transmission 

 Transmission of information is the extent to which greatly involved customers send information about the product to others. This is done usually through word-of-mouth communication. The researchers have shown that if consumers are highly involved they talk about the product frequently than others. Satisfied consumers are likely to speak favourable about the product, while unsatisfied speak negatively. Therefore, marketers catering to highly involved consumers should attempt to enhance consumer satisfaction and decrease dissatisfaction. For example, customer happy with ONIDA television communicates the same to others through wordof-mouth.

Models of Consumer Involvement 

 There are four prominent models of consumer behavior based on involvement which help marketers in making strategic decision particularly in marketing communication related strategies. The four models are as follows.

1. Low Involvement Learning Model 
2. Learn-Feel-Do Hierarchy model 
3. Level of Message Processing Model 
4. Product versus Brand Involvement Model

1. Low Involvement Learning Model 

 Low Involvement products are those which are at low risk, perhaps by virtue of being inexpensive, and repeatedly used by consumers. Marketers try to sell the products without changing the attitudes of consumers. New product beliefs replace old brand perceptions. Marketers achieve low– involvement learning through proper positioning. For example, writing pen with the ‘uninterrupted flow’, and tooth paste with ‘mouth wash’ positioning attracts new consumers.

2. Learn-Feel-Do Hierarchy Model

 Buying decisions vary according to the way they are taken. Some decisions are taken with lot of thinking others are taken with great feelings. Some are made through force of habit and others are made consciously. The learn-feel-do hierarchy is simple matrix that attributes consumer choice to information (learn), attitude (feel), and behavior (do) issues. The matrix has four quadrants, each specifying a major marketing communication goal to be informative, to be effective, to be habit forming, or promote self-satisfaction. Thinking and feeling are shown as a continuum - some decisions involve one or the other and many involve elements of both. High and low importance is also represented as a continuum.

3. Level of Message Processing Model

 Consumer attention to advertisements or any other marketing communication depends on four levels of consumer involvement: Preattention, focal attention, comprehension and elaboration. Each calls for different level of message processing. Pre-attention demands only limited message processing - the consumer only identifies the product. Focal attention involves basic information as product name or usefulness. In comprehension level, the message is analyzed and the content of the message is integrated with other information, through elaboration, which helps to build attitude towards the product. It is suggested that marketers make advertisements which can induce elaboration.

4. Product versus Brand Involvement Model

 Sometimes consumer is involved with the product category but may not be necessarily involved with the particular brand or vice versa. For example, house wives know more about kitchen ware but may not know the details of various brands. According to the consumer involvement in either product or particular brand, consumer types can be divided into four categories as described below.

(i)  Brand Loyals: These consumers are highly involved with both the product category and with particular brand. For example, cigarette smokers and paper readers fall in this category. 

(ii)  Information Seekers: These buyers are involved more with product category but may not have preferred brand. They are likely to see information to decide a particular brand. For examples, airconditioners and washing machine buyers fall under this category. 

(iii)  Routine Brand Buyers: These consumers are not highly involved with the product category but may be involved with the particular brand within that category. They have low emotional attachment with the product category and tied mainly with their brand. For example users of particular brand of soap for years, regular visitors to particular restaurant fall in this category. 

(iv)  Brand Switching: Consumers in this category have no emotional attachment either with product category or any brand within it. They typically respond to price. For example stationery items, fashion products come under this category.

Consumer Behavior and Marketing Action

Introduction

 Consumer behavior is comparatively a new field of study which evolved just after the Second World War. The seller’s market has disappeared and buyers market has come up. This has led to paradigm shift of the manufacturer’s attention from product to consumer and specially focused on the consumer behavior. The evaluation of marketing concept from mere selling concept to consumer-oriented marketing has resulted in buyer behavior becoming an independent discipline. The growth of consumerism and consumer legislation emphasizes the importance that is given to the consumer. Consumer behavior is a study of how individuals make decision to spend their available resources (time, money and effort) or consumption related aspects (What they buy? When they buy?, How they buy? etc.).

 The heterogeneity among people makes understanding consumer behavior a challenging task to marketers. Hence marketers felt the need to obtain an in-depth knowledge of consumers buying behavior. Finally this knowledge acted as an imperative tool in the hands of marketers to forecast the future buying behavior of customers and devise four marketing strategies in order to create long term customer relationship. 

Consumer Behavior: Definition

 It is broadly the study of individuals, or organizations and the processes consumers use to search, select, use and dispose of products, services, experience, or ideas to satisfy needs and study of its impact on the consumer and society. 

Customers versus Consumers

 The term ‘customer’ is specific in terms of brand, company, or shop. It refers to person who customarily or regularly purchases particular brand, purchases particular company’s product, or purchases from particular shop. Thus a person who shops at Bata Stores or who uses Raymond’s clothing is a customer of these firms. Whereas the ‘consumer’ is a person who generally engages in the activities - search, select, use and dispose of products, services, experience, or ideas.

Need for Study of Consumer Behavior

 The study of consumer behavior helps everybody as all are consumers. It is essential for marketers to understand consumers to survive and succeed in this competitive marketing environment. The following reasons highlight the importance of studying consumer behavior as a discipline.

Importance in Day to Day Life

 The purpose of studying a discipline is to help oneself to better appreciate its contributions. The reason to study consumer behavior is because of the role it plays in the lives of humans. Most of the free time is spent in the market place, shopping or engaging in other activities. The extra time is usually passed in knowing and thinking about products and services, discussing with friends about them, and watching advertisements related to them. The usage of them significantly reveals our life styles. All these reasons suggest the need for study. However, the purpose may be to attend immediate and tangible reasons. Pertinence to Decision Making

 Consumer behavior is said to be an applied discipline as some decisions are significantly affected by their behavior or expected actions. The two perspectives that seek application of its knowledge are micro and societal perspectives.

 The micro perspectives involve understanding consumer for the purpose of helping a firm or organization to achieve its objectives. The people involved in this field try to understand consumers in order to be more effective at their tasks.

 Whereas the societal or macro perspective applies knowledge of consumers to aggregate- level faced by mass or society as a whole. The behavior of consumer has significant influence on the quality and level of the standard of living.

Organizational Buyer versus Individual Buyer

 The obvious difference between industrial or institutional markets and consumer markets is that, instead of purchases being made for individual consumption industrial markets are made for business use. There are several factors that differentiate consumer markets and their buying behavior from organizational market and their buying behavior. The key factors of differentiation are:

1. Market Structure and Demand
2. Buyer Characteristics
3. Decision Process and Buying Patterns

1.  Market Structure and Demand The distinguishing factors of market structure and demand are as follows:

  ➢ In organizations, buyers are more geographically concentrated than consumer markets.

 ➢ Organizational buyers are fewer in number but they are bulk buyers compared to individual buyers.  

➢ Organizational buyer markets are either vertical or horizontal. In vertical structures they cater only one or two industries, whereas in horizontal structure the buyer base is too broad.  

➢ Organizational demand is derived from consumer demand. The nature of the demand is fluctuating and inelastic.

2.  Buyer Characteristics The distinguishing factors of buyer characteristics are as follows:

  ➢ Many individuals or group involvement is seen in decision making process.  

➢ Organizational buyers are quite knowledgeable and professional.  

➢ The buying motive is mostly rational than individual buyer.

3.  Decision Process and Buying Patterns The major differences are as follows:

  ➢ In organizational buying lot of formalities like proposals, quotations, procedures are to be followed unlike consumer buying.

  ➢ Decision process is much complex with high financial risk, technical aspects, multiple influencing factors etc.  

➢ Organizational buying requires more extensive negotiation over larger time period than consumer buying.

Books of Original Entry,Books of Final Entry,Trial Balance

Introduction to Accountancy

  Definition And Meaning Of Accounting

The American Institute of Certified Public Accountants (1941) defines ‘Accounting is the art of recording, classifying and summarising in significant manner and in terms of money, transactions and events which are in part, at least of a financial character and interpreting the results thereof. 

IMPORTANCE OF ACCOUNTING

1. Facilitates to replace memory and comply with legal requirements
2. Facilitates to ascertain net result of operations and also to know the financial position
3. Facilitates the users to take effective decisions
4. It is helpful in a comparative study
5. It assists the management
6. It facilitates to have control over assets
7. It facilitates the settlement of tax liability
8. It facilitates raising of loans
9. It acts as a legal evidence
10. It facilitates ascertainment of value of business. 

SCOPE OF ACCOUNTING

1.   Identifying
2.   Measuring
3.   Recording
4.   Classifying
5.   Summarising
6.   Analysing
7.   Interpreting
8.   Communication 

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