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MBA Introduction Derivatives Market Definition Long Sample Paper Question Answer

MBA Introduction Consumer Behaviour Consumer Decision Long Sample Question Answer Paper

MBA  Introduction Consumer Behaviour Consumer Decision Long Sample Question Answer Paper

MBA Introduction Consumer Behaviour Consumer Decision Long Sample Question Answer Paper

MBA Introduction Consumer Behaviour Consumer Decision Long Sample Question Answer Paper
MBA Introduction Consumer Behaviour Consumer Decision Long Sample Question Answer Paper

Introduction to Consumer Behaviour and Consumer Decision-making Introduction to consumot behaviour Applications of consumer behaviour knowledge in marketing Consumers and Customer Consumer Behaviour in the Contemporary Environment introduction Problem recognition Information teach Evaluation of almolive Post-purchase behaviour oibution theory and fusion of innovation

More MBA Question Answer in English

Section C


Q.1. Discuss the various practical applications of consumer behaviour. Ans. Practical Applications of Consumer Behaviour

There are varieties of practical applications in the field of consumer behaviour. Some involve a societal perspective while others illustrate a micro viewpoint. Together they underscore the importance of understanding consumers for solving a variety of contemporary problems. Some of these practical applications are:

  1. Consumer Behaviour and Marketing Management

Effective business managers realise the importance of marketing to the success of their firm. Marketing may be defined as the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objective

A sound understanding of consumer behaviour is essential to long-run success of any marketing program. In fact, it is seen as a cornerstone of the marketing concept and important orientation of philosophy of many marketing managers. The essence of the marketing concept is captured in three inter-related orientations:

  1. Consumers Wants and Needs: When the focus is on identifying and satisfying the wants and needs of consumers, the intention of the firm is not seen as merely providing goods and services. Instead of want and needs, satisfaction is viewed as the purpose and providing products and services are the means to achieve that end.
  2. Company Objective: Consumers wants and needs are numerous. Therefore, a firm that concentrates on satisfying a small proportion of all desires will most effectively utilise its resources. Company objective and any of the firm’s special advantages are used as criteria to select the specific want and need to be addressed.
  3. Integrated Strategy: An integrated effort is most effective in achieving a firm’s objective through consumer satisfaction. For maximum impact, this requires that marketing effort be closely Co-ordinated and compatible with each other and with other activities of the firm. Several major activities can be undertaken by an organisation, that is marketing oriented. These include marketing opportunities analysis, target marketing selection and marketing mix determination, which include decision on the proper combination of marketing variable to offer consumer. (a) Market Opportunity Analysis: This activity involves examining trend and condition in the market place to identify consumer’s needs and wants that are not being fully satisfied. The analysis begins with the study of general market trends, such as consumer’s life style and income levels, which may suggest unsatisfied wants and needs.

(b) Target Market Selection: The process of reviewing market opportunities often results in identifying distinct going of consumers who have unique wants and needs. This can result in a decision to approach each market segment with a unique marketing offering

Consider the soft drink market here, major segment of ultimate consumers are distinguished by the type of purchase situation:

The food store segment.

(II) The ‘cold bottle’ or vending machine segment and

(iii) The fountain market, which include fast food outlets.

(c) Marketing Mix Determination: This stage involves developing and implementing a strategy for delivering an effective combination of want satisfying features to consumers within target market. A series of decisions are made on four major ingredients frequently referred to as the marketing mix variables, product, price, place and promotion. The following characteristics in each area provide a small sampling of how knowledge of consumer behaviour is relevant for decision-making

(1) Product: The nature of physical product and service feature are of concern here among

decisions that are influenced by consumer behaviour. They are:

  • What size, shape and feature should the product have?
  • How should it be packaged?
  • What aspect of service are most important to consumers?
  • What type of warranties and service programs should be provided?
  • What type of accessories and associated product should be offered?

(II) Price: Marketeers must make decisions regarding the price to charge for the company’s

product or services and any modification to those prices. These decisions will determine the amount of revenues the firm will generate. A few of the factors involving consumer behaviour are: • How price aware the consumers in the relevant product category? • How sensitive are consumer to price differences among brands? • How large a price reduction is needed to encourage purchases during new product

introductions and sales promotions?

  • What size discount should be given to those who pay with cash?

 (iii) Place: The place variables involves consideration of where and how to offer product and

services for sale. It is also concerned with the mechanism for transferring goods and their ownership to consumers. Decisions influenced by consumer behaviour include:

  • What type of retail outlet should sell the firms’ offering?
  • Where should they be located and how many should there be?
  • What arrangements are needed to distribute product to retailers?
  • To what extent is it necessary for the company to own or maintain tight control ove

activities of firms in the channel of distribution

  • What image and clientele should the retailer seek to cultivate?

 (iv) Promotion: It concerns the goals and methods of communicating aspect of the firm and ils

offering to target consumers. Consumers relating decisions include:

  • What method of promotion are best for each specific situation?

. What is the most effective means of gaining consumers attention?

  • What method least convey the intended message?
  • How often should a given advertisement be repeated?

Il Consumer Behaviour and Non-profit and Social Marketing

Can crime prevention, charitable contribution or the concept of family planning be sold to per in much the same way that some business firms sell soap. A number of writers have suggested tha various social and non-profit organisations can be viewed as having services or ideas that they ar attempting to market to target group of consumers’ or constituents. Such organisations include government agencies, religious orders, universities and charitable constitutions. Often these groun must also appeal to the public for support in addition to attempting to satisfy some want or need in society.Clearly a sound understanding or consumer decision process can assist their efforts.

III. Consumer Behaviour and Governmental Decision-making

In recent years, the relevance of consumer behaviour principles to governmental decision-makine has become quite evident. Two major areas of activity has been affected:

  1. Government policies that provide services to the public or result in decision that influence consumer behaviour and
  2. The design to legislation to protect consumer or to assist them in evaluating product and


(a) Government Services: It is increasingly evident that government provision of public services can benefit significantly from an understanding of the consumers or users of these services, Numerous

it our frequently falling mass transportation system will not be viable alternative to private automobile travel until government planners fully understand how to appeal to the want and need of the public. In other cases, state and municipal planners must make a variety of decisions including where to locate highways, what areas to be considered for future commercial growth. The effectiveness of these decisions will be influenced by the extent to which they are based on an adequate understanding of consumer. This requires knowledge of public attitude, belief, perception and habits as well as how they tend to behave under a variety of circumstances.

(b) Consumer Protection: Many agencies at all levels of government are involved with regulating business practices for the purpose of protecting consumer’s welfare. Some government programs are also designed to influence certain consumer actions directly,

(c) Consumer Behaviour and Demarketing: United State history has long been characterised by Intensive efforts by private enterprise to stimulate the public to greater level of consumptions. Various government policies have supported such efforts because of their favourable effect on economic development. Recently however it has become increasingly clear that we are entering an era of scarcity in terms of such natural gas and even water. These scarcities have led to promotion stressing conservation rather than consumption. The effort to electric power company to encourage reduction of electrical use serves as one illustration. In other circumstances, consumers have been encouraged to decrease or stop their uses of harmful effects. For example, programs designed to reduce drug abuse. gambling and similar types of consumptions,

These actions have been undertaken by government agencies, non-profit organisations and other private groups. The term “Demarketing refers to all such efforts to encourage consumer to reduce their consumption of a particular product or service. Some demarketing efforts have met with considerable success. An analysis of the success and failure of various efforts strongly suggest that demarketing programs must be based on the sound understanding of consumers motives, attitude and historically established consumption behaviour

(d) Consumer Behaviour and Consumer Education: Consumers also stand to benefit directly from orderly investigations of their own behaviour. This can occur on an individual basis or as part of more formal educational programs. As we study what has been discovered about the behaviours of others, we can gain insight into our own interaction with the market place. e.g. when we learn that a large proportion of the billions spent annually on grocery product is used for impulse purchase and not

spent according to preplanned shopping list, we may be more willing to plan our purchases in an effort o save money. In general as we discover the many variables that can influence consumer’s purchases, We have the opportunity to understand better how they affect our own behaviour.

What is learnt about consumer behaviour can also directly benefit consumer in a more formal erve. The knowledge can serve as data for the development of educational programs designed to mprove consumers decision-making registered product and services. Such courses are now available t the high school and college level and are becoming increasingly popular.

0.2. Briefly explain all the determinants of consumer behaviour. 

Ans.               Determinants of Consumer Behaviour 

“he study of consumer behaviour is quite complex, because many variables are involved and their endency to interact influence each other and the buyer. These variables are divided into following reads:

  1. External Environmental Determinant: These are basic or specific determinants of consumer behaviour.

Cultural and Sub-cultural Factors: The consumer lives in a society having cultural characteristics though the customer has to learn everything from his experience but culture provides certain patterns ofbehaviour to be adopted. And each culture consists of smaller sub-culture which includes nationality, social group and geographical regions.

  1. Social Factors as Determinants of Consumer Behaviour: These are as follows: (a) Reference Group: There are the groups to which persons belong and interact and influence one another.

 (b) Family: The family is considered as one of the strongest determinants of group influence for the consumer behaviour.

  1. Individual Determinants: This include age and life cycle stage, occupation, economic condition, circumstance, life style and personality and self concept.

Age and Life Cycle Stage: Individual behaviour is also shaped by the stage of family life cycle. Family life cycle also include various sub-determinants like occupation, personal income and personality and self concept

  1. Psychological Determinants: In psychological determinants, following sub-factors are also Included:

(a) Motivation,

(b) Perception,

(C) Learning

(d) Attitude,

(e) Belief.

These determinants are personal in nature and influence the way consumers proceed through a decision-making process regarding product and service.

0.3. Discuss in detall about the contributions made by consumer behaviour in various areas. 

Ans.                   Contributions Made by Consumer Behaviour

Consumer behaviour is an applied behavioural science that is built upon contributions from a number of behavioural disciplines. The predominant areas are psychology, sociology, social psychology, anthropology, political science, economics, science, technology, engineering, medicine, etc.

  1. Psychology: Psychology is the science that seeks to measure, explain and sometimes change the behaviour of humans and other animals. It helps to use psychological and organisational theory and research to improve organisational effectiveness and the work-life of all individuals. Psychologists concern themselves with studying and attempting to understand individual behaviour. The study areas are learning perception, personality, emotions, training, leadership effectiveness, needs and motivational forces, job satisfaction, decision-making process, performance appraisals, attitude measurement, employee selection techniques, work design and job stress. 2. Sociology: Sociologists study the social system in which individuals fill their roles. Sociolo studies people in relation to their fellow human beings to improve organisational performance. Stud of group behaviour in organisations, group dynamics, design of work teams, organisational cultur formal organisational theory and structure, organisational technology, communications, power an conflict, etc. are made in sociology
  2. Social Psychology: It is an area within psychology that blends concepts from psychology and Sociology and that focuses on the influence of people on one another. The major areas are change the to implement it and how to reduce barriers to its acceptance. The study areas include measurine understanding and changing attitudes, communication patterns, building trust, the ways in which group activities can satisfy individual needs, group decision-making processes
  3. Anthropology: Anthropology is the study of societies to learn about human beings and their activities. Study on culture and environment has helped us understand differences in fundamental values, attitudes and behaviour between people in different countries and within different organisations
  4. Political Science: Political science is the study of the behaviour of individuals and groups within a political environment Study areas include structuring of conflicts, allocations of power, how people manipulate power for individual self-interest.
  5. Economics: Economists study the production, distribution and consumption of goods and services Students of organisational behaviour share the economist’s interest in such areas as labour market dynamics, productivity, human resource planning and forecasting, and cost benefit analysis.

The economic conditions of a country have long lasting impact on organisational behaviour. If psychological and economic expectations of employee are met, they are satisfied and become high performers. Economic systems include financial, commercial and industrial activities which have greater influences on the behaviour of the people. The consumption pattern in society monitors the behaviour of employees. Consumption oriented society witnesses a different employee behaviour from that of a production oriented society.

  1. Science: Science is systematised knowledge. The scientific methods attempt to produce information that is objective in the sense that it is certifiable and independent of a person’s opinions or preferences. Scientific method is the backbone of organisational behaviour. Organisational behaviour is based on the systematised study of facts, behaviour, their relationships and predictions

New scientific methods viz. observation of facts and behaviour, explanation of facts and relationships and coming to conclusion thereon have become important bases of the study of organisational behaviour. The cause and effect relationship is also established in organisational behaviour like that of science. The verification of the relationship and its quantification has added to the importance of organisational behaviour.

It becomes relatively easy to predict and mould the people at work. A researcher in the field of OB investigates new facts, tests theories, hypothesis and models. Personal bias, superfluous conclusions and whimsical approaches are avoided in the study. A systematised form of inquiry is used for the study of various problems.

  1. Technology: The level of technological development affects the behaviour of the employees. Modern age is the age of computerisation. It has come within the framework of the model of organisational behaviour. The study of technological development is becoming essential for understanding the organisational behaviour, because people are influenced by the technological development. Human behaviour relations and environments develop as a result of technological innovations

Technology changes consumer behaviour production activities, distribution and storage activities. To cope up with the technological development people have to become educated and/or technically skilled. They should have to be responsibility conscious and development oriented. Unskilled or

irresponsible will have no place in the modern innovative age. Thus, technological development leads to effective work behaviour, improved organisational culture and helpful work environment

  1. Engineering: Engineering also influences the study of organisational behaviour. Some topics are common to engineering as well as organisational behaviour. For example, work measurement, productivity measurement, work flow analysis, work design, job design and labour relations. In fact, organisational behaviour is dependent on engineering for these technical jobs
  2. Medicine: Nowadays, medicine has also come in connection with the study of human behaviour at work. Stress is becoming a very common problem in the organisations as well as in the people working in the organisations. Research shows that controlling the causes and consequences of stress in and out of organisational settings, is important for the well being of the individual as well as the organisations. Medicine helps in the control of stress as well as stress related problems

Q.4. Explain in detall, the consumer behaviour in the contemporary environment. 

Ans               Consumer Behaviour in the Contemporary Environment

Consumers are complex beings and therefore their behaviour is stimulated and motivated by a whole spectrum of determinants. Changes occurring in the environment encompass all the levels of society, thereby forming completely independent and different behaviours in satisfying consumers’ needs and wishes. Consumer study provides insight into how and in which way, these needs are met.ie provides insight into the individuals”total’ existence, which is the reflection of a given environment. A detailed identification of determinants influencing and determining the position of individual consumers in the environment, as well as identifying a whole range of individual behaviour patterns – from inclinations, abilities and affinities to their complete personalities is highly complex, in addition to a large number of factors reacting interactively, influencing one another and, finally, consumer behaviour. The act of making a purchase decision is a multidimensional and multidisciplinary process, given the fact that the consumer, as a dynamic and complex person, lives in very different ways.

The knowledge of the determinants and processes of the contemporary environment affecting consumer behaviour can serve as a basis for channelling this behaviour from the aspect of the whole society (a social behaviour), but it can also serve as stimulus for soci product consumption (organic products, recycled products, environmental activism, etc. Apparently, how companies establish the relationship between their products and services on the one side and the corresponding consumer lifestyle of a given environment on the other depends on how the needs ar met. In particular, different lifestyles present interesting challenges for companies, that is, aspects of lifestyles reflecting how consumers individualise and identify themselves in various spheres of life. starting from membership in certain groups, down to broader areas conditioning diversity and in general, opportunities for consumption. It can be argued that lifestyles are some kind of portrait of a person and his or her interaction with the given environment. Each individual learns new roles during their lifetime, changing their status del positions, adopting new attitudes, prejudices or interests and N

Marketeers must adapting their experiences to the newly-arisen situations in the

seed information into environment.

Consequently, individuals themselves are not passive the marketplace, identify observers merely receiving influences through the socialisation interested consumers, process; they influence changes with their behaviour, but on the engage those consumers other hand, they conform to the demands of the environment they

in conversation and then belong to. It is the individuals in a given environment that create

convert them into values, beliefs, customs ad rituals forming and influencing people’s

purchasers and users of behaviour and lifestyle, Consumer culture is the response to these

the final product Behaviour patterns a social phenomenon characteristic of an

environment which comprises multiple frameworks of human behaviour forming consume objectives, wishes and needs, as well as acceptable means of achieving consumer objectives.

An interesting approach is that culture is conditioned by traditional frameworks contemporary changes forming certain behaviours and pointing to culture’s causal relationships. In fact that culture is what points to total acquired beliefs and values of a society, it is the basis of the socialisation process and individuals in a given environment. The adaptability of culture to environment is obvious, as this segment offers the opportunity for new challenges emerging before an individual. It is the individual that adopts certain forms of manifestation. Le objects, objectives de and behaviours from the list of offered values. “Values are individuals’ deep judgements. Cultural values are not a static but a dynamic element of a society’s culture, formed and exchanged through social interaction Changes in cultural values can create new marketing opportunities and are usually manifested as changes in consumer behaviour

The modern environment is highly dynamic and thus determines consumers’ positions in all dimensions of life, giving rise to continuous research into contemporary consumers, Le their needs and preferences. The range of tastes and preferences is expanding and the list of sought. desired or better to say, demanded products is becoming increasingly long and complex. Through social adjustment and social limitation, social environment influences consumer behaviour by way of group norms and group via various avenues. Values channel consumer behaviour in the process of purchasing products and services; they refer to objects, objectives ideas and behaviours in general. In other words, values are individual judgements and are exchanged through social interaction depending on interests. Changes in values can and do make changes in marketing activities and they can also create new marketing opportunities.

Consumer behaviour is modified from early childhood and adapted to the demands of the changing environment. The processes of observation, specific behaviours and evaluation lead individuals to accumulate knowledge and experience used for performing certain roles assigned in the given social environment. An individual changes attitudes and opinions and at the same time, adopts values and beliefs of a particular group, i.e. environment. It is the environment and functioning of particular groups within it that offers the individual various types of lifestyle and consequently, a wide range of convictions, orientation and behavioural motives. The existing social references determine the circle of frameworks, models and benchmarks for comparing and assessing one’s own behaviour, Le compliance with groups, changing the individual’s established behaviour patterns, habits, views and needs

Q.5. Explain the process of online consumer behaviour.

 Ans.       Process of Online Consumer Behaviour

The process of online consumer behaviour consists of the following steps:

  1. Problem Recognition: The stimulus that gives rise to the need can come from a variety of sources. These could be offline or online in nature. This is particularly true as organisations use a mix of channels to reach the consumer these days. The website should create interest in the consumer about the online shopping portal as the customer data obtained online is relevant to building customer interest and in building long-term relationships.

It is a matter of pertinent question that is it possible that a person goes online without any purpose and return only to realise his true problem along with its solution. During this process, he has analysed all pieces of relevant information to arrive at an informed decision. This is referred to as serendipity or casual browsing

All this provides the user with two options regarding the problem be faces:

(a) The problem may be one which is of a perpetual or permanent nature, something that is

common and for which people readily accepts the solution. For example, advertisements

promoting low calorie food or drink will always generate interest among the ones aiming for

weight control. Then it is a matter of simply inserting the right keywords that describe the

problem in the search engine to obtain right solution for the problem.

(b) The second problem is a type of problem that can also be addressed by traditional media but

can be more effectively solved by the online medium. This is on account of the fact that customers prefer to remain online and choose websites they frequently visit. This is referred to as extreme self-segmentation. In this context, online consumers can be made aware of a problem they have but do not recognise through effective use of target marketing. This can be achieved through methods like website banner advertising or textual advertising a feature

(hypertext links) that is not available in other communication medium.

  1. Information Search: This process of consumer behaviour has been completely changed by the IT revolution and the change has been for both consumers and producers. It has never been before that consumer has so much information about the product being offered. This is has led to as some would say, information overload and sometimes this huge quantity of information can make the decision making complex for the consumer. The message coming out of the argument is that online-marketeers need to design their sites and e-mail strategy in a proper manner. It is crucial to understand the search behaviour of the customer so that customers can be served information in the most befitting manner Behavioural research can help the marketeer in identifying the important information activators that encourage purchasing like price discounts, discussion forums or product reviews. All these information activators must form part of the website development

In this age of internet connectivity, product information can be obtained from a variety of sources. These can be independent sources but the bulk is actually those provided by competitors. If competitors have a better website or their e-mail marketing more focussed, then their source of information will be preferred by the customers. This may lead to sales of the competitor’s product even when they are actually inferior in terms of quality.

Different stages of consumer purchasing may be facilitated with the use of online communication channels or offline channels or through the combination of both. For example, a customer may selecta product of his choice online and buy the product and take its delivery offline. Similarly, he may collect information about a product in a departmental store but order it online

  1. Evaluation of Alternatives: Evaluation of alternatives occurs in the minds of the consumers. It involves bringing together the various analysis of the information that has been gathered in the earlier stages. In an offline scenario, this involves physically matching data or figures noted down on pieces of paper or drawing tables about the costs and benefits involved. Internet can facilitate the completion of the same task more effectively. For example, some websites allow consumers to save information and bring it to a single page.
  2. Purchase Decision: This phase of consumer buying process can certainly be completed online Actually, this is what e-commerce is all about. Consumers can do the buying online. They can contribute to a social cause or download a document. They can download a map, be a part of online community, etc. Practically, the actual processing of the order must be hassle-free and simple for the user, more particularly in cases when consumers have limited IT knowledge. Many e-commerce functionalities like shopping cart COD, etc. are critical for any online transaction to translate the search into purchase.

else the customer may cancel his purchase out of annoyance.

Finally, buying takes place at two different levels: (a) The product offering alongwith other elements of marketing mix adds to provide a complete

package. In this package of niceties, product branding plays an important part in consumer understanding. In addition to that, customer segmentation and targeting and purchase Incentives can prove really effective, particularly in the case of spontaneous buying

(b) At this level, choice of a certain online marketeerdecision to choose a particular e-vendor ca product decision. At the same time, the decision number of factors

  1. Post-purchase Evaluation: The process of buying transaction gets completed. The details of the order and reference num signifies the importance of sharing post

Evaluation. The process of post-purchase evaluation can happen as soon as

rets completed. The consumer gets an e-mail from the company confirming order and reference number for tracking the order. The rise of virtual communit ne importance of sharing post purchase experience among the users. The rapid distributin womer responses across the web needs to be carefully monitored in order to build long-term omer relationships. It can play a significant role when other parties are also part of the transaction

For example, consumers at the Amazon site can either buy from the e-tailer giant itself or buy th. same product at cheaper rates from the suppliers who supply to Amazon. If a particular supplier of Amazon cannot satisfy a consumer then this can also affect the brand image of Amazon. In the post-purchase period, Amazon is eager to know customer feedback about the vendors, which servesa the basis of decision regarding whether a particular vendor must continue in the Amazon marketplace or not

0.6. Describe the changing face of consumer behaviour in different scenarios, Ans. Changing Face of Consumer Behaviour

While dealing with the changing faces of the consumers, a lot of difficulties are experienced the importance of constant research and study of consumer behaviour can be understood by the fact that

pact can be seen in there is always a change in the consumers and their environments. A significant impact ca the following scenarios:

  1. Globalisation: It is an international integration which involves exchange of produce nsible for shaping the ideas, business practices and cultures. It has emerged as a dominant factor responsible for nge in the lifestyle future patterns of the world market. Due to globalisation, there has been a drastic change in of consumers. So, both positive and negative issues are associated with globalisation.

Globalisation has the following effects on the consumer behaviour

(a)consumers have better option to access information related to the availability of products/

services, quality of products being offered. price range, etc, which makes them more aware by (b)Today, consumers are well informed. They have every piece of information related to the

brands, products, corporate houses, country locations, etc.

(C) Increased awareness of customers has given rise to greater quality consciousness

(d) Due to globalisation, even the customers from remote locations of the world recognise global brands.

(e) The availability of products in different currencies allows the customer to select cheaper and

better quality products and pay in any currency of their choice.

  1. Technological changes: There has emerged a lot of advancements in the technology. A lot of changes have resulted from the increased use of smartphones and improved internet connectivity. Technological advancements allow customers to obtain product related information at their fingertips that has increased consumer power. The various changes in consumer behaviour resulting from the technological changes are:

(a) Consumers do not think much before buying products which they really like.

(b) Consumers are looking more eagerly for those products which have better quality and features

(c)The selection of social media platform for the brand expansion is

(d)now decided by the consumers Now.consumers first read and research all the reviews, ratings and recommendations on the Internet before buying any product or service

(e) With increased number of alternatives in the markets, consumers are becoming switches

(f) Customers are nowadays connected with their reference groups through social media and

internet networks Consumer expectations have changed and they are free to decide what is correct for them and what is not

  1. New Retailing Environment. The retailing concent and structure has been drastically changed due to alterations in demographic, psychographic and socio-economic factors of consumer behaviour Today, retailing is not only related to merchandising but is also related to the desire and aspirations of the customers with the motive of creating long lasting customer relationships. The changing lace of consumers in the new retailing environment is as follows:

(a) The attitude of consumers towards shopping has changed. They prefer outlets having a

known layout. Most of the customers look for branded products

(b) The customer patronage changes significantly depending upon the product category. It is vital

for retailers to know where people like to shop and formulate their tactics accordingly, (C) When the customers buy any product or service which he has not planned to buy before entering the store, it is called impulse buying it can be completely unplanned, partially unplanned or unplanned substitution

  1. Media: There are changes in the conditions of the market resulting from the internationalisation of media Media plays an important role in affecting consumer behaviour. The changing face is

(a) The different online tools facilitate the sharing of various multimedia contents and easy interface also facilitates the new users to use these tools effectively

.(b) The influence of media has made customers more educated and they look for detailed information before buying any product.

(c) Media influences the perception and beliefs of the customer

(d) Media creates brand awareness which results in repetitive buying

(e) Media makes the customers aware about the existing and new products in terms of quality reviews, price, availability, etc.

(f) Some of the popular media platforms act as an intermediary between the company and the


Q.7. Explain the varying perspectives to defining Innovation

Ans. Innovation: An innovation is an idea, practice or product, perceived to be new by an individual or a group. A product is said to be an innovation when it is perceived by the potential market as a change and not by a technological change brought in it. The term innovation has been described with varying perspectives and orientations viz. firm-oriented, product-oriented, market oriented, and consumer-oriented.

They are discussed as follows:

  1. Firm-oriented: As per this approach, a product or service offering is regarded as ‘new. If the company starts manufacturing or marketing it for the first time. In other words, the firm orientation treats the ‘newness’ in terms of the company’s perspective. The product is ‘innovative, if it is ‘new’ for the company. The existence of the product in the market (as competitor’s offering or even as consumers’ awareness) is disregarded as long as the product is ‘new’ to the company, it is rewarded as an innovation

2 Product-oriented: A product and service offering is regarded as an innovation if the product changes in terms of form, attributes, features and overall benefits, such changes have a twofold connotation, one, in terms of technology and two, in terms of consumption usage and behavioural patterns. The product is ‘innovative, if it is ‘new’ in terms of form, attributes and features and there are changes in technology, as well as impact on consumer consumption behaviour

There are two sub-approaches to classify innovative products as per the product-oriented definition; viz:

Approach I: This approach classifies innovative products based on the degree to which the new product and service offering would upset established consumer usage and behavioural patterns. As this approach, innovations can be classified into three categories-continuous innovations, dynamicall continuous innovations and discontinuous innovations:

(a) Continuous Innovation: A product is regarded as a continuous Innovation, if it is a

modification over an existing product. It is not essentially a new product, butan improvement over the already existing one, they could also be line extensions, and as such continuous innovations do not disrupt established usage and behaviour patterns. For example improvements in laserjet printers, digital TVs, shaving razors or changes in call plans (Airtel Cell One)

(b) Dynamically Continuous Innovation: An innovation is regarded as dynamically continuous ir i exerts some influence on usage and behaviour patterns, but his influence is not totally disruptive. It does not totally change behaviour patterns. For example, the walkman givine way to the portable CD player or the pager giving way to the cell phone.

(C) Discontinuous Innovation Discontinuous innovations lead to disruption of usage and

consumption behaviour patterns. There is a change not only in the technology, but also requires consumers to change to new behavioural patterns in terms of usage and consumption. For example, the postal mailiving way to e-mail and internet, the radio/record player giving way to portable music and sound, the telephone giving way to the mobile phone

or the traditional glucose and diabetes blood test riving way to the home kit

Approach ii: According to another approach, innovative products can be classified on the basis of how the ‘newness’ in form, features and attributes can impact consumer satisfaction. The greater the degree of satisfaction, higher it ranks on the scale of innovativeness Innovations can be classified as artificially new, marginally new, and genuinely new.

(a) Artificially New: Embody not much of a change and do not much impact user satisfaction For example, a new flavour of an ice-cream

(b) Marginally New: Here, there is some level of change in customer satisfaction, because the product is new, differs a little over the existing products and provides creater benefit. For example, the laser printer replacing the dot-matrix printers.

 (c) Genuinely New: This implies a totally new product that impacts user satisfaction completely

It differs from existing product and service offerings and leads to customer satisfactionas the usage gives greater benefit. For example, microwave owens, cell phones, home medical tests and kits

  1. Market-oriented: The market oriented approach views ‘innovation’ purely from a marketeers perspective, in the sense that a product is regarded as ‘new’. depending on how much exposure the consumers have about the new product or service offering and the total sales penetration that has occurred in the specified short period of time. The product is regarded new if the market does not have much exposure ofil Sales penetration has been low. Here again, there can be two bases that underliea market-onented definition.

(a) a product or service offering is regarded as new if it has been in the market for a short period of time

(b) It is ‘new if it has been purchased/used/consumed by a small portion of the total potential

Market irres prod then the quich is aga a lot of adStage

  1. Consumer-oriented. The consumer-oriented approach to defining innovation is a favoured approach over others, especially in consumer behaviour research, and more specifically in research related to diffusion of innovation and adoption. The reason is that the concept of ‘newness’ or ‘innovation is dealt through focus on consumer, and his/her reaction towards the new product and

service offering in terms of acceptance and rejection. As per this approach, any product is regarded as ‘new, if the consumer believes it to be so it is purely based on the consumers’ perception of the newness of the product rather than on technological changes that the product embodies.

Amidst the varying perspectives and orientations, the approaches that receives wide attention are the market-oriented and the consumer-oriented approaches to studying innovation

0.8. Write a note on diffusion of innovation in consumer behaviour

 Ans.     Diffusion of Innovation In Consumer Behaviour

Diffusion is process by which a new product is accepted and spreads through a market. It is group phenomenon, in which first an idea is perceived, then it spreads throughout the market, and then individuals and groups adopt the product.

Diffusion is a process by which the acceptance of an innovation/new product, a new idea, a new service, is spread by communication to members of a social system over a period of time.

Diffusion Process: Diffusion process is the manner in which innovations spread throughout the market. Spread refers to the purchase behaviour where a product is purchased with some continuing regularity. Spread of innovation can be of three types as shown in the figure below:

The diffusion process follows a similar pattern, overtime,

Nedge irrespective of the social group or innovation. The typical diffusion N process shows a slow growth or adoption. It later rises rapidly and O H then a period of slow growth is noticed. In fast diffusion process,

of an innovation as the product clicks immediately. The spread of innovation is very

perceived by members of quick. People patronise the product immediately and later on there

a social system determine is again slow diffusion. In slow diffusion process, the product takes

its rate of adoption a lot of time to diffuse or spread and the consumer follows a pattern of adoption slowly by getting acquainted with the product

Stages of Diffusion Process

Diffusion process involves the following stages:

  1. Knowledge: Consumer is exposed to the innovations existence and gains some understanding of how it functions. In this stage, consumers are aware of the product but have made no judgement concerning the relevance of the product to a problem or recognised need. Knowledge of a new product is considered to be result of selective perception and is more likely to occur through the mass media than in later stages which are more influenced by opinion leaders
  2. Persuasion: In this stage, usually attitude formation takes place that is consumer forms favourable or unfavourable attitudes toward the innovation Consumer may mentally imagine how Satisfactory new product might be in use, le vicarious trial of the product in consumer’s mind.

It is also considered as the evaluation of consequences of using the product. This means consumer weigh the potential gains from adopting the product against the potential losses of switching from the product now used

A person may seek out new stories, pay particular attention to advertising for the product subscribe to product rating services, talk to experts in that product category, etc. This is basically done to reduce perceived risk in adopting new products. Each of the above information search and evaluation strategies has an economic and/or psychological cost.

Many persuasion methods are used by marketeers. One of the common arid effective methods is catalogues, specially used for new products because this provides more information than the typical retail setting. For example, marketeer can show the advantages ones present solutions of hair problems

  1. Decision: Consumer engages in activities that lead to a choice to adopt or reject the innovation Le, adoption or rejection). Adoption can be defined as a decision to make full use of an innovation as the best course of action. This means continued use of the product unless situational variables (lack of availability, or money, etc.) prevent usage. Rejection means not to adopt an innovation

There may be some persons who first consider adopting an innovation or at least give a trial, but then deciding not to adopt it. This is called an active rejection. Others never consider the use of the innovation, known as passive rejection

  1. Implementation: Implementation means consumer, puts the innovation into use. Until this stage, the process is a mental exercise, but in this stage behavioural change is required. Marketing plan is the determinant of whether a good product has been communicated effectively (ie, actually sales). Marketing mix planned should be such that purchase is made easy. This means proper coordination of the channels of distribution with new products and their communication process.
  2. Confirmation: Consumer seeks approval/reinforcement for the innovation decision, but may reverse this decision if exposed to conflicting messages about the product. This stage is also influenced by communication sources and consumers evaluate their purchase experiences. After evaluating they try to support their behaviour and later decide to continue or discontinue using the product.

Marketeers consider studying discontinuance to be equally important as the rate of adoption. They study so that marketing strategies can be tailor made with respect to the reasons for the same. It is seen that people who adopt the product later than early adopters, are more likely do discontinue. Therefore, marketeers try to upgrade follow-up service and feedback as sales of a new product expands.

Q.9. Describe the various stages in adoption process

 Ans Stages in Adoption Process 

Adoption is a micro concept that lays emphasis on the various phases or stages through an individual consumer passes while accepting/rejecting a new product or service offering. The study of adoption is important for a marketeer in the sense that it helps him understand the various stages through which a consumer passes right from his initial awareness to the final acceptance/rejection. It may so happen that the innovative offering may be existing for long in the market, but the consumer is unaware of it or it may have existed in the market for long, but is regarded as ‘new’ because the consumer has heard of it for the first time. This implies that consumers could differ in the manner they

ase activity, right from initial awareness to the final act of purchase. This could mean that the marketeer needs to design his selling strategy accordingly.

Generally speaking the consumer passes through five stages of adoption, le awareness, interest evaluation, trial and adoption (or rejection).

  1. Awareness: This is the first stage in the adoption process, where the consumer is exposed to the new product/service offering and gets to know of the product. The marketeers’ objective here is to provide some awareness about the innovation, the features and benefits as also the brand. The

consumer is generally passive and acts as a mere recipient of information. He becomes aware but lacks sufficient knowledge about the new offering,

Thus, awareness covers the following:

(a) Consumer in first expose to the product innovation

(b) Lacks in information about the product.

(c) May only know the name of product and its basic features.

  1. Interest: In this next stage, the consumer begins to develop some interest in the innovative offering and thereby puts in some effort to know more about it. The consumer becomes active in his search for information and tries to elaborate on the information received at the awareness stage. He actively searches for information about the new product/service and tries to assess how it can benefit him.

Interest covers the following points:

(a) Consumer is interested in product and search for additional information

(b) He wants to know what is it, how it works and what its potentialities are.

  1. Evaluation: The consumer who has acquired knowledge about the innovation, now begins to evaluate, he evaluates whether,

(i) more information search is necessary with respect to the innovation as well as to the brand

(ii) he is sufficient with the product/service information that he possesses.

The consumer also evaluates the innovative offering in terms of the attributes, features and overall benefits, as compared to existing alternatives; he assess the value of the product/service offering and the brand. If he feels that the offering provides value, he goes in for the next stage which is trial, else the process is aborted and the innovation is rejected.

Evaluation covers the following:

(a) Consumer decides whether or not be believe this product or service.

(b) Will it satisfy his needs and requirements?

(c) Individual makes a mental trial of the idea.

4.Trial: The consumer goes and tries out the innovative offering, but there is not yet any further purchase (repurchase) commitment. The product/service is experienced on a small scale and used on a limited basis only, to determine the worth or usefulness.

Thus, trial includes the following:

(a) Consumer uses the product on a limited basis.

(b) During this stage, the individual determines the usefulness of the innovation and may search for further information about it.

(C) The trial stage is characterised by small-scale experimental use, when it’s possible.

  1. Adoption or Rejection: Based on the trial stage, and the resultant experience, the consumer would decide to decision to use/reuse/patronise the offering. If the experience is satisfying, and the evaluation favourable, the innovative offering would be accepted, else it would be rejected. While this five staged procedure constitutes a general model of adoption of innovation, it has been criticised to be very general that lacks the complexities of real life buying and consumption.

Thus, rejection is applied in the following case: (a) Iftrialis favourable, consumer decides to use the product. (b) Iftrial is unfavorable, the consumer decides to reject it.

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