MODULE- 5

External influences on Consumer

Behavior
A) Social Class and Consumer
Behavior

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SIMPLE MODEL OF
CONSUMER
BEHAVIOR
Motives
Attitudes

Needs Consumer
Purchase
Decision Learning

Family
Perception

Personality
Internal
Factors
Economic External
Factors
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INTRODUCTION

 Consumer purchasing decisions are often affected by factors

that are outside of their control but have direct or indirect impact on
how we live and what we consume.
 Consumers are faced with many external influences,
including an individual’s culture, subculture, household structure,
and groups that he/she associates with.
 Marketers and business owners call these external influences
because the source of the influence comes from outside the person
rather than from inside.
 Both internal and external factors are inter connected and
work together to assist the consumer decision making process.

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 INFLUENCING FACTORS
IN CONSUMER DECISION
MAKING

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 The division of
members of a society
into a hierarchy of
distinct status classes,
Social Class so that members of
each class have either
higher or lower
status than members
of other classes.

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 The dynamics of status consumption
Social Class and Social Status
• Status is frequently thought of as the
relative rankings of members of each social
class
– wealth Social Comparison Theory
states that individuals
– power
compare their
– prestige own possessions against those
of others to determine their
relative social standing.

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 The dynamics of Status Consumption

Status Consumption

The process by which consumers actively increase their social

standing through conspicuous consumption or possessions

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 Convenient Approaches to
Social Class
• Social status is usually defined in terms of
one or more of the following
socioeconomic variables:
– Family Income
– Occupational Status
– Educational Attainment

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 Percent Distribution of Five-Category
Social-Class Measure

SOCIAL CLASSES PERCENTAGE

Upper 4.3
Upper-middle 13.8
Middle 32.8
Working 32.3
Lower 16.8
Total percentage 100.0

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 Social Class Measurement
Subjective Measures: individuals are asked to estimate their own social-
class positions

 Lower class
 Lower-Middle class
 Upper-Middle Class
 Upper class
 Do not Know/Refuse to answer

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 Reputational Measures:
Informants make judgments concerning the social-class membership
of others within the community
The Variables are measured through questionnaires that ask
respondents several questions about themselves, families, etc.

Objective Measures:
Individuals answer specific socioeconomic questions and then are
categorized according to answers

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 Objective Measures
• Single-variable indexes • Composite-variable
– Occupation indexes
– Education – Index of Status Characteristics
– Income (Weighted measure of the
– Other Variables socioeconomic variables like
occupation, source of income,
house type etc
– Socioeconomic Status Score
(Combines three basic
socioeconomic variables:
occupation, family income &
educational attainment

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 Characteristic features of Social Classes
1. Persons within a given social class tend to behave more alike

2. Social class is hierarchical

3. Social class is not measured by a single variable but is measured

as a weighted function of one’s occupation, income , wealth,
education, status, prestige etc

4. Social class is continuous rather than concrete, with individuals

able to move into a higher social class or drop into a lower class

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 Social Class Mobility

• Individuals can move either up or down in social class standing from

the class position held by their parents

• Upward Mobility: is when Individuals move up in social class

standing from the class position held by their parents.

Reasons for upward mobility: free education and opportunities for self
development and self advancement

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 Downward mobility: is when Individuals move down in
social class standing from the class position held by their
parents.

Some young adults are likely to find it difficult to ‘do better'

than their successful parents, and may not do as well as
their parents (e.g. to get better jobs, own homes ,have more
savings)

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 Geodemographic Clusters
The families of similar socio economic backgrounds tend to
reside in the same neighborhoods or communities-that is
they cluster together.

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 A composite
segmentation strategy
that uses both geographic
variables (zip codes,
Geodemographic
neighborhoods) and
Clusters demographic variables
(e.g., income, occupation)
to identify target
markets.

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 Social Stratification

Social stratification is the division of members of a society

into a hierarchy of distinct status classes, so that members
of each class have relatively the same status and members
of all other classes have either more or less.

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 Factors responsible for social stratification

• Authority
• Income
• Occupation and achievement
• Education

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 Five social –class categories in
India
• Upper class
• Upper middle class
• Middle-middle class
• Lower-middle class
• Lower class

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 Upper class

• Top-level executives, celebrities, heirs; high-rung

politicians,
• Small number of well-established families
• sponsor major charity events
• Serve as trustees for local colleges and hospitals
• May be heads of major financial institutions,
owners of major long-established firms

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 Upper middle class
Career oriented

Young, successful professionals, corporate managers, and business owners

Most are college graduates, many with advanced degrees

Active in professional, community, and social activities

Have a keen interest in obtaining the “better things in life”

Their homes serve as symbols of their achievements

Consumption is often conspicuous

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 Middle-middle class
• White collar workers

• Want to achieve respectability and be accepted as good

citizens

• Want their children to be well behaved

• Prefer a neat and clean appearance

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 Middle-middle class in India
 An average family of 4.3 people lives typically in a 900sf apartment; 71% own properties, but only
9% have a mortgage

 19% own cars, 100% of households have TVs, 91% have mobile phones and 20% have credit cards

 Household savings are low at 13% of annual income; mainly to meet emergency needs, healthcare
and education costs.

 Risk aversion is high: 84% have not taken loans, only 11% have invested in equities (keeps
changing

 Land and properties account for 51% of wealth, with 30% in cash and deposits

 Half of households have seen their income rise in the past 12 months, of which one third saw income
rise more than 20%

 Children’s future and education a key concern and priority; other major concerns are rising prices
and medical costs

 Very high aspirations for children with 43% wanting their kids to get a master’s degree and 29% a
doctorate

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 Lower-middle class
 The lower middle class is said to consist of "semi-professionals" and
lower level white collar employees

 These are people in technical and lower-level management positions

who work for those in the upper middle class as lower managers,
craftspeople, and the like.
 They enjoy a reasonably comfortable standard of living. Generally,
they have a Bachelor's and sometimes Masters college degree.

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 THE LOWER CLASS--ROCK BOTTOM

•Poorly educated, unskilled laborers

•Often out of work

•Children are often poorly treated

•Tend to live a day-to-day existence

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  Culture is an underlying determinant of human
behavior

 Howard and Sheth have defined Culture as “A

selective ,manmade way of responding to experience, a
set of behavior pattern”

 [Link] and Naresh K Malhotra have defined

culture as “The complex whole that includes
knowledge, beliefs, art, law, morals, customs and any
other capabilities and habits acquired by humans as a
members of society”

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 Characteristics of culture
 Culture is learnt

 Culture is shared

 Culture include inculcated values

 Culture as gratifying responses

 Cultures are similar but different

 Culture is not static

 Culture shapes behavioral pattern in an individual.

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 Issues in Culture
 Enculturation and acculturation

 Language and symbols

 Ritual (Custom)

 Cultural values

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  Enculturation:
 Acquisition of one’s own culture-institutions of
enculturation include family, educational institutions,
houses of worship and mass media

 Acculturation: Learning of a foreign or a new culture-

through mass media

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 Language and Symbols
 Culture is learned and shared through a common language and
symbols

 Non-verbal communication includes the use of symbols as

figures, colors, shapes etc to lend additional meaning to print
or broadcast information & to packaging products & services.

 E.g. The world Mercedes has symbolic meaning- To some it

suggests a fine luxury automobile, to others it implies wealth
& status, to still others it reminds them of a woman named
Mercedes.

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 Rituals (Custom)
 A type of symbolic activity consisting of a series
of steps occurring in a fixed sequence and
repeated every time

 They can be public, elaborate, religious or they

can be individual and mundane

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 Cultural values
 Widely held belief that endures over time-they provide inclination
to respond in standard ways-criteria for standard behavior-core
values and instrumental values

 Core values or terminal values-are common across societies-end

states of existence-enables choice of product class

 Instrumental values-way to achieve core values varies from one

society to another—modes of conduct-enables brand choice

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 Selected Rituals
SELECTED RITUALS and ARTIFACTS
TYPICAL Associated Artifacts
Wedding Silk saris, jewellery, kurtas, beauty
packages
Baby care products, towels, baby wraps, silver bowls etc spoons
Birth of child
Birthday Greeting Card, balloons, presents, cake with candles

Wedding Catered party, card and gift, display of

anniversary photos of the couple’s life together
Graduation Pen, card
Valentine’s Day cards, flowers and gifts
New Year’s Eve Greetings, party,

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 Subcultures and Consumer
Behavior

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 A distinct cultural
group that exists as an
Subculture identifiable segment
within a larger, more
complex society.

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 Examples of Major Subcultural Categories
CATEGORIES EXAMPLES
Nationality Greek, Italian, Russian
Religion Hindu, Muslim, Christian
Geographic region North, South west, east

Race African, American, Asian etc

Age Senior citizen, teenager, elderly

Gender Female, Male

Occupation Professionals, businessman

Social class Lower, middle, upper

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 Sub cultural division and Consumption pattern in India
 Each state and religion has got its own traditional style of dressing,
wearing ornaments, food preferences etc

 In North India wheat and wheat products are consumed more, In South
India rice and rice products are consumed more

 Certain communities consume vegetarian food, certain communities

consume non-vegetarian food

 In Rural-urban sub cultural division the consumption pattern varies

with regard to preferences in food items, housing clothing, transport
vehicle used saving pattern etc

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 Types of Sub Culture
1. Nationality Subculture

2. Religious Sub cultures

3. Geographic and Regional Subcultures

4. Racial Subcultures

5. Age Subculture

6. Gender as a subculture

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 [Link] Subculture
Nationality subcultures serve their members in three ways:
– To provide a source of psychological group
identification

– To offer a patterned network of groups and institutions

supportive of the subculture

– To serve as a frame of reference through which to

evaluate the dominant culture.

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 E.g. to Nationality Subculture Marketing to African Americans
African American consumers expect respect within the marketplace
and must feel a sense of acceptance.

When they seek subculture-specific products they use media targeted to

the subculture.

Use of black models in advertising is important to them.

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 [Link] Based on Religion
 Beliefs are a major influence on marketplace behavior.

 Generalizing based on religion must be done carefully.

 Religious calendars influence product selection.

 Geographic concentrations of religious sects are also important

to marketers

 Media choice depends upon sensitivity to lifestyle and behavior

patterns.

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 [Link] and Regional Subcultures
 Many regional differences exist in consumption behavior

 In North India wheat and wheat products are consumed

more, In South India rice and rice products are consumed
more

 Westerners have a mug of black coffeeEasterners have a

cup of coffee with milk and sugar

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 [Link] Subcultures

 Subcultures based on one’s race

 The African-American Consumer

 Asian-American Consumers

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African
African Americans
Americans and
and
Mainstream
Mainstream Media
Media
Watch
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ofTV
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on
Major
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Heavy
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ofLocal
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Now
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thePeople
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Integrated

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Black-Oriented
Black-Oriented Media
Media
Depict
Depict Blacks
Blacks
Black
BlackSports
Sportsand
and More
MorePositively
Positively
Celebrity
CelebrityFigures
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are
areIncreasing
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Retailers
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are Black-Oriented
Targeting New
NewGeneration
Generation
Targeting Media
African of
of Magazines
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AfricanAmericans
Americans

Have
HaveSpecific
Specific
Romance
RomanceNovels
Novels

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Reaching
Reaching the
the Asian
Asian American
American
Consumer
Consumer
Translating Advertising Overlooked Complex
Messages Into Asian Differences Among
Media Asian Subcultures

Problems
Encountered
by American
Marketers
Lack of Media Available Been Insensitive to
to Reach Asian Cultural Practices
Americans

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 [Link] Subcultures

Generation X Generation Y
Market Market

Seniors Baby Boomer

Market Market

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 Born between 1977
and 1994; also called
Generation
echo boomers and
Y
millennium
generation

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 Born between 1965
Generation X and 1979; post baby
boomer segment

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 Individuals born
between 1946 and
1964 (approximately
Baby 45% of the adult
Boomers population).They are
broad category that
extends from about 40
to 60.

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 Generally older
consumers. Consist of
Seniors subcultures, including
the “elderly
consumers” market.

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 [Link] as a Subculture
Gender Roles and Consumer Behavior
– Masculine vs. Feminine Traits
– A recent study found that men & women exhibit different
reactions to identical print ads. Women show superior affect &
purchase intention towards ads that are verbal, harmonious &
category-oriented.
– In contrast, men exhibit superior affect & purchase intention
towards ads that are comparative, simple & attribute oriented.
The Working Woman

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 Segmenting the Female Market
• Four Segments:
– Stay-at-Home Housewives
– Plan-to-Work Housewives
– Just-a-Job Working Women
– Career-Oriented Working Women

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 Cross-cultural consumer analysis

• A cross-cultural analysis involves the study of similarities and

differences among consumers in two or more nations or
societies

• The cross-cultural analysis creates an understanding about

values, customs, (Customs are the norms and expectations
about the way people do things in a specific country.)
symbols, & languages of other societies.

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 Some Comparisons
Chinese Cultural Traits American Cultural Traits
• Centered on Confucian • Individual centered
doctrine
• Emphasis on self-reliance
• Submissive to authority

• Ancestor worship • Primary faith in rationalism

• Values a person’s duty to • Values individual personality

family and state

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 • The greater the similarity between the nations ,the more
feasible it is to use relatively similar marketing strategies
in each nation. (International airlines commercials like
American Airlines, Continental Airlines etc for upscale
international business travelers)

• On the other hand ,if the cultural beliefs ,values, and

customs of specific target countries are found to be differ
widely ,then a highly individualized marketing strategy is
indicated for each country (Nike in china hiring Chinese
speaking people to develop the commercial)

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 The learning of a
Acculturation new “foreign”
culture.

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 Acculturation
• …process by which a culturally myopic view is
overcome

– First, the marketers must thoroughly orient

themselves to the values, beliefs and customs of the
new society to appropriately position and market
their products
• An appreciation of China’s ‘one child’ policy means that
foreign businesses will understand that Chinese families
are open to particularly high quality baby products for
their single child

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 Cross cultural Marketing problems and
Strategies to over come
 Product Problems

 Promotional Problems

 Pricing Problems

 Distribution Problems

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 Product Problems: International marketers have to select
product to meet local customs and tastes.

They have to be careful in product selection. Especially in

food products, soft drinks and personal care products they
have to be extra cautious

Marketers need to ensure that products are matched with the

needs of the specific overseas market

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 There's No Beef or Pork in Any
McDonald's in India...

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  McDonald's doesn't serve any beef or pork in any form, in
ANY of their 123 outlets (and counting) across the
country!

 Instead of ground beef and pork patties, the McDonald's

Menu in India features Indian burgers that are 100 percent
vegetarian - burger look-a-likes of potatoes, peas, and
carrots, with a little Indian spice thrown in

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 Consider Color
• Meanings of Blue • Meanings of Yellow
– Holland - warmth – U.S. - warmth
– Iran - death
– Sweden - coldness

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 Promotional Problems
Marketer has to communicate with the unfamiliar
target audience with unfamiliar communication
modes

Cultural dynamics and the specific buying motives

of the target customers must be kept in mind while
forming the promotional tool

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 Pricing Problems:
Each country has its own method of deciding on the
price front for foreign products

Marketers have to adopt a market oriented pricing

policy suitable to the economic environment

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 Distribution Problems
Since there is distance between the producer and the
foreign consumer, marketer has to cope with
problems related to selecting a suitable channel.

Distribution channel must be such that it should be

adapted to an individual foreign market

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 What is a Group?

• Two or more people who interact to

accomplish either individual or mutual
goals

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 NATURE OF GROUPS
• Two or more people
• Collective identity
• Interaction
• Shared goal interest

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 Types of Groups
• Primary Group Groups consisting of intimate, face-to-face interaction
and relatively long-lasting relationships. 
• Secondary Group Groups with large membership, less intimate, and
less long lasting.
• Formal Group :Formerly structured in a hierarchical order like
president-executive-secretary.
• Informal :The structure of the group is loosely defined
• Membership: A membership group is one to which a person either
belongs or would qualify for membership

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 Reference Group
A person or group that serves as a point
of comparison (or reference) for an
individual in the formation of either
general or specific values, attitudes, or
behavior.

From marketing perspective ,reference groups are groups that

serve as frames of reference for individuals in their purchase or
consumption decisions.

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 Broad Categories of
Reference Groups

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 • Normative Reference Groups: Reference group
that influence general or broadly defined values or
behaviors are called Normative Reference
Groups.
• E.g. Child’s normative reference group is
immediate family .It plays a major role in molding
the child’s general consumer values and behavior
(such as which food to select for good nutrition
,appropriate way to dress for specific occasions)

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 • Comparative Reference Groups:
Reference groups that serve as benchmarks for
specific or narrowly defined attitudes or behaviors
are called comparative reference group.
E.g. A comparative reference group might be a
neighboring family whose life style appears to be
admirable and worthy of imitation .Their home,
furniture, clothing style etc seems to be attractive .

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 Indirect Reference Groups

Individuals or groups with whom a

person identifies but does not have direct
face-to-face contact, such as movie stars,
sports heroes, political leaders, or TV
personalities.

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 Types of reference groups
1. Normative Reference Groups
2. Comparative Reference Groups
3. Indirect Reference Groups
4. Contactual group (the group in which the person interacts and has
regular contact like family, friends coworkers)
5. Aspirational Group( an individual wishes to belong)
6. Disclamant group: here a person may have membership face to
face contact but he disapproves the group values, attitudes and
behaviors

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 Friendship Groups

Shopping Groups

Work Groups

Virtual Groups or Communities

Brand Communities

Consumer-action Groups

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 Factors that affect reference group
influence
• Information and experience (firsthand
experience and no experience)
• Credibility, attractiveness and power of the
reference group
• Conspicuousness of the product (luxury item
vs. ordinary item)

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 Reference Group Appeals

• Celebrities
• The expert
• The “common man”
• The executive and employee
spokesperson
• Trade or spokes-characters

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 Types of Celebrity Appeals
TYPE DEFINITION EXAMPLE
Testimonial Based on personal usage, a Shahrukh khan in
celebrity attests to the quality Navratna tel
of the product or service
Endorseme Celebrity lends his name and Rahul Dravid for
nt appears on behalf of a product anti AIDS campaign
or service with which he/she
may not be an expert
Actor Celebrity presents a product or
service as part of a character
endorsement
Spokespers Celebrity represents the brand Amitabh for pulse
on or company over an extended polio
period of time

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 (a) Actual referent is a “typical” consumer (b) Symbolic referent The famous cricketer

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A second type of reference group appeals used by
marketers is the expert, a person who, because of his or
her occupation, special training, or experience, is in a
unique position to help the prospective consumer
evaluate the product that the advertisement promotes.

e.g. An ad for a quality frying pan may feature the

endorsement of a chef.

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 A reference group appeal that uses the testimonials of satisfied
customers is known as the common-man approach.

The advantage is that it demonstrates to prospective customers

that someone just like them uses and is satisfied with the good
or service being advertised.

The common man appeal is especially effective in public

health announcement (such as antismoking or high B.P.
messages), for most people seem to identify with people like
themselves when it comes to such messages.

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 The popularity of this type of advt. probably is due to the
success and publicity received by a number of executive
spokespersons.

Like celebrity spokespersons, executive spokespersons seem

to be admired by the general population because of their
achievements and the status implicitly conferred on business
leaders.

e.g. Ratan Tata, K. Birla, Mukesh Ambani etc.

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 These are often employed as attention grabbers, acting
as spokespersons to promote children’  products.

Trade characters are intended to bond a child to a brand

so that the child’s   brand awareness might form the
basis of brand preference either immediately or later in
life.

e.g. Animated characters used by marketers in

advertisements for children products

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 Family

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 Family
• Two or more persons related by
blood,marriage or adoption and reside
together
• Basic social group who live together and
interact to satisfy their personal and mutual
needs

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 3 types of families
• Married couples: Husband and wife( new
couples or older couples)
• Nuclear family: A husband and wife and
one or more children
• Extended Family: The nuclear family
together with at least one grand parent
living within the family is Extended Family

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 Family trends (changing family structure)

• Falling numbers of marriage.

• Increasing number of divorces.
• Increased incidence of remarriage.
• Women want smaller families.
• Steady increase in the number of unmarried adults and one
person households.
• Rapid increase in single parent family (one parent ,at least
one child). It is mainly due to divorce

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Table 10.6 Eight Roles in the Family Decision-Making
Process
ROLE DESCRIPTION
Influencers Family member(s) who provide information to other members about
a product or service
Gatekeepers Family member(s) who control the flow of information about a
product or service into the family
Deciders Family member(s) with the power to determine unilaterally or jointly
whether to shop for, purchase, use, consume, or dispose of a specific
product or service
Buyers Family member(s) who make the actual purchase of a particular
product or service
Preparers Family member(s) who transform the product into a form suitable
for consumption by other family members
Users Family member(s) who use or consume a particular product or service

Maintainers Family member(s) who service or repair the product so that it will
provide continued satisfaction.
Disposers Family member(s) who initiate or carry out the disposal or
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discontinuation of a particular product or service
 Dynamics of Husband-Wife
Decision Making
1. Autonomic role
partners independently make an equal number of
decisions

2. Husband-dominant role—
husband usually makes certain buying decisions, such as
purchasing life insurance.
3 Wife-dominant role—
wife makes buying decisions, such as buying
children’s clothing.
4. Syncratic role—buying decision made jointly.

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 The Family Life Cycle
• Traditional Family Life Cycle
– Stage I: Bachelorhood-single men and women establishing
household away from parents (staying as Paying guest after
getting job,before marriage)
– Stage II: Honeymooners-after marriage before arrival of first
child
– Stage III: Parenthood-from first child to the marriage of
children-full nest
– Stage IV: Post-parenthood-when children have left home for
studies or marriage
– Stage V: Dissolution-after the death of one of the spouses

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 OPINION
LEADERSHIP

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 OPINION LEADERSHIP

Opinion leadership (or word-of-mouth communication)-The opinion leader

informally influences the actions or attitudes of others, who may be opinion
seekers or merely opinion recipients

Influence is interpersonal and informal takes place between two or more people
none of whom represents a commercial selling source

Individuals who actively seek information and advice about products are opinion
seekers

Examples of Opinion Leadership

During a coffee break, a co-worker talks about the movie he saw
last night and recommends seeing it.

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 Dynamics of the Opinion Leadership Process
Reasons for the effectiveness of opinion leaders are:

CREDIBILITY
• Opinion leaders are highly credible source of information
• Intentions of Opinion leaders are perceived as being in the best
interests of the opinion recipients
• Base their product comments on firsthand experience
• Their advice reduces for opinion receivers the perceived risk
or anxiety inherent in buying new products.

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 POSITIVE AND NEGATIVE PRODUCT INFORMATION:
Information provided by the marketers is invariably favorable to the product
and/or brand. Opinion leaders provide both favorable and unfavorable
information adds to their credibility.

INFORMATION AND ADVICE:

Opinion leaders are the source of both information and advice. They may simply
talk about their experience with a product, relate what they know about a
product, or, more aggressively, advise others to buy or to avoid a specific
product.

OPINION LEADERSHIP IS A TWO-WAY STREET

•Opinion leaders in one purchase situation become opinion seekers in other
purchase situation

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 A comparison of the Motivation of
Opinion Leaders and Opinion
Receivers
Opinion Leaders
SELF-IMPROVEMENT MOTIVATIONS
•Reduce post purchase uncertainty or dissonance
•Gain attention or status
•Show superiority and expertise
•Feel like an adventurer
•Experience the power of “converting” others
PRODUCT INVOLVEMENT MOTIVATIONS
•Express satisfaction or dissatisfaction with a product or service
SOCIAL INVOLVEMENT MOTIVATIONS
•Express neighborliness and friendship by discussing products or service that may be useful to others.
MESSAGE-INVOLVEMENT MOTIVATIONS
•Express ones reaction to a stimulating advertisement by telling others about it.

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 OPINION RECEIVERS
• SELF-IMPROVEMENT MOTIVATIONS
• Reduce the risk of making a purchase commitment
• Reduce search time
• PRODUCT INVOLVEMENT MOTIVATIONS
• Learn how to use or consume a product
• Learn what products are new in the market place
• SOCIAL INVOLVEMENT MOTIVATIONS
• Buy products that have the approval of others there by ensuring
acceptance

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 PURCHASE PALS &
SURROGATE BUYERS
PURCHASE PALS:
•“purchasing pals” - information sources who
actually accompany consumers on shopping trips

SURROGATE BUYERS:
•Consultants who formally help consumers in
making purchase decisions. They replace opinion
leaders

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 Opinion Leaders and Surrogate Buyers

• OPINION LEADER

• Informal relationship with end users

• Informal exchange occurs in the context of a casual interaction
• Does not get paid for advice
• Usually socially more active than end users
• Accountability limited regarding the outcome of advice
• Likely to have (although not always) used the product
personally
• More than one can be consulted before making a final decision
• Same person can be an opinion leader for a variety of related
product categories

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 SURROGATE BUYER
• Formal relationship, occupation-related status
• Information exchange in the form of formal instructions/advice
• Usually hired, therefore gets paid
• Not necessarily socially more active than end users
• High level of accountability
• Search and screening of alternatives more rigorous
• May not have used the product for personal consumption
• Second opinion taken on rare occasions
• Usually specializes for a specific/service category

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 Measurement of Opinion
Leadership
• Self-Designating Method
• Sociometric Method
• Key Informant Method
• Objective Method

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OPINION LEADERSHIP MEASUREMENT DESCRIPTION OF METHOD
METHOD SAMPLE QUESTIONS ASKED

SELF-DESIGNATING METHOD Each respondent is asked a series of questions to “Do you influence other people in
determine the degree to which he or she perceives their selection of products?”
himself or herself to be an opinion leader.

SOCIOMETRIC METHOD Members of a social system are asked to identify to “Whom do you ask?”“Who asks you
whom they give advice and to whom they go for for info about that product
advice. category?”

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OPINION LEADERSHIP MEASUREMENT
DESCRIPTION OF METHOD SAMPLE QUESTIONS ASKED
METHOD

KEY INFORMANT METHOD Carefully selected key informants in a social system are asked to “Who are the most influential people
designate opinion leaders .(eg. college professor identifying in the group?”
students who are opinion leaders)

OBJECTIVE METHOD Artificially places individuals in a position to act as opinion “Have you tried the product?
leaders and measures results of their efforts. (Restaurant example)

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 Market Mavens
• Individuals whose influence stems from a general knowledge or market expertise that leads to
an early awareness of new products and services.
Market Maven
• A special category of opinion leader
• Possess a wide variety of information on different types of products (across product
categories), retail outlets and market details
• Liking shopping and sharing the experience
• Value conscious

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 Opinion leadership and marketing strategy

• Programs Designed to Stimulate Opinion Leadership (creation of opinion

leadership)

• Advertisements Stimulating Opinion Leadership (creation of opinion

leadership)

• Word of Mouth May Be Uncontrollable

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 1. Programs Designed to Stimulate Opinion Leadership

•Marketers design products to have word of mouth potential.

A new product should give customers something to talk about.
E.g. for such product: iPods, cell phones with digital cameras
Consumers are willing to sell them to each other by means of word of mouth.

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 • Multilevel Marketing
It is also known as direct marketing method of communication
Under this the company’s distributors directly approach the customer and give all information
about the product.
During the process they give frank opinion or discuss with the consumers all the benefits
(problems) associated with the product
The objective of such direct marketing programme is to assign the company’s distributors the role
of opinion leaders.

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 [Link] Stimulating Opinion Leadership:
•Firm’s advertising and promotional programmes largely relied on stimulating or
persuading consumers to tell your friends how much you like our product.
•E.g: Surf Excel ad in which real users that is opinion leaders give their feedback .

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 [Link] of Mouth May Be Uncontrollable
•Though word of mouth is most effective way of communication they are
sometimes difficult to control .
•Negative comments, in the form of rumors ,that are untrue, can sweep through
the market place to the disadvantage of a product

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 • Use of Internet by marketers to spread
the word of mouth
• Weblogs (creation of opinion leaders)
• email

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 Diffusion of
innovations

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 Diffusion of innovations
• Diffusion process- spread of innovation from its source to the consuming
public

• Adoption process-stages through which an individual consumer passes

when deciding to accept or reject a new product

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 The diffusion process

• Acceptance of innovation
• Is spread by communication
• To members of a social system
• Over a period of time

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 Rate of adoption
• How long it takes for a new product or service to be adopted by members
of a social system. Or how quickly it takes a new product to be accepted
by those who ultimately adopt it
• Fads- very fast, fashion- moderate, classic fashion/style-slow

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 Adopter categories
• A classification scheme that indicates where a consumer stands in relation
to other consumers in terms of time

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 Figure 15.9 Adopter Categories

Early Laggards
Adopters
13.5% Early Late 16%
Innovators Majority Majority
2.5% 34% 34%

Percentage of Adopters by Category Sequence

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 Profile of consumer innovator
• Earliest purchasers of a new product
• Interest in the product category
• Is an opinion leader
• Personality traits- less rigid, consistent, open minded, need for
uniqueness, inner directed, daring
• Purchase characteristics-Less brand loyal, deal prone (taking
advantage of offers), heavy users of the product category
• Media habits-greater exposure to magazines, special interest
magazines, Less viewing TV

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 Profile of innovators
• Social characteristics-socially accepted and socially involved, (opinion
leaders)
• Demographic characteristics- Younger, formal education, higher personal
income, high occupational status

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 • Early Adopters: Description
• 13.5% of population
• Respected
• More integrated into the local social system
• The persons to check with before adopting a new idea
• Category contains greatest number of opinion leaders
• Are role models
• Early Majority: Description
• 34% of population
• Deliberate
• Adopt new ideas just prior to the average time
• Seldom hold leadership positions
• planned for some time before adopting

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 • Late Majority: Description
• 34% of population
• doubtful
• Adopt new ideas just after the average time
• Adopting may be both an economic necessity and a reaction to peer pressures
• Innovations approached cautiously
• Laggards: Description
• 16% of population
• Traditional
• The last people to adopt an innovation
• Most “localite” in outlook
• Oriented to the past
• Suspicious of the new

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 The adoption process
• The stages through which an individual consumer passes while arriving at
a decision to try or not to try or to continue using or to discontinue using a
new product
• Stages in adoption process- awareness, interest, evaluation, trial , adoption
or rejection

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 Stages in the Adoption Process

Awareness

Interest

Evaluation

Trial

Adoption

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 Table 15.11 Stages in Adoption Process
WHAT HAPPENS
NAME OF
DURING THIS STAGE EXAMPLE
STAGE
Consumer is first Janet sees an ad for a new MP3
Aware exposed to the product player in the magazine she is reading.
ness innovation.
Consumer is interested Janet reads about the MP3 player on the
in the product and manufacturer’s Web site and then goes to
Interest searches for additional an electronics store near her apartment
information. and has a salesperson show her a unit.
Consumer decides After talking to a knowledgeable friend,
whether or not to Janet decides that this MP3 player will
Evaluat believe that this allow her to easily download the MP3
ion product or service will files that she has on her computer. She
satisfy the need--a kind also feels that the unit’s size is small
of “mental trial.” enough to easily fit into her beltpack.

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 Table 15.11 Stages in Adoption Process
NAME WHAT HAPPENS
OF DURING THIS EXAMPLE
STAGE STAGE

Consumer uses Since an MP3 player cannot be “tried”

like a small tube of toothpaste, Janet buys
Trial the product on a the MP3 player online from [Link],
limited basis which offers a 30-day full refund policy.

If trial is favorable, Janet finds that the MP3

consumer decides to
Adopti use the product on a player is easy to use and that
on full, rather than a the sound quality is excellent.
(Rejecti limited basis--if She keeps the MP3 player.
unfavorable, the
on) consumer decides to
reject it.

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 An Enhanced Adoption Process
Model
Rejection Discontinuation or Rejection

Evaluation

Pre-existing Adoption or
problem or Need Awareness Interest Evaluation Trial Rejection

Adoption or Rejection

Postadoption or
Postpurchase Evaluation

Discontinuation

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 POSTPURCHASE
PROCESSES,
CUSTOMER
SATISFACTION,
AND CUSTOMER
COMMITMENT

18-127

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 Postpurchase Consumer Behavior

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 Postpurchase Dissonance

Postpurchase Dissonance occurs when a consumer

has doubts or anxiety regarding the wisdom of a
purchase made and is a function of the following:

• The degree of commitment or irrevocability of the

decision

• The importance of the decision to the consumer

• The difficulty of choosing among the alternatives

• The individual’s tendency to experience anxiety

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 Postpurchase Dissonance

After the purchase is made, the consumer may utilize

one or more of the following to reduce dissonance:

 Increase the desirability of the brand purchased

 Decrease the desirability of rejected alternatives

 Decrease the importance of the purchase

decision

 Reverse the purchase decision (return before

use)

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 Product Use and Nonuse
Product Use
Marketers need to understand how consumers use their
product. They need to understand the symbolic and
functional way in which the product is used. So that they
can design the product accordingly.

They also need to know how consumers use the product in

a innovative way to expand the sales

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 • Product Non-use
It occurs when a consumer actively acquires
a product that is not used or used only
sparingly relative to its potential use

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 Disposition

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1-134
 Meaning
CRM methodology enables the organization to
understand the customers' needs and behavior
better.
It introduces reliable processes and procedures
for interacting with customers and develop
stronger relationships with them. The whole
process is designed to reduce cost and increase
profitability by holding on to the customer
loyalty.

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Value ( $ )

nship
ela tio
he R
ue of t
al
he V
Duration of Customer Relationship
T

Targeting Acquisition Retention Expansion

• Who Do we target • What is the best channel for • How can we improve • How many products does
• What segments are most each segment retention our average customer buy
profitable • What is the acquisition cost • What is our average • How can we induce our
• What segments match our for a channel / segment customer relationship current base to buy more
Value Proposition • Do certain channels deliver length products
• What is the best segmentation certain types of customers • How can we hold customer • Who are the prime targets
strategy for us / our industry • Cost effective acquisition for as long as possible for expansion
• What is the most cost • What is the cost of
effective method of expansion
retention

Customer Relationship Management can be simply defined as everything involved with

managing the customer relationship.

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 Significance of CRM
 Generation of more & more loyal customers
 Expansion of customer base
 Reduction in advertisement & other sales
promotion expenses

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  Easy introduction of new products
 Easy business expansion possibilities
 Increase in customer partnering

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 Types of CRM
 Operational CRM – Provides for the day
to day needs of customers.
 Analytical CRM – Allows analysis of
customer behaviour.
 Collaborative CRM – Allows interaction
between customer and company. Used
a lot in B2B businesses.

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 Strategies for building relationship
marketing
An organization strategies towards
developing & maintaining sustainable
relationship differ from one
organization to another depending on
certain factors.
These includes nature of business, it’s
size, market share, nature of product
etc.
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 Strategies for Building Relationships
Intangible
Incentives
benefits

Point of Usage Partnership

Customer Pricing
Clubs schemes

Social events Communication

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 Strategies for Building Relationships
Complaint
Develop CSI
monitoring

Preventive
CS research
actions
Build
Focus groups switching
barriers

TOT AL CARE PROGRAMS

Unethical Approaches to CRM ( read from book)

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 -C R M
e

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 e-CRM

e-CRM PROVIDES A MEANS TO

CONDUCT INTERACTIVE,
PERSONALISED & RELEVANT
COMMUNICATION WITH
CUSTOMERS ACROSS BOTH
1-144 ELECTRONIC & TRADITIONAL
 DIFFERENCE BETWEEN CRM & e-
CRM

• No functional difference

• Only difference in engineering,

architecture & execution

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 IMPORTANCE OF e-CRM

• Fast and accurate

• Tool for acquiring unknown customers

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