Module – 7

Consumer Behaviour
Dr Virupaksha Goud

Topics to be covered :
Consumer Influence and Diffusion of Innovations Opinion Leadership: Dynamics of opinion
leadership process, Measurement of opinion leadership, Market Mavens, Opinion Leadership &
Marketing Strategy, Creation of Opinion Leaders Diffusion of Innovations: Diffusion Process
(Innovation, Communication channels, Social System, Time) Adoption Process: Stages, categories of
adopters Post Purchase Processes: Post Purchase Processes, Customer Satisfaction, and customer
commitment: Post purchase dissonance, Product use and non use, Disposition, Product

Opinion Leadership
Opinion Leadership is the process by which one person (the opinion leader) informally influences the
actions or attitudes of others, who may be opinion seekers or opinion recipients.
One of the parties in a word-of-mouth encounter usually offers advice or information about a
product or service, such as which of several brands is best or how a particular product may be used.
This person, the opinion leader, may become an opinion receiver when another product or service is
brought up as part of the overall discussion.
Individuals who actively seek information and advice about products sometimes are called opinion
seekers.
Simple examples of opinion leadership at work include the following :
 A family decides that they need a new gas stove, and they ask a few of their neighbours
which brand they should purchase.
 A person shows his cousin photographs of his recent vacation in Kerala, and the cousin
suggests that using a different camera might produce better pictures.
 During a coffee break, a co-worker talks about the new movie she saw last night and
recommends seeing it.

Dynamics of the opinion leadership process

The opinion leadership process is a very dynamic and powerful consumer force. Some of the
reasons for the effectiveness of opinion leaders :
 Credibility : Opinion Leaders are highly credible sources of information because they
usually are perceived as objective concerning the product or service information or
advice they dispense. Their intentions are perceived as being in the best interests of
the opinion recipients because they receive no compensation for the advice.
 Positive and Negative product information : Information provided by marketers is
invariably favourable to the product and/ or brand. Thus the very fact that opinion
leaders provide both favourable and unfavourable information adds to their
credibility. An example of an unfavourable or negative product comment is “The
problem with those inexpensive dresses is that they soon become dull.”
 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 category specific : Opinion leadership tends to be category
specific; that is, opinion leaders often specialize in certain product categories about
which they offer information and advice. When other product categories are
discussed, however, they are just as likely to reverse their roles and become opinion
receivers.
  Opinion leadership is a two-way street: Consumers who are opinion leaders in one
product-related situation may become opinion receivers in another situation, even
for the same product. Rahul at the time of purchasing Laptop may seek information
and advice from other people and thus is an opinion receiver. After purchasing it, he
becomes well versed with the Laptop and becomes opinion leader for giving advice
to others.

Measurement of opinion Leadership

In measuring opinion leadership, the researcher has a choice of four basic measurement techniques
: 1) the self-designating method, 2) the sociometric method, 3) the key informant method, and 4)
the objective method.
Opinion Description Sample Advantages Limitations
Leadership Method Questions asked
Measurement
Method
Self-designating Each respondent “Do you influence Measures the Depends on the
Method is asked a series other people in individual’s objectivity with
of questions to their selection of own which respondents
determine the products?” perceptions of can identify and
degree to which his or her report their
he or she opinion personal influence.
perceives himself leadership.
or herself to be
an opinion leader.
Sociometric Members of a “Whom do you Sociometric It is very costly and
Method social system are ask?” questions have analysis often is
asked to identify “Who asks you the greatest very complex.
to whom they for information degree of Requires a large
give advice and to about the product validity and are number of
whom they go for category?” easy to respondents. Not
advice and administer. suitable for sample
information design where only a
about a product portion of the social
category. system is
interviewed.
Key Informant Carefully selected “Who are the Relatively Informants who are
Method key informants in most influential inexpensive not thoroughly
a social system people in the and less time familiar with the
are asked to group?” consuming than social system are
designate opinion the sociometric likely to provide
leaders. method. invalid information.
Objective Artificially places “Have you tried Measures Requires the
Method individuals in a the product?” individual’s establishment of an
position to act as ability to experimental design
opinion leaders influence and the tracking of
and measure others under the resulting impact
results of their controlled on the participants.
efforts. circumstances.

Market mavens
A special category of consumer influencer, who possess a wide range of information about many
different types of products, retail outlets and other dimensions of markets. They both initiate
discussions with other consumers and respond to requests for market information. Market mavens
like to shop, and they also like to share their shopping expertise with others. However, although they
appear to fit the profile of opinion leaders in that they have high levels of brand awareness and tend
to try more brands, unlike opinion leaders their influence extends beyond the realm of high-
involvement products.

Opinion Leadership and Marketing Strategy

Marketers have long been aware of the power that opinion leadership exerts on consumer’s
preferences and actual purchase behaviour. For this reason, marketers are increasingly designing
products with characteristics or design factors that make them easy to talk about and whip up
interest about.

Creating products with built-in-buzz potential

New product designers take advantage of the effectiveness of word-of-mouth communication by
deliberately designing products to have word-of-mouth potential. A new product should give
customers something to talk about (“buzz potential”). Examples of products and services that have
had such word-of-mouth appeal include i-pods, cell phones with digital cameras, and a host of other
sought-after technologies and luxury brands.

Strategy designed to stimulate buzz

The nature and scope of the Internet has inspired marketers to expand opportunities to take control
of the process of word-of-mouth. For instance, they are increasingly hiring buzz marketing agencies
that maintain large armies of largely volunteer consumer buzz agents who seem to greatly enjoy
telling other consumers (often friends, and family) about a product that they have been exposed to
and feel that they would like to talk about. An example of such a consulting agency is Bzzagent. They
assist their clients in creating word-of-mouth or buzz marketing campaigns.

Viral marketing
Also known as buzz marketing, wildfire marketing. It describes any strategy that encourages
individuals to pass on a marketing message to others, creating the potential for exponential growth
in the message’s exposure and influence. It is the marriage of e-mail and word-of-mouth. It is also
named “viral” because it allows a message to spread like a virus.

Weblogs as word-of-mouth
One of the newest mediums for disseminating word-of-mouth is the blog, with over five million of
these Web journals appearing on the Internet over the past few years. Almost 23000 new Weblogs
are created daily both by consumers and by companies.

Diffusion of Innovations
Diffusion of Innovations is a theory of how, why, and at what rate new ideas and technology spread
through cultures.
Elements of diffusion of innovations
 Innovation
Rogers defines an innovation as "an idea, practice, or object that is perceived as new by an individual
or other unit of adoption" .
 Communication channels
A communication channel is "the means by which messages get from one individual to another.”
 Time
"The innovation-decision period is the length of time required to pass through the innovation-
decision process" . Rate of adoption is the relative speed with which an innovation is adopted by
members of a social system.
 Social system
"A social system is defined as a set of interrelated units that are engaged in joint problem solving to
accomplish a common goal“.

Adoption Process

Categories of Adopters
 Innovators – Those buyers who want to be the first on the block to have the new product or
service. These buyers enjoy taking risks and are regarded as highly knowledgeable and
venturesome. Innovators keep themselves well informed about the product category by
subscribing to trade magazines. They are crucial to the success of any new product category
because they help the product gain market acceptance.
 Early Adopters – The second subgroup that begins to use a product or service innovation is
the early adopters. They generally don’t like to take as much risk as innovators do but
instead wait and purchase the product after careful review. Early adopters tend to enjoy
novelty and often are regarded as the opinion leaders for particular product categories.
 Early Majority – They are crucial because few new products and services can be profitable
only when this large group buys them. Its members don’t like to take as much risk and
therefore tend to wait until the problems are worked out of a particular product or service.
When early majority customers enter the market, the number of competitors in the
marketplace usually also has reached its peak, so these buyers have many different price
and quality choices.
 Late Majority – The last group of buyers to enter a new product market; when they do, the
product has achieved its full market potential. By the time, the late majority enters the
market, sales tend to level off or may be in decline.
 Laggards – These consumers like to avoid change and rely on traditional products until they
are no longer available. In some cases, laggards may never adopt a certain product or
service.

Post – purchase Dissonance

Cognitive Dissonance occurs as a result of some discrepancy between a consumer’s prior evaluation
and the purchase decision. The dissonance theory was derived from two basic principles : 1)
dissonance is unpleasant and will motivate the person to reduce it and 2) individuals experiencing
dissonance will avoid situations that produce more dissonance. Post – purchase dissonance is most
likely to occur when more than one alternative was attractive and a relatively permanent and
difficult decision had to be made. The doubt or anxiety resulting from such a decision is termed as
post-purchase dissonance.
The probability that a consumer will experience dissonance is a function of the following factors :
1) The degree of irrevocability of the decision : If it is easier for the consumer to change the
decision, it is less likely that the consumer will experience dissonance.
2) The importance of decision to the consumer : If the consumer views the decision as more
important, it is likely to cause dissonance.
3) The difficulty of choosing among the alternatives : If the consumer experiences difficulty in
choosing from among the alternatives because of their number, the number of relevant
attributes associated with each alternative, the consumer will experience dissonance of
greater magnitude.
4) The individual’s tendency to experience anxiety : If the consumer is more prone to
experiencing anxiety, it is more likely that he would experience post-purchase dissonance.
The consumers may use one or more of the following approaches to minimising the dissonance :
1) Increase the desirability of the brand purchased.
2) Decrease the desirability of alternatives not selected.
3) Decrease the importance of the purchase decision.
4) Return the product before using it.

Follow-up sales efforts can help reduce post-purchase dissonance in consumers. Many
marketers of consumer durable goods such as refrigerators, washing machines, autos,
computers and expensive cameras etc. send their recent purchasers follow-up letters
congratulating and reassuring them about the wisdom of their purchase. For eg. A customer
who has purchased Whirlpool Refrigerator receives a letter from Whirlpool that reads :
“Thanks for buying Whirlpool refrigerator. We know you would be happy with your decision.
If there is anything we can do at any time, we are at your service just a phone call away.”

Purchase Evaluation and Satisfaction/Dissatisfaction

Consumer’s post-purchase evaluation process is influenced by the purchase-process itself,
post-purchase dissonance, product use and disposal of product/package.
Relationship of Expectations, Performance and Satisfaction
Perceived Performance Below minimum desired Above minimum desired
relative to expectation performance performance
More than expected Satisfaction Satisfaction/Commitment
Same as expected Non-Satisfaction Satisfaction
Worse than expected Dissatisfaction Dissatisfaction

Consumer dissatisfaction is, in part, a function of discrepancy between expectations and

perceived product or outlet performance. Marketers need to pay attention to their product
or distribution/service related promotional claims because any exaggerated or unrealistic
claims can contribute to consumer dissatisfaction.

The Disconfirmation Paradigm

Positive
Expectations Satisfaction

Disconfirmation

Performance Dissatisfaction
Negative
 Satisfaction/ Dissatisfaction Determinants
Older people tend to have lower expectation levels and tend to be more satisfied from their
purchases. Higher education seems to be associated with lesser satisfaction and men tend to be
more satisfied than women with their purchases. Performance expectations and actual performance
are the major factors considered in the evaluation process of satisfaction or dissatisfaction. The
relationship between expectation and the level of satisfaction is influenced by a variable called
“disconfirmation of expectations”, Positive disconfirmation results when the performance of the
product or the outlet is perceived as better than expected, leading to satisfaction. Negative
disconfirmation occurs when the performance turns out to be worse than expected and causes
dissatisfaction.

Instrumental performance relates to the physical functioning of the product. For eg. Proper
operation of camera, microwave oven etc.
Symbolic performance refers to performance that relates to aesthetic or image enhancement. For
eg. Styling of a winter jacket.

Dissatisfaction Responses

Post-purchase evaluation

Dissatisfied

Take no action
Take action

Negative
attitude

Complain to Stop buying Negative Complain to Take legal action

retail outlet or the brand or at word of consumer
company that store mouth protection agencies

Implications for marketers

To meet consumer expectations, marketers need to focus on 1) creating reasonable expectations
among consumers through appropriate promotional efforts, 2) ensure consistency in product quality
so that whatever expectations are created among consumers through marketing communications
are fulfilled.
Companies are laying stress on Relationship Marketing where they maintain long term good
relations with consumers.

Characteristics of Relationship Marketing

The Firm provides The Customer provides

Trust and
Products/services Repeat purchase
Individualized attention promises Increased Loyalty
Continuous information Goodwill
Price offers Positive word of mouth
Customer services Lower costs for the firm
 Product Disposal
Disposal is just throwing away the used-up or meaningless items by consumers without nay thought.
Disposal of the product or its container may occur before, during or after product use. This occurs on
a regular basis for most consumers except in cases where the product is completely consumed such
as an ice-cream cone. Disposal action by consumers is increasingly becoming important for
governments and marketers because of major environmental concerns that involve growing lead
and mercury.
In India, many state governments have banned the use of certain types of plastic bags.

Disposal Alternatives

Product / package

Keep it
Get rid of it

Throw Trade Sell Give Recycle Loan Store New use

away in it away

Thank you