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Unit -IV: Consumer Decision Making 

Levels of consumer decision making,

four views of consumer decisionmaking (Economic, Passive, Cognitive

and Emotional), Opinion leadership-

dynamics, measurement and profile

!iffusion of "nnovation- !iffusion and

#doption Process

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DYNAMICS IN COMMUNICATION : thedynamics that operate in word-of-mouthcommunication

The message and its information content: Amessage may be of dierent kinds and assumevarious forms. The marketing message orinformation content can be classied into threetypes, viz., product news, advice and personaleperience.

i) Product news: !roduct news is any

information that a consumer gathers during hissearch for information. "nce a consumeridenties a need and seeks to satisfy it, hegoes in for a search of information. This

information search could specic, on-going and

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ii) Adice: As people communicate informallywith family, friends, peers, opinion leaders andeven strangers, they hear of personal

eperiences of others. They are also eposed tostatements that re#ect personal attitudes, viewsand opinions about alternative product andservice oerings and$or brands etc. !ut together

all this form the advice component.iii) Persona! e"#erience: !ersonal eperiencerefers to eperiences of product or service usageby communications partners %i.e. those withwhom a person interacts informally to gaininformation about product and service oeringand$or brands&. 'hile people gain information

through product news %cognition& and advice%co nition and aect&, the often su lement

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Two$Ste# %!ow of Communication Theor&' : The Two-(tep )low of *ommunication Theory

proposes that the "pinion +eader forms a vitallink in the interpersonal communication process,and has an important role to play intransmission of information. According to the

 Two-(tep )low of *ommunication Theory, themessage %information content from themarketer& #ows from the mass media %both printand$or electronic audio-visual& to the "pinion

+eaders and from there it is transmitted to themasses or the "pinion eceivers.

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Adantages of (OM communication'-'ord-of-mouth communication reduces

the physical and cognitive eort that theconsumer has to take to gatherinformation, evaluate alternatives and take

the right decision.-- t helps an individual seek advice fromthe right person who has interest,knowledge and eperience with a productand service category especially in cases ofhigh involvement products, a person maybe less knowledgeable and less involved

and can take advice from someone who is

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- 'ord-of-mouth communication also reduces thelevel of uncertainty associated with a purchase.

!eople turn to informal sources for informationso as to be able to be certain with respect to thepurchase decision. This is particularly true forhigh involvement products, as also for products

that need social approval and$or match socialclass and social status.!eople often turn to eperts and opinion leadersfor advice They also look up to reference

groups 'hile eperts provide productknowledge and make consumers feel morecertain about a product alternative, referencegroups lead to an increase in consumer/s

condence about making a product choice that

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(OD$O%$MOUT* COMMUNICATION ANDOPINION +,AD,S*IP:i& '"0 is informal in nature.ii& t is interpersonal and takes place between twoor more people. The people could be actualconsumers or prospects and are in no way

representative of the marketer.iii& 1nlike commercial sources, the peopleinvolved in '"0 communication do not haveulterior or hidden motives of making a sale and

earning prot.'ord-of-mouth communication generally relatesto face-to-face informal communication. 2owever,it could also occur through a telephonic

conversation or chatting and blogging on the

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As people communicate with each other in apurchase decision making situation, one of thoseinvolved in the informal communication process is

able to in#uence the attitude and purchasedecision of others. 2e is an "pinion +eader andthe process is known as "pinion +eadership.(chiman denes "pinion +eadership as 3the

process by which one person %the opinion leader&informally in#uences the actions or attitudes ofothers, who may be opinion seekers or merelyopinion recipients4.An identication of "pinion +eaders, theirbehavior and the very dynamics of the "pinion+eadership process is helpful to the marketer.

"nce the marketers have identied the "pinion+eaders, marketers can tar et their marketin

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OPINION +,AD,S AND OPINION,C,I-,S.S,,/,S: n some cases, the"pinion +eader 5ust likes to talk and discussabout a product or service category. 2evoluntarily provides information about theproduct and product category and$or about

brands. The people who form the audience andlisten to him are called "pinion eceivers.n other cases, prior to a purchase, people couldapproach an "pinion +eader and re6uest him for

information and advice about the productcategory and$or about brands. That is, the"pinion +eader would provide information onlywhen asked for. n such cases, the persons

%audience$or the receiver of information& are

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O+, P+AY,D 0Y OPINION +,AD,S: The ma5or roles played byopinion leaders are, i& authority gure ii& trend setter and iii& localopinion leader. i) Authorit& 1gure: The ro!e that is #!a&ed 2& an O#inion

+eader when he gies #roduct news and adice3 anda!so narrates his #ersona! e"#eriences to consumers3 is4nown as the authorit& 1gure ro!e'

ii) ii) Trend setter: O#inion +eaders act as trend setters'The& are inner oriented and do not 2other a2out what

others in the societ& sa& or do' The& are a!so innoatieand often go in for #urchase of new #roduct and sericeo5erings 6of their interest categor&) and through the#urchase and usage3 the& set the trend

iii)iii) +oca! O#inion +eader: O#inion +eaders are said to acta !oca! o#inion !eaders when a) the& constitute a#erson7s #ositie reference grou#8 and 2) the& #roideinformation a2out such #roduct and serice o5eringsand.or 2rands that he!# satisf& their needs and wants ofthe consumer grou# in a manner that is consistent withgrou# a!ues and norms' As !oca! o#inion !eaders3 the&

#roide 4now!edge and adice3 and narrate #ersona!e" eriences a2out roduct and serice o5erin s' Their

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MOTI-,S0,*INDOPINION+,AD,S*IP:7. because they are involved and interested in a product

or service category, and love to talk about it %productinvolvement&.

8. '"0 communication gives them an opportunity totalk about their interests to others.

9. they may feel so positively and favorably or negativelyand unfavorably about a product and$or brand that

they feel like telling about it to others %productinvolvement, self involvement and social involvement&

:. they possess knowledge, epertise and eperiencewith a product category,

;. they feel important and powerful when peopleapproach them for information and advice.

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?. They may be genuinely be benevolent and generous,and out of altruistic concerns may like to help others,especially family, friends, relatives and neighbours

%sel#ess motive@ social involvement&.7. "pinion +eaders may be also trying to reduce their

own level of post-purcahse cognitive dissonance%self-interest&.

77. nterestingly true, many provide information as a& they may be wanting to try out a new product orservice oering after someone else buys and uses itrst or b& c& they may themselves be trying to reassure

themselves of their own purchase decision byrecommending it to others and d& they may be dissatised with a purchase and liketo complain about the purchase of the product and

service and$or brand and$or company and$store from

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O#inion +eaders #roide 2oth #ositie and negatieinformation: O#inion +eaders #roide 2oth faora2!e andunfaora2!e information a2out #roduct and serice o5eringsand.or 2rands3 and this adds to their credi2i!it&' Com#ared to#ositie and neutra! information and.or ea!uation3 theim#act of negatie information and.or ea!uation is muchgreater and has a 2igger im#act on O#inioneceiers.See4ers' Thus3 the& wou!d aoid such #roduct andserice o5erings and.or 2rands that are s#o4en negatie!& 2&

O#inion +eaders'O#inion +eaders are in;uentia! and #ersuasie: O#inion+eaders are high!& in;uentia! and er& e5ectie at#ersuading #eo#!e around them' The& are credi2!e informa!sources of #roduct 4now!edge3 information and adice'

Peo#!e !oo4 u# to them for adice and the& are good atin;uencing the former 2ecause of the fo!!owing:- they are regarded as sub5ect eperts, i.e. it is believed that opinionleaders are knowledgeable and eperienced about a product orservice category.

- since they receive no monetary compensation, their information,advice, opinion and eperiences about a product or service category,

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DYNAMICS O% OPINION +,AD,S*IP POC,SS: The"pinion +eadership process is highly dynamic in nature."pinion +eaders communicate informally about product

and service oerings and$or brands. They oer productinformation and advice, and narrate eperiences. Theyare not generic in nature they are specic to a productcategory, and an epert in one product category wouldnot be an epert for another product category. Thus, aperson may be an "pinion +eader for a product categoryand an "pinion eceiver for another.

 The dynamic nature of "pinion +eadership is discussedas follows@ O#inion +eaders #roide #roduct

information3 adice and narrate e"#eriences:O#inion +eaders communicate informa!!& a2out#roduct and serice o5erings and.or 2rands8 the&gie #roduct news and adice to consumers

6current and #otentia!) and a!so narrate their#ersona! e"#erience to others' As such the& act as

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 O#inion +eaders are not generic in nature: The&are s#eci1c to a #roduct or serice categor&3 and

#ossess e"#ertise and s#ecia!i

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O#inion +eaders cou!d a!so 2ecome O#inioneceiers.See4ers: As e"#!ained a2oe3 O#inion+eaders are categor& s#eci1c' The& are e"#ertsin one #roduct.serice categor&3 and act asO#inion +eaders' *oweer3 when it comes toanother #roduct.serice categor&3 the& ma&2ecome O#inion eceiers.See4ers' The& ma&een see4 information from #eo#!e to whom

the& had gien information ear!ier a2outanotherproduct category. Thus, the roles may get reversedfrom "pinion +eaders to "pinion eceivers$(eekers in

the contet of other product$service categories.(ometimes a person may become an "pinioneceiver$(eeker for the same product also. This iswhen he is in a product-relatedconversation$discussion with a "pinion

eceiver$(eeker who is more informed, enlightened

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M,ASU,M,NT O% OPINION +,AD,S*IP: n order to measure"pinion +eadership, it is essential that "pinion +eaders with respect tothe product$service category are identied. t is also important thatpeople who have the potential to become "pinion +eaders are also

identied. There are three ways in which "pinion +eaders can beidentied these are listed as follows@a& marketers directly ask the consumers whether they are "pinion

+eaders.b& they ask a sub5ect epert to identify who the "pinion +eaders are.c& they study the communication patterns and #ows among

consumers, interpret the dynamics and identify the leaders  These methods, in particular the third one help marketers to identify thetraits and characteristics that make up an "pinion +eader for a type ofproduct or service category. t also helps the marketer understand thebehavior of "pinion +eaders and the dynamics underlying the "pinion+eadership process. 0arketers are interested in identifying, measuring

and analyzing the impact of the opinion leadership process onconsumption patterns and consumption behavior.

di h f b i

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According to ogers, there are four basictechni6ues for measuring "pinion +eadership,viz., i& the self-designating method ii& the

sociometric method iii& the key informantmethod and iv& the ob5ective method.i) The se!f$designating method: A marketingsurvey is conducted and people are asked a

series of 6uestions to determine the degree towhich they behave as "pinion +eaders.Cuestions pertain to@a& the etent to which they have given

information and advice about a product$servicecategory and$or brands to others in the socialsystem

b& how often they have been able to in#uencethe urchase decisions about others.

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ii) The sociometric method: Thesociometric method of measuring "pinion+eadership basis itself on the study of the

social system, and particularly thecommunication patterns and #ows toidentify those to give information and

advice as act as "pinion +eaders.esearchers eamine complete patterns ofinformal information #ows among

consumers of a particular product$servicecategory, and identify those who provideinformation to others as "pinion +eaders.'hile the techni6ue makes use of theanal sis of the communication #ow, it also

& h l h h h i

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a&those people to whom they have giveninformation and advice about aproduct$service category. n case the

respondent identies one or manypeople to whom he has providedinformation and advice, he is regarded

as an "pinion +eader. esearchers couldcross-eamine by contacting and6uestioning the receiver$(eekers of

information and conrming from them.b& those people to whom they have gonefor information and advice about aproduct or service category and$orbrand. 2er a ain, researchers could

iii) Th 4 i f t th d D d

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iii) The 4e& informant method: Dased oncareful observation and analysis of socialcommunication, key informants in a social

system are identied. These key informants areasked to identify and$or designate individuals inthe social group who are "pinion +eaders orwho are most likely to be "pinion +eaders'

 The key informants are those who are awareabout the communication patterns in a socialenvironment and able to provide a fair andimpartial assessment of these patterns. They

may or may not be a member of such group%s&they may be active participants or passiveobservers. n this way %where an epert isasked to identify "pinion +eaders&, thetechni ue is better than the self-desi natin

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i) The o2=ectie method: Theob5ective method is based on simulation.

t identies and measures "pinion+eadership by placing people in controlledenvironments %5ust as controlledeperiments&. !eople are chosen, giveninformation about new products andservice categories, and the asked to actout as "pinion +eaders. The resulting

3web4 and 3patterns4 of informalinterpersonal communication regardingthe relevant product or service category

are traced and analyzed. The techni6ue

)ill in the blanks

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 )ill in the blanks7. Any kind of informal interpersonal communication that takes placebetween individuals as consumers is known as EEEEEEEEEEEEEEEEEcommunication.8. The marketing message or information content can be classied into

three types, viz., product news, advice andEEEEEEEEEEEEEEEEEEEEEE.9. As per the Two-(tep )low of communication Theory, EEEEEEEEEEEEEEEactas middlemen in the entire process of communication.:. EEEEEEEEEEEEEEEEEEEEEEE are those among the masses who neitherin#uence nor are in#uenced by others.;. 3the process by which one person %the opinion leader& informally

in#uences the actions or attitudes of others, who may be opinion seekersor merely opinion recipients4 known asFFFFFFFF..

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7 . EEEEEEEEEEEEEEEEEEEact as a vital link between the marketer andconsumers.77. "pinion +eaders are said to be performing the EEEEEEEEEEEEEEEEroleas they act as eperts and authorities for a particular product category.78. There are some people who seem to know about everything about

the market and oer their advice about anything and everything. (uchpeople are called EEEEEEEEEEEEEEEEE.79 . The EEEEEEEEEEEEEmethod is based on simulation. t identies andmeasures "pinion +eadership by placing people in controlledenvironments.Geys@ 7. 'ord-of-0outh$nformal interpersonal 8. !ersonal eperience9. "pinion leaders :. nformation receivers ;. %the opinion leader

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INNO-ATION: n a highly competitiveenvironment, where number of playerseist and vie for a share of the market, the

introduction of new product and serviceoerings becomes crucial for eistence andlong term survival thus, marketers are

always on the move towards introduction ofnew product and service oerings thatwould help meet the evolving needs and

wants of the consumer segment%s&. The#roducts that are o5ered ma& 2es!ight!& di5erent from the e"istinga!ternaties3 some ma& 2e high!&di5erent3 and some tota!! new are

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(uch innovations fall on a continuum, andillustrate a change in one of few or all of

the :!s, be it in product form %productfeatures, attributes, benets, packaging oreven brand name& , the price %price, termsof payment, installments etc&, place

%physical versus electronic formats oreven personal selling& and$or promotion%media strategy, message strategy etc.&.

To understand 2atter The term9innoation has 2een descri2ed withar&ing #ers#ecties and

orientations3 i

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a) Firm-oriented: As per this approach,a product or service ofering is regarded

as “new,” i the company startsmanufacturing or marketing it for the rsttime. n other words, the rm orientation

treats the 3newness4 in terms of thecompanyBs perspective. -the product is3innovative4, if it is 3new4 for thecompany. -the eistence of the product in

the market %as competitorBs oering, oreven as consumersB awareness& isdisregarded as long as it is 3new4 to the

company, it is regarded as an innovation.

b) P d t i t d A d t d

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b) Product-oriented: A product andservice ofering is regarded as an

“innovation”, i the product changes interms of form, attributes, features,and overall benets such changes

have a twofold connotation, one, interms of technology, and two, in termsof consumption usage and behavioral

patterns.-the product is 3innovative4, if it is3new4 in terms of form, attributes and

features.

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c) Market-oriented: The market-orientedapproach views “innovation” purely rom amarketers’ perspective, in the sense that aproduct is regarded as 3new4, depending on howmuch eposure the consumersB have about thenew product or service oering, and the total

sales penetration that has occurred in thespecied short period of time.- the product is regarded 3new4 if the marketdoes not have much eposure of it. - sales

penetration has been low. 2ere again, there canbe two bases that underlie a market-orienteddenition viz.,i& a product or service oering is regarded as

3new4, if it has been in the market for a short

d) Consumer oriented: The consumer oriented

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d) Consumer-oriented: The consumer-orientedapproach to dening “innovation”, is a avoredapproach over others, especially in consumer

behavior research, and more specically inresearch related to diusion of innovation, andadoption the reason is that the concept of3newness4 or 3innovation4 is dealt through focus

on consumer, and his$her reaction towards thenew product and service oering, in terms ofacceptance and re5ection. As per this approach,any product is regarded as 3new4, if the

consumer believes it to be so it is purely basedon the consumersB perception of the newness ofthe product, rather than on technological changesthat the product embodies. Amidst the varyingers ectives and orientations, the a roach(es

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DI%%USION POC,SS: 3Hiusion4 is dened asa macro process that deals with the spread of anew product or service oering amongst the

potential market it relates to theacceptance$re5ection of an innovation by thesegment%s&. 3Hiusion of nnovation4 is dened asa process by which an innovation spreadsamongst and gets the absorbed$accepted orassimilated by the market.(chiman denes 3diusion4, as 3the process by

which the acceptance of an innovation is spreadby communication %mass media, salespeople, orinformal conversations& to members of a socialsystem %a target market& over a period of time4.

The denition comprises four basic elements of

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ADOPTION POC,SS: The second ma5orprocess in Hiusion of nnovation is

3Adoption4. Adoption is a micro conceptthat lays emphasis on the various phasesor stages through an individual consumer

passes while accepting$re5ecting a newproduct or service oering.(chiman denes adoption as 3the stagesthrough which an individual consumer

passes while arriving at a decision to tryor not to try or to continue using or todiscontinue using a new product4.

Jenerally speaking, the consumer passes

-arious Mode!s of the Ado#tion Process:

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-arious Mode!s of the Ado#tion Process:A'*ierarch& of ,5ects Mode!(tages@7. Awareness@ the stage involves initial awareness on

the part of the consumer of the innovative product$service oering.

8. Gnowledge@ the consumer gets to know about theproduct$service, the attributes, features, benets,

price etc.9. +iking@ he develops feeling of like$dislike towards theinnovation.

:. !reference@ the feeling of like$dislike gets deeperinto preference to buy or not to buy the innovativeproduct$service.

;. *onviction@ the consumer develops condence anddecides with certainty to buy the product$service.

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0' o2ertson7s Mode! 6(tages& @?' Pro2!em recognition: the consumer realizes that there is a

need.@' Awareness@ he becomes aware of the product$service oering.

' Com#rehension: he gathers information on the variousproduct$service oerings as also on the brands he comprehendsthis information and develops an understanding of theproduct$service oering and the various brands.

B' Attitude@ based on his comprehension, the consumer develops a

feeling of liking$favorableness or dislike$unfavorableness towardsthe product$service oering and the various brands.' +egitimi

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oger7s Mode!:6Stages):?' Gnowledge@ the consumer becomes aware of the

innovative product$service oering, and gains

knowledge and understanding about the oering,features, attributes, benets, value, price etc.

8. !ersuasion@ this is the stage of attitude formation theconsumer forms a favorable$unfavorable feeling

towards the innovation. This depends on the perceivedcharacteristics of the innovation %in terms of relativeadvantage, compatibility, compleity, trialability andobservability&.

9. Hecision@ based on his attitude, the prospect mentally

decides to adopt$re5ect the roduct$service oering hemay purchase and use the oering, re5ect it or go in foranother alternative.

:. mplementation@ the consumer implements his

decision the stage involves trial and use of the

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 %i!! in the 2!an4s:7. As per the EEEEEEEEEEE approach, a product or service oering is regarded as 3new,4if thecompany starts manufacturing or marketing it for the rst time.8. As per the product-oriented approach, innovations can be classied into three

categories,continuous innovations Hynamically continuous innovations, and EEEEEEEEEEinnovations.9. Amidst the varying perspectives and orientations, the approach%es& that receiveswideattention are the EEEEEEEEEEEEEEEEand the consumer-oriented approaches to studying3innovation4.

:. Jenerally speaking, the consumer passes through ve stages of adoption, viz.,awareness,

 EEEEEEEEEEEEEEEEEEEE, EEEEEEEEEEEEEEEEEEtrial, and adoption %or re5ection&;. The products that are oered may be slightly dierent from the eistingalternatives, some may be highly dierent, and some totally new are referred to asan 3FFFF.

. the product is 3innovative4, if it is 3new4 in terms of form, attributes andFFFF...?. "onsumer-oriented “innovation”, is a avored approach over others, especially in

related research