Reference no: EM13994400

Consumer Behavior

SECTION A:

1. What is Consumer Behavior? In what ways is the study of consumer behavior linked to the development of marketing strategies?

2. What is Weber's Law? Explain the concept of Absolute threshold, differential threshold, and subliminal perception.

3. Explain the concept of customer life time value, with example.

4. Explain approach and avoidance motives, with help of relevance examples.

5. Explain different types of buying behavior, with help of matrix.

SECTION B:

1 A person is believed to buy the brand in a product class whose image is most congruent with his or her self image. Discuss this statement with the help of examples.

2 Explain the stages of family life cycle in Indian context. How would you use the concept of family cycle in designing marketing strategies for:
(a) Credit card
(b) Mutual fund

3 Explain culture, sub-culture and social class. Explain the role of culture of sub-culture in designing the marketing strategy .for
(a) A big retail mall in urban India
(b) Holiday resort in hill station

CASE STUDY:

Brewing more coffee for India; Italian coffee brand Lavazza prepares for the second phase of its expansion in the country

Few people understand coffee better than the lavazzas, now into brewing for close to 116 years. The lavazza, now into brewing for close to 116 years. The Lavazza brand of the sixth largest coffee roaster globally, Luigi Lavazza S.p.a. with revenues of €1.13 billion, speaks for itself. Now it is the fourth generation managing this family business across the globe, nurturing ambitions to enter new markets and, possibly, make India its second largest market after Italy, which contributes to nearly 60 per cent of total sales.

"In fact, we are keen that the Italian way of coffee sipping becomes popular in India too and its consumption goes up gradually, at offices, public places and homes. The key here is to popularize different ways of making coffee to suit individual tastes," says Giuseppe Lavazza, Vice-President and Marketing Director of Luigi Lavazza.

"You see, Italians consume about 6 kg per year per person as against 80 gm in India. This shows there is so much potential for us to grow the business here. This is not going to be easy. It will take at least five years to consolidate and expand presence," he says.

The Italian coffee company, which has four manufacturing units back home and a small one in Brazil, has announced plans to set up a unit at Sri City in Andhra Pradesh, about 60 km from Chennai. This facility, along with the existing chain of cafes, will play a major role in its business plans.

On whether they would consider an entry into the tea business, Lavazza says, "Definitely not. We prefer to do just the coffee business. There is so much scope to grow this business."

The Lavazzas bring rich history and heritage to their business. The company traces its origin to a small grocery store opened by Luigi Lavazza back in 1895 at Via San Tommaso in Turin, Italy. The small shop that specialized in roasting and selling coffee gradually expanded. While emphasizing organic growth it made a series of acquisitions, including Barista Coffee Company Ltd and Fresh & Honest Café Ltd in India in 2007.

"In 2010, we acquired Italian Ercom, the Onda chain of coffee shops in Bulgaria and the Argentine Coffice, culminating in the acquisition of an approximately 7 per cent stake in the American company Green Mountain Coffee Roasters. Lavazza operates with 11 direct subsidiaries globally," says Marco Lavazza, Development and Acquisition Manager.

"If the acquisition of Barista Coffee and Fresh & Honest helped us enter India in phase one of the business, the setting up of the new manufacturing unit will mark the second one. With this unit, we will be able to address the regional market by making India a business hub. We are keen that India becomes the second largest market after Italy within five years," he says.

Speaking passionately about coffee and the business potential, Giuseppe Lavazza says, "Barista Lavazza has over 200 espresso bars in 30 locations in India. We plan to double this number within the next three years. Thus far we have invested over €100 million in the country and plan to invest €20 million in the new plant."

"These investments will be crucial for growth. Once the new plant is operational, the income generated from it would be ploughed into the expansion of coffee bars. Apart from marketing efforts, we see these coffee bars playing a crucial role in popularizing our brand and Italian coffee drinking ways," he said.

The cost of coffee beans has been going up lately. "We expect a tough year ahead again. But the sale price is not hiked. We try and balance the price hike and sale price by close monitoring. One of the focus areas for the Lavazzas has been to engage the local communities. We already source coffee beans from plantations in India. This could go up over time," says Giuseppe Lavazza.

The country has more than 1,200 coffee outlets across various brands. The recent announcement of Starbucks making its India entry is seen to be stirring up the market further. But Giusuppe Lavazza believes there is great potential for growth as the number is quite small for a large population. He says, "We welcome competition. Every market we are present in, there's competition. This helps improve the quality and levels of service. This also provides us an opportunity to differentiate ourselves from the rest."

(Business Line February 3, 2011)

Q Analyze the market for coffee and Trace the consumer profile for lavazza.

Q Suggest marketing strategies, to popularize coffee sipping in India and to increase the per capita consumption of coffee

SECTION C

1. Miller Lite was introduced with the slogan "everything you want in a beer...and less." This slogan was a success because:
a. it contained less beer per serving.
b. it told people they would gain less weight.
c. it told people they could drink more beer without feeling full.
d. it cost less than regular beer.

2. The reason Miller Lite's "less filling" slogan was a success over Gab linger beer's "low-calorie" slogan is because:
a. Miller offered consumers a product benefit while Gablinger's offered a product attribute.
b. Miller offered consumer a product attribute while Gablinger's offered a product benefit.
c. They were positioned in the same way.
d. Beer drinkers wanted more calories in their beer.

3. For each individual, reality is a totally personal phenomenon, based on all of the following except that person's:
a. Needs.
b. Wants.
c. Personal experience.
d. Perception of other people's experience.

4. _____ is defined as the process by which an individual selects, organizes, and interprets stimuli into a meaningful and coherent picture of the world.
a. Knowledge
b. Perception
c. Motivation
d. Attitude

5. _____ is(are) the immediate and direct response of the sensory organs to stimuli.
a. Sensory receptors
b. Sensation
c. Sensory input
d. Sensory adaptation

6. As sensory input decreases, our ability to detect changes in input or intensity _____.
a. increases
b. decreases
c. is not affected
d. may increase or decrease

7. Two people driving together may spot a billboard at different times. This means they have different _____.
a. absolute thresholds
b. differential thresholds
c. just noticeable differences
d. adaptation levels

8. The lowest level at which an individual can experience a sensation is called the _____.
a. absolute threshold
b. differential threshold
c. just noticeable difference
d. adaptation level

9. The point at which a person can detect the difference between something and nothing is called the _____.
a. absolute threshold
b. differential threshold
c. just noticeable difference
d. adaptation level

10. Sensory adaptation is of concern to national advertisers, who try to continuously change their advertising campaigns. They are concerned that consumers will:
a. Get bored of their ads.
b. Get used to their ads.
c. Not understand their ads as intended.
d. Develop negative reactions to their ads.

11. Some TV ads decrease sensory input by using silence in their ads to generate attention. This is a form of advertising used in order to overcome _____.
a. sensation
b. boredom
c. sensory adaptation
d. the just noticeable difference

12. It is imperative that marketers determine the just noticeable difference so that negative changes are not readily discernible to the public, and:
a. So that product improvements are very apparent to consumers without being wastefully extravagant.
b. so that product improvements are not very apparent to customers - just below the j.n.d.
c. so that price increases are very apparent to customers - just above the differential threshold.
d. both a and c

13. Stimuli that are too weak or too brief to be consciously heard or seen may be strong enough to be perceived by one or more receptor cells. This process is called _____.
a. sequential transition
b. subliminal perception
c. sensation
d. sensory adaptation

14. In the late 1950s Coca-Cola used _____ to try to persuade moviegoers to buy more popcorn and drink more Coke by displaying hidden messages that were not noticeable to the aware conscious.
a. subliminal advertising
b. superluminal perception
c. deceptive promotion
d. perceptual distortion

15. Subliminal messaging:
a. Has proven to be effective in selling more products.
b. Has proven to influence attitudes and feelings.
c. May provide new opportunities for modifying antisocial behavior through public awareness campaigns.
d. all of the above

16. "Individuals see what they want to see" sums up the whole notion of _____.
a. motivation
b. perception
c. subliminal messaging
d. attitude

17. According to the principles of sensation:
a. Individuals are aware and absorb all stimuli that they are exposed to.
b. Most individuals subconsciously block the receipt of most stimuli.
c. The constant exposure to stimuli keeps us in a semi-disoriented state.
d. both a and c

18. Our picture of the world is a product of physical stimuli from the outside environment, and input provided by the individuals themselves in the form of certain predispositions. Which of the following is not one of the predispositions?
a. expectations
b. learning
c. motives
d. sensory receptors

19. All the following are the three aspects of perception, except:
a. Perceptual selection.
b. Perceptual organization.
c. Perceptual mapping.
d. Perceptual interpretation.

20. In the context of consumer perception and advertising, in general, _____ is one of the most attention-compelling attributes of a stimulus.
a. content
b. contrast
c. context
d. drama

21. It is important for marketers to design their packages to ensure rapid customer perception because the average package on a supermarket shelf has about _____ to make an impression.
a. 1/10 of a second
b. 2 seconds
c. 10 seconds
d. 1 minute

22. Advertorials and infomercials are attempts from marketers to:
a. Make the reader/viewer think it is part of the editorial/programming.
b. Deceive consumers by offering products of low quality nature.
c. Appeal to the lower class.
d. all of the above

23. Stimuli that conflict sharply with expectations often receive more attention than those that conform to expectations. Marketers have been accused of using sexuality in advertising. Which of the following statements is most correct?
a. In ads where sexual content was relevant to the brand, the brands were remembered the least.
b. In ads where sexual content was irrelevant to the brand, the brands were remembered the most.
c. In ads where sexual content was irrelevant to the brand, the ad was remembered but the brand wasn't.
d. Wherever sexuality was used, the brands were remembered.

24. _____ is a concept related to perception. People actively seek out messages that they find pleasant and actively avoid painful or threatening ones.
a. Selective attention
b. Selective exposure
c. Perceptual defense
d. Perceptual blocking

25. People selectively expose themselves to:
a. ads that they find pleasant.
b. ads that they are sympathetic with.
c. ads that reassure them of the wisdom of their purchase decision.
d. all of the above

26. _____ is when consumers have a heightened awareness of stimuli that meet their needs or interests, and minimal awareness of stimuli irrelevant to their needs.
a. Selective attention
b. Selective exposure
c. Perceptual defense
d. Perceptual blocking

27. Consumers subconsciously screen out stimuli that they find psychologically threatening, even though exposure has already taken place. This is consistent with the perception factor of _____.
a. selective attention
b. selective exposure
c. perceptual defense
d. perceptual blocking

28. Govt requires tobacco firms to feature graphic health warnings on cigarette packs. In a perception context, this is to try to combat ____ where people no longer pay attention to the warning labels on packets.
a. selective attention
b. selective exposure
c. perceptual defense
d. perceptual blocking

29. Consumers need to protect themselves from being bombarded with stimuli by simply tuning out such stimuli from their conscious awareness. This is known as _____.
a. selective attention
b. selective exposure
c. perceptual defense
d. perceptual blocking

30. TIVO and VCRs are technologies that consumers have gladly adopted as a way to avoid being bombarded with messages. This protecting oneself from stimuli is knows as _____.
a. selective attention
b. selective exposure
c. perceptual defense
d. perceptual blocking

31. To simplify life, people have a natural tendency to select stimuli from the environment and organize them into groups and perceive them as a unified whole. In a perception context, this is known as _____.
a. perceptual defense
b. perceptual blocking
c. perceptual mapping
d. perceptual organization

32. Stimuli that contrast with their environment are more likely to be noticed. In accordance with this, people have a tendency to organize their perceptions into _____.
a. groups
b. figure and ground
c. a series of events
d. stereotypes

33. The way people remember telephone and social security numbers is consistent with the fact that people tend to form a better picture of the world using _____.
a. grouping
b. figure and ground
c. a series of events
d. stereotypes

34. People have a need for _____. If the stimuli they are exposed to is incomplete, they perceive it as complete by filling in the missing pieces.
a. stereotyping
b. grouping
c. closure
d. exaggeration

35. Marketers successfully use soundtracks of a frequently viewed commercial on radio. They yield similar results from audiences that are familiar with the commercial as would TV viewing because of people's natural need for _____.
a. stereotyping
b. grouping
c. closure
d. exaggeration

36. When stimuli are highly ambiguous, an individual will usually:
a. Ignore them.
b. Block them out.
c. Interpret them according to one's own needs, wishes and interests.
d. Interpret them according to what is socially acceptable.

37. Some factors distort our perceptions of the world around us. One such factor, _____, serves as expectations of what specific situations, people, or events will be like, when exposed to a certain combination of stimuli.
a. stereotyping
b. jumping to conclusions
c. the halo effect
d. first impressions

38. Marketers are sure to perfect products before introducing them because:
a. First impressions are hard to change.
b. Stereotypes about the company will be confirmed.
c. it is hard to position a defective product.
d. all of the above

39. Copywriters are careful to give their most persuasive arguments first, because:
a. People's memories are short.
b. People's attention span is short.
c. People jump to conclusions before examining all the relevant evidence.

40. Many times a new product is a success because it is an extension of a successful and trusted brand. This is because people:
a. Create first impressions.
b. Tend to stereotype.
c. Are affected by the halo effect.
d. Jump to conclusions.