Unit – 2: Study of consumer behaviour in Service Marketing

Q. Define the concept of consumer behaviour in services. Explain in detail the consumer purchase decision process.

Q. Discuss the importance of the study of consumer behaviour in service marketing.          2014, 2017, 2018

Q. What is customer expectation? Explain the factors that influence customer expectation of service.   2019, 2022

Q. What is service expectation? Explain various types of customer’s expectations of services. Discuss the nature and determinants of customer’s expectation of services.     2015

Q. What are the various customer groups? What are their distinctive characteristics?         2017

Q. Define the term ‘perception’. Explain the process of perception in the context of service marketing. Explain various factors which influence customer perception towards different services. 2014, 2016

Q. Define service market segmentation. Explain the factors that are generally considered by marketers in service market segmentation.      2018, 2018

Q. Define Target Market. Explain various approaches towards target market. Also explain its
importance and drawbacks.         2019, 2022

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Consumer Behavior in service

Consumer behavior in service marketing refers to the actions and decisions of individuals or groups who use or purchase services. It is the study of how consumers make choices about which services to use and how they use them. Understanding consumer behavior is important in service marketing because it can help businesses to identify the needs and preferences of their target market and develop strategies to meet those needs effectively.

In the purchase of any particular service six distinct roles are played. These are:

i) Initiator: The person who has a specific need and proposes to buy a particular service.

ii) Influencer: The person or the group of people who the decision maker refers to or who advise. These could be reference groups, both primary and secondary. It could be even secondary reference group like word of mouth or media, which can influence the decision maker.

iii) Gatekeepers: The person or organization or promotional material which acts as a filter on the range of services which enter the decision choice set.

iv) Decider: The person who makes the buying decision, irrespective of whether he executes the purchase himself or not. He may instruct others to execute. It has been observed at times, more typically in house hold or family or individual related services, one member of the family may dominate in the purchase decision.

v) Buyer: The person who makes the actual purchase or makes bookings for a service like travel, hotel room, hospital, diagnostic lab, etc.

vi) User: The person who actually uses or consumes the product. It can be other than the buyer. In a number of services, it has been observed that users are also the influencers.

Factors influencing buyer behavior

There are a number of factors or variables which affect the buying behavior. For example; people go on holiday during the vacation time so vacations become a variable. A person may visit an exclusive restaurant during ‘happy hours’, which he does not visit normally. In this case the marketing efforts of the organization (sales person and the scheme)become the factor influencing to buy. Similarly, there are other factors which affect the buying decision. These factors can be classified into four major categories, namely:

1. Situational Factors: The situational factors influencing the buying behavior are, the influence of time pressure in product and brand choice, the atmosphere of the retail outlet, occasion of purchase etc. For example, if you are traveling, then demand for lodging and boarding will obviously be there.

2. Socio Cultural Factors: Buyers or consumers do not take buying decision or the decision not to buy, in a vacuum. Rather, they are strongly influenced by Socio Cultural factors.

a) Cultural Factors: Children acquire from their environment a set of beliefs values, and customs which constitute culture. These beliefs, values and customs go deeper and deeper as a person grows. Therefore, it is sometimes said that culture is learnt as a part of social experience. The various sub-categories within a culture can be identified based on religion,age, gender, occupation, social class, geographical location etc. This classification is significantly relevant from the consumer behavior point of view

b) Reference Groups: There are certain groups to which people look to guide their behaviour. These reference groups may guide the choice of a product but may not be the brand. Peer groups and the peer pressure have generally been observed to play an important role in the purchase of credit cards, cell phones, etc. The knowledge of reference group behaviour helps in not only offering substitutes but also in pricing and positioning them. It is important to note that there are ‘negative’ reference groups also and some persons don’t want to associate themselves with these groups. The negative reference groups guide the behaviour in terms of“what not to do”.

c) Family: The family is another major influence on the consumer behaviour. The family consumption behaviour to a large extent depends on the family life cycle. The stages in family life cycle include bachelorhood, newly married, parenthood with growing or grown up children, post-parenthood and dissolution. Knowledge of these stages helps greatly in knowing the buying process. Often family members play a significant role in the purchase of a particular service, for example it’s the teenage children who influence the parents to decide on a destination and middle aged buy more of insurance services than the younger ones.

3. Psychological Factors

a) Perceptions: It is the process by which buyers select, organize and interpret information into a meaningful impression in their mind. Perception is also selective in which only a small part is perceived out of the total what is perceptible. Buyer’s perception of a particular product greatly influences the buying behaviour. For example, if the buyer’s perception of a product is not positive it requires much harder efforts from the marketing or sales person to convince the buyer on the qualities of the product and thus suggesting him to purchase it.

b) Attitude: An attitude is a learned predisposition to respond in a consistently favourable or unfavorable manner with respect to a market offer (i.e. a brand, a particular shop or retail outlet, an advertisement, etc.). Attitude is a dispositional term indicating that attitudes manifest themselves in behaviour only under certain conditions. Knowing a buyer’s attitude towards a product without knowing the personal goals is not likely to give a clear prediction of his behavior.

c) Motivation: Motivation is the driving force within individuals that compel them to action.This driving force is subconscious and the outcome of certain unfulfilled need. Needs are basically of two types. First, the ‘innate needs’ those needs an individual is born with and are mainly physiological. They include all the factors required to sustain physical life e.g., food,water, shelter, clothing, etc. Secondly, the ‘acquired needs’ those which a person acquires as he/she grows and these needs are mainly psychological, like love, fear, esteem, acceptance etc. For any given need, there could be a variety of goals.

4. Personal Factors

a) Personality: Personality can be described as the psychological characteristics that determine how an individual will react to his or her environment. There are a number of dimensions (personality traits) against which an appreciation of an individual’s personality can be developed. Each personality trait denotes two absolute points and a person’s personality characteristics can be identified somewhere between those two absolute points, indicating the proximity to either of the two.

b) Life Style: Lifestyle as distinct from social class or personality is nothing but a person’s pattern of living and is generally expressed in his/her activities, interests and opinions. Life styles suggest differences in the way people opt to spend on different products differently. Life style variables (psychographics variables) help a firm to identify the ‘Inner consumer’ or the feelings of the consumer about their products which needs to be stressed in advertising campaigns.

c) Demographic Factors: Buyer’s demographic factors like age, gender, education, occupation, etc. also have influence on the purchase behaviour. These factors are very much significant in the study of behaviour of buyers. For example, fast food outlets are more patronized by the teenagers than the elderly persons- example of age as a factor; air travel is more used by the executives than the factory workers-examples of occupation as a factor.

The consumer is the focus of marketing efforts. The modern concept spells out the real significance of buyer’s behaviour. The modern marketing management tries to solve the basic problems of consumers in the area of consumption. To survive in the market, a firm has to be constantly innovating and understand the latest consumer needs and tastes. It will be extremely useful in exploiting marketing opportunities and in meeting the challenges that the Indian market offers. It is important for the marketers to understand the buyer behaviour due to the following reasons.

1)      Better Consumer: The study of consumer behaviour enables us to become a better consumer. It will help consumer to take more precise consumption related decisions.

2)      Studying the need of consumers: It helps marketers to understand consumer buying behaviour and make better marketing decisions.

3) Market Prediction: The size of the consumer market is constantly expanding and their preferences were also changing and becoming highly diversified. So without studying it, marketers cannot predict the future of their business. 

4)      Economic Stability: It is significant for regulating consumption of goods and thereby maintaining economic stability.

5)      Efficient utilisation of resources: It is useful in developing ways for the more efficient utilisation of resources of marketing. It also helps in solving marketing management problems in more effective manner.

6)      Studying consumer’s mood: Today consumers give more importance on environment friendly products. They are concerned about health, hygiene and fitness. They prefer natural products. Hence detailed study on upcoming groups of consumers is essential for any firm.

7)      Consumer Protection: The growth of consumer protection movement has created an urgent need to understand how consumers make their consumption and buying decision.

8)      Studying Consumer’s preference: Consumers’ tastes and preferences are ever changing. Study of consumer behaviour gives information regarding colour, design, size etc. which consumers want. In short, consumer behaviour helps in formulating of production policy.

9)      Market segmentation: For effective market segmentation and target marketing, it is essential to have an understanding of consumers and their behaviour. 

10)   Marketing research: Marketing managers regarded consumer behaviour discipline as an applied marketing science, if they could predict consumer behaviour, they could influence it. This approach has come to be known as positivism and the consumer researcher who are primarily concerned with predicting consumer behaviour are known as positivists.

11)   As the marketing research began to study the buying behaviour of consumers, they soon realized that many consumers rebelled at using the identical products everyone else used, for example in case of purchase of house, interiors, car, and dress material etc. people prefers unique products. Consumer preferred differential products that they felt reflected their own special needs, personalities and lifestyles.

When customers decide to buy a service to meet an unfilled need, they go through what is often a complex purchase process. This process has three separate stages-the pre-purchase stage, the service encounter stage, and post-purchase stage.

1. Pre-purchase stage: The decision to buy and use a service is made in the pre-purchase stage. Individual needs and expectations are very important here because they influence what alternatives customers will consider. If the purchase is routine and relatively low risk, customers may move quickly to selecting and using a specific service provider. But when more is at stake or a service is about to be used for the first time, they may conduct an intensive information search. The next step is to identify potential suppliers and then weigh the benefits and risks of each option before making a final decision.

2. Service encounter stage: After deciding to purchase a specific service, customers experience one or more contacts with their chosen service provider. Contacts may take the form of personal exchanges between customers and service employees or impersonal interactions with machines or computers. In high-contact services, such as restaurants, health care, hotels, and public transportation, customers may experience a variety of elements during service delivery, each of which has the potential to provide clues to service quality.

Service environments include all of the tangible characteristics to which customers are exposed. The appearance of building exteriors and interiors; the nature of furnishings and equipment; the presence or absence of dirt, odor, or noise; and the appearance and behaviour of other customers can all serve to shape expectations and perceptions of service quality.

3. Post-purchase stage: During the post-purchase stage, customers continue a process they began in the service encounter stage- evaluating service quality and their satisfaction or dissatisfaction with the service experience. The outcome of this process will affect their future intentions, such as whether to remain loyal to the provider that delivered service and whether to pass on positive or negative recommendations to family members and other associates.

Customers evaluate service quality by comparing what they expected with what they perceive they received. If their expectations are met or exceeded, they believe they have received high-quality service. If the price-quality relationship is acceptable and other situational and personal factors are positive, then these customers are likely to be satisfied. As a result, they are more likely to make repeat purchases and become loyal customers. However, if the service experience does not meet customers’ expectations, they may complain about poor service quality, suffer in silence, or switch providers in the future.

Once that target segment or market is clear, the service marketer has to position himself appropriately for that segment. Positioning, as is now well understood in marketing, is an integral part of strategy for a new service provider. Even in the case of a mature business, a service marketer needs to reaffirm its positioning in the minds of target customers. At times, a subtle shift in positioning may also be necessary to keep up with the changing consumer preferences or to cope with the challenges from competitors.

Briefly, the positioning is a mental image or picture that a service provider would like to have about it in the consumer’s mind. It is a deliberate attempt at building an identity of a certain kind for the service. The act of creating an image about a product or service in the consumer’s mind is known as positioning.

In the words of Kotler, “Positioning is the act of designing the company’s offer and image so that it occupies a distinct and valued place in the target consumers’ minds.” In short, the process of creating an image for a product in the minds of targeted customers is known as product positioning. Close-up tooth paste is looked upon by the consumers more as a mouth wash than a teeth cleaner, while ‘pepsodent’ has created an impression of germ killer in the consumers’ minds.

STEPS IN PRODUCT POSITIONING

1) Identifying potential competitive advantages: Consumers generally choose products and services which give them greatest value. The key to winning and keeping customers is to understand their needs and buying processes far better than the competitors do and deliver more values.

2) Identifying the competitors position: When the firm understands how its customers view its brand relative to competitors, it must study how those same competitors position themselves.

3) Choosing the right competitive advantages: It refers to an advantage over competitors gained by offering consumers greater value either through lower price or by providing more benefits.

4) Communicating the competitive advantage: The Company should take specific steps to advertise the competitive advantage it has chosen so that it can impress upon the minds of consumers about the superiority claimed in respect of the product over its competing brands.

5) Monitoring the positioning strategy: Markets are not stagnant. They keep on changing. Consumer tastes shift and competitors react to those shifts. After a desired position is developed, the marketer should continue to monitor its position through brand tracking and monitoring.

ELEMENTS OF POSITIONING

It is concerned with the following four elements.

1) The Product: Design, special feature, attributes, quality, package etc. of product create its own image in the minds of the consumers. Material ingredient of a product is also important in the process of product positioning.

2) The Company: The goodwill of a company lends an aura to its brand. For example, Tata, Godrej, Bajaj etc. have very good reputation in the market

3) The Competitors: Product image is built in consumers’ mind in relation to the competing product.Thus a careful study of competition is required.

4) The Consumer: Ultimate aim of positioning policy is to create a place for the product in consumers’minds. Therefore, it becomes necessary to study the consumer behaviour towards the product.

TECHNIQUES OF PRODUCT POSITIONING

Following technique are used in positioning a product in the market:

a)      Positioning by Corporate Identity: The companies that have become a tried and trusted household name. For example, Tata, Sony etc.

b)      Positioning by Brand Endorsement: Marketers use the names of company’s powerful brands for line extensions or while entering another product category. Lux, Surf, Dettol etc.

c)       Positioning by Product Attributes and Benefits: It emphasize the special attributes and benefits of the product. Close-up is positioned on fresh breath and cosmetics benefits.

d)      Positioning by use, Occasion and Time: It is to find an occasion or time of use and sit on it. For example, Vicks vaporub is to be used for child’s cold at night.

e)      Positioning by Price and Quality: Company position its brand by emphasizing its price and quality. Eg. Nirma detergent powder.

f)       Positioning by Product Category: Brand is perceived to be another product category. Eg. Maruti positioned its van as Omni, family car.

g)      Positioning by Product User: Positioning the product as an exclusive product for a particular class of customers. E.g. Scooty as a two wheeler for teenagers.

h)      Positioning by Competitor: An offensive positioning strategy and is often seen in cases of comparative advertising. E.g. Tide and Rin

i) Positioning by Symbols: Some companies use some symbols for positioning their products. Eg. Vodafone symbol.

Market segmentation is the sub- dividing of market into homogeneous sub section of customers, where any sub section may conceivable be selected as a market target to be reached with a distinct market mix. The marketer has to identify his targeted customers (segments). For example, a motorcycle manufacturing company has to identify their market segments, like female officers, teenage college students, and middle aged customers. After identifying the segments, the marketer (manufacturer) has to understand their tastes and expectations. In the case of female customers, they need not use much power full vehicles, like that the teenagers demand most powerful and stylish vehicles and the middle aged customers need vehicles having more mileage.

Benefits of market segmentation

No one can satisfy all people all time, can satisfy some people all the time or all people for some time. This concept is reflected in market segmentation:

1. Facilitates proper choice of target market

2. Helps distinguish one customer group from another within a given market

3. Facilitates effective tapping of the market, adapting the offer to the target

4. The “divide and rule” concept as a strategy of dividing markets for conquering them

5. Helps crystalise the needs of the target buyers and bring out more predictable responses from them, helps develop marketing programs on a more predictable base,helps develop marketing offers that are most suited to each group

6. Helps specialization required in products/services, distribution, promotion, and pricing for matching the customer group and developing marketing offers and appeals that match the needs of such groups.

7. Makes marketing effort more efficient and economic, helps to identify less satisfied segments and concentrate on them to improve level of satisfaction

8. Helps to concentrate efforts on the most production and profitable segments instead off rittering them away over irrelevant or unproductive or unprofitable segments

9. Brings benefits to the customer as well, in various ways

10. When segmentation attains high sophistication, customers and companies can choose each other and stay together.

Steps in the Segmentation Process

Five major steps are involved in dividing markets into meaningful segments, although these steps and their description may vary from one situation to another.

a. Define and analyze the market—determine market parameters (based on characteristics that may include or exclude customers from a group) within organization’s mission and business definition, as well as its strategic intent.

b. Identify and describe potential segments—decide on the most useful dimensions or variables for selecting members of potential market segments; then aggregate customers into homogeneous groups, develop a profile of the characteristics of each group, etc.

c. Select the segment(s) to be served—select segments by evaluating against predetermined criteria, then rank according to the organization’s ability to serve the market profitably while providing customer satisfaction.

d. Determine the product positioning strategy—determine the best “fit” between a product and a market according to features most desired by customers; consider competitors’positioning strategies, organizational goals, and the market situation.

e. Design and implement the marketing program—develop a tactical plan (marketing mix)and determine objectives for the marketing program; all elements of the marketing mix must be consistent with the selected positioning strategy.

Bases of segmentation (Factors of service market segmentation)

Service Market segmentation dividing the Hetrogenous market into homogenous sub-units. Heterogeneous means mass marketing, which refers people as a people. Homogeneous means dividing the market into different sub units according to the tastes and preferences of consumers. The following are the popularly used bases for segmenting service markets.

a) Geographic Segmentation It is the simplest way of segmenting the market. Under this approach, the market will be divided into various geographical units. Companies generally use the marked divisions such as nations, states, regions, cities and towns to get the benefits of already existing database resources at a very low price. Geographic segmentation reflects in the identification of cultural groups, climatic differences, resource combinations, demand supply gaps, religion and race. It provides opportunity to the service stalls to explore distinctive opportunities for product development as well as product differentiation.

b) Demographic Segmentation Demography is the study of population. Under this approach, the market will be divided into segments based on various demographic variables such as age, family size, gender, family life cycle, income, occupation, education, religion, race, nationality and social class. The differences in consumer responses based on the demographic variables are studied and accordingly segmentation plan is worked out. The demographic variables are the most popular basis for differentiating customer groups. Wants, preferences, user status and usage rates are mostly associated with demographic variables. In addition, demographic variables are easier to measure.

c) Psychographic Segmentation This approach is more focused than geographic and demographic approaches. Under this approach, consumers are divided into groups based on lifestyle, personality and values. Many a time, the consumer belonging to the same geographic and demographic group may exhibit different psychographic profiles. People belonging to the same demographic group may vary in their activities, opinions, value perceptions and interests. To use this basis of segmentation, service providers have to develop a sound database on the psychographics of the market in order to make the service offer more focused.

d) Behavioural Segmentation For this approach, consumers are divided into groups based on their knowledge, attitudes and use or response to a service. The variables used under this segmentation are occasions, benefits, user status, usage rate, loyalty status, buyer readiness stage and attitude towards the service.

e) Techno graphic Segmentation The market for technology related services has been on a tremendous rise during the last one-and-a-half decade. Marketers are trying to identify the customer groups that have the willingness as well as the ability to use the latest technology. Forester Research Incorporation has developed a ten-category segmentation scheme, which is also called ‘technogrality’. Identification of segments was based on the interaction of three variables. These are attitude towards technology, application of technology and the financial position of the consumers.

Customer Expectations are the needs, wants, and preconceived ideas of a customer about a product or service. Customer expectation will be influenced by a customer’s perception of the product or service and can be created by previous experience, advertising, word of mouth, awareness of competitors, and brand image. The level of customer service is also a factor, and a customer might expect to encounter efficiency, helpfulness, reliability, confidence in the staff, and a personal interest in his or her patronage. Knowing what the customer expects is probably the most critical step in delivering service quality. If an organization is able to understand and meet customer expectations, then customer satisfaction may be easily attained.

Types of Customers Expectations

Customer’s service expectations largely depend upon the reference points of an individual customer that is why from a single point of service different customers hold different expectations. Depending upon varied reference points, service expectations can be divided into different levels or types that are:

a) Ideal service level: Ideal level of a service may be explained as a “dream service”. This is the kind of a service a customer would expect in ideal situation and will generate a delightful service experience.

b) Desired service level: Desired service is the “wished for” level of service quality that a customer believes can and should be delivered. This is the level of service a customer would expect in normal circumstances.

c) Adequate service level: It is the minimum level of service that a customer will accept without being dissatisfied. It may not be the best but bare minimum a customer would accept.

d) Predicted service level: It is the level of service quality a customer believes a firm will actually deliver.

Factors affecting Customers expectations

1) Internal Factors: the internal factors that impact consumer expectations include individual needs, level of involvement, past experience, and service philosophy. Individual needs influence the consumption values a consumer will expect from a service. For example, someone who is extremely hungry will expect more in terms of quantity of food that is the functional value, than someone who is dining with a significant other. In the latter case, quality of service and aesthetics will be more important. He or she may be looking for social or even emotional consumption benefits. Level of involvement will impact consumer expectations.

2) Situational factors: Consumer expectations are often modified by situational factors. For example, the reason for the purchase will often modify expectations. A business that uses a commercial employment agency to hire a high level executive will have different expectations than if they were hiring a dock worker to load trucks. Their ideal, desired, and adequate service levels will all be higher. They will expect the firm to spend more time in screening applicants in the former case. Consumer mood will affect expectations. Individuals who are in a joyful, positive mood normally have lower adequate service expectations than an individual who is in a bad, negative mood. The ideal and desired levels of expectations are not normally affected. The predicted level may be a person in a bad mood will often predict they will receive poor service. Weather may be a factor for a couple of reasons. One reason is that weather affects peoples, mood, which in turn, will affect what they expect. Second, weather itself will modify expectations. In foggy, snowy, or heavy rain, passengers expect airline flights to be delayed.

3) Firm produced factors: Firm-produced factors include promotions, pricing, distribution, service personnel, tangible cues, other customers, firm image, and pre-service waiting. Examples will vary but here are the ways that expectations would normally be effected. Promotions by a service organization will affect the predicted level of expectations. It may have an impact on the desired level, but seldom will it affect the ideal level. Adequate level of expectations may be raised if consumers are promised a certain level of service by advertisements or sales personnel. Pricing normally has a direct impact on expectations. As price increases, expectations increase. Distribution will affect the predicted service level and may impact the adequate, but seldom impact the ideal or desired. Service personnel can affect all four. Promises or communication by the service personnel of the service can modify any of the expectations either upward or downward. Tangible cues normally only affect the predicted. Other customers normally impact only the predicted although they may have an impact on the other level of expectations depending on what they say or do.

4) Competition Factors: The competitive options available to consumers will impact their desired and adequate level of consumer expectations. Normally the ideal and predicted levels are not impacted. A business firm that has ten competent accounting firms from which to choose will normally have higher expectations than a business firm which has only four from which to choose. The desired level will change because there are alternative available that can supply the service. The minimum level of expectations will increase because there are other competent firms than can perform the service at a higher level. Thus, competition normally drives expectations upward.

Managing Customers Service Expectations

1) By Calculating: Customer expectations can pose a major challenge to service provider. That’s because expectations are wondrous creatures: They grow, they shrink, they change shape, and they change direction. Customer expectations keep on shifting constantly. The satisfaction or dissatisfaction of customers is determined by these expectations and the service providers, ability to meet those expectations.

2) Watch for changes: If customers’ satisfaction level is changing, the service provider needs to find out if something has happened, either at the customers’ end or at service providers’ part, to affect their expectations or perceptions. Whether that change in satisfaction level is upward or downwards it needs to be analyzed what is happening. If satisfaction is rising, the service provider should continue the same performance; if satisfaction is slithering downward, figure out how to reverse the situation before it falls off the chart.

3) Managing Promises: Customer expectations are affected in a big way by the external marketing communications. Whatever a company promises to deliver it to its customers through advertising and promotional activities that affect the level of expectations. If a company is able to deliver what it has promised to its customers, it will generate customer satisfaction and loyalty but if a company makes big promises it will raise customers’ expectations and in case it fails to meet those expectation, the company will loose its reliability. The service provider should be very realistic in making promises.

4) Getting It Right the First Time: Best efforts must be made to deliver the service right first time. Definitely, a company must work upon a good service programme in case service failure occurs but it is also very evident that it is not always possible to recover a service once it goes bad. So effective internal marketing programmes, sound procedures and systems, right kind of environment must be created to provide a good service encounter.

Meaning of Perception

The term “perception” can be defined as the ability to derive meaning. Derived from the word “perceive”, it refers to the ability of giving meaning to whatever is sensed by our sense organs. It is the process through which an individual interprets ones’ sensory impressions to give meaning to them. Schiffman defines it as “the process by which an individual select, organizes, and interprets stimuli into a meaningful and coherent picture of the world.”

Perception is the process of selecting, organizing and interpreting information inputs to produce meaning. A person receives information through the senses: sight, taste, hearing, smell and touch. How and what consumers perceive strongly affect their behaviour toward products, services, prices, package designs, salespeople, stores, advertisements and manufacturers.

Nature of perception:

1. Perception is a complex process. After a stimulus is detected by the sense organs, the perception process comes into play and involves the interplay of three processes, viz., selection, organization and interpretation. It is a dynamic process.

2. It is also an intellectual process; it involves a lot of cognitive effort. Once sensation takes place,the perception process involves the selection, organization and interpretation of data.

3. Perception is broad in nature; it includes a physiological component (through sensation), as well as sociological and psychological components.

4. Perception is a subjective process as two people may perceive the same stimuli differently. While two persons may be exposed to the same stimuli, the manner in which they select them, organize and interpret them is different. This is because the two are impacted by their background, learning and experiences, motivation, personality, cultures, values and lifestyles, social class effects etc.which may be different from each other.

Factors affecting the perception of consumers

Perception of a consumer is affected by the following factors

1.       Motives and needs: Our motives and needs will definitely influence our perception. For example, a hungry person is motivated to recognise only the food items among other articles. His attention cannot be directed towards other things until his motive is satisfied.

2.       Cognitive styles: People are said to differ in the ways they characteristically process the information. Every individual will have his or her own way of understanding the situation. It is said that the people who are flexible will have good attention and they are less affected by interfering influences and to be less dominated by internal needs and motives than or people at the constricted end.

3.       Mental set: Set refers to preparedness or readiness to receive some sensory input. Such expectancy keeps the individual prepared with good attention and concentration. For example, when we are expecting the arrival of a train, we listen to its horn or sound even if there is a lot of noise disturbance.

4.       Selectivity: This is the degree to which the brain is selecting from the environment. It is a function of how much is going on around the individual, and also of how selective (concentrated) the individual is on the current task. Selectivity is also subjective. Some people are a great deal more selective than others.

5.       Expectation: Expectations affect the perception of a person. Expectations are related with the state of anticipation of particular behaviour from a person. For example, a technical manager will expect that the non- technical people will be ignorant about the technical features of the services.

6.       Situation: Elements in the environment surrounding an individual like time, location, light, heat etc., influence his perception. The context in which a person sees the objects or events is very important.

7.       Cultural Upbringing: A person’s ethics, values and his cultural upbringing also play an important role in his perception about others. It is difficult to perceive the personality of a person raised in another culture because our judgement is based upon our own values.

8.       Past experience: This leads us to interpret later experience in the light of what we already know. Psychologists call this the law of primacy, sometimes sights, smells or sounds from our past will trigger off inappropriate responses: the smell of bread baking may recall a village bakery from twenty years ago, but in fact the smell could have been artificially generated by an aerosol spray near the supermarket bread counter.

Perceptual process/ mechanisms

The perceptual process starts when a person is exposed to a stimulus and the sensory receptors report the same to the human body. While the senses may be exposed to various stimuli, the human senses select only some of these at a point of time. This is because the sense organs have a limited capacity at a particular point of time. After the sense organs, report a few stimuli, the perceptual process takes over. Of the stimuli that have been detected, few are selected, organized and interpreted for meaning. This is known as perception.

Although we may differ in perceptual processes, universally speaking, the perceptual process comprises four components, viz., input, perceptual mechanism, output and behaviour. Let us have a discussion on these.

i. Input: The input to the perceptual process refers to the various stimuli that surround an individual and exist in his environment. It could assume various forms, for example, it could be another person, object, thing, or situation. The perceptual process begins when the sensory receptors detect a stimulus in the environment, which acts as an input to the perceptual mechanism.

ii. Perceptual mechanism: The perceptual mechanism consists of three sub-processes, viz.,selection, organization and interpretation. Once the sense organs detect a stimulus in the environment, a person selects, organizes and interprets it through perceptual selectivity, perceptual organization and perceptual interpretation. Put together, these are known as perceptual mechanisms.

1. Perceptual selection or perceptual selectivity refers to a tendency within a person to select one or a few out of the many stimuli present in the environment; this selectivity is based on one’s demographic, socio-cultural and psychographic factors. A person would tend to select those stimuli that appear relevant and attractive to him.

2. Perceptual organization refers to the process of organizing the various stimuli with other cues around so that a whole picture can be created. In other words, the various stimuli are organized and given a form. It is the process of organizing inputs into a definite and interpretable structure.

3. Perceptual interpretation refers to the process of drawing in inferences out of the organized whole (of stimuli), and giving meaning to it.

iii. Output: Once the input has been interpreted, it results in an output. This output towards the stimuli assumes various forms, for example, in the formation of emotions and moods, feelings and opinions, as well as attitudes and beliefs.

iv. Behaviour: The resultant behaviour is an outcome of the output. Based on his emotions and moods, feelings and opinions, as well as attitudes and beliefs, a person would enact out behaviour. This behaviour is a function of and will be reflective of such emotions and moods, feelings and opinions, as well as attitudes and belief.

Elements of Perception

Elements of Perception are given below

1)      Sensation: Sensation is the immediate and direct response of the sensory organs to stimuli. A stimulus may be any unit of input to any of these senses. Examples of stimuli include services, packages, brand names, advertisements and commercials. Sensory receptors are the human organs that receive sensory inputs. Their sensory functions are to see, hear, smell, taste and feel. All of these functions are called into play, either singly or in combinations, in the evaluation and use of most consumer services.

2)      The Absolute Threshold – The lowest level at which an individual can experience a sensation is called the absolute threshold. The point at which a person can detect the difference between “something” and “nothing” is that person’s absolute threshold for the stimulus. Sensory adaptation is a problem that causes many advertisers to change their advertising campaigns regularly. Marketers try to increase sensory input in order to cut through the daily clutter consumers experience in the consumption of advertising. Some increase sensory input in an effort to cut through the advertising “clutter.” Other advertisers try to attract attention by decreasing sensory input.

3)      The Differential Threshold The minimal difference that can be detected between two stimuli is called the difference threshold or the JND (just noticeable difference). A 19th century German scientist named Ernst Weber discovered that the JND between two stimuli was not an absolute amount, but an amount relative to the intensity of the first stimulus. Weber’s law states that the stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different.

Targeting – Meaning, Significance and Drawbacks

Meaning of Target Marketing

Target marketing is the process of identifying a specific group of consumers as the target for a product or service, and then developing marketing strategies to reach and appeal to that group. It involves analyzing the characteristics, needs, and behaviour of the target market and developing a marketing mix (also known as the “Four Ps”) that meets their specific needs. The Four Ps are product, price, promotion, and place.

Target marketing is based on the idea that it is more effective and efficient to focus marketing efforts on a specific group of consumers rather than trying to appeal to a general, broad audience. By understanding and meeting the needs of the target market, businesses can build long-term relationships with their customers and increase customer loyalty.

Significance of Target Marketing

Target marketing approach is important to a marketing plan because it allows the company to focus on the needs and wants of its target audience and enables them to plan of what they want to accomplish and achieve in the future. Target markets represent the people or the consuming public who may consume of purchase your products and services, have the capability to purchase it financially and can be easily reached by marketing campaign or advertisements. Behavioral, socioeconomic and demographic data enables company to identify what messages will attract the best and positive response among its target markets. Stiff competitions among businesses are unavoidable and to remain competitive, businesses must invest in advertisements to increase market awareness and focus on their target markets to create a long lasting and good relationship with the consumers. By focusing on a target market, businesses can:

1. Increase customer loyalty: By understanding and meeting the needs of their target market, businesses can build long-term relationships with their customers and increase customer loyalty.

2. Improve marketing effectiveness: Target marketing allows businesses to create more targeted, relevant marketing campaigns, which can be more effective at reaching and converting their target market.

3. Increase ROI: By focusing their marketing efforts on their most valuable customers, businesses can achieve a higher return on investment (ROI) from their marketing efforts.

4. Save resources: By targeting a specific market, businesses can be more efficient with their marketing resources and avoid wasting time and money on marketing efforts that are not likely to be effective.

Drawbacks of Target Marketing

While target marketing can be an effective way for businesses to reach and appeal to specific groups of consumers, there are also some potential drawbacks to consider:

1. Limited scope: By focusing on a specific target market, businesses may miss out on opportunities to sell to other potential customers. This can result in a narrow customer base and potentially lower overall sales.

2. Negative perception: Some consumers may view targeted marketing as intrusive or manipulative, especially if it is perceived as being overly personal or irrelevant. This can lead to negative perceptions of the business and potentially harm its reputation.

3. Changing markets: Markets and consumer needs and preferences can change over time, which means that a target market that was once effective may no longer be relevant. This can require businesses to constantly adjust their target market, which can be time-consuming and costly.

4. Legal and ethical considerations: There are also legal and ethical considerations to be aware of when targeting specific groups of consumers. For example, it is illegal to discriminate based on certain characteristics such as race, age, and gender, and businesses must ensure that their marketing efforts are inclusive and non-discriminatory.

While target marketing can be an effective way to reach specific groups of consumers, it is important for businesses to carefully consider the potential drawbacks and ensure that their marketing efforts are legal, ethical, and respectful of all potential customers.

Various Approaches of Target Marketing

There are various approaches that businesses can use to identify and target their market:

1. Demographic segmentation: This involves dividing the market based on characteristics such as age, gender, income, education, and family size. For example, a business that sells sports equipment may target young, male athletes with a high income.

2. Psychographic segmentation: This involves dividing the market based on personality, values, attitudes, interests, and lifestyles. For example, a business that sells eco-friendly products may target consumers who are environmentally conscious and value sustainability.

3. Behavioral segmentation: This involves dividing the market based on consumers’ knowledge, attitudes, usage patterns, and responses to a product or service. For example, a business that sells health supplements may target consumers who are health-conscious and regularly use such products.

4. Geographic segmentation: This involves dividing the market based on location, such as by country, region, or city. For example, a business that sells winter clothing may target consumers in colder regions.

5. Technographic segmentation: This involves dividing the market based on technology usage, such as by those who are early adopters, those who are late adopters, or those who do not use technology at all. For example, a business that sells smartphones may target early adopters who are always looking for the latest technology.

In addition to these traditional approaches, businesses can also use more targeted methods such as customer profiling, which involves creating a detailed profile of the ideal customer based on data such as purchase history and demographics. This can help businesses to more accurately target their marketing efforts and create personalized marketing campaigns that are more likely to be successful.

Another approach is customer relationship management (CRM), which involves using technology to collect and analyze data about customers’ interactions with a business in order to improve their experience and build long-term relationships. This can involve using data from multiple sources such as social media, email, and phone calls to create a comprehensive view of each customer and tailor marketing efforts accordingly.

Overall, the best approach to target marketing will depend on the specific business and its goals, as well as the characteristics of the target market. By understanding the needs, wants, and behavior of the target market, businesses can develop effective marketing strategies to reach and appeal to their customers.

Various Types of Consumer Groups and Their Distinctive characteristics

There are various customer groups in service marketing, and they can be distinguished by their characteristics such as their needs, preferences, and behavior. Some common customer groups in service marketing include:

1. Individual customers: These are individuals who use services for personal use, such as healthcare, education, or personal finance. Individual customers can have a wide range of characteristics depending on their age, income, and lifestyle.

2. Business customers: These are organizations that use services for business purposes, such as consulting, transportation, or IT support. Business customers often have specific needs and may be more concerned with cost and efficiency.

3. Government customers: These are public sector organizations that use services for government purposes, such as defense, education, or healthcare. Government customers may have different needs and preferences compared to other customer groups.

4. International customers: These are customers from other countries who use services while traveling or living abroad. International customers may have different cultural norms and expectations and may require additional support and assistance.

5 Wholesale customers: These are intermediaries, such as wholesalers or distributors, that purchase services in large quantities for resale to other businesses. Wholesale customers may be more concerned with volume discounts and delivery logistics.

6. Retail customers: These are end customers who purchase services for personal use through retail channels, such as stores or online marketplaces. Retail customers may be more concerned with convenience and the overall shopping experience.

7. Public sector customers: These are organizations that are funded and operated by the government, such as schools, hospitals, and public utilities. Public sector customers may have different needs and preferences compared to other customer groups.

8. Not-for-profit customers: These are organizations that are not operated for profit, such as charities and religious institutions. Not-for-profit customers may have different priorities and may be more concerned with social or environmental impact.

9. Niche market customers: These are customers with very specific needs or preferences that are not well served by mainstream offerings. Niche market customers may require specialized services or may be willing to pay a premium for unique or personalized experiences.

Some distinctive characteristics of these customer groups include:

1. Individual customers: These customers may be more concerned with personal convenience, quality, and value for money.

2. Business customers: These customers may be more focused on cost and efficiency and may require additional support and customization.

3. Government customers: These customers may have specific regulatory requirements and may be more concerned with compliance and security.

4. International customers: These customers may have different cultural norms and expectations and may require additional support and assistance in navigating unfamiliar environments.

5. Wholesale customers: These customers may be more concerned with volume discounts, delivery logistics, and the ability to customize orders.

6. Retail customers: These customers may be more concerned with convenience, the overall shopping experience, and the availability of various payment options.

7. Public sector customers: These customers may have specific regulatory requirements, may be subject to government procurement processes, and may be more concerned with compliance and social responsibility.

8. Not-for-profit customers: These customers may be more concerned with social or environmental impact, may have limited resources, and may prioritize value for money.

9. Niche market customers: These customers may have very specific needs or preferences that are not well served by mainstream offerings, and may be willing to pay a premium for unique or personalized experiences.

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