CHAPTER 1

CONSUMER BEHAVIOUR THEORY

1.1 INTRODUCTION TO THE TOPIC
Walters defines consumer behaviour as: " ... the process whereby individuals decide whether,
what, when, where, how, and from whom to purchase goods and services."

Mowen provides a different definition by explaining consumer behaviour as: "... the study of
the buying units and the exchange processes involved in acquiring, consuming, and disposing
of goods, services, experiences, and ideas". This definition focuses on buying units in an
attempt to include not only the individual but also groups that purchase products or services.

Schiffman & Kanuk define consumer behaviour as: "The behavior that consumers display in
searching for, purchasing, using, evaluating, and disposing of products, services, and ideas."
Schiffman & Kanuk elaborate on the definition by explaining that consumer behaviour is,
therefore, the study of how individuals make decisions to spend their available resources
(time, money, effort) on consumption-related items. It includes the study of what, why, when,
where and how often they purchase and how they use the purchased product. In addition, it
encompasses all the behaviours that consumers display in searching for, purchasing, using,
evaluating and disposing of products and services that they expect will satisfy their needs.

According to Schiffman & Kanuk, two different types of consumers can be distinguished,
namely personal and organisational consumers. Personal consumers purchase products and
services for personal or household use or as a gift to someone else. Personal consumers,
therefore, purchase for final consumption. Organisational consumers on the other hand
purchase products and services to run an organisation, including profitable and non-profitable
organisations, government organisations and institutions.

A final definition of consumer behaviour, by Engel, Blackwell & Miniard ,states that: "those
actions directly involved in obtaining, consuming, and disposing of products and services,
including the decision processes that precede and follow these actions.

From a marketing perspective, consumer behaviour most probably became an important field
of study with the development of the so-called marketing concept. Assael emphasises the
influence of the marketing concept in marketing by stating that, according to the marketing
concept, marketers first need to define bene"fits sought by consumers in the marketplace,
followed by the drafting of marketing plans supporting the needs of consumers.
1.2 MODELS OF CONSUMER BEHAVIOUR
The discussion on models of human behaviour attempts to explain human behaviour as well
as its influence on consumer behaviour. These models had a very narrow approach in terms of
their explanations of human behaviour and the impact thereof on consumer behaviour. It only
focused on one subset of possible influences on behaviour, for example the Marshallian
model, focusing only on the influence of financial resources on behaviour. The shortcomings
of models of human behaviour led to more complex models of consumer behaviour appearing
in the early 1960s. Some of the noted models of consumer behaviour are :

The BeUman information processing model.

The Nicosia model.
The Howard-Sheth model.
The Howard model.
The Engel, Blackwell,Kollat, Miniard model.

In the present study we will study the Engel, Blackwell, Miniard model in details throwing
lights in the decision process of a consumer while buying a bike.

The Engel, Blackwell. Miniard model has its origin in decades of work on the subject of
consumer behaviour by Engel, Kollat, Blackwell, and Miniard. These authors were
responsible for the evolution of the model from 1968 to its present form, namely the eighth
edition of their book on the subject of consumer behaviour.

Important to note, as stated by Engel, Blackwell & Miniard, is that the name of the model is
compiled from the names of the authors, and it can therefore be concluded that the Engel,
Blackwell, Miniard model is based on the same model as that of Engel & Blackwell, and
Engel, Kollat & Blackwell. Although the eighth revision of the Engel, Blackwell, Miniard
model will be discussed in this section, it is important to briefly mention the evolution of the
model since 1978, from the third revision by Engel et al., to the eighth revision by Engel,
Blackwell, and Miniard. According to Engel et al, the Engel, Kollat, Blackwell model
(referred to as the EKB model) was a revision of a previous version of the model and had
several distinct purposes, namely:

a) the interrelationship between stages in the decision-process and the endogenous and
exogenous variables which are highlighted.

b) to clarify the relationship between attitudes and behaviour as well as the introduction of
beliefs and intentions as explicit variables and the introduction of normative compliance.

c) to define variables with greater precision and specify functional relationship for the
purpose of empirical testing.

Engel & Blackwell revised the 1978 version of the EKB model and listed the same reasons
for the revision as stated above. Interesting to note is that both revisions listed 16 equations
and variable definitions in an effort to compare the EKB model to that of the Howard-Sheth
and the Howard models. The 1978 version of the EKB model, by Engel et al. Compares the
EKB model to the 1974 version of the Howard model, whereas the 1982 version, by Engel &
Blackwell, compares the EKB model to the 1977 version of the Howard model.

The EBM model discussed below is based on the findings of Engel et al. Since the 1995 and
2001 versions are essentially the same model and theory, the researcher will discuss the 1995
version. The complete EBM model is shown in Figure below where a solid arrow indicates a
direct relationship and a broken arrow, an indirect or feedback relationship between variables.

Fig: Engel,Blackwell,kollat model

It should be noted that the EBM model identifies three broad decision processes based on the
extent of active reasoning underlying consumer behaviour, namely extended, limited and
midrange problem-solving.

According to the EBM model, the consumer decision-making process is influenced and
shaped by a number of factors and determinants, categorised in three broad categories,
namely individual differences, environmental influences and psychological processes. The
three categories will be discussed below, based on the discussion provided by Engel et al.,
together with the components associated with each category, in an attempt to explain the
consumer behaviour and decision processes suggested by the EBM model.
1.2.1 Individual differences

The EBM model suggests that consumer behaviour is influenced by five major categories of
individual differences. These individual differences are consumer resources; knowledge;
attitudes; motivation; personality, values and lifestyle.

i.Consumer resources

Each decision situation is characterised by the involvement of three different consumer

resources. First, the consumer uses time, which is valued since time is often more important
to consumers than money due to the increasing lack of time in a modern society. The second
resource is money or economic resource, and the third is information reception and
processing capabilities. The consumer's perception regarding the availability of these
resources may affect the willingness to spend time and money on products, which causes the
consumer to carefully allocate these resources due to the limited availability thereof.

ii) Knowledge

Knowledge, defined as the information stored in memory, encompasses a wide variety of

information, including the availability and characteristics of products and services.
Information contained in memory regarding products include awareness of the product
category and brands within the product category, attributes and beliefs of both the product
category and specific brands, and the availability of products in terms of the distribution
channels and competitors selling products within these channels. In addition to the above,
knowledge regarding products also includes when to purchase, since the consumer may be
aware of specials at certain times during the year and may therefore delay the purchase
decision. A final component of knowledge is the information contained in memory regarding
the uses and requirements to use a product. Consumers may, therefore, be aware of the uses
of products, although they are not able to actually operate them.

iii) Attitudes

An attitude can be defined as an overall evaluation of alternatives, ranging from positive to

negative. Attitudes are considered important in viewing consumer behaviour, since behaviour
is strongly influenced by attitudes towards a given product or brand. In addition to the above,
attitudes influence future choice and are difficult to change, even though being a common
marketing tool.

iv) Motives

Needs and motives, where need is a central variable in motivation, influence all phases of the
decision process. Activated needs, defined as a perceived difference between an ideal and the
present state that is sufficient to activate behaviour, lead to energised behaviour or drive that
is channelled towards certain goals that have been learned as incentives. In addition to the
above, it should be noted that needs fall within two categories, namely the utilitarian or
functional category which has practical benefits, and the hedonic or subjective category with
emotional benefits.
v) Personality

Personality, values and lifestyle encompass what is known as psychological research, where
the emphasis is placed on individual traits, values, beliefs and preferred behaviour patterns
that combine to characterise market segments. Personality, defined as consistent responses to
environmental stimuli, provides for orderly and coherently related experiences and behaviour.
Personality is alsothe component that makes one individual unique from all others and
provides consistency of responses.

vi) Values

Values represent an individual's beliefs about life and accepted behaviour, therefore
expressing both the goals that motivate people and appropriate ways to achieve those goals.
Values are classified as either being social, implying shared beliefs that characterise a group
of people and thereby defining behaviour for the group that will be acceptable as "normal", or
personal, responsible for defining "normal" behaviour for an individual.

vii) Lifestyle
Lifestyle, reflecting an individual's activities, interests and opinions, represents certain
patterns in which people live and spend their time and money. Lifestyle can, therefore, be
viewed as the result of all the economic, cultural and social life forces that contribute to an
individual's human qualities.

1.2.2 Environmental influences

Environmental influences impacting on consumer behaviour include culture, social class,
personal influences, family and the situation.

i) Culture

Culture, from a consumer behaviour perspective, implies the values, ideas, artefacts and other
meaningful symbols assisting individuals to communicate, interpret and evaluate as members
of society.

According to the EBM model, the importance of culture 'from a consumer behaviour
perspective is that it provides people with a sense of identity and understanding of acceptable
behaviour within society. In addition to the above, culture influences attitudes and behaviour,
including the sense of self and space, communication and language, time and time
consciousness, values and norms, food and feeding habits, relationships with family,
organisations and government, dress and appearance, beliefs and attitudes, mental processing
and learning, as well as work habits and practices.
ii) Social class

The second environmental influence, "social class", can be defined as divisions within society
where individuals share similar values, interests and behaviours. Social classes are
differentiated by socio-economic status differences, often leading to consumer behaviour
differences, for example the make of a vehicle or the favourite style of dress. The impact of
social class on consumer behaviour can often be observed when viewing consumer time
spent, products purchased, where, and how they purchase products, especially since brands of
products and services are associated with specific social classes.

iii) Personal influences

Consumers are often influenced by people they associate with, where they conform to the
norms and expectations of others or simply value their opinions in the buying process. This
influence can either be the observation of others or alternatively the active seeking of advice,
where the person providing the advice becomes an influential or opinion leader.

iv) Family

The family is often the primary decision-making unit with different roles and functions, often
resulting in simultaneous co-operation and conflict. Two behavioural roles of the family can
be distinguished, namely instrumental or functional roles, involving financial, performance
and other ''functional'' attributes, such as conditions of purchase and expressive roles,
involving the support of other family members in the decision-making process by expressing
the family's emotional needs and upholding of family norms.

At least five definable roles, assumed by the husband, wife, children, or other members of the
household, can be distinguished in family consumption decisions. These roles are the initiator
or gatekeeper, initiating family thinking about purchasing products and gathering
information. There is the influencer, the individual determining the criteria to be used by the
family when purchasing products as well as identifying products that would most likely meet
the criteria. Then there is the decider, the person with the financial authority, determining
how the money of the family should be used and on which products or brands. The buyer is
the person responsible for visiting the store, purchasing the products and bringing it home.
Finally, there are the users, the individuals in the family using or consuming the product.

v) Situation

The final environmental influence impacting on consumer behaviour according to the EBM
model is that of the situation, since behaviour changes as the situation changes. The
importance of considering the situation is due to changes impacting on consumers sometimes
being unpredictable and erratic, for example retrenchments from work resulting in the
postponement of purchases. Situational factors can be divided into three categories, namely
communication, purchase and the usage situation. Communications situations influencing
consumers are, for instance, affected by marketing messages, where, for example, the impact
of a television advertisement is in part determined by the programme during which it is
broadcast. The purchase situation includes elements of the information environment, for
instance the availability thereof externally or internally in memory, the volume of
information, determined by the number of choice alternatives as well as the number of
attributes per alternative. Other aspects from the information environment influencing the
purchase situation are the format, implying the manner in which it is organised, and form of
information. In addition to information influences, the retail environment or store
atmospherics also influence the purchase situation. Factors comprising the retail environment
include music, layout, point of purchase material, colours and crowding caused by the density
of shoppers in a store. The final situational influence, "product consumption", plays an
important part in consumer behaviour, since consumers may alter their purchase patterns due
to usage situations. An example of the consumption situation is where it is acceptable to drink
a certain brand of wine at home, yet when with friends it may be unacceptable.

1.2.3 Psychological processes

The psychological processes in the EBM model comprise the decision-process behaviour of
consumers which, together with the environmental influences and individual differences,
form an elaborated consumer behaviour and decision model.

This process will focus in detail on the consumer decision-making process, it is important to
consider the decision process documented by the EBM model, since the discussion on this
element of the model not only completes the model but also provides insight into the
influence of processing ability and the complexity thereof on consumers. The decision-
making process in the EBM model comprises the following components: need recognition,
search for information, information processing, pre-purchase alternative evaluation, purchase,
consumption and post-purchase alternative evaluation as well as divestment.

i) Need recognition

The first stage of the decision-making process is that of need recognition, where the
consumer senses a difference between what is perceived as an ideal state of affairs compared
to the actual state at any given time. Need recognition is therefore a state of desire, initiating
a decision process that occurs throughout the interaction of individual differences and
environmental influences.

ii) Search for alternatives

The second stage of the decision process is that of internal search into memory to determine
whether or not enough is known about alternatives to make a decision without additional
information searches. If there is not sufficient information contained in memory, consumers
will engage in external search. Individual differences and environmental influences, influence
external search. For example, some consumers are cautious and unwilling to purchase
products without searching for extensive and detailed information, whereas others may
purchase products without comparing alternatives.

External sources used when searching for information are categorised as either being
marketer dominated or other. Marketer dominated sources imply any activities by suppliers of
products for the purpose of offering information or persuasion, including for example point of
sale material and advertising. The "other" external source of information in the EBM model
includes for instance word-of-mouth from others, product rating and consumer reports.
iii) Information processing
The information processing process commences when the consumer is exposed to an external
search. In the information processing process, five distinctive steps can be identified, namely
exposure, attention, comprehension, acceptance and retention.

Exposure forms the first step of information processing since communication first needs to
reach consumers, resulting in the activation of one or more senses and therefore the start of
preliminary processing. Once exposed to information, consumers need to allocate
information processing capacity to the incoming information, or alternatively decide not to
allocate processing capacity. Attention to information will most likely occur if the incoming
message and the contents thereof are considered relevant. At this stage of the process,
consumers may ignore marketing dominated messages, thereby exercising their capabilities
of selective attention.

During the third step of the information processing process, comprehension, the message to
which attention was attracted, is further analysed against categories of meaning stored in
memory. At this pOint, the marketer wishes for accurate comprehension of the message.

The goal of the marketer's message is to modify or change beliefs and attitudes held by
consumers. At this stage of the information processing process, acceptance of an incoming
message can be assumed if it has not been screened out as being unacceptable. Of importance
to note with acceptance is that there will be, at least to some degree, changes in consumer
beliefs and attitudes if the message was accepted.

The final step in the process is that of retention, where the marketer will aim to not only
achieve acceptance for its information but also the storing thereof in memory for future use.

It should be noted in conclusion to the information processing process that attention to stimuli
will be attracted and held only if the information is relevant to the needs and motives of the
consumer. Due to the massive volume of competing messages to which consumers are
exposed, only a small subset will be processed as a result of the selective information
processing capabilities of consumers.

iv) Pre-purchase alternative evaluation

At the pre-purchase evaluation phase of the EBM model, the consumer will examine products
in terms of their attributes as compared to personal standards and specifications, defined as
evaluation criteria.

The evaluation criteria, expressed in the form of preferred attributes, present the desired
outcomes from the purchase and consumption of products. Evaluation criteria, intluenced by
individual and environmental influences, can therefore be perceived as becoming a product-
specific manifestation of the consumer's needs, values and lifestyle.
v) Purchase
The purchase process occurs in either a retail-type environment or through inhouse shopping,
and often requires the assistance of a highly skilled salesperson, although this does not
necessarily imply that the decision and evaluation process is executed at the point of
purchase.

vi) Consumption and post-consumption alternative evaluation

The consumption of products has traditionally not been the concern of marketers, since the
primary objective used to be to sell the product. This view has changed since marketers need
to remain competitive by ensuring consumer satisfaction with the purchase and the
consumption of products in an effort to retain consumers. Marketers can, therefore, learn a
great deal from consumers by examining how products are consumed, noting preferences and
suggestions on how to improve on products, and 'finally to probe into reasons why products
are returned.

Dissatisfaction with the purchase and consumption of a product occurs when the consumer
perceives the chosen alternative to be failing against the desired outcome. The consumer may
also experience, doubt with the purchase even before consumption, simply because of the
presence of alternatives that also cater for the desirable features. This phenomenon is known
as post-decision regret and may inspire the consumer to engage in further information search.
The importance of satisfaction and dissatisfaction with the purchase and consumption of a
product is illustrated in Figure 2.6, where satisfaction provides feedback to pre-purchase
alternative evaluation, assisting the consumer with future alternative evaluation and choice,
and dissatisfaction which leads to external search for information.

vii) Divestment

The final stage of the decision process model is divestment, where the consumer faces the
options of disposal, recycling or re-marketing.
 CHAPTER 2

INTODUCTION TO THE COMPANY

2.1 OVERVIEW

Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest manufacturer
of two - wheelers, based in India. In 2001, the company achieved the coveted position of
being the largest two-wheeler manufacturing company in India and also, the 'World No.1'
two-wheeler company in terms of unit volume sales in a calendar year. Hero MotoCorp Ltd.
continues to maintain this position till date.

The company is the largest two wheeler manufacturer in India. In India, it has a market share
of about 46% share in 2-wheeler category. The 2006 Forbes 200 Most Respected companies
list has Hero Motors ranked at #108.

Hero Honda started its operations in 1984 as a joint venture between Hero Cycles (sometimes
called Hero Group, not to be confused with the Hero Group food company of Switzerland) of
India and Honda of Japan. In 2010, when Honda decided to move out of the joint venture,
Hero Group bought the shares held by Honda. Subsequently, in August 2011 the company
was renamed Hero MotoCorp with a new corporate identity.

Hero Motocorp has four manufacturing facilities based at Dharuhera Neemrana and
Gurgaon in Haryana and at Haridwar in Uttarakhand. These plants together have a production
capacity of 7.6 million 2-wheelers per year. Read More Hero MotoCorp has a sales and
service network with over 6,000 dealerships and service points across India. It has a customer
loyalty program since 2000, called the Hero Honda Passport Program which is now known as
Hero GoodLife Program.

It is reported that Hero MotoCorp has five joint ventures or associate companies, Munjal
Showa, AG Industries, Sunbeam Auto, Rockman Industries and Satyam Auto Components,
that supply a majority of its components.

2.2 Vision
The story of Hero began with a simple vision - the vision of a mobile and an empowered
India, powered by its two wheelers. Hero MotoCorp Ltd., company's new identity, reflects its
commitment towards providing world class mobility solutions with renewed focus on
expanding company's footprint in the global arena.

2.3 Mission
Hero MotoCorp's mission is to become a global enterprise fulfilling its customers' needs and
aspirations for mobility, setting benchmarks in technology, styling and quality so that it
converts its customers into its brand advocates. The company will provide an engaging
environment for its people to perform to their true potential. It will continue its focus on
value creation and enduring relationships with its partners.
 CHAPTER 3

RESEARCH METHODOLOGY

3.1 Meaning of Research

Research in common parlance refers to a search for knowledge. It refers to the systematic
method consisting of enunciating the problem, formulating a hypothesis, collecting the facts
or data, analyzing the facts and reaching certain conclusions either in the form of solutions(s)
towards the concerned problem or in certain generalisations for some theoretical formulation.

3.2 Research Methodology

Research methodology is a way to systematically solve the research problem. It may be
understood as a science of studying how research is done scientifically. The system of
collecting data for research projects is known as research methodology. The data may be
collected for either theoretical or practical research for example management research may be
strategically conceptualized along with operational planning methods and change
management. Some important factors in research methodology include validity of research
data, Ethics and the reliability of measures most of your work is finished by the time you
finish the analysis of your data. Formulating of research questions along with sampling
weather probable or non probable is followed by measurement that includes surveys and
scaling. This is followed by research design, which may be either experimental or quasi-
experimental. The last two stages are data analysis and finally writing the research paper,
which is organized carefully into graphs and tables so that only important relevant data is
shown.
The present study seeks to find out the customers attitude towards buying
of bike.

3.3 SOURCES OF DATA

Both primary and secondary data are used to collect the information.

Primary data: Primary data is collected from the consumers/prospects with the help of a
questionnaire as well as face-to-face interactions.

Secondary data: The secondary data are collected from the companys website and various
other journals.

3.4 Sampling Design: -

Sample Size: 20
Sampling method : Convenience sampling.

3.5 Objective of the Research:

The objective is to study the buying behaviour of consumer regarding the buying decision of
bikes with special reference to the bikes of Hero & Royal Enfield brands.

3.6 Scope of the study:

The study has been made to find the level of satisfaction the consumer has regarding the
service provided by the brand.

3.7 Limitations of the study

When the buyers are busy we cant get accurate data from them.
During survey some respondents may not give answer in proper manner.
Due to the time limit of our project we could cover only some area.