AKSHITA PANDEY

UNIT-2

CONSUMER BEHAVIOUR

Consumer Behaviour Models

Everything you need to know about the models of consumer behaviour.

It is very important for a company to know and understand the consumers’ response towards different
product features, prices and advertising appeals, as well as their effect on the product getting a
competitive edge over the other products. Stimulus response model of buyer behaviour is the starting
point in this respect.
The models of consumer behaviour are:-

Models of Consumer Behaviour – Traditional Models and Contemporary Models

1. Traditional Models:
The early or traditional models were developed by economists with a view to understand economic
systems. Economics helps to understand how scarce resources are allocated among unlimited
wants and needs. The first four Models give a general view in terms of the Economic model,
Learning model, Psychoanalytic model and the Sociological model.
i. Economic Model:
Under economics, it is assumed that man is a rational human being, who will evaluate all the
alternatives in terms of cost and value received and select that product/service which gives
him/her maximum satisfaction (utility). Consumers are assumed to follow the principle of
maximum utility based on the law of diminishing marginal utility. It is assumed that with limited
purchasing power, and a set of needs and tastes, a consumer will allocate his/her expenditure over
different products at given prices so as to maximise utility.

The law of equimarginal utility enables him to secure maximum utility from limited purchasing
power.
Economic model of consumer behaviour is unidimensional. This means that buying decisions of a
person are governed by the concept of utility. Being a rational man he will make his purchase
decisions with the intention of maximising the utility/benefits.
Economic model is based on certain predictions of buying behaviour.
1. Price effect – Lesser the price of the product, more will be the quantity purchased.
2. Substitution effect – Lesser the price of the substitute product, lesser will be the quantity of the
original product bought.
3. Income effect – More the purchasing power, more will be the quantity purchased
The assumption about the rational behaviour of human beings has been challenged by the
behavioural scientists. They are of the opinion that while the predictions are useful, the model only
explains how a consumer ought to behave, it does not throw light on how does the consumer
actually behave.
Behavioural scientists feel the economic model is incomplete. They feel that Economics is assuming
the market to be homogeneous where all the buyers will think and act alike and also focuses only
on one aspect of the product i.e., income.
It has been argued upon that man is a complex entity and hence the need to adopt a
multidisciplinary approach to understand consumer behaviour. Whereas, the model has ignored all
vital aspects such as perception, motivation, learning, attitude, personality and socio-cultural
factors.
Added to this, man is today living in a technologically advanced age with constant exposure to the
various marketing variables such as superior technologically advanced quality products (and
services), efficient network distribution centers, highly interactive media exposure etc. Under such
circumstances man cannot be assumed to be a rational person who only treats ‘price’ as the
deciding factor in his consumption related decisions.
Behaviour scientists have opined that broader perspectives need to be adopted while analysing the
buyer behaviour. So apart from economics, even the role played by needs, motives, personality, self-
concept and the socio-cultural factors have to be considered for understanding the buyer responses
to various stimuli, which in turn could influence their buying behaviour.

Psychoanalytical Model:
This model is based on the work of psychologists who were concerned with personality. They were
of the view that human needs and motives operated at the conscious as well as at the subconscious
levels. This theory was developed by Sigmund Freud. According to him human behaviour
(personality) is the outcome of
(a) ‘id’ – the source of all psychic energy which drives to act,
(b) ‘super ego’ – the internal representation of what is approved by the society,
(c) ‘ego’ – the conscious directing ‘id’ impulses to find gratification in a socially accepted manner.

Thus, we can say that human behaviour is directed by a complex set of deep-seated motives.
From the marketing point of view this means that buyers will be influenced by symbolic factors in
buying a product. Motivational research has been involved in investigating motives of consumer
behaviour so as to develop suitable marketing implications accordingly. Marketers have been using
this approach to generate ideas for developing products – design, features, advertising and other
promotional techniques.

The Sociological Model:

According to this model the individual buyer is a part of the institution called society. Since he
is living in a society, he gets influenced by it and in turn also influences it in its path of development.
He is playing many roles as a part of various formal and informal associations or organisations such
as a family member, as an employee of a firm, as a member of a professional forum and as an active
member of an informal cultural organisation. Such interactions leave some impressions on him and
may play a role in influencing his buying behaviour.
Intimate groups comprising of family, friends and close colleagues can exercise a strong influence
on the lifestyle and the buying behaviour of an individual member. The peer group plays a very
important role in acting as an influencing factor especially in adopting particular lifestyles and
buying behaviour patterns. The group generally has an informal opinion leader, whose views are
respected by the group. This leader is able to influence the individual member’s lifestyle and buying
decisions.
Similarly, depending on the income, occupation and place of residence etc., each individual member
is recognised as belonging to a certain social class. As a member of a particular class, he may enjoy
certain status and prestige. Further, each class has its own standards of lifestyle and buying
behaviour pattern. So an individual member will adopt the role suitable to conform to the style and
behavioural pattern of the social class to which he/she belongs.

The marketers, through a process of market segmentation can work out on the common behaviour
patterns of a specific class and group of buyers and try to influence their buying pattern.

2. Contemporary Models:
With the evolution of the consumer behaviour study, newer approaches were used to understand
what influences consumer behaviour. These were said to be contemporary models.
Howard Sheth Model of Consumer Behavior

John Howard and Jagadish Sheth put forward the Howard Sheth model of consumer behavior in
1969, in their publication entitled, ‘The Theory of buyer Behaviour’.

The Howard Sheth Model is a sophisticated integration of the various social, psychological, and
marketing influences on consumer choice into a coherent sequence of information processing. It aims
not only to explain consumer behavior in terms of cognitive functioning but to provide an empirically
testable depiction of such behavior and its outcomes (Howard 1977).
 The logic of the Howard Sheth model of consumer behavior summarizes like this. There are inputs in
the form of Stimuli. There are outputs beginning with attention to a given stimulus and ending with
purchase. In between the inputs and the outputs, there are variables affecting perception and
learning. These variables are termed ‘hypothetical’ since they cannot be directly measured at the time
of occurrence.

The Howard Sheth model of consumer behavior suggests three levels of decision making:

1. The first level describes extensive problem-solving. At this level, the consumer does not have any
basic information or knowledge about the brand and he does not have any preferences for any
product. In this situation, the consumer will seek information about all the different brands in the
market before purchasing.
2. The second level is limited problem-solving. This situation exists for consumers who have little
knowledge about the market, or partial knowledge about what they want to purchase. In order to
arrive at a brand preference, some comparative brand information is sought.
3. The third level is habitual response behavior. At this level, the consumer knows very well about
the different brands and he can differentiate between the different characteristics of each product,
and he already decides to purchase a particular product.

According to the Howard Sheth model of consumer behavior, there are four major sets of variables;
namely:

1. Inputs: These input variables consist of three distinct types of stimuli (information sources) in the
consumer’s environment. The marketer in the form of product or brand information furnishes
physical brand characteristics (significative stimuli) and verbal or visual product characteristics
(symbolic stimuli). There are impersonal sources like mass media communication and advertising,
over which the firm has no control. However, the information sources also include sales and service
personnel who can add and help the marketing efforts of the firm. The third type is provided by the
consumer’s social environment (family, reference group, and social class). This social source is
personal and the company/marketer has no control over this source. All three types of stimuli
provide inputs concerning the product class or specific brands to the specific consumer.
2. Perceptual and Learning Constructs: The central part of the model deals with the psychological
variables involved when the consumer is contemplating a decision. Some of the variables are
perceptual in nature and are concerned with how the consumer receives and understands the
information from the input stimuli and other parts of the model. For example, stimulus ambiguity
happened when the consumer does not understand the message from the environment. Perceptual
bias occurs if the consumer distorts the information received so that it fits his or her established
needs or experience. Learning constructs category, consumers’ goals, information about brands,
criteria for evaluation alternatives, preferences, and buying intentions are all included. The proposed
interaction In between the different variables in the perceptual and learning constructs and other
sets give the model its distinctive advantage.
3. Outputs: The outputs are the results of the perceptual and learning variables and how the
consumers will respond to these variables (attention, brand comprehension, attitudes, and
intention).
4. Exogenous(External) variables: Exogenous variables are not directly part of the decision-making
process. However, some relevant exogenous variables include the importance of the purchase,
consumer personality traits, religion, and time pressure.
5. The decision-making process, which Howard-Sheth Model tries to explain, takes place at
three Inputs stages: Significance, Symbolic and Social stimuli. In both significative and
 symbolic stimuli, the model emphasizes material aspects such as price and quality. These
stimuli are not applicable in every society. While in social stimuli the model does not mention
the basis of decision-making in this stimulus, such as what influences the family decision?
This may differ from one society to another.

6. Most scholars agree that the study of consumer behavior was advanced and given an impetus
by Howard Sheth Model. The major advantage and strength of the model lied in the precision
with which a large number of variables have been linked in the working relationships to cover
most aspects of the purchase decision and the effective utilization of contribution from the
behavioral sciences.

7. Finally, no direct relation was drawn to the role of religion in influencing the consumer’s
decision-making processes. Religion was considered as an external factor with no real
influence on consumers, which gives the model obvious weakness in anticipation of the
consumer decision.

Engel-Kollat-Blackwell (EKB) Model of Consumer Behavior

The Engel-Kollat-Blackwell model of consumer behavior outlines a five-stage decision process that
consumers go through before purchasing a product or service.

• Awareness: During this stage, consumers view advertisements from a business and become aware
of their need, desire, or interest, to purchase what they've just discovered.
• Information Processing: After discovering a product or service, a consumer begins to think about
how the product or service relates to their past experiences or needs and whether it will fulfill any
current needs.
• Evaluation: At this point, consumers will research the product they’ve discovered and research
options from competitors to see if there is a better option or if the original product is the best fit.
• Purchasing Decision: A consumer will follow through with a purchase for the product that has
beat out competitors to provide value. A consumer may also stop the process if they change their
mind.
• Outcome Analysis: After making a purchase, a customer will use what they’ve bought and assess
whether their experience is positive or negative. After a trial period, they’ll keep a product and
maybe decide to become repeat customers or express dissatisfaction and return to stage three.

Overall, EKB says that consumers make decisions based on influencing factors that they assess
through rational insight.

This model applies to businesses that have many competitors with similar products or services. If
your product market is highly saturated and competitive, the goal is to outshine your competitors
by meeting customers at every stage of their journey.

Increase visibility for your business during the awareness stage through Search Engine
Optimization. Show them how your product or service will benefit them and give them the
resources they need to weigh you against your competitors, like customer reviews and
testimonials, free trials, discounts for bulk purchases. Lastly, and provide excellent after-sales
support to show them that you care about their business even if they make a return.

Black Box Model of Consumer Behavior

The Black Box model, sometimes called the Stimulus-Response model, says that customers are
individual thinkers that process internal and external stimuli to make purchase decisions. The
graphic below illustrates the decision process.

It may look complex, but it’s a fairly straightforward path. A consumer comes into contact with
external stimuli from your business’ marketing mix and other external stimuli, and they process it
 in their mind (black box). They relate the external stimuli to their pre-existing knowledge, like
personal beliefs and desires, to make a decision.

In short, this model says that consumers are problem solvers who make decisions after judging how
your product will satisfy their existing beliefs and needs. Since consumers only follow through with
a purchase after understanding how a product relates to their experiences, this model can benefit
businesses selling products that go along with a lifestyle.

Case in point: cars. Different brands sell their cars to specific types of buyers. Jeeps and Subarus are
for those that engage in outdoor activities and need a sturdy, reliable vehicle. At the same time,
Mercedez Benz and Lexus’ are marketed to those who want luxurious driving experiences. Even
though the machinery is relatively similar, these brands speak to the pre-existing life values that
customers have, and they promise that purchasing their vehicle will uphold their values.

Nicosia Model

The Nicosia Model places emphasis on the business first and the consumer second. It argues that
the company’s marketing messages determines whether customers will buy. Simple, right?

While it’s an attractive model because it places all the power on businesses, it’s unwise to ignore the
customer’s internal factors that lead to a purchase decision. In other words, while you may offer the
wittiest and most effective marketing copy ever, a customer’s internal attributes may have more
sway in some instances over others.

The model is comprised of four “fields”:

• One: The business’ characteristics and the customer’s characteristics. What does your
marketing messaging look like? And what’s your customer’s perception of that messaging? Are they
predisposed to be receptive to your message? The latter is shaped by the customer’s personality
traits and experiences.
• Two: Search and evaluation. Similar to the Howard Sheth model’s “limited problem-solving”
stage, the customer begins to compare different brands here based on the company’s messaging.
• Three: Purchase decision. The purchase decision will occur after the company convinces the
customer to choose them as their retailer or provider.
• Four: Feedback. During the feedback field, the company will determine whether it should continue
using the same messaging, and the customer will decide whether they will continue to be receptive
to future messages.