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Traditional models of consumer behavior: an overview

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A model can be defined as a simplified representation of reality. It simplifies by incorporation only those aspects of reality that model builder. Other aspects that are not of interest only add to the complexity of the situation and can be ignored. Thus an architect’s model of a building may not show furniture arrangements if that is not important to the building’s design. Similarly, in modeling consumers we should feel free to exclude any aspects that are not relevant to their behavior. Since we have defined consumer behavior as involving a decision process, models that focus on this process will be of considerable interest to us.

Any given property or process can be modeled in a variety of ways. We could model something by verbally describing it, by representing it with diagrams or mathematical symbols, or by characterizing it with some physical process such as electrical current. The most common consumer –behavior models are verbal, often supported by a schematic drawing.

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Consumer–behavior models can also be classified in terms of scope. Some are designed to represent a very specific aspect of behavior, such as consumer’s repetitive purchasing of the same brand over a period of time. Others are much more comprehensive because they attempt to include a great variety of consumer behaviors. These comprehensive models are less detailed in nature so that they can represent many diverse situations.

Models are devised for a variety of reasons, but the two purposes for developing most consumer models are assisting in constructing a theory that guides research on consumer behavior and to facilitate learning what is presently known about consumer behavior. In both cases the model serves to structure systematic and logical thinking about consumers. This entails identifying the relevant variables, indicating their characteristics, and specifying their interrelationships, that is, how they influence each other.

Developing theory is an interrelated set of concepts, definitions, and propositions that presents a systematic view of some phenomenon. It presents a logical viewpoint that is useful in understanding some process or activity. More specifically, a theory has four major functions: description, prediction, explanation and control. The descriptive function involves characterizing the nature of something such as the steps consumers go through while deciding on a purchase.

In its predictive role a theory is used to foretell future events, as when learning theory is used to predict what brand names will be easier for consumers to remember. Theory can be used for explanation in order to learn the underlying causes of some event or activity. This would occur when we want to understand why consumers regularly purchase the same brand of soup. Is it because of habit or loyalty to the brand? Although it is possible events without understanding their causes, knowing why something happens greatly enhances our ability to predict its occurrence. Control is the ability to influence or regulate future events. This has been extremely difficult in the behavior is far from present capabilities.

A useful relationship exists between models and theories because models can assist theory development by clearly delineating the relevant variables and their influence on each other. That is, models can be used to depict or express a theory. In this way models an present a unified view of what is known about consumer behavior and help identify what remains to be explored. This allows researchers to advance knowledge by selecting the most important aspects of consumer behavior for analysis and testing.

Another primary motivation for using models is to serve as a learning aid. In this role , models provide a structure helpful for organizing knowledge about consumer behavior into a logical pattern that is easier to comprehend. They also remind us of the interrelations between relevant variables. Therefore, as we concentrate on one particular variable, reference to the model will remind us to consider how it interacts with other variables to influence behavior.

Models of consumer behavior

Comprehensive verbal models have been employed most often in the study of consumer behavior. A variety of such models exist, each taking a somewhat different view of consumers. Those chosen for presentation here are well known and represent traditional approaches to the study of consumers, while more contemporary viewpoints are presented next.

Traditional models of consumers:

The earliest comprehensive consumer models were actually devised by economists seeking to understand to economic systems. Economics involves the study of how scarce resources are allocated among unlimited wants and needs. Its two major disciplines- macroeconomics and microeconomics- have each developed alternative views of consumers. Partially because they have undergone some modernization these models still influence contemporary views of consumers.

Microeconomic Model:

The classical microeconomic approach, developed early in the nineteenth century, focused on the pattern of goods and prices in the entire economy. It involved making a series of assumptions about the nature of the “average” consumer and then developing a theory useful in explaining the workings of an economy made up of money such people. Focus was placed on the consumer’s act of purchase, which, of course, is only a portion of what we have defined as consumer behavior. Thus, micro economists concentrated on explaining what consumers would purchase and in what quantities these purchases would be made. The tastes and preferences leading to these purchases were assumed to be known already. Therefore, micro economists chose to ignore why consumers develop various needs and preferences and how consumers rank these needs and preferences.

The resulting theory was based on a number on a number of assumptions about consumers. Primary among these were the following:

Consumers’ wants and needs are, in total, unlimited and therefore cannot be fully satisfied.

Given a limited budget, consumers’ goals are to allocate available purchasing dollars in a way that maximise satisfaction of their wants and needs.

Consumers independently develop their own preference, without the influence of others, and these preferences are consistent over time.

Consumers have perfect knowledge of the utility of an item; that is, they know exactly how much satisfaction the product can given them.

As additional units of a given product or service are acquired, the marginal satisfaction or −utility provided by the next unit will be less than the marginal satisfaction or utility provided by previously purchased units.

Consumers use the price of a good as the sole measure of the sacrifice involved in obtaining it. Price plays no other role in the purchase decision.

Consumers are perfectly rational in that, given their subjective preferences; they will always act in a deliberate manner to maximize their satisfaction.

Given these assumptions, economist argued that perfectly rational consumers will always purchase the good that provides them with the highest ratio of additional benefit to cost. For any given good this benefit/ cost ratio can be expressed as a ratio of its marginal utility to price (MU/P). Therefore, it can be shown that the consumer would seek to achieve a situation where the following expression holds for any number (n) of goods:

MU1 = MU2 = MU3 MUn

If anyone products ratio is greater than the others, the consumer can achieve greater satisfaction per dollar from it and will immediately purchase more of it. Provided there is an adequate budget, the consumer will continue purchasing until the products declining marginal utility reduce its MU/ P ratio to a position equal to all other ratios. Additional purchasing of that good will then stop. Although the micro economics model has had an important influence on your understanding of consumers, it provides a severely limited explanation of consumer behavior, with a major deficiency being its highly unrealistic assumptions. For example, consumers frequently strive for acceptable and not maximum levels of satisfaction. In addition, consumers lack perfect knowledge regarding products, and they often influence each other’s preference. Also appear to use many variables in addition to price to assess a products cost and many frequently use price as a measure of product quality as well as cost. Finally, consumers simply do not appear to be perfectly rational in all their purchase decisions. These unrealistic assumptions may not have hindered the usefulness of this model in explaining the behavior of an entire economics system, but they certainly are not as useful in understanding how actual consumers behave in specific purchase situations of concern to marketers and others.

Macroeconomics Model: Macroeconomics focus aggregate flows in the economy – the monetary value of goods and resources, where they are directed, and how they change over time. From such a focus, the macroeconomics draws conclusions about the behavior of consumers who influence these flows. Although the discipline has not generated a full unified model of consumers, it does offer a number of insights into their behavior.

One interest centers on how consumers divide their income between consumption and savings. This deal with two economics facts of life: higher-income families spend a smaller proportion of their disposable income than do lower income families, but as economic progress raises all income levels over time these proportions do not seem to change. That is, lower – income groups do not significantly change the proportions of income devoted to spending as economic progress results in an increase in their income. The relative-income hypothesis explains this apparent contradiction by arguing that people’s consumption standards are mainly influenced by their absolute income levels. Therefore, the proportion of a family’s income levels is rising at the same time.

Behavioral Economics:

Traditional economics focused on the results of economic behavior ( supply, quantity, demanded, prices and the like) rather than actual behavior of complicating of consumers themselves. Behavioral influences on consumer were viewed as complicating factors which could be assumed to cancel each other out.

George katona found this approach lacking and argued that an appreciation of how psychological variables influence consumers could lead to a deeper understand of the behavior of economic agents. Katona’s viewpoint, now known behavioral economics, was fostered by important changes which occurred in our economy.

Contemporary models

As the study of consumer behavior evolved into a distinct discipline, newer approaches were offered to describe and explain what influenced consumer behavior. These contemporary views are quite different from previous models because of their concentration on the decision process that consumers engage in when deliberating about products and services.

  • Ø Nicosia model
  • Ø Howard- Sheth Model
  • Ø Engle- Blackwell- Miniard Model
  • Nicosia model – Francesco

Nicosia was one of the first consumer- behavior modelers to shift focus from the act of purchase itself to the more complex decision process that consumers engage in about products and services. He presented his model in flow-chart, resembling the steps in a computer program.

The model is views as representing a situation where a firm is designing communications to deliver to consumers, and consumers, and consumer’s responses will influence subsequent actions of the firm. Generally, as shown in figure 1 the model contains four major components or fields : the firm’s attributes, the consumer search for and evaluation of the firm’s output and other available alternatives, the consumer’s motivated act of purchase and the consumer’s storage or use of the product. Nicosia assumes that the consumer is seeking to fulfill specific goals and that initially there is no history between the consumer’s and the firm, so no positive or negative predispositions toward the firm exits in the consumer’s mind.

The consumer will properly become motivated to gain information at this point, and search activity is likely to occur. Some search activity will involve:

Source:

Searching internal memory for relevant information about the communication. External search may also occur, where the consumers visits store, reads, etc. This likely to lead to evaluation.

Model Evaluation – Our review of the Nicosia model has been brief and quite general. However, it is sufficient to appreciate that the model was developed from the author’s massive review of existing literature relevant to consumer behavior.

Howard Sheth Model- Howard

Sheth Model depicted in figure 2 serves as an integrating framework for a very sophistical comprehensive theory of consumer behavior. It should be noted that the authors actually use the term “buyer” in their model to refer to industrial purchase as well as ultimate consumers.

v Extensive problem solving

v Limited problem solving

v Routinized response behavior

Input variables- input variables are depicted in the left portion of the model as stimuli in the environment.

Output variables- the five output variables in the right hand portion of the model are the buyer’s observable response to stimuli inputs.

  • Ø Attention
  • Ø Comprehensive
  • Ø Attitude
  • Ø Intention
  • Ø Purchase behavior

Source: Constructs dealing with information processing and learning constructs dealing with the buyer’s formation of concepts.

Engle- Blackwell- Miniard Model The Engle-Blackwell-Mininard model was originally developed in 1968 by Engle, Kollat, and Blackwell and has gone through numerous revisions. Most recently the model has been contributed to by Mininard in conjunction with Engle and Blackwell’s.

The scheme, shown in figure 3 depicts consumer behavior as a decision process of five activities which occur over time. 1. Motivation and recognition, 2. Search for information, 3. Alternative Evaluation, 4. Purchase and 5. Outcomes. As shown in the model, variables are grouped into four general categories: a) Stimuli inputs, b) information processing, c) decision process, d) variables influencing the decision process.

Similar to the Howard- Sheth Model, the authors recognize two significantly different modes of operation by consumers. The authors argue that the same basic model can be used to characterize both EPS and LPS behavior. What will change is the degree to which various stages in the model be used by consumers.

Characteristic of the individual and environment influences such as the urgency of need. Any information inputs are subjects to information processing activities which the consumer uses to derive meaning from stimuli.

Marketers must have access to data concerning consumers, buying habits and which kinds of media they favour, in order to develop convincing communication programs. By deeply analyzing different consumer behaviour models marketers can understand that consumer behaviour concepts influence the development of marketing communication strategies. By using these models they can assess the information needed to identify and select target markets. These models also help different marketing strategies like positioning and market segmentation.

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