17 Model to study Consumer Behaviour

Kulbhushan Chandel

1. Learning Outcome:

After completing the module, the student will be able to:-

Understand how consumer behaves while taking purchase decisions.
Understand what factors govern or influence the consumption decisions.
Understand besides Economic Factors, the Psychological Factors also play an important role.

2. Introduction

Consumption Decisions may be analysed both at micro and macro levels. Micro decisions deal with consumption at individual or household level where as macro decisions shows the aggregate of individual decisions at the national level. Besides, these two, consumption decisions are also made at organization level or institution level. Thus all the consumption decision cannot be categorized into micro and macro levels. Some decisions are intermediate, deals with industry demand.

Consumer behaviour or buyer behaviour is defined as the behaviour that consumes display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs. Consumer behaviour focuses on the how individuals make decisions to spend their available resources on consumption related items. That includes what they buy, why they buy, when they buy, where they buy from, how often they buy, how often they use it, how they evaluate it after the purchase and the impact of such evaluations on future purchases and how they dispose of it.

In order to succeed in any business in today‟s competitive world, marketers have to know everything they can know about their consumers. They must know what the buyers want, what they think, how they work, how they spend their leisure time, and so on. They need to understand the personal and the group influences that affect consumer decisions and how these decisions are affected by the other people.

3. Need for Consumer Behaviour Model

When the consumer has various options or alternatives and he has to make choice from various alternatives then the model is required to be formulated. Models of consumer behaviour do not apply to „No choice decisions‟. Thus the consumer behaviour models tell about the decisions of choices to be made from the multiple options under the given constraints. Number and Nature of options affect the consumer‟s decisions. Past decisions also affect present consumption decisions. The model of consumer behaviour has to include the inputs that go into the decision making, the process through which the decision is made and the outcome after the implementation of purchase decision. The model creates a link between the causes of a decision to its outcome. Awareness of need generates desire and the desire converts itself into want which finally leads the consumer to make the decision to purchase the good. Before taking purchase decision a lot of information is collected. After the processing of information, the final purchase will be the outcome.

4. Models of Consumer Behaviour: – A model is a precise and concise statement of theory. Models of consumer behaviour focus on assumption on which these are formulated. The model deals with decision of consumption made by decision making entities. The model of consumer behaviour tells about what factors govern the choice of purchases and decisions. Thus model includes the process of planning the purchase, execution of the plan and after-effects of consumption.

Consumer behaviour is a very complex subject as needs, wants and demands of human beings are innumerable. The buyers are also influenced by various internal and external factors. Consumer behaviour studies all the major social sciences like economics, psychology, sociology, anthropology. The influence of these has prompted the experts for the following consumer behaviour models:

Economic Model: The economic model of consumer behaviour views the buyers as a rational man and his buying decisions will only be concerned with its utility. Deriving maximum utility from the products using his resources is the sole objective of the man.
Learning Model: The learning model views that the buyer‟s behaviour can be influenced by the manipulating drives, stimuli and responses of the buyer. This model is based on the man‟s ability to learn, forget and discriminate.
Psycho-Analytical Model: This model is founded by Freudian psychology. According to this model, the individual has a complex set of deep motives which drives him towards buying decisions. The buyer is viewed as a world of his own, with his own fears, desires and belongings. It is supposed that the buyer‟s decision can be influenced by appealing to those desires and longings.
Sociological Model: This model views the individual buyer as being influenced by the society. He is influenced by the intimate groups and social classes. His buying decisions may not be rational when he tries to fulfil his desires. In such context, several of his buying decisions may be due to social compulsions and are not at all rational.
Howard- Sheth Model: This model came from John Howard and Jagdish Sheth in 1969 in their publication titled “The Theory of Buyer Behaviour”. The buyer is analysed as a system with stimuli as the input into the system and behaviour as the output of the system. In between there are various variables which affect perception and learning.

5. Three Prominent models of Consumer Behaviour

1. Katona Model: According to this model alone economic factors do not influence the consumption decisions. Psychological factors also play a very important role. Due to Psychological variables, human beings respond to same stimuli differently. Thus psychological factors are the cause of consumption decision according to this model. That is why this model is categorized under behavioural economics Consumer behaviour model is the outcome of interrelations between economic & psychological factors. Katona model is an inspiring model to determine consumer behaviour theory.

2. Nicosia Model: In 1956, a leading scholar Francesco Nicosia in the field of consumer behaviour gave this model. This model is a comprehensive model. Nicosia model is mechanistic and applied computer flow chart technique to depict relationship among the elements. According to Nicosia, each element of consumer behaviour depends upon preceding element. Each element becomes the input of next element. This model shows a web between firms & consumers. Firms communicate with the customers through advertisements and consumer respond to this communication. These responses will act as a base for firm‟s further actions. This is also known as pretesting before the launch of new product.

This model is descriptive one & not analytical. The highlight of this model says that firm gives a specific communication so as to get appropriate response from the consumers. The response of consumer‟s depends upon two attributes: (i) attributes of consumers and (ii) attributes of the communication. These two attributes must match to get the desired response from the consumers. Until the attributes of communication match the profile of consumers, there will not be desired response. Other firms will imitate the firm‟s communication, if the firm‟s communication is successful in getting desired response from the consumer‟s side.

3. Howard- Sheth Model: John Howard & Jagdish Seth propounded this model in 1969. This model is more comprehensive and realistic than the other models. The model is too broad to analyse the behaviour of individuals as well as institutions. Producer wants to sell the entire output, it is irrelevant to whom it is sold. Besides micro and macro demand, the proportion of total demand is accounted by inter-industry demand. Business houses do not purchase for direct consumption, they execute a long term agreements with the suppliers to buy in bulk. They behave differently from individual households. Each buyer reacts differently according to his goal. Thus, the model seeks to explain the comprehensive purchases (by all the parties like purchases of trading firms for retail selling, the purchases of manufacturing firms to meet intermediate demand, the purchase of government, purchases of export houses for selling abroad etc.) This model is a wide theory of purchase behaviour of all the consumers.

This model is more comprehensive than Nicosia Model. This model recognized the importance of learning and its influence on purchase decision. But the model excludes the influence of unsatisfactory experience from the purchase decision. Model also overlooked the oligopoly market form when few sellers always compete with each other to tap the consumer‟s attention by introducing new products. This never ending process & a satisfied consumer will also accept the new offer which provides him better quality or low price. The model does not offer any method to measure the variables like motives, intentions and predispositions. It also ignored the importance of role of family members in the purchase decision and consumer‟s behaviour is usually repetitive in nature. Consumer tends to save information in their mind and establish a routine behaviour. There is a wide gap between the operational specification and theoretical definition of a variable. This model also does not give any general theory to explain or analyse the consumer‟s behaviour. This is more descriptive than analytical.

6. Buyer Characteristics Influencing Consumer Behaviour

Consumer behaviour is influenced by the cultural, social, personal and psychological characteristics. These factors are not controlled by the marketing people rather they have to understand them to study consumer behaviour. These are as follows:

1. Cultural Characteristics

Culture: Cultural factors like the buyer‟s culture, subculture and social class have a broad and a very deep influence on the consumer behaviour. As a person grows in the society, he learns a basic set of values, perceptions, preferences and behaviour through the process of socialisation.
Sub Culture: The main culture includes small group of subcultures that provide more specific identification and socialisation for its members. It includes nationality groups, racial groups, communities, geographical locations, etc., all these have effect on the buyer behaviour.
Social Classes: These are homogenous groups whose members share similar values, interests, behaviours. Upper class, middle class lower class are such social groups.

2. Social Characteristics

Reference Groups: Reference groups influence the buyer behaviour very strongly. The consumer behaviour is not only affected by the family members but also by the groups outside the family. Every person is not only the member of his family but also the member of some group outside the family. These groups can be called as ‘Reference Groups.’ Reference groups are the social, economic and professional groups with whom the customer interacts directly or indirectly and often take their direction and advice to evaluate his purchase decisions. Reference groups play a significant role in attitude formation. The study of reference groups is also relevant for the marketers in formulating effective marketing programmes. The marketer therefore, tries to categorize the reference groups of their target customers.
Family: Family as a main group greatly influences the consumer behaviour. Most of the decisions made by consumers are taken within the family environment. They are affected by the desires, attitudes, and values of the other family members. Family traditions and customs build up individuals’ tastes; personality, ambitions, attitudes and lifestyle do influence the buying behaviour. It decides the pattern of consumption. The family influences the decision making process involved in buying. The members of the family may play different roles while taking buying decision.

3. Personal Characteristics

Age: Age is an important factor for segmenting the market and to influence the consumer behaviour. The need and requirements of an individual change with the change in age.
Occupation: The occupation of a person decides the consumption pattern. A person normally buys goods that suit his occupation. The needs of an individual largely relate to his work. Thus, a marketer should try to design different products to cater the needs of different occupational groups
Economic Circumstances: These determinants refer to personal income, disposable income, discretionary income of the consumer, the rate of increase in income, the degree of economic inequality, regional imbalances, inflation, etc. Knowledge of these factors is essential to understand the consumer behaviour.
Personality: The behaviour of every individual differs from another. The personality develops with certain unique characteristics called traits. The personality traits are different in individual to individual. An understanding of the personality traits of the consumers helps the marketer to identify the kind of behaviour their consumers might have. Such an understanding goes a long way in formulating a compatible marketing strategy for the marketers. Hence, the personality is a useful variable in analysing consumer behaviour but classification of personality traits and its evaluation is a difficult task.
Life style: It has been observed that customers coming from different cultures, sub-cultures, social classes, occupations, etc. bear different lifestyle. The lifestyle of a person represents his: Activities, Interests, Opinions and Demographic features.

4. Psychological Characteristics

Motivation: Motivation is something that makes the individuals to act in particular way. It determines the behaviour of a consumer and explains why a consumer acts in a particular manner. According to Philip Kotler, people are exposed to a large number of stimuli. It is not possible to concentrate all of them. People generally notice the stimuli that relates to their current needs. Further, people bend the information according to their ideas and pre-conceptions. They recognize only that information that will fit to their set up. Sometimes, they ignore the positive aspects of alternate brand since they have already made their decision.
Perceptions: Perception is a process wherein human mind receives and interpret stimuli and formulate his mind set with regard to some object. Perception has its own impact on consumer behaviour or consumer decision making. There are different types of perception in the minds of the consumers such as Product perception: Food items must be fresh, Price perception: Low priced products are of low quality.
Beliefs: Some authors explain ‘belief’ as determinants of consumer behaviour. A person forms certain beliefs and attitudes in his mind based on experience and learning. A belief is a descriptive thought that a person has about product or service. Such beliefs are powerful tools in developing product and brand images. Marketers must make efforts to correct the wrong beliefs, if any, because consumers act on their beliefs.
Attitudes: Attitude refers to a predisposition of a person to behave in a certain manner when exposed to a given stimulus. Social psychologists define attitude as an emotional predisposition of the consumer to respond positively or negatively to an object or class of objects. Thus, a person can have positive or negative, favourable or unfavourable attitude towards people, places, products and other things.

7. Stages in Buying Decision Process

The buying process of a consumer is the decision making process leading towards purchase function. The buying process has composed of many stages and is influenced by number of factors. The customer thinks much before taking purchase decision. For some items he takes no time to decide whereas for some items like luxurious one he takes much time to decide about his purchases. The buying process passes through following steps:

Need Recognition: The buying process starts with the arousal of the needs. The need is activated through internal or external stimuli. The basic needs of a human being are the internal stimuli‟s which inspire him to go in for purchase decision. It includes needs for hunger, thirst, sex etc. On the other hand the needs which aroused from the objects which we saw in the external environment are the external stimuli. For example when we saw some product in the shop while purchasing some other product is an external stimuli. The marketer must identify the drive that might connect to the potential buyer and make the buyer feel that the product can satisfy his needs.
Information Search: After arousing the needs the consumer tries to get as many as information‟s about the product or services he needs. If needs are more intensive, the consumer enter the state of active information search. He tries to get more information‟s about the product or services. The followings are the main source of information to a consumer.

Personal Sources: It includes the family, friends, neighbours etc.
Commercial Sources: The information from this source is got from advertisements, salesman, dealers etc.
Public Sources: It includes mass media, consumer rating organizations etc.
Experimental Sources includes handling, examining, using products etc.
The marketer finds it worthwhile to study the consumer information sources to plan marketing strategy efficiently accurately.

Interest: The consumer‟s interest is indicated in his willingness to seek further information about a product. At this stage the consumer is actively involved in the buying process and pay proper attention to get maximum information‟s about the product and services. If his interest is lost somewhere in between his attention may be diverted resultantly he may be losing his interest to buy the product or services. The marketer should focus objectively to maintain his interest and must try to attend his queries efficiently.
Evaluation: Once the interest to buy the product or services is generated the consumer enters to the subsequent stage of evaluation and intention. It is a stage of mental trial by the consumer on the product or services. In this stage the consumer assigns relative weights or ranks to different products and services and evaluates the pros and cons of buying those products or services. After this stage the consumer make up his mind set either to buy the product or services or to leave them. On the basis of the evaluation process the marketer can also develop the product and the segment of the market in accordance to the needs and requirements of the customers.
Purchase Decision: There are some other considerations too which play an important role for taking buying decisions:

Attitude of the family members, relatives and friends.
Anticipated situational factors as expected family income.
Expected total cost and expected benefits of products and services.
The consumer takes final decision after considering all such factor. In this stage of buying process a consumer take the final decision to buy the product or services.

Post Purchase Feelings: This is a final stage of consumer buying process. If the product or services matches with the expectations, the consumer will be satisfied with the products or services offered to him to buy. On the other hand if it falls short of his expectations, he will be dissatisfied. Post purchase behaviour originates out of the experience regarding the use of the product and services. This behaviour is reflected in repeat purchases from further purchases. If product use experience indicates satisfaction, then repeat purchases will occur, other not.

Hence, the very spirit of consumer behaviour study is the gratitude of the fact that the consumer is a multifaceted person, influenced by the social environment in which he lives, his family, his society, his friends, his colleagues etc. leaving some notion on him and influencing him in his day to day life.

8. Summary

To understand consumer behaviour is not an easy task, but it is important for the firms which want to survive in the market for long run. Proper analysis of consumer behaviour helps the marketers to frame marketing strategies according to the needs of consumers. Consumer behaviour or buyer behaviour is defined as the behaviour that consumes display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs. Consumer behaviour focuses on the how individuals make decisions to spend their available resources on consumption related items. That includes what they buy, why they buy, when they buy, where they buy from, how often they buy, how often they use it, how they evaluate it after the purchase and the impact of such evaluations on future purchases and how they dispose of it. In order to succeed in any business in today‟s competitive world, marketers have to know everything they can know about their consumers. They must know what the buyers want, what they think, how they work, how they spend their leisure time, and so on. They need to understand the personal and the group influences that affect consumer decisions and how these decisions are affected by the other people. When the consumer has various options or alternatives and he has to make choice from various alternatives then the model is required to be formulated. Models of consumer behaviour do not apply to „No choice decisions‟. Thus the consumer behaviour models tell about the decisions of choices to be made from the multiple options under the given constraints. Number and Nature of options affect the consumer‟s decisions. Past decisions also affect present consumption decisions. The model of consumer behaviour has to include the inputs that go into the decision making, the process through which the decision is made and the outcome after the implementation of purchase decision. The model creates a link between the causes of a decision to its outcome. Awareness of need generates desire and the desire converts itself into want which finally leads the consumer to make the decision to purchase the good. Before taking purchase decision a lot of information is collected. After the processing of information, the final purchase will be the outcome. Consumer behaviour is a very complex subject as needs, wants and demands of human beings are innumerable. The buyers are also influenced by various internal and external factors. Consumer behaviour studies all the major social sciences like economics, psychology, sociology, anthropology. There are various models as discussed above provide a base to understand the behaviour of consumers. These models tell about the factors which govern & influence consumption patterns of consumers. There are various factors like social, economic, psychological etc. which determine the consumer behaviour. Consumer behaviour depends upon two variables i.e. stimulus (input) & response (output). Consumer learns his behaviour from family; friends reference groups, neighbours and changes from time to time. Thus, consumer behaviour models explain the whole process of planning the purchase, execution of the plan and after-effects of consumption.

Suggested Readings (Books and Websites)

“Marketing Mix Definition”. Investopedia.com. Retrieved 9 April 2015.
Booms, Bernard H.; Bitner, Mary Jo (1981). “Marketing Strategies and Organization Structures for Service Firms”. Marketing of Services. American Marketing Association: 47– 51.
Ghosh PK, Sales Management- Text and Cases, Himalaya Publishing House, 2010.
Jobber David and Lancester Geoff, Selling and Sales Management, Pearson Education, Sixth Edition.
Kotler, Philip (2012). Marketing Management. Pearson Education. Kotler, P. and Keller, K. (2006), Marketing and Management, Pearson Prentice Hall, Upper Saddle River, NJ, USA
McCarthy, Jerome E. (1964). Basic Marketing. A Managerial Approach. Homewood, IL: Irwin.
McCarthy, Jerome E. (1975)”Basic Marketing: A Managerial Approach,” fifth edition, Richard D. Irwin
Needham, Dave (1996). Business for Higher Awards. Oxford, England: Heinemann.