CONSUMER BEHAVIOUR MODEL UNIT-2

Economic Model
According to economic theory, the buyers are assumed to be rational in their decision making. They
follow the law of marginal utility. Consumers evaluate the alternatives available & they choose the
alternative which would provide them with highest utility & lowest cost. Consumer allocates his/her
expenditure over different products at given price so as to maximize utility. Thus, the law of eque-
marginal utility enables him/her to secure maximum utility from limited purchasing power. The
purchasing decision is based on economic calculation & reasons.

The Economic Model, one of the oldest models of Consumer Behaviour tries to explains what a person is
likely to buy and in what quantity. This model takes into consideration the behaviour of an economic
man, who would give foremost importance to the monetary or financial considerations while making a
decision. The ultimate objective of an individual, as per this model, is the maximization of satisfaction by
investing the minimum money resources for the satisfaction of needs and wants.

Despite having certain limitations, it is one of the widely used models of consumer behaviour and is a
must know for all the students of marketing and business management.

Economic model of consumer behaviour is un-dimensional. The following presumptions are made about
buying behaviour.

 Lower the price of the product, larger will be the quantity bought- price effect.
 Higher is the purchasing power, higher will be the quantity- Income effect.
 Lower the price of a substitute product, lesser the quantity that will be bought of the original
product- substitution effect.
 Higher the promotional expenditure higher will be the sales Communication effect.

Psychoanalytic Model
The model suggests that human needs operate at various levels of consciousness. His motivation which
is in these different levels, are not clear to the casual observer. They can only be analyzed by vital and
specialized searching.

According to Freud, our personality develops from the interactions among what he proposed as the
three fundamental structures of the human mind: the id, ego, and superego. Conflicts among these
three structures, and our efforts to find balance among what each of them “desires,” determines how
we behave and approach the world. What balance we strike in any given situation determines how we
will resolve the conflict between two overarching behavioral tendencies: our biological aggressive and
pleasure-seeking drives vs. our socialized internal control over those drives.

The Id
The id, the most primitive of the three structures, is concerned with instant gratification of basic physical
needs and urges. It operates entirely unconsciously (outside of conscious thought). For example, if your
id walked past a stranger eating ice cream, it would most likely take the ice cream for itself. It doesn’t
know, or care, that it is rude to take something belonging to someone else; it would care only that you
wanted the ice cream.

The Superego

The superego is concerned with social rules and morals—similar to what many people call their ”
conscience ” or their “moral compass.” It develops as a child learns what their culture considers right
and wrong. If your superego walked past the same stranger, it would not take their ice cream because it
would know that that would be rude. However, if both your id and your superego were involved, and
your id was strong enough to override your superego’s concern, you would still take the ice cream, but
afterward you would most likely feel guilt and shame over your actions.

The Ego

In contrast to the instinctual id and the moral superego, the ego is the rational, pragmatic part of our
personality. It is less primitive than the id and is partly conscious and partly unconscious. It’s what Freud
considered to be the “self,” and its job is to balance the demands of the id and superego in the practical
context of reality. So, if you walked past the stranger with ice cream one more time, your ego would
mediate the conflict between your id (“I want that ice cream right now”) and superego (“It’s wrong to
take someone else’s ice cream”) and decide to go buy your own ice cream. While this may mean you
have to wait 10 more minutes, which would frustrate your id, your ego decides to make that sacrifice as
part of the compromise– satisfying your desire for ice cream while also avoiding an unpleasant social
situation and potential feelings of shame.

Sociological Model
This is concerned with the society. A consumer is an element of the society and he may be a member of
many groups and institutions in a society. His buying behavior is influenced by these groups. Primary
groups of family friend’s relatives and close associates extract a lot of influence on his buying.

A consumer may be a member of a political party where his dress norms are different from different
member. As a member of an elite organization, his dress needs may be different, thus he has to buy
things that confirm to his lifestyle in different groups.
 Buyer Behaviour Model
BLACK BOX MODEL
The black box model shows the interaction of stimuli, consumer characteristics, decision process and
consumer responses. It can be distinguished between interpersonal stimuli (between people) or
intrapersonal stimuli (within people).

The black box model is related to the black box theory of behaviourism, where the focus is not set on
the processes inside a consumer, but the relation between the stimuli and the response of the
consumer.

The marketing stimuli are planned and processed by the companies, whereas the environmental
stimulus is given by social factors, based on the economical, political and cultural circumstances of a
society. The buyer’s black box contains the Buyer Characteristics and the Decision Process, which
determines the buyer’s response.

The black box model considers the buyers response as a result of a conscious, rational decision process,
in which it is assumed that the buyer has recognized the problem. However, in reality many decisions
are not made in awareness of a determined problem by the consumer. Once the consumer has
recognized a problem, they search for information on products and services that can solve that problem.

NICOSIA MODEL (CONFLICT MODEL)

This model focuses on the relationship between the firm and consumers. The firm communicates with
consumers through its marketing messages (advertising), and the consumers react to these messages by
purchasing response. Looking to the model we will find that the firm and the consumer are connected
with each other, the firm tries to influence the consumer and the consumer is influencing the firm by his
decision. The Nicosia model is divided into four major fields:

Field 1: The consumer attitude based on the firms’ messages. The first field is divided into two subfields.
The first subfield deals with the firm’s marketing environment and communication efforts that affect
consumer attitudes, the competitive environment, and characteristics of target market. Subfield two
specifies the consumer characteristics e.g., experience, personality, and how he perceives the
promotional idea toward the product in this stage the consumer forms his attitude toward the firm’s
product based on his interpretation of the message.

Field 2: search and evaluation The consumer will start to search for other firm’s brand and evaluate the
firm’s brand in comparison with alternate brands. In this case the firm motivates the consumer to
purchase its brands.

Field 3: The act of the purchase The result of motivation will arise by convincing the consumer to
purchase the firm products from a specific retailer.

Field 4: Feedback This model analyses the feedback of both the firm and the consumer after purchasing
the product. The firm will benefit from its sales data as a feedback, and the consumer will use his
experience with the product affects the individuals attitude and

predsposition’s concerning future messages from the firm.

The Nicosia model offers no detail explanation of the internal factors, which may affect the personality
of the consumer, and how the consumer develops his attitude toward the product. For example, the
consumer may find the firm’s message very interesting, but virtually he cannot buy the firm’s brand
because it contains something prohibited according to his beliefs. Apparently it is very essential to
include such factors in the model, which give more interpretation about the attributes affecting the
decision process.

HOWARD-SHETH MODEL
This model suggests three levels of decision making:

The first level describes the 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.

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.

The third level is a habitual response behavior. In 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 there are four
major sets of variables; namely:

(a) 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 (significant stimuli) and verbal or visual product characteristics (symbolic stimuli).
The third type is provided by the consumer’s social environment (family, reference group, and social
class). All three types of stimuli provide inputs concerning the product class or specific brands to the
specific consumer.
(b) 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.

(c) Outputs- The outputs are the results of the perceptual and learning variables and how the consumers
will response to these variables (attention, brand comprehension, attitudes, and intention).

(d) 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.

The decision-making process, which Howard-Sheth Model tries to explain, takes place at three Inputs
stages: Significance, Symbolic and Social stimuli. In both significant and symbolic stimuli, the model
emphasizes on 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 influence the family decision? This may differ from one society to another. Finally, no

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

ENGEL, BLACKWELL, MINIARD MODEL (OPEN SYSTEM)

This model was created to describe the increasing, fast-growing body of knowledge concerning
consumer behavior. This model, like in other models, has gone through many revisions to improve its
descriptive ability of the basic relationships between components and sub-components, this model
consists also of four stages;

First stage: decision-process stages The central focus of the model is on five basic decision-process
stages:

Problem recognition, search for alternatives, alternate evaluation(during which beliefs may lead to the
formation of attitudes, which in turn may result in a purchase intention) purchase, and outcomes. But it
is not necessary for every consumer to go through all these stages; it depends on whether it is an
extended or a routine problem-solving behavior.

Second stage: Information input At this stage the consumer gets information from marketing and non-
marketing sources, which also influence the problem recognition stage of the decision-making process.
If the consumer still does not arrive to a specific decision, the search for external information will be
activated in order to arrive to a choice or in some cases if the consumer experience dissonance because
the selected alternative is less satisfactory than expected.

Third stage: information processing This stage consists of the consumer’s exposure, attention,
perception, acceptance, and retention of incoming information. The consumer must first be exposed to
the message, allocate space for this information, interpret the stimuli, and retain the message by
transferring the input to long-term memory.

Fourth stage: variables influencing the decision process This stage consists of individual and
environmental influences that affect all five stages of the decision process. Individual characteristics
include motives, values, lifestyle, and personality; the social influences are culture, reference groups,
and family. Situational influences, such as a consumer’s financial condition, also influence the decision
process.
This model incorporates many items, which influence consumer decision-making such as values,
lifestyle, personality and culture. The model did not show what factors shape these items, and why
different types of personality can produce different decision-making? How will we apply these values to
cope with different personalities? Religion can explain some behavioral characteristics of the consumer,
and this will lead to better understanding of the model and will give more comprehensive view on
decision-making.