CONSUMER DECISION

MODELS – (NICOSIA,
HOWARD-SHETH, AND EKB)
MODULE - 2
 INPUT-PROCESS-OUTPUT MODEL
• This is a simple model of consumer behavior, in which the input for the customer is the firm’s
marketing effort (the product, price, promotion and place) and the social environment.
• According to Kotler and Armstrong , the basic model of consumer decision making process
comprises of three major components
• Viz, marketing and other stimuli, these act as stimuli (influences), the buyer’s black box, buyer’s
response.
• 1. Marketing and other stimuli:

• A consumer is confronted with a stimuli in the environment

This stimuli could be of two kind:

• One that is presented by the marketer through the marketing mix or the 4Ps
• The other that is represented by the environment and could be PESTC
• 2. Buyer’s Black Box:

This stimuli is represented to the consumer by the marketer and the environment is then dealt with by the
buyer’s black box.

• The buyer’s black box comprises of two sub-components:

• The buyer’s characteristics and the buyer decision process
• The buyers characteristics could be personal, psychological, cultural and social.
• The buyer decision process involves 5 steps.
3. Buyer Responses:

• The outcome of the thinking that takes place in the black box are the buyer’s responses
• These refer to buying attitude and preferences
• What does the consumer buy,, where, when and in what quantity?
 NICOSIA MODEL

• Nicosia model concerns with inter relationship.

• This is a dynamic model

• The information about the resultant action of the consumer is fed back to the system
• This feedback allows for an improvement of:
• Firms Attributes
• Consumer Attributes
 Nicosia Model

Field 1 Field 2
Attitude
Message Exposure Search & Evaluation

Motivation

Field 4 Field 3
Purchase
Decision
Feedback Decision or Action
 FIELD 1
• It represents the exposure of a consumer to the messages
Field 1 • From the firm; and
• Its effects on consumers
Sub Field 2
Sub Field 1 • Sub Field 1
• Companies communications to the targeted audience
Firms
Customers
Attributes • Sub Field 2
Attributes
• What the consumer makes out of the communication and other
inputs.

- German - European Cars are expensive

- Engineering - Over the top
- Quality - Par Excellence
- Pricing - Luxury
- Comfort - Aspirational
 FIELD 2

• The message exposure of the consumer leads

Field 2
to the development of certain attitudes
towards the products. Attitude
Search & Evaluation

• Here the alternatives are searched and

evaluated
Motivation
• Which creates a level of motivation to act
within the consumer’s mind
 FIELD 3 Motivation

• Field 3 is a result of motivation

Field 3
Purchasing
• It represents the stage of action
decision
Decision or Action
• It is mental process where:
• The motivation culminates
• To a certain decision
• Which Subsequently shown in action
 FIELD 4
• Field 4 is a result of the purchase decision
Field 4
• It may be a positive or a negative decision
Experience
Consumption Feedback
• If the purchasing decision results in
• Purchase of the product, the
• Results in consumption
• Formation of experience
• Experience becomes part of consumer Purchasing Decision
attribute of future.
• Rejection of the product, then
• Feedback may be used by the firm to
improve its attributes
 NICOSIA MODEL: A CRITICAL ANALYSIS
• The Nicosia Model is incomplete in a number of aspects
• Does not specify
• Type of Consumer
• Previous relationship with firm, if any
• Other consumer attributes
• Influences and inter-relationships among the consumer attributes
• The model does not elaborate the process in the second and third fields
• Questions which remain unanswered….
• Is this model for a new product from a known producer?
 HOWARD SHETH MODEL

• Attempt to explain rational behavior within constraints of

• Limited problem solving capacities
• Incomplete information

• Three levels of learning/stages of decision making

 • Advanced stage of decision making

• Choice criteria are defined

• Buyer undecided about the best brand

• Limited problem solving
 • Choice criteria are will defined

• Routinized Response Behavior

• Strong predisposition towards one brand

• Little evaluation of alternatives by the buyer

 • Inputs

• Outputs

Four set of constructs • Hypothetical Construct

• Perceptual Construct
• Learning Construct

Exogenous Variable
Solid line shows flow of
information. Dashed line
indicate feedback effects
 HOWARD SHETH MODEL - INPUTS
• Input Variables consists of three distinct stimuli (information
sources)

• Significative Stimuli
• Proclaimed Brand Characteristics

• Symbolic Stimuli
• Verbal or visual product characteristics

• Social Stimuli
• Family, Reference Group and Social Class

• All three stimuli form inputs to the consumer concerning the

product class or specific brand.
 HOWARD SHETH MODEL - OUTPUT
• The outputs are the results of the perceptual
learning variables.
Intention

• The outputs are the response of these three

variables Routinized Behavior
• Purchase
• Attitude
Limited Problem Solving
• Intention
• Attention
Extensive Problem Solving
• Brand Comprehension
 HSM – HYPOTHETICAL CONSTRUCTS
• It is the central part of the model concerned with the consumer’s decision contemplation
• Deals with psychological variables

• It consists of two part- Perceptual and Learning Constructs

• Interaction between the different variables in the perceptual and learning constructs and other sets give model its
distinctive advantage

• Perceptual Variables are concerned with

• Consumer receipt of information from significative stimuli and social factors
• Consumers understanding of the information
 HSM - PERCEPTUAL CONSTRUCTS
• Pertain the way the individual deals with information
• How the consumer receives information
• How consumer understand the information
• Stimulus ambiguity
• When consumer does not understand the message from the environment
• Perceptual Bias
• When the consumer distorts the information received so that it fits his\her established
needs or experience
 PERCEPTION

• The process by which an individual selects, organizes and

interprets stimuli into a meaningful and coherent picture of
the world.

• How we see world around us

 PERCEPTUAL BIAS (SELECTION)

• Consumers subconsciously are selective as to what they

perceive

• Stimuli selected depends on two major factors:

• Nature of stimuli
• Expectation
• Motives
 PERCEPTUAL BIAS

• Selective exposure • Consumers seek out for messages:

• Which are pleasant
• With which they can sympathize and
• Which reassures them of good purchase
• Selective attention

• Heightened awareness when stimuli meet their needs

• Perceptual defense • Consumer’s preference to different messages and
media

• Perceptual blocking
 HSM – LEARNING CONSTRUCT
• Learning Construct

• Category
• Consumer’s Goals
• Information about brands
• Criteria for evaluation
• Alternatives
• Preferences and buying intention

Perceptual Bias
 LEARNING

• Learning refers to any change in the content • As per the Howard Sheth Model, Consumers Learn:
or organization of long-term memory • Criteria for evaluation
• Alternatives
• Consumer behavior is largely a learned • Category
behavior • Preferences
• Consumer Goals
• Learning is largely influenced by: • Information about brands
• Buying Intention
• Importance
• Involvement
• Mood
• Reinforcement
• Stimulus Repetition
 HSM LEARNING CONSTRUCT
Routinized Response
Behavior

Intention

Confidence
Limited Problem Solving
Attitude

Brand
Extensive Problem Motive
Choice Comprehension
Solving Criteria

Perceptual Bias

Satisfaction
EXTENSIVE PROBLEM SOLVING Purchase

Intention
Intention
Confidence
Overt Search
Attitude Attitude

Brand
Comprehension
Stimulus
Brand
Ambiguity Comprehension
Choice
Motive Criteria

Perceptual Bias Attention

 THE ENGEL-KOLLAT-BLACKWELL MODEL
• The EKB model of Consumer Behavior was originally developed in 1968 to serve as a framework for
organizing the fast-growing body of knowledge concerning consumer behavior.

• Over the years it has been revised a number of times at improving its descriptive ability and clarifying
basic relationships between components and subcomponents.

Model consists of four sections:

1. Information Input
2. Information Processing
3. Decision Process Stages
4. Variables Influencing the decision process
The five steps involved in the decision making process stage are briefly explained here:
• Problem Recognition: This may account of an external stimuli, for example a young girl has seen an
advertisement of an exhibition of American Diamonds and may feel the desire to possess the same or
seeing a beautiful dress displayed in the showroom, may make a youngster to feel the need for a new
dress.

• Information Search: Initially the information available with the consumer may be consistent to the
beliefs and attitude held by him or her.
• The Consumer will try to gather more information seeking or search stage.
• The individual get exposed to the stimuli which may catch his/her attention, and retained in memory
• The method of information processing is selective in nature and consumer will accept the information which is
conclusive to what is perceived by them.
• Alternative Evaluation

• Choice: The choice is based on normative compliance and anticipated circumstances.

• Normative compliance related to the extent to which the consumer is influenced by other people like friends, family
etc.
• Unanticipated circumstances like losing the job, finds diverted for another urgent cause etc.
• At this stage, a purchase decision is likely to occur unless when confronted by un anticipated circumstances like
losing job, finds diverted for another urgent cause.

• Outcome
 CONSUMER DECISION MAKING PROCESS
• Consumers’ buying decision and consumption process of products or services always take place in
the context of some specific situation.

• From a marketers’ point of view, it is extremely important to understand how situations and internal
and external source of influence affect the purchase process.

• Depending on set of circumstances, consumers’ behavior may take any number of directions.
• Ex: The type of gift the consumer may purchase for his son’s b’day might be well different from the type
of gift in the occasion of a friend’s marriage .
• The type of clothes bought for jogging will be most likely be different from those worn at a marriage party.
STAGES IN CONSUMER DECISION MAKING

Problem Recognition
Ram realizes that he is fed-up with a
black-and-white TV that has bad sound
reproduction
Information Search
Ram surfs the internet to learn about TVs

Evaluation of Alternatives &

Selection
Ram compares several models in the store
in terms of reputation and available
features
Purchase
Ram chooses one model it has a feature
that really appeals to him & buys it.

Post-purchase action
Dissonance & Complex Evaluation
 THE NATURE OF SITUATIONAL INFLUENCE

• Situational influence are temporary conditions or settings that occur in the environment at a specific time and
place.
• The consumptions situation can become the basis for developing and positioning new products for specific
consumer segments.
• Ex: Fitness Bands/Watches, Smart Watches, Casual/Formal Watches

• Purchase occasions can also be related to certain situations such as birth, marriage, buying a new house,
marriage anniversary, Diwali, Christmas, Mother’s Day, Valentine’s Day
 THE COMMUNICATION SITUATION
• Whether the consumer is alone or in a group, in a good or foul mood, in a hurry or relaxed; it may
determine the degree to which the consumer will notice, understand and retain the information.

• Three types of communication situation may influence consumer response:

• The exposure situation
• The context of the communication
• The consumer’s mood while exposure to communication occurs.

• The “mood of consumers” is also an important variable when they are exposed to marketing
communication.
 LEVELS OF CONSUMER DECISION MAKING
• Not all consumers decision making situations receive the same degree of information search. If
all purchase decisions required extensive effort, then consumer decision making would be an
exhausting process that left little time for anything else.
• On continuum of effort ranging from very high to very low, we can distinguish three specific
levels of consumer decision making:

• Extensive problem solving

• Limited problem solving
• Routinized response behavior
• Extensive Problem Solving:
When consumers have no establishes criteria for evaluating a product category or specific brands in that
category or have not narrowed the number of brands they will consider to a small, manageable subset, their
decision-making can be classified as Extensive Problem Solving.

• Limited Problem Solving:

At this level of problem solving, consumers already have established the basic criteria for evaluating the
product category and the various brands in the category. However, they have not fully established preference
concerning a select group of brands.

• Routinized Response Behavior:

At this level, consumers have experience with the product category and a well-established his or her criteria
wit which to evaluate the brands they are considering. In some situations, they may search for a small amount
of additional information; in others, they simply review what they already know.
FOUR VIEWS OF CONSUMER DECISION MAKING
1. An economic view:
In the field of theoretical economics, which portrays a world of perfect competition, the consumer has often
been characterized as making rational decisions.

To behave rationally in the economic sense, a consumer would have to

i. Be aware of all available product alternatives.
ii. Be capable of correctly ranking each alternative in terms of its benefits and disadvantages
iii. Be able to identify the one best alternative.

Realistically, however, consumers rarely have all of involvement or motivation to make so-called “perfect”
decision.
It has been argued that the classical economic model of an all-rational consumer is unrealistic for the following
reasons:
i. People are limited by their existing skills, habits and reflexes.
ii. People are limited by their existing values and goals
iii. People are limited by their extent of their knowledge

Consumers operate in an imperfect world in which they do not maximize their decision in terms of economic
considerations, such as price-quantity relationships, marginal utility etc.

Indeed, the consumer generally is unwilling to engage in extensive that is good enough.

For this reason, the economic model is often rejected as too idealistic and simplistic.
2. A Passive View
Quite opposite to the rational economic view of consumers in the passive view that depicts the consumers
as basically submissive to the self-serving interests and promotional efforts of marketers.

In the passive view, consumers are perceived as impulsive and irrational purchasers, ready ot yield to the
aims and into the arms of marketers

The principal motivation of the passive model is that it fails to recognize that the consumers fail to
recognize the consumers plays an equal, if not dominant, role in many business situations.
3. A Cognitive View
The consumer as a thinking problem solver. Within this framework, consumers frequently are pictured as
either receptive to or actively searching for products and services that fulfill their needs and enrich their lives.

Within the context of the cognitive model, consumers are viewed as information processors. Information
processing leads to the information of preferences and, ultimately, to purchase intentions.

The cognitive view also recognizes that the consumer is unlikely to even attempt to obtain available
information about some of the alternatives to make a ‘satisfactory’ decision.

The cognitive view describes a consumer who falls some where between the extremes of the l
4. Emotional View
When a consumer makes that is basically an emotional purchase decision, less emphasis is placed on the
search for pre-purchase information. Instead, more emphasis is placed on current mood and feelings (“Go for
it”).

Some emotional decisions are expressions that “you deserve it” or “treat yourself”.

For instance, many consumer buy designer-label clothing, not because they look any better in it, but because
status labels make them feel better. This is a rational decision.
 ONLINE DECISION MAKING
Consumers are increasingly using the internet as a method of purchasing goods and services. We will the
typical objectives of marketers at each stage of the decision making process and show how they attempt to
influence each stage in the context of internet shopping, making reference to both high and low involvement
products and services.

The decision making process

●
Problem recognition
●
Information search
●
Evaluation of alternatives
●
Product choice
●
Post purchase
 FORCES INFLUENCING THE ONLINE
CONSUMER’S BEHAVIOUR
Other stimuli: Personal and Environmental
Uncontrollable Factors
Demographic, personal, cultural, sociological,
economic, legal, environmental etc..

Marketing Buyer’s Decision Process Buyer’s Decision

stimuli Problem identification, Search, Trust Product choice, Brand
(Traditional building, Evaluation of alternatives, choice, Dealer choice,
Marketing Mix) Choice, Post-purchase behaviour Purchase timing

Web Experience:
Online Controllable Marketing Factors

Source: Based on P. Kotler’s framework (2003)

Stimulating Need Recognition

“ Problem recognition occurs whenever we see a significant difference between our current state of affairs
and our ideal state.”

• Product replacement
• Opportunity recognition
• Altered perception
• Previously unsatisfied need
• Trickle down – the purchase of one product offsets another
Information Search
Types of information search

•Existence / availability of the product or service

•Information about the characteristics of the product or service
•Information regarding alternatives

INTERNAL vs. EXTERNAL

INFORMATION SEARCH - INTERNAL

Memory
All products / brands

Ones you know Ones you

don’t

•Those you would consider buying

•Those you feel indifferent towards

•Those you wouldn’t consider

 Information Search – External
Ex: Search Engine, Internet

FACTORS WHICH EFFECT INFORMATION

Search
• Consumers will typically search for more information when making a high
involvement purchase.
• Consumers are likely to be brand loyal.

• Consumers 1qare likely to make assumptions.

• The consumers prior expertise

• More market knowledge = less time spent on search.

• If there is too much or it is too complex the consumer is unlikely to make a decision.
• Evaluation of Alternatives
• Purchase

• Post-Purchase Evaluation

• It is important for the consumer to feel satisfied with their purchase in terms of;
• Price
• Function
• Style
• Acceptance from peers

• If customers are happy with the purchase they are more likely to make repeat purchases in the future.