Cb 1 models of consumer behaviour
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This document discusses several theories of consumer behavior: - Jeremy Bentham's hedonism from 1789 which states that human behavior is guided by seeking pleasure and avoiding pain. - George Katona's theory from 1963 which proposed that consumers are influenced not just by economic factors but also social, political, and psychological factors in their decision making. - Francesco Nicosia's model from 1966 which conceptualized consumer decision making as occurring across four fields: firm and consumer traits, consumer search and evaluation, the act of purchase, and feedback. - John A. Howard and Jagdish N. Seth's model from 1969 which categorized three types of consumer response behavior: extensive problem solving, limited problem solving
Cb 1 models of consumer behaviour
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- 2. 25-08-2014 2 Human behaviour is guided by the search for pleasure Given by Jeremy Bentham (1789) Motive Force: › “Maximum Pleasure with minimum effort” Gives rise to material culture › Earning and spending of money People buy because of › Beauty, Fun, Sensational Experiences, Thrill Concept of Marginal Utility › Based indirectly on hedonism › Maximize consumption between choices till marginal utilities are same across products › Forms the basis of Economic Analysis › Two Main Approaches Ordinal Utility Approach Revealed Preference Approach › Lead to Macro-Economic Analysis of J.M. Keynes Consumption Function and Aggregate Demand
- 3. 25-08-2014 3 Propounded by George Katona in 1963 Consumers are Economic Agents; however they are influenced by other forces: › Social › Political › Psychological Katona believed that Psychological factors can mitigate the impact of economic factors
- 4. 25-08-2014 4 Macro Economic Condition › GDP, Employment, Inflation Macro Economic Variables › Taxes, Subsidies, Credit Policy, Other Rates of Interest Personal Traits › Motivation, Attitude, Aptitude, Perception, Expectation, Knowledge › Use of these in Personal Decision Making Katona Believed that: › “The consumer, based on his personality traits, behaves as per the macro conditions and variables” Actual Economic Conditions Psychological Process Consumer Sentiments Economic Behaviour Merits › The first model to explicitly state that psychological processes are important Demerits › Micro and Macro Framework have been mixed without highlighting the roles they play › Does not explain purchase decisions › Taste and Preferences are unaccounted for
- 5. 25-08-2014 5 Propounded by Francesco Nicosia in 1966 Assumes that › Consumer seeks to realise well defined goals › Consumer has no predisposition towards firms – either positive or negative Constitutes of Four Fields › Firm and Consumer Traits › Consumer Search and Evaluation › Act of Purchase › Feedback Subfield One: Firms Attributes Subfield Two: Consumer Attributes Including Predisposition Message Exposure Attitude Search Evaluation Motivation Action Actual Purchase Experience Consumption / Storage Field 4: Feedback Field 3: Purchase Field 2: Search and Evaluation Field 1: Firm and Consumer
- 6. 25-08-2014 6 Merits › Brief and quite and general › Firms communicate to Consumers › Consumers deliberate activate the decision making process › It contributed to the funnel approach Demerits › Not much detail explanation of the internal factors › Assumes demand is generated due to communication › Lumps all types of communication – informative and persuasive – into single category Promulgated by John A. Howard Jagdish N Seth in 1969 Assumes the following: › Consumers have incomplete information about market conditions › Consumers have limited ability to understand and analyse the conditions that confront them › The objective of the consumer is a rational choice of brand from those that are available and they know about Three (3) types of Response Behaviour › Extensive Problem Solving (EPS) › Limited Problem Solving (LPS) › Routine Response Behaviour (RRB)
- 7. 25-08-2014 7 Merits › It recognizes the influence of unsatisfactory experiential learning on future purchase decisions. › The entire process of search evaluation will be repeated again and again until the consumer gets the satisfaction. › Consumer are incessantly exposed to information. Demerits: › It does not discuss the influence of unsatisfactory experience gained from the purchase. › It over looks the dynamics of an oligopoly market competition. › Model does not offer any method to measure variables/ parameters › It leaves out unbranded products
- 8. 25-08-2014 8 All the models are based on the process rather than the cause and consequence of a decision They do not formulate a crisp and well articulated theory as to why do consumers purchase more of one than the other goods? Models are descriptive rather than being analytical Howard and Seth model is the most realistic one Managerial models have attempted to bring in realism as compared to economic models Propounded by James F Engel, David T Kollat Roger D Blackwell in 1968 Underwent extensive revision and is currently known as the Engel-Blackwell-Miniard Model (1990) Will be studied in detail in the Consumer Behaviour
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