Models of consumer behaviour.ppt presentation
- 1. Models of consumer behavior FALAK NAAZ
- 2. Definition According to Louden and Bitta – “consumer behaviour is the decision process and physical activity which individuals engage in when evaluating acquiring using or disposing of goods and services”. According to Ostow and Smith – “consumer behaviour as action of consumers in the market place and the underlying motives for their action.” It includes the study of what they buy, why they buy, where they buy, how often they buy, how often they use it.
- 3. Importance of study consumer behaviour Facilitating effecting marketing strategies . Identifying marketing opportunities . Enhancing customer experience . Minimizing risks and failure. Building strong brand relationships . Comprehending consumer needs .
- 4. Why study consumer behaviour ? Consumer do not always act as theory suggests . Consumer preferences are changing and becoming highly diversified. Implementing the marketing concept. Consumer research have vividly pointed out that consumers dislike using identical products and prefer differentiated products to reflect their special needs, personalities and life – styles.
- 5. Why study consumer behaviour ? Meeting of special needs of customers requires market segmentation. Rapid introduction of new products with technological advancement has made the job of studying consumer behaviour more imperative. Consumer behaviour can be used to sell products that might not sell easily because some other products has been satisfying the customer, even if the new product saves life much quicker than the old products.
- 6. Models of consumer behaviour TRADITIONAL MODEL o Economic model o Learning model o Psychoanalytic model o Sociological model CONTEMPORARY MODEL o The Howard Sheth model o The Nicosia models o The Engel-Kollat Blackwell model
- 7. Economic model According to this model, consumer behaviour is driven by the principle of maximum utility basis on the law of diminishing marginal utility. The law of diminishing marginal utility says that the marginal utility from each additional unit declines as consumption increases. There are three effects that influence model :
- 8. Economic model 1. Price effect This will lead to an increase in demand which can help producers to make profit for themselves by selling more products at a fixed price. Consumers will tend to buy lower quantities of product if the price is high. For example, if you are offered free groceries on upselling then people are much inclined to buy a bottle of grocery more. Price elasticity = price ÷ quantity
- 9. Economic Model 2. Substitution effect This refers to the tendency of consumers generally to prefer other products over an existing one. Some individuals have higher level of preference for product. For example, if we are offered free wine with our meal then people are much inclined to switch from beer. This will increase the income of restaurant owners and managers because this new drink has ahigh profit margin. Substitute effect = Price / Preference
- 10. Economic model 3. Income effect The income effect is also known as elasticity of demand which indicates the responsiveness to income changes. In short, individuals with high incomes will spend a larger portion of their money as opposed to those having low income. Income effect = Price / Income
- 11. Learning model The learning model is a theoretical framework that shows how consumer’s purchase decisions are influenced by their acquired information through experience and how they apply that information during decision – making. It has four vital theories : 1. Needs Consumer purchase decisions can be influenced by basic needs. Basic needs may include food, shelter, educational, needs and so on .
- 12. Learning model 2. Learning In this case, the purchase decision influenced some external sources of information. For example, the consumer might have used it for a limited time previously, learned about it from advertisements, or heard about it from a friend.
- 13. Learning model 3. Reinforcement Consumers usually do not want to experiment with instability. It’s not about ease of use, it’s about becoming used to it. It could also be a positive consequence of a product.
- 14. Learning model 4. Motivation Certain motivation can influence the buying decisions of a consumer. It’s the belief of the consumer that they will be satisfied by buying that product. This motivation can be intrinsic, such as the satisfaction of completing a target. This could also be extrinsic, such as winning lottery. This model is based on Maslow’s hierarchy model of need.
- 15. Psychoanalytic model It says a consumer ‘s purchase decision is influenced by unconscious factors of human behaviour. It might not be rational to some extent, as it can be connected to some previous experience. These unconscious factors can develop through childhood trauma, good memory or any type of emotion.
- 16. Sociological model Purchase decision can be influenced by the society that we live in. Social factors like economic class, local culture or influencing groups or people can manipulate your needs.
- 17. Howard Seth Model The Howard Sheth model framework takes a different approach to purchase decision – making. Instead of just simple input and output, it considers various factors. These factors include social factors and psychological factors.
- 19. The Nicosia Model The Nicosia model is a framework that describes how consumers make decisions to purchase a product or services. This model focuses on the relationship between a company and its consumers and how businesses can influence consumer behaviour through advertising.
- 20. The Engel – Kollat Blackwell model It was describing the increasing, fast growing body of knowledge concerning consumer behaviour. This model like in other models has gone through many revisions to improve its descriptive ability of the basic relationship between components and sub – components.
- 21. The Engel – Kollat Blackwell model It has four stages : Information input stage 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 a choice or in some cases if the consumer experience dissonance because the selected alternative is less satisfactory than expected.
- 22. The Engel – Kollat Blackwell model Information processing stage 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.
- 23. The Engel – Kollat Blackwell model Decision process stage The central focus of the model is on five basic decision – process stages: Problem recognition Search for alternatives Alternate evaluation Purchase Outcomes,
- 24. The Engel – Kollat Blackwell model Variables influencing the decision process The 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. consumer’s financial condition also influences the decision process.
- 25. Engel –Kollat Blackwell model