UNIT I

CONSUMER BEHAVIOUR

Consumer Behaviour is the study of how individual customers, groups or organizations

select, buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It
refers to the actions of the consumers in the marketplace and the underlying motives for those
actions. The study of consumer Behaviour assumes that the consumers are actors in the
marketplace. The perspective of role theory assumes that consumers play various roles in the
marketplace. Starting from the information provider, from the user to the payer and to the
disposer, consumers play these roles in the decision process. Consumer Behaviour is a
complex , dynamic, Multidimensional process and all marketing decisions are based on the
assumptions about consumer Behaviour which includes communicating , Purchasing , and
consuming , interacting.

Definitions

In the words of Engel, Blackwell, and Mansard, “consumer Behaviour is the actions and
decision processes of people who purchase goods and services for personal consumption”.

According to Schiffman “Consumer Behaviour is defined as Behaviour that consumers

display in searching for purchasing, using evaluating and disposing of products and services
that expect will satisfy their needs”.

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”.

“CB behaviour refers to the actions and decision processes of people who purchase goods
and services for personal consumption.”- James F Engel, Roger D Blackwell and Paul
Miniard.

“The mental and emotional processes and the physical activities of people who purchase and
use goods and services to satisfy particular needs and wants”- Bearden et al.

“The behaviour that consumers display in searching for, purchasing, using, evaluating and
disposing of, if products and services that they expect will satisfy their needs.”- Leon G
Schiffman and Leslie Lazar Kanuk

Nature of Consumer Behaviour

1. Influenced by various factors:

i. Marketing factors such as product design, price, promotion, packaging,
positioning and distribution.
ii. Personal factors such as age, gender, education and income level.
iii. Psychological factors such as buying motives, perception of the product and
attitudes towards the product. iv. Situational factors such as physical surroundings
 at the time of purchase, social surroundings and time factor v. Social factors such
as social status, reference groups and family.
2. Undergoes a constant change: Consumer Behaviour is not static. It undergoes a change
over a period of time depending on the nature of products.
3. Varies from consumer to consumer: All consumers do not behave in the same manner.
Different consumers behave differently. The differences in consumer Behaviour are due
to individual factors such as the nature of the consumers, lifestyle and culture.
4. Varies from region to region and country to county: The consumer Behaviour varies
across states, regions and countries. It may differ depending on the upbringing, lifestyles
and level of development.
5. Information on consumer Behaviour is important to the marketers: Marketers need to
have a good knowledge of the consumer Behaviour. They need to study the various
factors that influence the consumer Behaviour of their target customers. i.e. Product
design/model, pricing, packaging, positioning, promotion of product etc…
6. Leads to purchase decision: A positive consumer Behaviour leads to a purchase decision.
A consumer may take the decision of buying a product on the basis of different buying
motives. The purchase decision leads to higher demand, and the sales of the marketers
increase.
7. Varies from product to product: Consumer Behaviour is different for different products.
There are some consumers who may buy more quantity of certain items and very low or
no quantity of other items.
8. Improves standard of living: The buying Behaviour of the consumers may lead to higher
standard of living. The more a person buys the goods and services, the higher is the
standard of living. But if a person spends less on goods and services, despite having a
good income, they deprives themselves of higher standard of living.
9. Reflects status: The consumer Behaviour is not only influenced by the status of a
consumer, but it also reflects it. The consumers who own luxury products like luxury car,
watches and other items are considered belonging to a higher status. The luxury items
also give a sense of pride to the owners.

Scope of Consumer Behaviour

The words such as consumer behaviour, individual buyer behaviour, and buying
behaviour of the consumer are all the same. Consumer behaviour is defined as the study
of individuals, groups, and organizations performance in selecting, buying, using the
goods and services, ideas, or experiences to fulfil the buyer's needs and wants.
The information given below will help you to understand the behaviour of the customers.
Companies conduct various research programs to collect information about their target
customers.
The scope of consumer behaviour is as follows.
i. Demand Forecasting
Consumer behaviour helps in the forecasting of the demands for the business. Every
business identifies the needs and wants of the customers by understanding their
behaviour. Forecasting helps them to find out the unfulfilled demands in the market
easily. If the company knows what their consumer wants, they can design and produce
the product accordingly.
The behaviour of the consumer plays an important role in forecasting the demand for the
products. In addition, it helps the company to identify the market opportunity available
to them.
ii Marketing Management
Effective business managers know the importance of marketing towards the success of
the business. Understanding consumer behaviour is essential for the long-run success of
any marketing program. A better understanding of consumer needs and wants helps the
business to plan and execute the marketing strategies accordingly.
Proper understanding of the behaviour of the consumer makes the company know its
customers in a better way. That ultimately helps businesses to strategize and implement
marketing in a better way.
iii Non-profit and Social Marketing
In today's world, every non-profit business-like government sector, religious sector,
university, the charitable institution runs the business's overall activity by implementing
proper marketing plans for the business. Also, they contribute to solving the problems of
society. Thus, a transparent consumer behaviour process and decision-making
contributed efforts towards the success of the business.
iv Selecting Target Market
Consumer behaviour helps the organization to select its target group from the market.
Studying and identifying consumer behaviour helps them to know the consumer
segments with distinct features and wants. It helps in segmenting the overall market into
different groups.
v. Market Mix
Proper development and designing all-important elements like product, price, place, and
promotion are essential for every business. It helps them to identify the likes and dislikes
of the customers. This allows marketers to design optimum marketing mix plans and
improve the effectiveness of marketing strategies. The proper implementation of a
marketing mix helps organizations to attract more customers, thereby increasing profit.
vi. Educating Customers
Consumer behaviour helps the marketer to know how consumers spend on buying
decisions. By understanding the customer's behaviour, a marketer can easily get an idea
of how they can improve their buying decision. The market can guide and suggest a way
to save their money and give them better options. Customers get aware of the
opportunities available to them as per their behaviour.
vii. Assists in Designing Product Portfolio
Designing the product portfolio is a challenging part in every business. Every business
should design a portfolio that consists of all classes of the product. Consumer behaviour
helps in identifying the class and needs of the customers. It helps companies to design
the product which fulfils the requirements of their customers. In this way, a business can
design the optimum portfolio and serve its customers better.

Factors Influencing Consumer Behaviour

The behaviour of consumer is dependent on a number of factors which may be economic or

non-economic factors and are dependent upon economic factors such as income, price,
psychology, sociology, anthropology, culture and climate. The study of consumer behaviour
has proved that following are the main factors which influence the behaviour:

1. Economic Factors: Price, Income, Distribution of Income, Competition with substitute ,

utility and Consumer preferences are the factors categorised as Economic factors .

2. Social Factors: Culture, Attitude of society, social values, Life-style, personality, Size of
family, Education, health standards are the factors catagorised as Social factors.

3. Psychology : It decides the personality, taste, attitudes of individuals or groups, life style,
preferences especially on occasions like marriage. The demonstration influence is also
dependent upon psychology of an individual.

4. Anthropology & Geography: Climate, region, history all effect, consumer behaviour. In
hot countries like India certain products which keep us cool like squashes, sarbatas, are
demanded but they have no demand in cold regions. Culture is also influenced by climate.

5. Technology: In case of equipment’s whether for consumer use or industrial use is affected
by technological innovations and features. Even in case of perishable goods the shelf life etc
are determined by technological developments. Innovations and introduction of new product
also depends upon technological development.

6. Others: Knowledge-technical or otherwise and information. Government decisions, laws,

distribution policies, production policies have also big affect on consumer behaviour.

Advantages of Studying Consumer Behaviour

1. Saves from Disaster: The failure rate of new products is surprisingly high not only in
highly competitive economies of USA, Europe and Japan etc. but even in India. For instance,
Roohafza of Hamdard succeeded well but when other companies tried like Dabur to produce
similar products they could not succeed. There are many more such examples. If one tests the
market before launching a new product this type of disaster can be avoided or minimized.

2. Helps in Formulating Right Marketing Strategy: If one studies well what factors will
influence demand of a product accordingly production and marketing strategies can be
framed. In food items it is taste which decides whether consumer will buy it or not. If through
the study of consumer behaviour one is able to know correctly the factors which influence
buying decisions of the consumer one can promote sales of existing or new product.

3. Segmentation of Market is Helped: The study of consumer behaviour suggested that

everyone does not buy on price consideration or utility consideration only. For high income
group’s high priced cloth, cars, etc have been produced. The producers of such items make
heavy profits which would not have been possible without study of consumer behaviour
because it is against basic economic theory.

4. Helps in Development of New Products: Before launching a new product proper study of
consumer tastes i.e. behaviour avoids later failure and loss. This is particularly true for food
items and daily consumption products. It is equally true for fashion goods like garments,
cosmetics, cigarettes and new flavors of existing products. In certain cases if a product is
reintroduced after a long gap this type of study helps.

5. Helps in Product Orientation: The study of consumer behaviour helps to find-out why
consumers are drifting away from a product or why they are not liking it. For instance, some
of Indian toothpastes are being produced for long like Neem but it could not capture the
market. There are many other instances when a new product has been developed or reoriented
to again capture its old glorious position. Those who do it scientifically succeed and others
who do not study consumer behaviour properly or do not orient loose the market, merely by
pretty faces or fancy claims he wants to be assured that what is claimed is really true.

6. Helps in Reorientation of Packaging: A great deal of importance is being given to

packaging for quite some time by marketing department and market research. But whether a
particular packaging is liked by consumers or not is a recent phenomenon. Consumer if likes
a packing helps in pushing sales. In certain cases this fact is advertised also. But in many
cases this has been done without study of consumer behaviour and his attraction or disliking
of a particular packaging. The fact however remains that proper study can help in pushing
sales.

7. Helps Consumers to Study their Behaviour: The consumers often are guided by their
income, emotions, opinion of others and they do not undertake study of their behaviour
whether it is scientific or not. The science, however, can help them to study cost benefit of
their buying decisions. The study can reveal them whether buying an expansive item is
rational, or not. If there are competitive goods it can help them to make consumer preference
chart and then decide what to buy immediately and what to postpone and what should be
rejected.

Limitations of Study of Consumer Behaviour

Consumer buying behavior relates to the identification of consistent stages of decision
making used in every purchase situation. The process begins with need recognition, followed
by information gathering, a purchase and finally, post-purchase evaluation. Marketers rely on
an understanding of buyer behavior to effectively position products and services. However,
consumer buying behavior does have following limitations :

1. Inconsistency: One of the biggest drawbacks of relying too heavily on consumer buying
behavior is that consumers rarely apply the same steps in the same way for every product and
service purchase. This makes it more difficult for marketers trying to stimulate a need or to
offer messages that enhance the likelihood of a purchase for their brand. Thus, most
companies have to perform more research into their particular market segments and how they
approach their brand.

2. Limited Buyer Interest: Another primary limitation for marketers using the consumer
buying behavior model is that consumers sometimes are much less involved in a purchase
decision. For instance, someone buying laundry detergent is generally less involved in the
purchase than someone buying a car or washer and dryer. Thus, the ability of marketers to
affect consumers by analyzing buyer behavior is limited.

3.Social and Cultural Influences: Marketers spend significant time trying to interpret
consumer buying behavior related to their products, but they must also understand how each
given customer is influenced externally by social relationships and culture. However,
knowing how a given customer is influenced by family, friends and their community for
purchases of appliances, food and household items is significantly more complex.

4. Applying Stimuli: It is pointed out that marketing tries to respond to consumer buying
behavior by communicating with stimuli expected to elicit the desired consumer response.
But unfortunately, buying behavior involves a number of complicated psychological
variables related to consumer perception, motivation, learning, memory, attitude and
personality. Therefore accurately predicting response to a given message often demands
significant marketing research and focus group studies.

Types of Consumer Buying Behaviour:

The four types of consumer buying behaviours are:

i. Routine Response/Programmed Behaviour:

Buying low involvement frequently purchased low cost items; need very little search and

decision effort; purchased almost automatically. Examples include soft drinks, snack foods,

milk.

ii. Limited Decision Making:

Buying product occasionally. When you need to obtain information about unfamiliar brand in

a familiar product category, perhaps. Requires a moderate amount of time for information

gathering. Examples include clothes-know product class but not the brand.

iii. Extensive Decision Making: Complex high involvement, unfamiliar, expensive and/or

infrequently bought products. High degree of economic/performance/psychological risk.

Examples include cars, homes, computers, education. Spend a lot of time seeking information

and deciding. Information from the retailers catalogs; friends and relatives, store personnel,

etc. Go through all six stages of the buying process.

iv. Impulse buying, no conscious planning.

The purchase of the same product does not always elicit the same Buying Behaviour. Product

can shift from one category to the next.

For example: Going out for dinner for one person may be extensive decision making (for

someone that does not go out often at all), but limited decision making for someone else. The

reason for the dinner, whether it is an anniversary celebration, or a meal with a couple of

friends will also determine the extent of the decision making.

v. Variety-Seeking Buying Behaviour:

Some buying situation depicts low consumer involvement but significant brand differences.
Consumers are often observed to do a lot of brand switching. For example – in purchasing
cookies the consumer has some beliefs, chooses a brand of cookies without much evaluation
and evaluates it during consumption. In future, the consumer may reach for another brand out
of boredom or a wish to experiment. Here brand switching occurs for the sake of variety
rather than dissatisfaction.

vi. Buying Behaviour Reducing Dissonance:

Sometimes the consumer who is highly involved in a purchase sees little difference in the
brands. His high involvement is based on the fact that the purchase is expensive, in-frequent
and risky. The buyer will shop around to learn what is available but he will buy fairly quickly
because brand differences are not pronounced.
He may respond primarily to a good price or the convenience of purchasing at time or place.
For e.g. – carpet’ buying is an involving decision because it is expensive and relates to self-
identification, yet the buyer is likely to consider most carpeting in a given price range to be
the same.
The consumer might experience past purchase dissonance due in noticing certain disquiet
features of the carpet or hearing favourable things about carpets. He starts learning more
things and seeks to justify his or her decision to reduce the dissonance. He passes first
through a state of behaviour, acquires some new benefits and ends up evaluating his choice
favourably.
In this situation pricing, good location and effective sales personnel are important influences
of brand choice. The major role of market communication is to supply beliefs and evaluations
that help the consumer feel good about his or her choice after the purchase.
(3) Buying Behaviour Based on Habits:
Many products are purchased under conditions of low consumer involvement and the absence
of significant brand differences. For example- in purchase category. They go to store and
reach for the brand, having no strong brand loyalty. They have low involvement with most
low cost, frequently purchased products. Their behaviour in these cases does pass through the
normal belief/attitude/behaviour sequences. They do not search extensive information about
the brands.
They evaluate their characteristics and make a weighty decision on which one to buy. They
are passive recipient of information as they watch T.V. or see a print ad. Ad repetition creates
brand familiarity rather than brand conviction. Consumers do not really form an attitude
towards a brand but select it simply because of its familiarity.
After purchase, they may not evaluate it because they are not involved with the product. So in
the buying process, brand beliefs are formed by passive learning and followed by purchase
behaviour, which may be or may not be followed by evaluation.
In case of low involvement products marketers with few brand differences find it effective to
use price and sales promotions are an incentive to product trial, since buyers are not highly
committed to any brand. A number of things should be observed in advertising a low
involvement product. The ad copy should street only a few key points.
Visual symbol and integer are important because, they can be easily remembered and
associated with the brand. The ad campaigns should go for high repetition with short-
duration messages. Television is more effective than print-media. It is a low involvement
medium that is suitable for passive learning.

Models of Consumer Behaviour

A consumer behavior model is a theoretical framework for explaining why and how
customers make purchasing decisions. The goal of consumer behavior models is to outline a
predictable map of customer decisions up until conversion, thus helping you steer every stage
of the buyer’s journey. The consumer behaviour models are largely divided into two
categories.
 I. Traditional Behaviour Models

Traditional behavior models were developed by economists hoping to understand what

customers purchase based on their wants and needs. Traditional models include the
following:

 Learning Model

 Psychoanalytical Model

 Sociological Model

 Economic Model

1. Learning Model of Consumer Behaviour

The Learning Model of customer behavior theorizes that buyer behavior responds to the
desire to satisfy basic needs required for survival, like food, and learned needs that arise from
experiences, like fear or guilt. This model takes influence from psychologist Abraham
Maslow’s Hierarchy of Needs.

The bottom level of this hierarchy represents basic needs, and ascending sections describe
learned needs, or secondary desires, that allow consumers to feel as though they’ve reached
self-fulfillment.

The Learning Model says that consumers first make purchases to satisfy their basic needs and
then move on to meet learned needs. For example, a hungry customer would fulfill their need
for food before a learned need to wear trendy clothing.

If you’re a multipurpose business that sells products that meet all levels of customer needs,
this model applies to you. For example, Target is a United States-based department store that
sells hundreds of products. Super Targets are larger versions of the chain that also sell
groceries.

When a customer visits a Super Target, they first see products that satisfy their basic needs —
the grocery section. They’re probably also seeing produce first, as these items are seen as the
most nutritious and necessary for survival. After produce, customers move on to other aisles
that satisfy learned needs, like purchasing their favorite cookies, clothing items, or beauty
accessories.
You can think of it like this: If you’re a business with a significant amount of in-store
options, improve the customer experience and speak to their buyer behavior by first leading
them to the products that will satisfy their innate needs. Without doing this, they may
navigate through your store anxious about meeting those needs and spend less time browsing
other products and making additional purchases. Once they feel comfortable, they’ll move on
to satisfy the desires that bring them joy rather than help them survive.

2. Psychoanalytical Model of Consumer Behaviour

Sigmund Freud is the father of psychoanalysis. The psychoanalytical model draws from his
theories and says that individual consumers have deep-rooted motives, both conscious and
unconscious, that drive them to make a purchase. These motives can be hidden fears,
suppressed desires, or personal longings.

Thus, customers make purchases depending on how stimuli from your business, like an
advertisement on Instagram, appeal to their desires. It’s important to note that, since these
desires can be unconscious, customers don’t always know why it appeals to them; they just
know it feels right to have it.

This model is unique in terms of application, but it’s relevant to businesses that sell an image
that accompanies their products or services. For example, say you sell glasses (Spectacles).
We all long to fit in and feel like we’re valued and seen as capable, smart people. Glasses are
sometimes a symbol of intelligence, so you’d want to appeal to this desire when crafting a
customer experience.

You may instruct marketing to create ad campaigns that display pictures of people wearing
your glasses in educational settings or doing things that society labels as ‘smart.’
3. Sociological Model

The Sociological Model of consumer behaviour says that purchases are influenced by an
individual's place within different societal groups: family, friends, and workgroups. An
individual will essentially purchase items based on what is appropriate or typical of the
groups they’re in.

For instance, C-Suite executives are expected to be professional and formal. People who hold
these jobs will make purchases that speak to and uphold this group’s rules, like formal
business wear.
 This model can apply to most businesses, especially those that create products and services
relevant to specific groups. To use the Sociological Model, you’d want to create experiences
that speak to how these groups usually act. One example is brands that sell exercise
equipment.

You sell to and appeal to consumers that are part of a societal group that likes to work out. To
delight these customers, you’d want to sell to their desires, like equipment that improves
performance or an insulated water bottle that stays cold and leaves them satisfied during their
breaks. By doing this, you’re speaking to the consumer in that specific group and showing
them that your product will help them retain their position in that group.

Check out this ad from Nike. They’re selling this shoe to the undefined group of people who
like to run, claiming that it will improve their speed and help them fit in with the group.

4. Economic Model of Consumer Behaviour

The economic model of consumer behaviour is the most straightforward of the traditional
models. This model argues that consumers try to meet their needs while spending as few
resources (e.g. money) as possible.

That means that businesses and manufacturers can predict sales based on their customers’
income and their products’ price. If companies offer the lowest-priced product, they may feel
that they’re guaranteed a consistent level of profit.

While the economic model is the easiest to understand, it’s also the most limited. A buyer
may have other reasons for purchasing a product aside from price and personal resources.

One such example would be prescription medicine in healthcare industry. While the price of
a prescription drug may exceed the buyer’s resources, the buyer would still have to find a
way to purchase it and meet their needs. They might open a credit card or take out a personal
loan to pay for the medicine. Thus personal income and price don’t affect the purchasing
decision here; instead, need does.

II. Contemporary Models

Contemporary models of consumer behaviour focus on rational and deliberate decision-

making processes rather than emotions or unconscious desires. The contemporary models
include:

 Engel-Kollat-Blackwell (EKB) Model

 Black Box Model

 Hawkins Stern Model

 Howard Sheth Model

 Nicosia Model

 Webster and Wind Model

1. Engel-Kollat-Blackwell (EKB) Model of Consumer Behavior

The Engel-Kollat-Blackwell model of consumer behavior outlines a five-stage decision

process that consumers go through before purchasing a product or service.

 Awareness: During this stage, consumers view advertisements from a business and become
aware of their need, desire, or interest, to purchase what they've just discovered.
 Information Processing: After discovering a product or service, a consumer begins to think
about how the product or service relates to their past experiences or needs and whether it will
fulfill any current needs.
 Evaluation: At this point, consumers will research the product they’ve discovered and
research options from competitors to see if there is a better option or if the original product is
the best fit.
 Purchasing Decision: A consumer will follow through with a purchase for the product that
has beat out competitors to provide value. A consumer may also stop the process if they
change their mind.
 Outcome Analysis: After making a purchase, a customer will use what they’ve bought and
assess whether their experience is positive or negative. After a trial period, they’ll keep a
product and maybe decide to become repeat customers or express dissatisfaction and return to
stage three.

Overall, EKB says that consumers make decisions based on influencing factors that they
assess through rational insight.

This model applies to businesses that have many competitors with similar products or
services. If your product market is highly saturated and competitive, the goal is to outshine
your competitors by meeting customers at every stage of their journey.

Increase visibility for your business during the awareness stage through Search Engine
Optimization. Show them how your product or service will benefit them and give them the
resources they need to weigh you against your competitors, like customer reviews and
testimonials, free trials, discounts for bulk purchases. Lastly, and provide excellent after-
sales support to show them that you care about their business even if they make a return.
2. Black Box Model of Consumer Behaviour

The Black Box model, sometimes called the Stimulus-Response model, says that customers
are individual thinkers that process internal and external stimuli to make purchase decisions.

It may look complex, but it’s a fairly straightforward path. A consumer comes into contact
with external stimuli from your business’ marketing mix and other external stimuli, and they
process it in their mind (black box). They relate the external stimuli to their pre-existing
knowledge, like personal beliefs and desires, to make a decision.

In short, this model says that consumers are problem solvers who make decisions after
judging how your product will satisfy their existing beliefs and needs. Since consumers only
follow through with a purchase after understanding how a product relates to their
experiences, this model can benefit businesses selling products that go along with a lifestyle.

Example: cars. Different brands sell their cars to specific types of buyers. Jeeps and SUVs are
for those that engage in outdoor activities and need a sturdy, reliable vehicle. At the same
time, Mercedez Benz and Lexus’ are marketed to those who want luxurious driving
experiences. Even though the machinery is relatively similar, these brands speak to the pre-
existing life values that customers have, and they promise that purchasing their vehicle will
uphold their values.
 3. Hawkins Stern Impulse Buying Model

The Impulse Buying theory is an alternative to the Learning Model and EKB, as it claims that
purchases aren’t always a result of rational thought. When we think of impulse buying, we
typically imagine picking up a candy bar or a pack of gum right before checking out. These
are certainly impulse purchases, but Hawkins Stern categorizes them into four different types:

 Escape Purchase: Sometimes called pure impulse, this involves purchasing an item that isn’t
a routine item or on a shopping list. Consumers are drawn to these items through appealing
visuals.
 Reminder Purchase: A consumer makes a reminder impulse purchase when they come
across a product through in-store setups, promotional offers, or a simple reminder that a
product exists, like a strategically placed ice cream scoop in the freezer aisle of a grocery
store.
 Suggested Purchase: Suggested impulse purchases occur when a consumer is made aware of
a product after a recommendation or suggestion from an in-store salesperson or online
algorithms. For example, seeing an ad that says, “Other people who bought this shoe you’re
about to buy also purchase these socks.” The consumer didn’t know the socks existed, didn’t
plan to buy them, but now the suggestion has told them that they need them.
 Planned Purchase: Although planned is the opposite of impulse, these purchases occur when
a consumer knows they want a particular product but will only buy it if there is a deal
 involved. An unexpected price drop could lead a customer to make a planned impulse
purchase.

The Hawkins Stern Model applies to most businesses, as there are no limits to what a
customer with this purchasing behavior will buy. Create a tailored customer experience by
putting care into product displays, creating AI algorithms for online shopping, or placing
items on sale to appeal to your shoppers who are planned purchase impulse buyers.

4. Howard Sheth Model of Buying Behavior

The Howard Sheth model of consumer behavior posits that the buyer’s journey is a highly
rational and methodical decision-making process. In this model, customers put on a
“problem-solving” hat every step of the way — with different variables influencing the
course of the journey.

According to this model, there are three successive levels of decision-making:

 Extensive Problem-Solving: In this stage, customers know nothing about the product they’re
seeking or the brands that are available to them. They’re in active problem-solving mode to
find a suitable product.
 Limited Problem-Solving: Now that customers have more information, they slow down and
begin comparing their choices.
 Habitual Response Behavior: Customers are fully aware of all the choices they have and
know which brands they prefer. Thus, every time they make a purchase, they know where to
go.

We’ve all gone through some version of these stages. Let’s look at an anecdotal example.

When I first started buying glasses online, I had no idea which retailers I should use or
whether the glasses sold online would be the same quality as the opticians’ offerings. I
searched online to find a high-quality online glasses retailer (extensive problem-solving).

I found a few choices and started comparing them from both a pricing and quality standpoint
(limited problem-solving). I eventually chose one, and that’s the retailer I’ve used ever since
(habitual response behavior).

But these stages aren’t that simple. According to the Howard Sheth model, I was under the
sway of several stimuli during this process:
 Inputs: This refers to the marketing messages and imagery a consumer receives while they’re
going through the decision-making process. “Inputs” also refers to any perceptions and
attitudes that come from the consumer’s social environment, such as their friends, family, and
culture.
 Perceptual and Learning Constructs: This may sound complicated, but this stimulus is
simply the customer’s psychological makeup and psychographic information. Perceptual and
learning constructs may include needs, preferences, and goals.
 Outputs: After inputs and perceptual and learning constructs are mixed together, you get the
output. The output is the customer’s resulting action under the influence of marketing
messages, social stimuli, and internal psychological attributes. It can result in the customer
paying more attention to a certain brand over another.
 External Variables: This is anything that’s not directly related to the decision-making
process, such as weather or religion, that still may sway the customer’s decision.

5. Nicosia Model

The Nicosia Model places emphasis on the business first and the consumer second. It argues
that the company’s marketing messages determines whether customers will buy. Simple,
right?
 While it’s an attractive model because it places all the power on businesses, it’s unwise to
ignore the customer’s internal factors that lead to a purchase decision. In other words, while
you may offer the wittiest and most effective marketing copy ever, a customer’s internal
attributes may have more sway in some instances over others.

The model is comprised of four “fields” or “Areas”:

 One: The business’ characteristics and the customer’s characteristics. What does your
marketing messaging look like? And what’s your customer’s perception of that messaging?
Are they predisposed to be receptive to your message? The latter is shaped by the customer’s
personality traits and experiences.
 Two: Search and evaluation. Similar to the Howard Sheth model’s “limited problem-
solving” stage, the customer begins to compare different brands here based on the company’s
messaging.
 Three: Purchase decision. The purchase decision will occur after the company convinces
the customer to choose them as their retailer or provider.
 Four: Feedback. During the feedback field, the company will determine whether it should
continue using the same messaging, and the customer will decide whether they will continue
to be receptive to future messages.
 6. Webster and Wind Model of Buying Behaviour

The Webster and Wind Model is a B2B buying behavior model that argues there are four
major variables that affect whether an organization makes a purchase decision. Those are:

 Environmental Variables: Environmental variables refer to any external factors that could
sway a purchase decision. Customer demands, supplier relationships, and competitive
pressure are a few examples. Broader variables apply, too, such as technology, politics, and
culture.
 Organizational Variables: Organizational variables refer to internal factors that could sway
a purchase decision, such as the organization’s goals and evaluation criteria.
 Buying Center Variables: Who makes the final purchase decision? Who has the authority to
sign the contract, and who influences the buying process? Buying center variables take all of
this into account.
 Individual Variables: These variables refer to the demographic and psychographic
information of the individual prospect at the business. What’s their education and level of
experience? What are their goals and desires?

After taking all of those variables into account, B2B organizations are then able to chart a
predictable buyer’s journey for their target customers.
 Consumer Research

Companies conduct market research to better understand the consumers, their needs and their
satisfaction level. After conducting various surveys and focus groups, companies analyze the
consumer data and then make recommendations based on the results.
Consumer Research Process is the type of basic research conducted to know the tastes and
preferences of the customers so that the company can market the products according to their
changing tastes and preferences. So, The Consumer Research Process Notes includes
various Steps like:-
1. Identification or Formulation of problems or opportunities,
2. Establishing the Design for Market Research,
3. Choosing a Basic Techniques of Research,
4. Select the Best Sampling Procedure,
5. Collection of Data,
6. Analysis of Data,
7. Preparing the Report.

1.Identification Or Formulation of Problems or Opportunities

This is the first consumer research process and it means to do research for analyzing and
formulating the problems and opportunities of consumer behavior. This step will help to
identify the causes, benefits, objectives, and remedial measures to solve the
problem. Consumer Research Process Example– Technological Advancement, Tastes, and
Preferences.
2. Establishing the Design for Market Research
This is the secondary consumer research process and it means,
(a) It is a planned theme made by the researchers to follow to answer the research objectives,

(b) It is an approach technique to identify the solution of a particular problem,

(c) It helps researchers for doing market research with two forms-

(i) Descriptive Design-
In descriptive design, the researchers find the answers to related questions. It is calculated by
Mean, Median, and, Mode of the data collected. For eg– 30% of the persons said they like
Virat Kohli.
(ii) Casual Design-
In casual design, we will examine the one variable with another and second variable. It can be
calculated by regression analysis to formulate the combination of two or more variables. For
eg– the older the respondent, the more he/she likes Virat Kohli.
However, the casual design approach is based on the cause and effect relationship.

3. Choosing a Basic Techniques of Research-

This is the third consumer research process and it means choosing a word determines the
targeting. It includes various techniques for solving the problems:
(i) Market Survey-
The survey is an essential part of the research and by which the researchers can acquire the
market data, trends, and changing factors. Thus, the survey also helps to define the structure
of market challenges and opportunities.

(ii) Observations-

Observation includes cellular data by which the researchers observe the source of data’s and
factors which are collected through the market surveys. They observe the collected forms of
data and then placed a design format for our research.

4. Select the Best Sampling Procedures-

This is the fourth consumer research process and it means the sample is a subset or sub-part
of the individual term. In this, there are two types of sampling will be used, first
is probability and second is non-probability.
We can give the information related to the population and number of respondents which
constitutes sample size.

5. Collection of Data-
This is the fifth consumer research process and it means data collection is proper of
systematic order to gather the necessary information collected by the various sources. The
researchers will collect data from various sources:
(i) Creating surveys in a particular target market for acquiring the necessary information
related to their problems.
(ii) Through direct marketing (from website surveys, email marketing surveys, creating ads
for surveys and so on.
(iii) Through market mediators and government reports,
(iv) Through personal interaction of public.

6. Analysis of Data-
This is the sixth consumer research process and it means observation of data, it consists or
analyzes the particular data and transform into meaningful or objective information.
The collected data is analyzed using statistical tools such as Standard deviation, correlation,
regression, Keyes square test, e-test, f-test, and ANOVA (Analysis of Variants).

7. Preparing the Report-

This is the seventh consumer research process and it means in this last process step, the
researchers should communicate their reports to the team and managers (in the form of oral
or written).
And, in this, the researchers made the report of market research for solving the queries and
find the answers to a particular problem. The reports also contain various points like:

 Approval Letter,
 Table of Contents,
 List of Examples,
 Methodology research,
 Research Goal,
 Techniques,
 Results,
 Hypothesis,
 Conclusions.

Methods of Consumer Research

There are two main types of consumer research – quantitative and qualitative. Both types rely
on different research techniques that we’ll explore in more detail down below.

Quantitative consumer research

By 2025, the global data pool is expected to rise up to 175 zettabytes. That’s why meaningful
data has become more valuable than ever and the way companies collect data can either make
or break their business success.
Quantitative research is a data collection method that revolves around numbers and stats. It’s
an essential part of consumer research that can provide businesses with measurable data on
their customers. Such data can be mathematically and statistically analyzed in order to gain
more insight into consumer behavior.

The most effective and most popular techniques for obtaining quantitative data are different
types of online questionnaires such as surveys and polls.

Surveys and polls

Nowadays, the easiest way to obtain consumer data is through online surveys, questionnaires,
and polls. Thanks to highly-advanced and intuitive survey tools, it’s now easier than ever to
create your own data collectors, either from scratch or using professionally written templates.

All the LeadQuizzes users, for example, gain free access to 78 professionally written and
beautifully designed survey, quiz, and form templates. This includes market and consumer
research survey templates such as the ones shown in the image below:

To access the LeadQuizzes templates, just log in to your account (or sign up for a free trial if
you don’t have an account yet) and select your preferred template from the selection of pre-
made templates. You can use the templates as they are or easily customize them to meet your
specific needs.

One of the easiest ways to obtain quantitative customer data is by using an NPS (Net
Promoter Score) survey. This customer research technique allows you to easily evaluate the
satisfaction of your current users and express it through numbers for easy analysis. With just
one single question – “How likely are you to refer our business?” – you can easily measure
consumer satisfaction and loyalty.

Qualitative consumer research

Unlike quantitative research, which relies on numbers, qualitative consumer research is

descriptive in nature. To obtain qualitative data, you need to be using open-ended questions
with no predefined answer options. While this means that you can still be using online
surveys to obtain qualitative data as well, there are a few more options to choose from.

Focus Groups

A focus group is a small group of people who are experts on a particular subject matter and
whose job is to analyze a particular aspect of consumer research – e.g. a new update, feature,
product, and so on.

Ideally, focus groups contain somewhere between 3-10 people, including an obligatory
moderator. Depending on the research topic and goal, the members of a focus group should
be brought together around certain common denominators.

For example, if you’re doing research on the use of birth control pills, all the members of
your focus group need to be sexually active females. The remaining parameters like age,
education, employment, and so on, may or may not be relevant here.
One-to-One interviews

In most cases, this is a conversational method that presupposes an interviewer and an

interviewee. During this type of consumer research, the researcher (the interviewer) asks
questions (that are equivalent to the open-ended survey questions) related to products and
services.

There are two main limitations to this method. Firstly, it’s very time consuming and might
become overwhelming if you have to interview an excessively large number of consumers.
And secondly, it very much relies on the researcher’s expertise and ability to extract the
relevant information from interviewees.

Social media monitoring

This type of consumer research could also be described as content or text analysis but, in
recent years, it primarily refers to the analysis of consumer behavior on social media. Here,
the researchers analyze consumers’ social life by decoding their social media posts and
interactions to draw inferences related to their consumer behavior and habits.

Ethics in Consumer Research

Marketing research has experienced a resurgence with the widespread use of the internet
and the popularity of social networking. It is easier than ever before for companies to
connect directly with customers and collect individual information that goes into a
computer database to be matched with other pieces of data collected during unrelated
transactions. The way a company conducts its market research these days can have serious
ethical repercussions, impacting the lives of consumers in ways that have yet to be fully
understood. Further, companies can be faced with a public backlash if their market research
practices are perceived as unethical.

The Use of Deceptive Practices

The ease with which a company can access and gather data about its customers can lead to
deceptive practices and dishonesty in the company's research methods. This type of ethical
problem can run the gamut — from not telling customers that information is being collected
when they visit a website to misrepresenting research results by using faulty data. At no
time should a researcher ever coerce or pressure a respondent to give a particular answer.
Any action that uses lies and deception to find out or establish information about consumer
opinions falls under this category.

Another deceptive technique is known as SUGGING , the practice of selling under the
guise of research. With this method, a salesman contacts an individual by phone posing as a
market researcher. As they ask questions, supposedly in the name of research, they are in
fact gaining information about a potential sales lead or even leading the person toward
developing a bias for a particular product.

Invasion of Privacy
One of the most serious ethical considerations involved in market research is invasion of
privacy. Companies have an unprecedented ability to collect, store and match information
relating to customers that can infringe on a person's right to privacy. In many instances, the
customer does not know or understand the extent of the company's infiltration into his life.
The company uses this information to reach the customer with targeted advertising, but the
process of targeting can have a chilling effect on personal freedom. Recent laws such as the
EU's GDPR have increased punishments and fines for data privacy violations. Similarly,
California has adopted a new law granting greater protections to resident consumers as
well.

Breaches of Confidentiality

Another significant ethical consideration involved in market research involves breaches of

confidentiality. Companies regularly share information about customers with partners and
affiliates, requiring the customer to opt-out of the sharing if he doesn't want to be involved.
(US and EU have different standards.) Some companies sell information they have gathered
on customers to outside companies. Ethically, any unauthorized disclosure of customer
information is problematic.

Undertaking Objective Market Research

Marketing and advertising have a significant impact on public perceptions. Market

researchers have an ethical obligation to conduct research objectively, so that available data
allows for the development of a balanced or reality-based picture. Researchers who allow
their own prejudices to skew their work tend to contribute to the perpetuation of stereotypes
in advertising, the development of destructive social constructs and the enabling of unjust
profiting from poverty. For example, a market researcher with a one-dimensional view of
minorities could do a fair amount of harm if allowed to shape an advertising campaign
based on skewed data collection.

ethics-distinguishing Good from Bad, pursuing Right versus Wrong, judging objects
according to their Worth or Value-are as old as philosophy itself, ethics appears to be one of
those areas in which knowledge does not so much progress as move in ever-widening circles
that eventually return every investigator to the place where he or she began, a position
characterized by deep doubts and unresolved uncertainties. Thus-with rare exceptions-we
approach ethical issues in consumer research armed with no proven arsenal of scientific
procedures, no instruments with accepted validity, no rigorously standardized tests, no
generally accepted criteria. Instead, the main investigative tools we can bring to the task at
hand are a little detachment and a lot of humility.

Application of Consumer Behaviour Knowledge

1) Analyzing market opportunity: Consumer behavior study help in identifying the

unfulfilled needs and wants of consumers. This requires examining the friends and conditions
operating in the Marketplace, consumer’s lifestyle, income levels, and energy influences.
This may reveal unsatisfied needs and wants. Mosquito repellents have been marketed in
response to a genuine and unfulfilled consumer need.
2) Selecting the target market: Review of market opportunities often helps in identifying
district consumer segments with very distinct and unique wants and needs. Identifying these
groups, behave and how they make purchase decisions enable the marketer to design and
market products or services particularly suited to their wants and needs. For example, please
sleep revealed that many existing and potential shampoo users did not want to buy shampoo
fax price at rate 60 for more and would rather prefer a low price package containing enough
quantity for one or two washers. This finding LED companies to introduce the shampoos
sachet, which become a good seller.

3) Marketing-mix decisions: Once unsatisfied needs and wants are identified, the marketer
has to determine the right mix of product, price, distribution, and promotion. Where too,
consumer behavior study is very helpful in finding answers to too many perplexing questions.
The factors of marketing mix decisions are:

i) product ii) price iii) promotion iv) distribution

4) Use in social and nonprofits marketing: Consumer behavior studies are useful to design
marketing strategies by social, governmental, and not for profit organizations to make their
programs more effective such as family planning, awareness about AIDS.

Importance of consumer behavior:

1) production policies: The study of consumer behavior affects the production policies of
the enterprise. Consumer behavior discovers the habits, tastes, and preferences of consumers
and such discovery enables and enterprise to plan and develop its products according to these
specifications. It is necessary for an enterprise to be in continuous touch with the changes in
consumer behavior so that necessary changes in products may be made.

2) Price policies: Buyer behavior is equally important in having price policies. The buyers of
some products purchase only because particular articles are cheaper than the competitive
articles available in the market.

3) The decision regarding channels of distribution: The goods, which are sold and solely
on the basis of low price mast and economical distribution channels. In the case of those
articles, which week T.V. sets, refrigerators, etc. Must have different channels of distribution.
Thus, decisions regarding channels of distribution are taken on the basis of consumer
behavior.

4) A decision regarding sales promotion: Study of consumer behavior is also vital in

making decisions regarding sales promotion. It enables the producer to know what motive
prompt consumers to make purchases and the same are utilized in promotional campaigns to
awaken a desire to purchase.

5) Exploiting marketing opportunities: Study of consumer behavior helps the marketers to

understand the consumer’s needs, aspirations, expectations, problems, etc. This knowledge
will be useful to marketers in exploiting marketing opportunities and meeting the challenges
of the market.

6) Consumers do not always act or react predictably: The consumers of the past used to
react to price levels as if price and quality had positive relations. Today, week value for
money, lesser price but with superior features. The consumer’s response indicates that the
shift had occurred.

7) Highly diversified consumer preferences: This shift has occurred due to the availability
of more choice now. Thus the study of consumer behavior is important to understand the
changes.

8) Rapid introduction of new products: Rapid introduction of new products with

technological advancement has made the job of studying consumer behavior more
imperative. For example, information technologies are changing very fast in the personal
computer industry.

9) Implementing the Marketing concept: This calls for studying consumer behavior, all
customers need have to be given priority. Thus identification of target market before
production becomes essential to deliver the desired customer satisfaction and delight.

Scope of Consumer Behaviour: 

1) Consumer behavior and marketing management: Effective business managers realize
the importance of marketing to the success of their firm. A sound understanding of consumer
behavior is essential to the long-run success of any marketing program. In fact, it is seen as a
cornerstone of the Marketing concept, an important orientation of philosophy of many
marketing managers. The essence of the Marketing concept is captured in three interrelated
orientations consumers’ needs and wants company integrated strategy.

2) Consumer behavior and non-profit and social marketing: In today’s world even non-
profit organizations like government agencies, religious sects, universities, and charitable
institutions have to market their services for ideas to the “target group of consumers or
institution.” At other times these groups are required to appeal to the general public for
support of certain causes or ideas. Also, they make their contribution towards eradication the
problems of society. Thus a clear understanding of the consumer behavior and decision-
making process will assist these efforts.

3) Consumer behavior and government decision making: In recent years the relevance of
consumer behavior principles to government decision making. Two major areas of activities
have been affected:

i) Government services: It is increasingly and that government provision of public services

can benefit significantly from an understanding of the consumers, or users, of these services.
ii) consumer protection: Many Agencies at all levels of government are involved with
regulating business practices for the purpose of protecting consumers’ welfare.

4) Consumer behavior and demarketing: It has become increasingly clear that consumers
are entering an era of scarcity in terms of some natural gas and water. These scarcities have
led to promotions stressing conservation rather than consumption. In other circumstances,
consumers have been encouraged to decrease or stop their use of particular goods believed to
have harmful effects. Programs designed to reduce drug abuse, gambling, and similar types of
conception examples. These actions have been undertaken by government agencies non-
profit organizations, and other private groups. The term “demarketing” refers to all such
efforts to encourage consumers to reduce their consumption of a particular product or service.

5) Consumer behavior and consumer education: Consumer also stands to benefit directly

from orderly investigations of their own behavior. This can occur on an individual basis or as
part of more formal educational programs. For example, when consumers learn that a large
proportion of the billions spend annually on grocery products is used for impulse purchases
and not spend according to a pre-planned shopping list, consumers may be more willing to
plan an effort to save money. In general, as marketers that can influence consumers’
purchases, consumers have the opportunity to understand better how they affect their own
behavior.