02 Consumer+Behaviour+Models

Consumer Behaviour

Consumer behaviour models

Janice Denegri Knott

Room: W435

Email: [email protected] 2

A model a is simplified version of reality, it has

never been reality, it isn’t reality and it will

never be reality...

… therefore all models are subject to criticism

(oh and if we are a bit postmodern, we could ask, what is reality)

ObjectivesObjectives

At the end of this session, you should be able to:

Understand the concept of modelling within consumer behaviour studies; Evaluate the applicability of traditional models of consumer behaviour;

Evaluate the applicability of contemporary models of consumer behaviour.

Understand the main components of the assignment

1. The models hall of fame1. The models hall of fame

• Maslow’s Hierarchy of Needs;• Hierarchy of Effects• Elaboration Likelihood model• Howard-Sheth model• Engel, Kollat and Blackwell model• Nicosia Model• Decision-making models• Problem identification models• Fishbein and Ajzen’s Behavioural Intention model• Fritz Heider Balance Theory• E.Roger’s adoption and diffusion of innovations• Image congruency theory• Information processing

2. Models and theory2. Models and theory

• Theory: an interrelated set of concepts, definitions and positions that presents a systematic view of phenomenon (Loudon and Della Bitta, 1993)

Theory has 4 functions, to:

1. Describe 2. Explain 3. Predict 4. Control

Are all these functions realistic?

3. Types of models3. Types of models

Algebraic models:Fishbein’s Attitude Model

Ao= ∑=bieii=1

n

Ao = the person’s overall attitude towards the object

bi= the strength of his belief that the object is related to attribute I (e.g. ASDA is good value for money)

ei= his evaluation or intensity of feelings (liking or disliking) toward attribute i

n= the number of relevant beliefs for that person


Conceptual models: Hierarchy of needs, (Maslow)


Personal variable models: a take on Ajzen’s Theory of Planned Behaviour (1991)


Comprehensive Models: Howard-Sheth Model


Black Box Models

4. Consumer behaviour models: A brief history4. Consumer behaviour models: A brief history

4.1. Traditional Models of consumers

Early models derive from economics and were interested in studying how scarce resources are allocated to quench and unlimited amount of wants and needs (Loudon and Della Bitta, 1993)

• Macroeconomics

• Microeconomics

4. Traditional models of consumer behaviour4. Traditional models of consumer behaviour

Macro

economics

1. Microeconomics

Focus: The act of purchasing

Focus: Aggregate flows in the economy

4.1. Microeconomics 4.1. Microeconomics (from Loudon and Della (from Loudon and Della BittaBitta, 1993), 1993)

• Concentrates on the act of purchasing

• Interested in knowing what consumers were purchasing, ignoring the why and how underpinning their behaviour

• Assumptions made:– Consumers wants and needs are unlimited and unquenchable– Consumers allocate their resources to maximise levels of

satisfaction (MU1/P1 =MU2/P2 =… MUn/Pn)– Consumers have perfect knowledge– The additional satisfaction of a unit that is bought after the first

purchase will be less than the first purchase’s marginal satisfaction

– Price is key – Consumers rational

What are the limitations of this approach?

4.2. Macroeconomics 4.2. Macroeconomics (from Loudon and Della (from Loudon and Della BittaBitta, 1993), 1993)

• Looks at the overall economy; the value of goods; from these conclusions are drawn about consumers’ behaviour influencing these flows

• Relative income hypothesis: how much is spent it not solely determined by income but is influenced by peers

• Permanent income hypotheses: consumers determine how much to spend based on a perceived average of what can be consumed and not only on income

• Consumers’ behaviour is not taken into account

What are the limitations of this approach?

4.2.1. Behavioural economics 4.2.1. Behavioural economics (from Loudon and Della (from Loudon and Della BittaBitta, 1993), 1993)

• George Katona introduces the need to look at psychological influences guiding consumer’s behaviour: behavioural economics

• Consumers will purchase products when they have confidence in the economy (consumer sentiment)

Actual economicconditions

Psychologicalprocess

Consumersentiment

Economicbehaviour

The Katona Model (source: Loudon and Bella Ditta, 1993)

Could this model help an organisation in any of its activities?

4.3. Limitations4.3. Limitations

Is this you? Do you know anybody who thinks like this?

5. Contemporary Models5. Contemporary Models

5.1. Nicosia Model 5.2. Howard-ShethModel

5.3. Engel-Blackwell-Kollat

5.1. Nicosia Model (1966)5.1. Nicosia Model (1966)

Sub-field one:Firm’s attributes

Sub-field one:Firm’s attributes

SearchEvaluation

SearchEvaluation

ATTITUDE

Sub-field two:Consumer’s

attributes(pre-dispositions)

Sub-field two:Consumer’s

attributes(pre-dispositions)

DecisionDecision

MOTIVATION

ConsumptionConsumption

PURCHASING BEHAVIOUR

EXPERIENCE

FEEDBACK

Field Two: Search for and evaluation of means-end(s) relation(s) (Pre-Action Field)

Field One: From the source of a message to the consumer’s attitude

Field Three: The act of purchase

MESSAGEEXPOSURE

Field Four:The feedback


5.1.1. Limitations5.1.1. Limitations

• Incomplete in a number of aspects, very reductionist

• Variables in the model have not been clearly defined (Rau and Samiee, 1981)

• A number of assumptions have been made that question the validity of this model, for instance:– What type of consumer are we talking about?– The company and the consumer have an existing relationship? What

type?– Is this for a new product? Is this the first exchange the consumer has

had with the producer?• The model cannot be validated, according to Foxall (1980) it is pre-

scientificDo you agree with these? Can you t think of any other limitations?

5.2. Howard5.2. Howard--ShethSheth Model (1969)Model (1969)

Perceptual Constructs

Learning Constructs

Exogenous Variables

1

Outcome



• Too many variables, a complex model that can be difficult to read


• A number of assumptions have been made that question the validity of this model, for instance:– Sharp distinctions between exogenous and other variables have not

been made– The model cannot be generalised, it cannot be applied to co-joint

decision making for example– Can this model be applied for non-branded products (Rau and

Samiee, 1981)?• The model cannot be validated, according to Foxall (1980) it is pre-

scientific Do you agree with these? Can you t think of any other limitations?

5.3. Engel, Blackwell and 5.3. Engel, Blackwell and MiniardMiniard (1990)(1990)



• Too many variables, a complex model that can be difficult to read


• The model is vague (Loudon and Della Bitta, 1993)– Key variables are vaguely defined

• How do environmental variables affect consumers’ behaviour?• How do motives influence consumers’ behaviour?

– It is a mechanical overview of human behaviour– Can this model be applied for non-branded products? Goods?

Services? (Rau and Samiee, 1981)• The model cannot be validated, according to Foxall (1980) it is pre-

scientificDo you agree with these? Can you t think of any other limitations?

6. Conclusions6. Conclusions

• A model presents phenomena in such a way that it can be easily communicated

• Models are just representative of reality, they are not reality

• There are different types of models (black box, conceptual, algebraic, personal variable and comprehensive models)

• The Nicosia, Howard-Sheth and the Engel, Kollat and Blackwell model have all been criticised on the grounds that they are pre-scientific

6. Conclusions6. Conclusions

• Models operate on the assumption that all human behaviour is rational

• All models are mechanistic

• No model provides genuine insight of what underpins consumer behaviour, is this possible?

• The proposal (200 words worth 10% of your final grade)– SUBMISSION DATE: MONDAY, 20TH NOVEMBER

• A report (2070-2530 words worth 40% of your final grade) – SUBMISSION DATE: MONDAY, 15TH JANUARY

• End of year examination, worth 50% of your final grade

Assessment

• Select a company or not-for-profit organisation that you are familiar with;

• Evaluate how a specific consumer behaviour theory or model can aid in understanding consumers’behaviour and guide marketing/advertising practice.

Assignment’s main components

• Consider the options offered in page 10 of your unit guide;

– Go over guidelines offered and the assessment criteria

• Read lecture notes and accompanying reading in order to select theory or model;

• Select an organisation that would benefit from your analysis

– Conduct an environmental scanning to construct a justification for why there would be a need for your evaluation

Assignment guidelines

02 Consumer+Behaviour+Models

Documents

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