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� 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

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� 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

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� 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

ConditionsPsychological

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

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� 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

ExposureAttitude

Search

&

Evaluation

Motivation

Action

Actual

Purchase

Consumption /

Storage

Experience

Field 4: Feedback

Field 3: Purchase

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Field 1: Firm and Consumer

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� 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)

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� 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

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� 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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