CONSUMER BEHAVIOR

SESSION: III
MODELS OF CONSUMER
DECISION MAKING PROCESS
Instructor:
Dr. S. Sahney
Visiting Faculty, IIM Raipur
Source: Schiffman and , Kanuk, Wells and Prensky, Peter and
Olson, Loudon and Bitta
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ECONOMIC MODELS

-Based on the economic theory.

-Largely explains behaviour on the basis of allocation of scarce
resources among unlimited needs and wants.
- micro-economic and macro economics models.

Micro Economic Models:

The micro economic approach was based on the way an 'average'
consumer allocates his resources.
The focus was on the act of purchase in terms of what customer
bought and how much would be purchased.
The microeconomists concentrated on explaining what consumers
would purchase and in what quantities these purchases would be
made.

Macro economic perspective:

Macro economics, the field focussed on aggregate flows in the
economy, their direction and change over time, tries to draw
generalisations about the behaviour of consumers, who by their
decisions, influence these flows.
Two inputs from the macro economic field are important for our
understanding of consumer behaviour:
-relative income hypothesis, and
-permanent income hypothesis.

The relative income hypothesis explains:

-Higher income families spend a lower portion of their disposable
income as compared to the lower income families.
-With the rise in economic progress, these proportions do not change
as there is a rise in all income levels.

The permanent income hypothesis explains:

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THE PSYCHOLOGICAL MODEL
(THE PAVLOVIAN LEARNING MODEL)
The learning model was first introduced by a group of classical
psychologists, Pavlov being one of the propounders.
The model suggests that human behaviour is based on some central
concepts the drives, stimuli, cues, responses and reinforcements which
determine the human needs and needs satisfying behaviour.
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III

THE PSYCHOANALYTIC MODEL

The model suggests that human needs operate at various levels of

consciousness.
The motivational wellsprings embedded in these different levels, are
not obvious to the casual observer, nor does the individual himself
understand them fully.
They can only be analyzed by vigorous, specialized probing.
The founder of the psychoanalytic school of thought, Sigmund Freud
pioneered the procedure of vigorous observation and analysis to

Two more contributions from the field of psychology are notable:

a) the Geslalt model, because it gave useful insights and a new
angle on human perception.
b) the Cognitive theory which was able to provide valid explanations
to many hitherto unexplained aspects of buyer behaviour.

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SOCIOLOGICAL MODEL

The sociological model postulates that man's needs and behaviour are
largely dependent upon and shaped by the social groups and forces.
People tend to take the cue for their needs and wants, and how to fulfill
them, from culture, subcultures, social class reference groups and
family.
The social theorist Thorstien Veblen (19th century) suggested that
individuals are members of various social groups and they tend, under
normal circumstances to conform to largely unwritten but nevertheless 9
powerful behavioural standards or norms of these social groups".

CONTEMPORARY MODELS
-HOWARD SHETHS MODEL
-NICOSIAS MODEL
-BETTMANS MODEL

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HOWARD SHETH MODEL A BACKGROUND:

John Howard came out with the first truly integrative model of buyer
behaviour in 1963.
He was the first to introduce the difference between problem solving
behaviour, limited problem solving and automatic response behaviour.
A more meaningful elaboration was provided in the publication of "The
Theory of Buyer Behaviour" in 1969 by Howard and Sheth.
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More variables impinging upon the behaviour of the consumer were

The Howard-Sheth model serves as an integrating framework

for a very sophisticated comprehensive theory of consumer
behavior.
It should be noted that the authors actually use the term
"buyer" in their model to refer to industrial purchases as well as
ultimate consumers.

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It distinguishes three levels of decision making:

1 Extensive problem solvingearly stages of decision making in which
the buyer has little information about brands and has not yet developed
well-defined and structured criteria by which to choose among products
(choice criteria).
2 Limited problem solvingin this more advanced stage choice criteria
are well defined but the buyer is still undecided about which set of
brands will best serve him. Thus, the consumer still experiences
uncertainty about which brand is "best."
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3 Routinized response behaviorbuyers have well-defined choice

Focussing on repeat buying, the model relies on four major

components
-stimulus inputs,
-hypothetical constructs,
-response outputs, and,
- exogenous variables.
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INPUT VARIABLES
Input variables are depicted in the left portion of the model as stimuli in
the environment.
Significative stimuli are actual elements of brands that the buyer
confronts, while symbolic stimuli are generated by producers represent
ing their products in symbolic form, such as in advertisements.
Social stimuli are generated by the social environment including family
and groups.
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OUTPUT VARIABLES
The five output variables in the right-hand portion of the model are the
buyer's observable responses to stimulus inputs.
They are arranged in order from attention to actual purchase and are
defined as follows:
Attentionthe magnitude of the buyer's information intake.
Comprehensionthe buyer's store of information about a brand.
Attitudethe buyer's evaluation of a particular brand's potential to
satisfy his or her motives.
Intentionthe buyer's forecast of which brand he or she will buy.

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HYPOTHETICAL CONSTRUCTS
They are categorized into two major groups:
(1) perceptual constructs dealing with information processing, and
(2) learning constructs dealing with the buyer's formation of concepts.
The three perceptual constructs of the model can be described as follows:
Sensitivity to informationthe degree to which the buyer regulates the
stimulus information flow.

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The buyer's six learning constructs are defined as:

Motivegeneral or specific goals impelling action.
Brand potential' of the evoked setthe buyer's perception of the ability
of brands in his or her evoked set (those that are actively considered) to
satisfy his or her goals.
Decision mediatorsthe buyer's mental rules for matching and ranking
purchase alternatives according to his or her motives.
Predispositiona preference toward brands in the evoked set
expressed as an attitude toward them.

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EXOGENOUS VARIABLES
At the top of the black box the model lists a number of external
variables that can significantly influence buyer decisions.
These variables were not as well defined as other aspects of the model
because they are external to the buyer.
Some of the exogenous variables are importance of the purchase, time
at the disposal of the buyer, personality traits, financial status etc.
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MODEL DYNAMICS
The process starts when the buyer confronts an input stimulus and it
achieves attention.
The stimulus is subjected to perceptual bias as a result of the influence
of the buyer's predispositions as affected by his or her motives,
decision mediators, and evoked set.
The modified information will also influence these variables which, in
turn, will influence his or her predisposition to purchase.
The actual purchase is influenced by the buyer's intentions and

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MODEL EVALUATION
The Howard-Sheth model represents a significant contribution to
understanding consumer behavior.
It identifies many of the variables influencing consumers and details
how they interact with each other.
Also, the modeland the earlier work on which it is basedrecognizes
explicitly for the first time different types of consumer problem solving
and information-search behaviors.
It also recognizes that outcomes of consumers' decisions are more

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Of course, the model has certain limitations.

First, it does not make sharp distinctions between exogenous and other
variables.
Second, some of the variables are not well defined and are difficult to
measure.
The model also has limited generality.
For example, it is not highly useful in explaining joint decision making
between family members or other members of an organization.

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The major advantage and strength of the theory lies in the precision
with which a large number of variables have been linked in the working
relationships to cover most aspects of the purchase decision and the
effective utilization of contribution from the behavioural sciences.
The weakness stems from the fact .that, there being substantial
measurement error, the theory cannot be realistically tested.

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NICOSIA'S MODEL OF CONSUMER DECISION

PROCESS
-Francesco Nicosia was one of the first consumer-behavior modelers to
shift focus from the act of purchase itself to the more complex decision
process that consumers engage in about products and services.
-He presented his model in flow-chart format, resembling the steps in a
computer program.
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-Also, all variables are viewed as interacting, with none being inherently

This model elaborates the decision making steps that the consumers
adopt before buying goods or services.
The main fields and subfields of the model are as following:
1.
2.
3.
4.

Marketer's Communication affecting consumers attitude.

Consumer's search and evaluation
Purchase action
Consumption experience and feedback

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Nicosia's model provides insights about how the non-action kind of

variables present in the environment and related to the consumers
trigger actions at the consumers end.
The flowcharting approach followed by the model systemises the
presentation of the model considerably.
But, it also forces boundaries on the set of possibilities before the
consumers.
The boundaries may be even unrealistic.
This kind of situation limits the scope and flexibility of the model.

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BETTMAN'S INFORMATION PROCESSING MODEL OF

CONSUMER CHOICE
In this model the consumer is seen in the center of a host of
information processing activities.
The consumer is the recipient of a large amount of information from the
marketer, competitors and rest of the environment.
Moreover, he has his own database built over time from his
experiences, personality and set of values.

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This model is also built around several flowcharts.

These flowcharts describe the components and interconnections
among themselves that are involved in the decision process.
The main components of the model are the following:
i)
Processing Capacity
ii)
Motivation
iii)
Attention and Perceptual Encoding
iv)
Information Acquisition and evaluation
v)
Memory
vi)
Decision Process
vii)
Consumption and Learning

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