Economic Models of Consumer Behavior

Business Management Sales & Marketing

<h2>What is Consumer Behavior?</h2>According to Business Dictionary, “Consumer buying behavior is the process by which individuals search for, select, purchase, use, and dispose of goods and services, in satisfaction of their needs and wants”. The following definition is also used in numerous research journals. “Consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.”Consumer behavior refers to the process that customers go through while making a purchase, and it includes aspects that impact their decision. Purchase decisions for many items and services are the result of a lengthy, complex process that include a broad search for information, brand comparison, and evaluation.Let us see the main economic models of consumer behavior.<h2>Pavlovian Model</h2>Ivan Pavlov, a Russian scientist, was the inspiration for this model. Pavlov's studies involved ringing a bell and then applying a meat paste to the dogs' tongues, causing them to salivate.After a number of pairings, the dogs were able to associate the bell sound (the conditioned stimulus) with the meat paste (the unconditioned stimulus) and showed the same unconditioned response (salivation) to the bell alone as they did to the meat paste.<h2>Economic Model</h2>In economics, man is assumed to be a rational human being who will weigh all of the options in terms of cost and value obtained and choose the product or service that will provide him with the most satisfaction (utility).The law of diminishing marginal utility assumes that consumers would follow the maximization principle. With limited purchasing power and a set of requirements and tastes, it is anticipated that a consumer will spread his or her money among a variety of products at varying costs to maximize utility.<h2>Input, Process, Output Model</h2>The model focuses on the product being advertised, as well as the consumer's environment and family history.In this paradigm, the following factors serve as inputs and outputs −Inputs include an organization's marketing efforts in terms of product, price, location, and promotion, as well as environmental forces such as family, reference groups, culture, socioeconomic class, and others that impact a consumer's decision-making process. These elements, cause the consumer to define his wants and ensure that, after thorough consideration, the customer has the intention to purchase things.Process is concerned with the purchasing process. In order to make a purchasing decision, a consumer must go through several processes, including need recognition, awareness, evaluation, and purchase.Outputs are the consumer's reactions to the organization's marketing efforts.Consumers' reactions can be seen in the following areas −<ul class="list"><li>Purchasing choice</li><li>Selecting a Product Selecting a Brand</li><li>Dealer or Store of Your Choice</li><li>When and how much to buy</li><li>Following-up on a purchase</li></ul><h2>Psychological Model</h2>This model is based on the research of psychologists who studied personality. They believed that human needs and motives were manifested on both the conscious and subconscious levels. Sigmund Freud's three levels of consciousness (id, ego, and superego) all operate to influence one's purchasing decisions and behaviors.A concealed symbol in a company's name or emblem may persuade a person's subconscious mind to purchase that product rather than a similar product from another firm. This method has been used by marketers to produce product development ideas, such as design, features, advertising, and other promotional approaches.<h2>Howard Sheth Model</h2>The buyer's journey, according to the Howard Sheth model of consumer behavior, is a highly rational and rigorous decision-making process. Customers put on a "problem-solving" hat every step of the way in this approach, with several elements impacting the journey's outcome.There are three layers of decision-making, according to this model. They are as follows −<ul class="list"><li>Extensive Problem-Solving</li><li>Limited Problem-Solving</li><li>Routine Response Patterns</li></ul>The model has incorporated principles from learning theory to explain brand choice behavior when the buyer transitions from Extensive Problem Solving to Routinized Problem Solving.<h2>Sociological Model</h2>The individual customer, according to this paradigm, is a member of the social institution known as society. Because the individual lives in a society, he/she is influenced by it and, in turn, determines its development path.Brands that sell food and beverages to athletes are one example. To gratify these customers, sell products that cater to their needs, such as low-calorie snacks or protein powder to assist them enhance their protein intake. By doing so, you are addressing directly to the consumer in that group and demonstrating how your product will assist them maintain their position within it.<h2>Family Decision Making Model</h2>Every family member has a different role to play in the purchasing choice. In a family structure, there are six sorts of members who have sway over other family members' purchasing decisions.It is as follows −<ul class="list"><li>The User</li><li>The Influencer</li><li>The Preparer</li><li>The Gatekeeper</li><li>The Buyer</li><li>The Decider</li></ul><h2>Engel-Blackwell-Kollat Model</h2>Consumers go through a five-stage decision process before acquiring a product or service, according to the Engel-Kollat-Blackwell model of consumer behavior.AwarenessConsumers become conscious of their need, want, or curiosity to purchase what they just learn during this stage after seeing adverts from a firm.Information ProcessingAfter learning about a product or service, a consumer begins to consider how it relates to their previous experiences or needs, as well as whether it will meet any current wants.EvaluationConsumers will conduct research on the product they have discovered as well as competing possibilities to determine if there is a better option or whether the original product is the best fit.Purchasing DecisionA consumer will make a purchase for a product that has outperformed competitors in terms of value. If a customer changes their mind, they can halt the process.Customer Experience AnalysisAfter making a purchase, a customer will use it and evaluate whether their experience was favorable or poor. They will keep a product after a trial time and may elect to become repeat consumers, or they will express unhappiness and return to stage three.This approach is appropriate for companies who have a large number of competitors offering similar products or services. If your product market is saturated and competitive, the goal is to stand out by addressing clients at every point of their journey.<h2>Industrial Buying Model</h2>The Industrial Buying Model addresses the time-consuming process of making purchasing decisions in a typical industrial setting. Many elements influence the purchase choice in an industrial setting. These criteria may be specific to products or to the company that creates the products in question.The type of purchase made by consumers, the potential risks associated in picking a particular option, and the pressure relating to product delivery on time are all product specific variables. The Organizational Specific Variables concentrate on resolving issues that develop from time to time as a result of purchase decisions, persuasion and negotiation challenges related to the same, and other factors pertinent to scenarios that may arise from time to time.<h2>Nicosia Model</h2>The Nicosia Model prioritizes business above all else, with the consumer coming in second. It claims that the marketing messages used by the company determine whether or not people would buy.There are four "fields" in this model. They are as mentioned below.<ul class="list"><li>The features of the company and the characteristics of the customer - What is the tone of your marketing messages? Is your message likely to resonate with them? The latter is influenced by the personality qualities and life experiences of the customer.</li><li>Searching and assessing - The buyer begins to compare other brands based on the company's messaging, similar to the Howard Sheth model's "limited problem-solving" stage.</li><li>Making a purchase decision - The customer will make the purchasing decision once the company has persuaded them to choose them as their store or provider.</li><li>Provide feedback - The organization will select whether or not to keep utilizing the same messaging in the feedback section, and the customer will decide whether or not they will continue to be receptive to future messages.</li></ul><h2>Conclusion</h2>It is essential for marketers to understand the exact demands that customers are attempting to meet and how they translate these needs into purchasing criteria. Marketers must recognize how consumers obtain knowledge about various options and use that information to choose amongst rival brands. In this way, understanding of consumer behavior is important for marketers.

Abhishek Sengupta

Updated on: 22-Jun-2022

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