Unit 6: Understanding Consumers and Consumer

Behaviour
A Rational Decision Making Model
The process itself may involve the following stages:
A need is felt which creates a problem to be solved.
A solution is sought for that problem.
Alternative solutions are analysed and assessed.
A decision is made as to which is the best solution to the problem.
The decision is implemented.
A review is made of the decision.
At any stage it may be necessary to go back to a previous stage and review earlier thinking.
This is known as a feedback loop. This basic process can be shown as a very simple model
as follows:
Rational Decision Making Model

The Decision-making Unit

Buying can be done by an individual or by a group of people. We call the individual(s),
involved in buying, the Decision-making Unit (DMU).
When more than one person is involved, the individuals may have a definite "role" to play in
the process. The roles have been identified as follows:

The initiator: the person who comes up with the idea of buying an item
The influencer: the person, or people, who will shape the outcome of the decision
The decider: the person with the power or authority to make the decision
The buyer: the person who makes the actual purchase
The user: the person who will eventually use the product

And, of course, in many purchases there will also be:

The gatekeeper: the person who can prevent the decision from being made or make
it more difficult, e.g. a receptionist who prevents a salesperson from seeing a buyer

Types of Purchasing

New Buy Decisions

Repeat Buy Decisions

Assael Model (1987):

This asserts that the type, or nature, of purchasing is affected by two variables:
(a) The involvement of the buyer with the product, and
(b) The differences available (between products/brands).
The following diagram demonstrates the interaction between these variables:
From Assael Four Types of Buying Behaviour

Habitual Buying
The customer has, in the past, considered alternatives and has found "the ideal". The
customer is happy to stick with their decision and has, in fact, become "loyal".
Variety Seeking
If a product is tried and found to be lacking in some aspect, the buyer will simply try another
one the next time they buy, or they may actively decide to keep trying different brands to see
which is best
Dissonance Reducing
Dissonance reducing purchasing is the kind of purchasing which is designed to reduce postpurchase "doubt". Because the degree of involvement is high, usually because of value and
the item being something this is only bought rarely
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Complex Buying
High product involvement and lots of choice make this an extremely hazardous type of
purchase for a buyer. For example computers, you have to consider machine capabilities,
software, compatibility with your existing discs and printer, etc. This type of decision can take
a lot of time in the search for information and assessment of alternatives before a purchase
is made.

Impulse Buying
There is really no accounting for this type of purchase and yet we all do it from time to time.
We are attracted by an advertisement, or a point of sale display and we leap in and buy
without thinking about it. Producers are aware of the existence of impulse, or non-rational,
purchasing which is why so much money is spent on promotional literature and point of sale
displays.

INFLUENCES ON INDIVIDUAL BUYING BEHAVIOUR

Marketing managers are in the "people" business. Even though they may be trying to
make profits, they must understand individual and group behaviour both from the
internal (supply) and external (demand) points of view.
Behaviour stems from needs (requirements), and wants (desires)

Influences on Consumer Buying Behaviour

Cultural
The influences under this heading can be sub-divided into three sections:
Culture

Culture includes both abstract ideas and beliefs, as well as physical artefacts, which
are important to a society. It summarises the learned values and attitudes of a society
as a whole.

Sub-culture
Cultures of all kinds will contain smaller groups or sub-sections. The differences may be
based on life style, religion or on belief in some ideal

Social Class
Despite the claims for "classless societies" which we hear from politicians, class systems
still exist around the world. Social classes are the "divisions" which a society accepts and
they may be based on status, money or education

Social

Influences from family and friends or other reference groups, such as clubs and
interest societies
For example, if your father has always bought Rover cars, you may be influenced
into buying a Rover
university students buy Yugo cars as a status symbol
Becoming first time manager you may realise that a BMW car would fit your status
better than a Yug
.

Personal
Personal factors relate to the individual, e.g. age, life style, occupation, wealth and character.
For example, a young man of 21 who enjoys danger is more likely to be attracted to a motor
cycle

Psychological
Wilson, Gilligan and Pearson (in "Strategic Marketing Management", 1992) identify four
psychological characteristics as being important: motivation; perception; learning; and beliefs
and attitudes.

Motivation: This is what drives us to do or want something.

Perception: This is how we "see" things.

Learning: This comes from experience. As we learn, we change our expectations to

meet with the newly acquired knowledge.

Beliefs and Attitudes: The dictionary definition of "belief" is "principle, proposition or

idea accepted as being true without positive proof". From this you can see that
"belief" will be personal to each individual.

Personality and Environmental Influences

CLASSIFICATIONS OF CONSUMERS
Socio-economic Groupings (Class)
In the UK, social classes are recognised as:
A Upper middle class: higher managerial or professional levels
B Middle class: middle to senior management, rising professionals
C1 Lower middle class: junior and supervisory managers, clerical grades
C2 Skilled working class: manual trades involving individual skills
D Working class: semi and unskilled workers
E Benefit takers: pensioners, widows, anyone using state benefits.

The Family Life Cycle

SAGACITY

The inadequacies of the FLC and social classifications led to the introduction of this
model of influences on behaviour.
The model uses life cycle as its main base and suggests four stages of life:
Dependent, Pre-family, Family and Late.
It then splits up each stage in accordance with income and then income is split up
according to white collar (managerial/higher) or blue collar (skilled/lower)
occupations.
The underlying suggestion of this model is that people will have different hopes and
buying behaviour as they move through their lives and will be influenced by their
current situation.

Geographic/Residential Groups
In the UK, the ACORN system uses categories of housing, i.e.
A Modern family housing for manual workers
B Modern family housing for higher incomes
C Older housing of intermediate status
D Very poor quality older terraced housing
E Rural areas
F Urban local authority housing
G Housing with most overcrowding
H Low-income areas with immigrants
I Student and high-status non-family areas
J Traditional high-status suburbia
K Areas of elderly people.

Life-style Groupings
AIO Activities, Interests and Opinions
Customers are tested by questionnaires which are analysed and the customer is then
"categorised".
VALS Value and Life Style
Arnold Mitchell produced this model of understanding individual behaviour. He suggested
that people can be classified as one of four types:
Need-driven: "survivors" and "sustainers"
Outer-directed people: "belongers", "emulators (imitate to match others)" and
"achievers"
Inner-driven people: "I am me", "experientials", "societally conscious"
Combined (outer/inner): "integrated

Cross-cultural Consumer Characteristics (4Cs)

This classification was devised by the Young and Rubican advertising agency and classified
people into one of three overall groups which could then be sub-divided:

Other life style groups

(a) YAKS (young, adventurous, keen and single): 18-24; living at home or in rented
accommodation; fashion followers; live well; high entertainment expenditure; often
little regard for savings; often high credit card users.
(b) EWES (experts with expensive styles): 24-35; trained/skilled in highly paid job; often
married but usually two incomes; some in rented, some in mortgaged
accommodation; ability to meet payments; fashion-conscious; disposable income to
keep up with latest trends; 2-3 holidays per year (Mediterranean in summer/USA
skiing in winter); high credit card users.
(c) BATS (babies add the sparkle): 24-35; married or living together, rented/mortgaged;
previous (or latent) fashion-consciousness suppressed by other priorities and loss of
second income; 1-2 holidays per year often with friends or camping in UK or France.
(d) CLAMS (close check against money spent): 34-44; married but children growing;
mortgage commitments at their peak; often paying school fees; some in mid-life
crises divorcing or re-marrying; 1-2 holidays per year either package or visiting
friends and relatives in UK; budget carefully; pay credit cards on time or leave very
small outstanding balance.
(e) MICE (money is coming easier): 44-54; children grown some left home; often
inherited property giving financial security and ability to purchase luxury items; 1- 2
holidays per year often now without children usually in UK but often "special"
places they have always wanted to see or visiting old friends who have moved
abroad.
(f) OWLS (older with less stress): 55+; children grown and left home; financial security;
2-3 holidays per year maybe visiting friends abroad in similar life situations; still
conscious of money but determined to enjoy themselves; major expenditure is on
holidays and presents for children and grandchildren; use credit cards but often
sparingly and always pay in full and on time.

THE SOCIAL PSYCHOLOGY OF CONSUMER BEHAVIOUR

Engel, Kollatt and Blackwell (1978) proposed a development of the systems approach to
apply to the decision-making process as a framework for highlighting aspects of the
influences which bear on the process.
Simplified Version of the Engel, Kollat and Blackwell Model

The "perceptual system", can include such items as past experience, advertising,
recommendations, perceived need, funds available and even "wishful thinking".
Similarly, "evaluative system" could include such items as attitudes, hereditary
beliefs, knowledge, advice, information search, motives, life-style, and group
compliance.

Fulfilment of Needs

The two classic theoretical models on the nature of needs as an influence on

behaviour are:
Maslow's Hierarchy of Needs, and
Hertzberg's Two Factor Theory.

Maslow's Hierarchy of Needs

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Herzberg proposed what he called his Two-Factor Theory, in which he stated that factors of
the first kind were hygiene or maintenance factors (they needed satisfying, but they did not,
of themselves, motivate) and those of the second kind were satisfiers.
There are three aspects of behaviour designed to fulfil needs and their impact on consumer
actions.

(a) Personal Roles and Self-image

Within each individual there are several "persons", one of which will be dominant and
the others hidden, at any given time, depending on what you are doing, with whom,
and who is watching. This multiplicity of personality has two sources; one social and
the other psychological. Socially, we may be said to be "more than one person"
because adult people are required to adopt more than one role from time to time.
For instance, I am a writer, a teacher and an administrator in my job and I am a
husband, a father, a son and a brother in my family life; I am also a friend, a fellowmember of a voluntary society and a neighbour among my social contacts; and I am
a ratepayer, a taxpayer, a voter and a householder within civic life.
Psychologically, we are "more than one person" because our perception of
ourselves is a source of considerable anxiety. Malhotra has postulated three different
"self concepts" or self-images:
The actual self-concept (my picture of myself as I really am)
The ideal self-concept (the "me" I would like to be, were it not for my
faults and flaws), and
The social self-concept (the "me" as I believe others see me).

(b) Purchase Risk

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Perceived risk the risk that the purchaser feels is attendant upon his own act of choosing.
This has two sources: lack of information and the possible on sequences of the
purchase.

Strategies to reduce risk

1)

Functional strategies would include mechanisms that reduced the down-side

consequences of the "wrong" decision, such as money-off promotions, guarantees
and warranties, free samples, offers of a test drive of a new motor car, detailed
instructions and manuals, and promises of free after-sales service, help and advice.

2)

Psychological means of reducing perceived risk would include advertisements that

showed how easy the product was to use or how socially acceptable it was or
endorsements by people who are seen to be opinion-leaders among the group being
targeted.

(c) Problem-solving Behaviour

Extended Problem-solving (EPS)
When a person is faced for the first time with a new product (new to him, not necessarily
new on the market) it seems that he may exhibit a particular kind of behaviour. This involves:
(i) Searching for information (perhaps talking to other consumers, reading articles in
newspapers or magazines or searching for reports by consumer associations)
(ii) Processing that information in order to categorise the product, i.e. to fit it mentally into a
grouping of similar products
(iii) Considering his own attitudes and preferences ("am I the sort of person who would want
want/need/use this?")
(iv) Consulting the social and fashionable pressures that are evident ("everyone else I've
met this week seems to be buying one of these")
(v) Assessing such factors as price, availability and all the risks associated with the
purchase.
Limited Problem-solving (LPS)

Once the product has been purchased and tried out, it may be that the consumer's
experience leads him to feel much more comfortable
The mental factors needed for subsequent purchases are fewer. The information
search is much more limited, the sources consulted fewer, the sense of risk may be
reduced and the consumer may feel that he now "knows his way around" when
looking for the product

Routine Problem-solving

After a while, the consumer may become habituated to buying the product and
knowledgeable about where and for how much it may be had.
There is some evidence that consumers may become so bored with their RPS state
that they actually engage in brand-switching behaviour, simply to alleviate the tedium
of repeatedly buying the same product time after time.

The Influence of Groups

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The interactive way that some groups of people influence others is of great
importance to marketers. A good deal of research has been done in this area and we
shall examine three of the key concepts here.

(a) Diffusion of Innovation

Rogers' Model of Diffusion of Innovation

The model of the "diffusion of innovation" developed by Rogers continues with the idea
that people move through the decision-making process at different speeds.

They are usually also quite prepared to pay a premium price for something that is
new, where other people might be more cautious and wait until price competition has
brought the price down to a level they are more comfortable with. These people are
referred to commonly as innovators and people like this are thought to constitute
only about 2.5% of the population.
Following the innovators in taking up products are the early adopters. These
(perhaps 13.5% of the population) are people who are not temperamentally inclined
to take the risks associated with discovering and trying out new things for
themselves, but who are keen "followers of fashion".
The next group is the early majority. These (34% of the population) will generally
not try a product until it has been well tried by others before them. They are not
inclined to search hard for a product so if it is not on the shelves of their regular
shops and stores, they will not go to the trouble of seeking it out, as innovators or
early adopters would.
Another 34% of the population are the late majority, who do not feel comfortable
with a new product unless there is clearly little risk associated with its newness. They
prefer to choose between several competing brands and they need the low prices
associated with fierce competition to tempt them into the market.
Finally, there is a group of some 16% who are known as laggards. These people are
distrustful of anything that is not seen as traditional, well-tried and tested, familiar,
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even old-fashioned. Curiously, although these come very late to market for products,
they are among the most loyal of consumers.

(b) Reference Groups

People often see themselves as members, potential members or aspirant members, of
particular groups. When we make every day decisions about how we should and will behave
in various situations, we seem to do so by reference to what people would expect in the
groups that matter to us. Psychologists call these groups reference groups. One of the most
common reference groups in early life is the family.
Three broad types (or functions) of reference group have been identified.
Normative groups
These are groups to which we would like to think we belong and so we behave in ways
which we think appropriate to membership. So, for instance, if I like to think of myself as
middle-class, I will read a broadsheet newspaper, wear a collar and tie, encourage my
children to think of going to university, work in a professional or near-professional occupation
and so on. The family is the first normative group for most of us but regional, class and
occupational groupings are common normative groups in later life.
The comparative function
Here the members of the group we now belong to influence our behaviour by approving of
certain choices we make and making clear their disapproval of others. So if I feel that the
group I find most attractive is more likely to drink filter coffee than instant, I too will be
powerfully influenced to do the same.
Expert groups
This third group are seen as, either by virtue of their own natural, inherited or acquired
knowledge, or because by having already bought and used the product they have become
expert in choice and use. So, for instance if we want to choose the "right" washing liquid, the
opinion of an experienced housewife who has been washing clothes for years would be seen
as highly influential. We have all seen advertising that makes use of this kind of reference
group.

(c) Credibility

Great emphasis is placed on using trusted personalities to provide credibility to the

messages in advertisements.
In the field of consumer psychology, the work of Osgood and Tannenbaum has been
valuable.
In the formation of their Congruity Theory, they examined the relationship between
an idea (such as a brand value) and the person who advocates it.
They concluded that where the audience's feelings about the idea and the advocate
start out at different points on a scale of approval, those feelings will move toward
each other, arriving at a point where they are equal the point of congruity.

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So, if I disapprove of bungee-jumping but I approve of Fred (personality), then when I

hear Fred speak approvingly of bungee-jumping, both my feelings about Fred and
my feelings about bungee-jumping move towards each other until they are at the
same point of my scale of approval the point of congruity.
Osgood and Tannenbaum concluded that in such situations, strong feelings in either
direction move less readily than weak feelings.

Osgood and Tannenbaum Congruity Theory

Cognitive Dissonance

Festinger formulated the theory of Cognitive Dissonance. "Dissonance" is a musical

term that signifies the unpleasant effect of two or more conflicting sounds being
produced together
Festinger recognised that people are happiest when they have to deal either with
only one, unchallenged idea or with ideas that do not conflict and are widely
separated
For example I buy a new car. I am moved to make my choice principally by the
sexy red colour, the reasonable price and the car's great comfort. I leave the
showroom a happy man. I return home and get out of the car. The man next door
looks over the fence and compliments me on my new possession. He asks what it is
like for speed. He asks what its consumption of fuel is like. He asks how often it has
to be serviced and how much parts cost. Having gone indoors with the manual, I look
up information on the points he has raised. Within ten minutes I am downcast. The
car seems to be built for comfort, not for speed; its greater weight and lack of
aerodynamics means that it uses a lot of fuel; being a foreign make, parts are difficult
and costly to get hold of; and it requires a routine service every four thousand miles,
where six thousand is the more usual requirement.

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Festinger suggests that when a person makes a decision (any kind of decision, not
just a purchase) the mind is rather like a weighing-scale or balance.
On one side of the scale are the positive factors that make one tend towards a
particular decision and the negative factors that make one tend away from the
alternatives.
On the other side of the scale are the negative ideas about the chosen option plus all
the positive things about the alternatives.
Festinger's Theory of Cognitive Dissonance

Festinger demonstrated that when the scale tips sharply in either direction, we are
mentally comfortable; we experience "assonance" or harmony. We feel that the
evidence shows that we made the right decision or that we definitely made the wrong
decision and so we act quickly to reverse it
A decision too close to the point of balance produces dissonance an unpleasant
conflict of closely-related ideas.

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Decision-Making Sets
Decision-making Sets

"Hierarchy of Effects" Theories

Strong's model, dating from a book in 1925 and universally known as the AIDA
model, is one of the earliest and still influential today.

Attention

Interest

Desire

Action
This model has spawned many others, as various scholars sought to improve upon it.
The generic name for all these models is "hierarchy of effects" models, since they all
postulate an ordered process of successive mental stages.
Here are just a few:

Colley (1961)
Unawareness Awareness Comprehension Conviction Action

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 Lavidge and Stainer (1961)

Awareness Knowledge Liking Preference Conviction Purchase

Rogers (1962)
Awareness Interest Evaluation Trial Adoption

Howard and Sheth (1969)

Attention Brand comprehension Attitude Intention Purchase

Engel, Blackwell and Kollat (1978)

Perceived information Problem recognition Search Evaluation of alternatives
Belief Attitude Intention Choice

ORGANISATIONAL PURCHASING
Organisations buy differently from individual consumers for a number of reasons:

Purchases tend to be of higher value.

Purchasing tends to be for higher quantities.
Purchasing will tend to be better documented.
Buying will tend to be done in a logical manner, etc.

Types of Industrial Purchases

Industrial purchases have been well documented as being one of three types:

Straight re-buy: simply repeat purchasing without changes of any kind

Modified re-buy: where some aspect is changed, e.g. specification or supplier
New buy: involving new specifications, new supplier, etc
The group of people will often be involved in industrial buying is called a decisionmaking unit (DMU).

Influences on Organisational Buying

Organisations buy differently from individual consumers, for a number of reasons.

They have multiple objectives/needs for example Profits, Reduced costs, Meeting
needs of employees, Legal and social restraints etc

A lot of people may be involved in the purchasing decision

Buying patterns may be formally set by the organisation
The value of the purchase is often high

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