UNIT 16 EARLY MODELS

Objectives After going through this unit, you should be able to: Explain how the early thinking on various aspects of consumer behaviour was formed Describe the contributions from related fields which have furthered our understanding of consumer behaviour Discuss how these early models are useful in understanding behaviour of consumers. Introduction Economic Models The Psychological Model (The Pavlovian Learning Model) The Psychoanalytic Model The Gestalt Model The Cognitive Dissonance Explanation Sociological Model Summary Self-Assessment Suggested Readings

Early Models

Structure 16.1 16.2 16.3 16.4 16.5 16.6 16.7 16.8 16.9 16.10

16.1

INTRODUCTION

Some attempts to understand why a consumer behaves the way he does, have always been going on. A variety of the early, traditional models, each explaining the behaviour of the consumer from its own perspective and indeed taking a differential view of the consumers, exists. It is interesting to look at some of these early models to enhance our understanding of how the views of what makes a consumer `tick' have changed over time and how each different input from related fields has furthered the available knowledge in this field. We will in this unit look at the micro and macro economic models, coming from the field of economics, some sociological models, the psychological theory view and resultant explanations of buyer behaviour.

16.2

ECONOMIC MODELS

The economic theory, which largely explains behaviour on the basis of allocation of scarce resources among unlimited needs and wants, has given alternative views of the consumer from the view point of its sub-disciplines, i.e. micro-economic and macro economics. That these models were powerful influences is evident from the fact that they still influence the contemporary view of consumers.

Micro economic models: The micro economic approach was based on the way an `average' consumer allocates his resources and then develops generalisation about aggregates of such average consumers in the economy. The focus was on the act of purchase in terms of what customer bought and how much would be purchased. The inter play of needs and motivation, the priortisation of these preferences was not considered in developing the actual models.
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Modelling Buyer Behaviour

The micro economic theory of consumer decision making was based on the following assumptions:
a) Being unlimited, consumer needs and wants can never be fully satisfied. b) As consumer resources are limited, he would allocate the available money in a way that maximises the satisfaction of his needs and wants. c) Consumers have complete knowledge about the utility of each product and service i.e. they are capable of computing the exact satisfaction that each item is likely to produce. d) As more units of the same item are bought, the marginal utility or satisfaction provided by the next unit of the item will keep on decreasing, according to the law of diminishing marginal utility. e) Price is used as a measure of sacrifice in obtaining the goods and/or services. f) The overall objective of the consumer, is to, in a very rational manner, maximise his satisfaction out of the act of purchase. The model adds to our understanding of certain aspects of consumer behaviour, but the explanation provided are rather limited. This inadequacy arises out from the unrealistic basic assumptions on which the theory of the model is based. Research shows that consumers for most purchases seek adequate levels and not maximum levels of satisfaction consumers almost never have perfect knowledge about the utility of each item they seek to decide upon. Consumers are not rational in all their purchases. They use a variety of variables to assess the ` sacrifice' or cost they will bear while purchasing goods and services in addition to the 'price'. In addition, in some cases, high prices may actually be preferable, when in absence of other available cues, the consumer uses the price as an indicator of quality. The model is also silent about the processes that precede and follow the actual act of purchase. In spite of above limitations the model provides a useful prespective and many marketers believe that the greater the rational nature of a given purchase (e.g. of buying of equipment in an industrial setting) the closer will be the application of the micro economic model to the act of purchase. Activity - 1 Analyse the last purchase of a consumer non durable that you bought and consumer durable you bought, in terms of the above model. How many of the generalisation of the above model applied to your purchase behaviour and which ones did not? 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. These are the relative income hypothesis and the permanent income hypothesis. The relative income hypothesis concerns a very interesting fact. 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 relative income hypothesis contends that as peoples' consumption standards are more influenced by their social groups and peers, the

proportion of the families income relative to others is likely to change only when the rise in income is significant enough to put the family in a different social setting. The permanent income hypothesis on the other hand explains that individuals are slow to change their consumption patterns even when there are sudden changes in their income. According to the hypothesis, consumers are influenced by their own perception of some average amount that can be consumed without disturbing their accumulated wealth rather than using the estimate of "actual" income in a given period to determine the level of their consumption expenditure. Activity - 2

Early Models

Observe critically the spending behaviour of you over family and that of a few others that you are familiar with. How well do the two hypothesis given above explain the spending behaviour. In what way does the spending behaviour differs?

16.3

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. Individually - a drive is a strong internal stimulus which compels action. - stimuli are inputs which are capable of arousing drives or motives. The way a person responds to a given stimulus would depend upon the. Configuration of cues. Cues is a sign or signal which acts as a stimulus to a particular drive. The way an individual reacts to the stimuli is known as his response. If the response to a given stimulus is "rewarding", it reinforces the possibility of similar response when faced with the same stimulus or cues. Applied to marketing if on an informational cue like advertising, the buyer purchases a product (response), the favourable experience with the product increases the probability that the response would be repeated the next time the need stimulus arises (reinforcement). The configuration of cues confronting the organism are always changing and therefore the learned responses are generalised. This generalisation may motivate the buyer to a similar response e.g. brand shifting in both the following cases - his favourite brand is out of stock or he is exposed to a new brand, or his forming an opinion that all whiteners are harsh on the fabric, on the basis of his experience of two brands of chemical whiteners. On the other hand, the connection between cue and resultant response becomes more specific through discrimination. Repeat purchases of alternative brands, and the more favourable post purchase feelings about one of them; lead the buyer to discriminate more specifically between these alternatives and he, when faced with similar cue configuration will be more specific about his reponse.

Modelling Buyer Behaviour

The model provides useful insights in the behaviour of the consumer by showing that human needs are a result of the interplay of drives, stimuli, responses etc. The marketer utilizes this knowledge to build up the demand of a product by associating it with strong drives and providing positive reinforcement. They could use the concepts of generalisation to create a market for a new product by associating it with similar cues as that of the competitor and hope to shift buyer loyalities; or to create a differentiated image for their own product by associating it with dissimilar, strong drives. The above model however does not deal adequately with phenomenon such as perception, the subconscious and inter-personal influeoae, which were later found to be important determinants of behaviour. Activity - 3 Suggest five examples of genralisation and discrimination from your own purchase experiences. Generalisation . . . . Discrimination

16.4

THE PSYCHOANALYTIC MODEL

This model tries to overcome a major limitation of the above stimulus response model by incorporating certain intervening variables like the family and social environment. The model suggests that human needs operate at various levels of consciousness. His motivational wellsprings embeded in these different levels, are not obvious to the casual observer, nor does the individual himself understand them fully. They can only be analysed by vigorous, specialised probing. The founder of the Psychoanaltic school of thought, Sigmund Freud pioneered the procedure of vigorous observation and analysis to understand the personality complexities and was able to provide some insight on the basic reason for individual personality differences and resultant behaviour. Freud started with the,assumption that the child enters the world with instinctive needs; the gratification of which depends upon others. He tries to gratify these needs through direct blatant means like screaming, crying, grabbing etc. The painful realisation that instant gratification of his needs is not possible, and the resultant frustration, lead him to develop more subtle means of gratifying his needs. These instinctive drives are never fully overcome. As he grows older, his psyche becomes more complex. The instinctive needs and urges reside in the id; which becomes their reservoir. The intellectual planning centre which mediates the unrestrained needs and social constraints, called the ego, governs the manifestation of these needs and urges. A third part of the psyche, the super ego, which embodies values, channelises the gratification of instinctive drives into socially approved outlets, so that the guilt that is felt towards some of these urges is avoided. Man tends to feel guilty about some of his instinctive urges, especially the sexual urge. This l e a d s him to suppress them from his consciousness, to either deny them or to channelise them in socially acceptable ways in an entirely unconscious fashion. These urges, though they are diverted in acceptable norms of behaviour, are never fully , overcome or eliminated. They surface now and then according to the state of delicate balance which the ego maintains between the impulsive powerful urges of the id and the intuiting, oppressive power of the super ego. Freud maintained that sex or libido, is one of the most powerful instincts and the motives for many acts can be attributed to the sexual urge manifesting itself in obvious fashions unconsciously. Later researchers

like Adler postulated that other impressed desires, like the urge for power, also act as powerful motivators of behaviour, though like the urges mentioned by Freud, these also manifest themselves in diverse behaviour patterns. According to the Psychoanalytic theory, therefore, by implication the behaviour of the individual is never simple. The motivations that underlie it axe not apparent to a casual observer of overt behaviour or even to the person himself. To quote an example - the purchaser of a sports car giving his reasons for purchase may say that he bought it for its looks, maneuverability. Subconsciously however, he may have had a desire to ' feel young or Impress others with this more costly trendy model, At a still deeper level the sports car may have been purchased to achieve surrogate gratification of unsatisfied sexual strivings. Taking its basis in the above stated Freudian school of thought, -a new field of research in buyer behaviour called motivation research emerged in the fifties. The researchers, starting from the. Freudian premise that the human behaviour is result of both- his conscious and subconscious mind, try to probe the latter by using projective techniques in order to be able to furnish reasons underlying overt behaviour. This field has provided useful broadening of the research methodology of the Freudian school and utilized the concepts thereof to the, study of human behaviour. The most important marketing implication of the model is that since buyers' needs operate at several levels of consciousness, he is concerned not only with. the functional aspect ,of the product, the symbolic aspect may also hold substantial meaning for him and motivate him to a buying decision. He may therefore respond to a- stimulus to both his conscious and subconscious, since his behaviour is a product of both. This has Important Implications for the advertising function and the product planning function. While psychoanalytic theories have been depreciated in many quarters, they can not be written off or dispensed with. It cannot be denied that by shaping up contemporary psychological thinking about individual personality differences and development, the behavioural complexities and the motivations that underline behaviour, the psychoanalytic theory has contributed significantly to our understanding of man many aspects of ids behaviour, buyer behaviour included. Two more contributions from the field of psychology ale notable, the first, the Gestalt model, because it gave useful insights and a new angle on human perception and the second, the Cognitive theory which was able to provide valid explanations to many hitherto unexplained aspects of buyer behaviour. Both are discussed briefly, below. Activity - 4 You have earlier in this course, studied Freuds model in relation to personality. Relating the material in both these units, pick up five examples from the Indian advertising scene which aim, at both the conscious and the subconcious motivations. Also comment at how effective do you think these ads are? . . . . . . . . .

Early Models

16.5

THE GESTALT MODEL

This model lays special empahsis on man and his. environment and on, the basis of controlled experiment, was able to give quite conclusive proof that individuals perceive and interpret the stimuli confronting them in relation to the organisation of their own individual experiences. The term gestalt means form a configuration and the gestalt theory dealt specifically with the physical perception of stimuli.

Modelling Buyer Behaviour

Enlarging upon and modifying the gestalt approach, Lewing postulated that man lives in complex psychological field composed of many influences. If a realistic theory of motivation is to be formed, he said, all these influences must be realised and comprehended. By his contention, human activity is basically goal directed and individual behaviour of any sort is directed towards a stable organisation of- his psychological field, through attempts to reduce tension, reconcile conflicts and make sense out of the world in which he lives. This model, as noted earlier, was a step forward in the study of perception and interpretation of individual stimuli and may have implications for the marketer in planning his marketing strategy and particularly, brand strategy.

16.6

THE COGNITIVE DISSONANCE EXPLANATION

The cognitive theory or more pertinent to the understanding of buyer behaviour, the theory of cognitive dissonance has provided highly useful and rational explanation for the buyer behaviour. The theory has also been discussed in our theoretical explanation of brand loyalty, since it explains to a certain extent, the tendency towards consistent brand patronage. Leon Festinger, the propounder of the theory of Cognitive dissonance hypothesised that: 1. The existence of dissonance (a state of imbalance in the cognitive structure) is psychologically uncomfortable and will lead the person to reduce dissonance and achieve consonance (i.e. balance) 2. Whenever dissonance exists, the person, in addition to trying to reduce it will also actively try to avoid situations and information which add to dissonance. Consider the implication of such a process for the purchase and post purchase behaviour of individuals. An individual strives towards equilibrium in his cognitive structure (set of beliefs and disposition about people, products, events etc.) and will strive to reduce tension in order to maintain this balance and render life pleasant. A disharmony (dissonance) may result from purchasing a product; after using it or receiving adverse reports about the product, especially if the product is an expensive one. "The magnitude of the post purchase decision is an increasing' function of the general importance of the decision and of the relative attractiveness of, the unchosen alternatives". Applied to day-to-day marketing situations, the theory interprets buying behaviour as follows - when several alternatives confront the buyer in his choice decision, he is likely to experience some anxiety, which becomes more insistent once a commitment to purchase one of them has been made. As advertisements and word of mouth information highlighting the qualities of the rejected alternatives are perceived and received, he may experience some doubts- about the rationality of his decision. The product itself may not live up to his expectation and this adding to the already existing anxiety will give rise to what is called post purchase dissonance. According to Festinger, the buyer in this situation will try to reassure himself by seeking information to support his choice; and also by avoiding sources of information which would reduce his buying confidence. He may, in addition, collect information which projects the rejected alternatives disadvantageously. Being selective in his perception, therefore, the buyer may select the information supporting or favourable to his choice and avoid or distort unpleasant information. This theory triggered off a series of relevant research studies which have added to the fund of knowledge about the consumer. Several studies on advertisement readership have proved that in order to reduce dissonance, a large amount of advertising is actually read after the purchase has been made. The marketing implication of the theory lies in the fact that since dissonance (and reassurance) motivate buyer action, the effort to dispel dissonance should be embodied in the product package, its advertising and word of mounth publicity as also in its after

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sale services. The advertising and promotion function should be enlarged to include the reassurance aspect to lend support to the buyers choice decision. Activity - 5 Talk to five of your friends about their recent expensive purchases and discuss with them as to how they dealt with feelings of dissonnance if any in terms of these purchases.

Early Models

16.7

SOCIOLOGICAL MODEL

So far the discussion on behaviour has been focussed on the individual as a single entity and the role of the social environment on the individual's psyche has not been touched upon. A fair amount of knowledge however has been accumulated though the studies of several social scientists, which provides insights in certain areas of social influence on buyer behaviour. The sociological model postulates that man's needs and behaviour are lamely 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 powerful behavioural standards or norms of these social groups". Sometimes they emulate the behavour norms of the higher status groups to which, they aspire to belong. In subsequent years several social researchers confirmed this and reiterated that the purchase by individuals of various kinds of goods and services is likely to be strongly influenced by group norms of the, group to which they belong or aspire to belong. The major source of influence on individual behaviour are the family, the culture and the subcultures that surround the individual, the reference group to which he belongs or aspires to belong and social class.

16.8

SUMMARY

Marketers have always been interested in the consumer decision process, as the consumer's decision to purchase or reject a product or service is the final test of the success of a given marketing strategy. Theories of consumer decision making vary, based on the researcher's assumption about the behaviour of mankind. The various models discussed in the unit depict the consumers and their decision making processes in various different ways, according to the point of view taken by the researchers in each case. The various schools of thought present interesting explanations of why a consumer, acts the way he does.

16.9

SELF-ASSESSMENT QUESTIONS

1. How does the micro-economic model explain the decision process of a consumer? What are the shortcomings of the model. 2. Explain the implication of the relative income hypothesis and fixed income hypothesis for marketers targetting their products for family consumption. 11

Modelling Buyer Behaviour

3. Discuss the concept of cognitive dissonance and its implications for marketing decision.

16.10 SUGGESTED READINGS

1. Meryl Paula Gardner, "Mood States and Consurea Beha Journal of Consumer Research, 12, December 1985. 2. John A Howard and Jagdish N Sh.eth, "The Theory of Buyer Bel,aviour" (New York: Wiley 1969), 3. Kathleen M. Rassuli and Gilbert I). Havell, "A New Perspective on Choice" in Advances in Consumer Research.

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