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(CONSUMER BEHAVIOR) How to market at each stage of the buying decision

process using the Howard Sheth Model

Presentation · August 2020

DOI: 10.13140/RG.2.2.25248.20481

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 CONSUMER BEHAVIOUR

How to market at each stage of the buying

decision process using the Howard Sheth Model

By

N Jacintha
INTRODUCTION
Consumer behavior involves the study of how people, either individually or in groups acquire, use,
experience, discard, and make decisions about goods, services, or even lifestyle practices such as socially
responsible and healthy eating, any person engaged in the consumption process is a consumer. Consumers
are individuals who purchase goods/services for their personal use or to meet the needs of the family and
households collectively.

There are mainly 5 aspects in the process which are should be answering the basic questions about the
behavior of what, why, when, where, how often they buy and how often they use it. An approach that
focused solely on the act of purchase had come up with a prevalent model known as ‘Utility Theory’ which
proposes that consumers make choices based on the expected outcomes of their decisions. The law of equi-
marginal utility states that the consumer will distribute his money income between the goods in such a way
that the utility derived from the last rupee spent on each good is equal. In other words, consumer is in
equilibrium position when marginal utility of money expenditure on each good is the same. Now, the
marginal utility of money expenditure on a good is equal to the marginal utility of a good divided by the
price of the good. (htt) Consumers are viewed as rational decision makers who are only concerned with self-
interest. Consumer behavior is an action a person takes in purchasing and using products and services,
including the mental and social processes that precede and follow these actions.

Need for studying Consumer Behavior by marketers:

If the data regarding the decisions taken by the consumer can be analyzed and the same can be applied in
understanding the Behavior of the consumer, the 3 basic ideas that are to be focused in buying process are
1. The buying decision can be made by someone
2. The buying decision can be influenced by someone
3. Somebody might have motivated the buyers to take action on buying decision
Hence the study should analyze the consumer buying process during the purchase to know and analyze the
above discussed ‘somebody’.
PRODUCT:

SAMSUNG BLUETOOTH TRULY WIRELESS EARPHONES/HEADSETS

Using Howard Sheth Model to analyze the cognitive behavior of a consumer

(In the context of buying a Samsung Bluetooth truly wireless earphones worth 12000 INR)

Howard Sheth Model is one of the most objectively constructed contemporary models of consumer behavior.
It is an attempt to explain rational brand choice behavior within the constraints of limited individual capacities
and incomplete information.
PROBLEM DEFINITION
A Bluetooth Headset (True Wireless Solution) is one of the most significant purchases that younger
generation in INDIA are eagerly looking into these days because of many personal and professional solutions
it provides. But the options available are many, buying decision requires tremendous research

“What makes a perfect TWS Headset?”

“Which are factors that can be driving a person to buy
one?” “What type of decision-making process should be
adopted?”

The expectations from different customers are different especially when there are many options available
and the price bracket is huge. Normal range is from 1700 INR to 24000 INR. Hence a huge amount of
research will go in deciding on purchase including the cost constrains the customer has and the solution that
was being offered by the product. Hence falling short with the expectations will end up with a sense of
dissatisfaction among the customers.

SCOPE OF RESEARCH
Now a day’s customers’ buying power is increased drastically and they are willing to pay for newer
products even if they are costly, as far as the product is providing value to him and is solving their problem
(different for different individuals). Even in the middle class segment with increased Tech-Space that is
involved in day to day activities, it is evident that faster and newer technology is more of a necessity than a
luxury.
Hence, this study investigates the impact of factors affecting the consumer buying perception and behavior
of TWS Headsets. It also attempts to analyze the influence of perception in the consumers’ mind and how
can this analysis benefit the marketers in their favor to win the hearts of the consumers.

OBJECTIVES
1. To determine the influencers involved during the consumer buying decision of a Samsung TWS
Headset
2. To understand the source of information from which consumers’ decisions vary
3. To understand the response that a consumer gives to the information obtained.
4. To understand the Product attributes that influence the consumer buying decision for a Samsung
TWS Headset
THEORETICAL FRAMEWORK
The Howard Sheth Model is an approach for analyzing the combined impact of the social, psychological and
marketing factors on the buying behavior or preference of the consumers and the industrial buyers into a
logical order of information processing.

Fig: Howard Sheth Model theoretical framework

CONTENTS OF THE MODEL:

1. Three Levels of Decision-Making in Howard Sheth Model

Three significant stages of the buyer’s decision-making or selection of a particular brand have been
described in the model and let us now discuss each of these in details below:

a. Extensive Problem Solving

This, being the initial stage of decision-making, where the buyer is new to the market. He/she has no or little
information about the brands and has no preference for a particular product or service. Thus, a consumer is an
information seeker at this level, who check out different brands available in the market, before making buying
decision.

b. Limited Problem Solving

At this level, the buyer has inadequate or incomplete information about the product, market or the brands
operating in it. Sometimes the buyer is confused among the various alternatives. Therefore, to make a buying
decision, he/she look for a comparative study of the different brands and the products available in the market.

c. Routinized Response Behavior

The habitual response behavior stage is where the buyer is entirely aware of the products offered by different
brands and the features, pros and cons of each product. He/she is capable of evaluating and comparing the
multiple options available in the market. Here, the buyer decides in advance, which product is to be purchased.
Why its extensive problem solving (in the context of Samsung TWS Headset for me)?

I underwent an Extensive problem-solving decision making as I had no much information about this area.
The data that is available about the product is excess and many reviews are being circulated by different
people online and offline as well. In general, considering the constraints that for me, having no clue how this
TWS solution offered can be quantified.
Before this TWS technology came into the market, there is this wired Bluetooth neck band
type available and I personally never used this TWS. Hence having no clue about the quality and the cost
that needs to be balanced while taking a decision is crucial here and should be effectively dealt with. Hence
it is an extensive problem solving when there should be significant research and effort that is needed to
decide on the purchase decision otherwise the time and money spent will go in vain!

1. Variables in Howard Sheth model

Beginning with the stage of extensive problem solving, the buyer slowly converts into a regular customer of
the organization, at the routinized response behaviour level. This whole process of buyer’s decision-making
functions on four pillars of this model or the four essential elements of this model. These variables are
elaborated below:

Input Variables

The stimulus inputs refer to the idea or information clue about the brand and its product in terms of product
quality, distinctiveness, price, service offered and availability. These can be further classified as follows:

i. Significant Stimuli: It is the physical traits of the product and the brand. For a TWS headset, it
includes price, durability, availability, distinctive characteristics and service.
ii. Symbolic Stimuli: The advertisements and hoardings about the new launched product and a number
of YouTube videos that explain the benefits that a customer is getting, made me consider this
product. Also the customer engagement and communication with the executives created a
psychological impact has already been created as the product is from a reputed brand “SAMSUNG”
and my perception towards the product has a significant impact on knowing the quality and
reputation of the brand.
iii. Social Stimuli: The interactions with my family, friends and other expertise (reference groups) which
are considered as a source of information for the buyers.
a. Hypothetical Constructs
The hypothetical constructs depict the central part of the model. It includes all those psychological variables
which play a vital role in the buyer’s decision-making process.
It can be further bifurcated into the following two categories:

Perceptual Constructs
These components define the consumer’s procurement and perception of the information provided at the
input stage. It is an essential element since it drives the buyer’s brand selection and purchases, which
includes:
i. Sensitivity to Information: The data that we get from the social groups can be biased based on their
information and perception towards the brand that they suggest and the way they use the same
product. So the information that I have received is essential but my top priorities have never been
dismissed.
ii. Perceptual Bias: There were many TWS Headsets that different brands are offering, with lower the
budget that I considered and even higher but my affiliation towards the brand is something that drove
in the process.
iii. Search for Information: I tried to seek for more information to ensure the right decision-making so
that the investment won’t go in vain although I had a choice of which one to consider.
Learning Constructs
The learning constructs define the buyer’s knowledge, opinion, attitude and end decision on product or
brand selection.
Following are the various learning constructs of a buyer (here Myself):
i. Motive: I preferred to purchase a TWS headset to ensure the better audio and video experience with
my smartphone and laptop.
ii. Choice Criteria: The Sound Quality and price was the most considered criteria during the purchase.
iii. Brand Comprehension: Samsung is the brand that comes to my mind when I think of newer
technology that I can spend on, and hence my first option has always been the same
iv. Attitude: My willingness for the TWS Headset offered by Samsung was a different sort of emotional
bond because of the brand connect I have right from my first smartphone experience almost a decade
ago
v. Confidence: Buying influences majorly on the trust and confidence that we have on the Brand and
Samsung is worth the confidence for me.
vi. Intention: The buyer’s purchase motive, preference criteria, brand comprehension, consumer
attitude and confidence, results in the selection of a particular brand.
vii. Satisfaction: The satisfaction in using a TWS solution while attending webinars or enjoying music
and movies, with ease, can’t be quantified. It should be felt! Samsung is worth the quantification
Output Variables
The output or as we say, the result of the buyer’s decision-making can be seen in the form of his/her
response towards the input variables.
It consists of five major components which are arranged systematically below:
i. Attention: My focus on the information that I collected is keen and hence the decision would let me
have that product for a long time.
ii. Brand Comprehension: I had a clear vision about Samsung Galaxy Buds and specifically about the
offerings it has including active noise cancellation made me decide on the same
iii. Attitude: Although I had opinions on Samsung I further did evaluation of it in terms of individual
likes and dislikes, which indirectly determined my behaviour, interest and awareness towards it.
iv. Intention: To ensure a convenient mode a using my audio and video requirements of using a
smartphone is considered as main objective for me to purchase
v. Purchase Behaviour: In the actual purchase, all the above elements are involved

b. Exogenous Variable
There are certain other external factors which influence the buying behaviour of an individual or a firm by
hampering the product purchase of a preferred brand. The exogenous variables are the environmental forces
or components of this model. These are as follows:
i. Importance of Purchase: If the buyer perceives the product to be less crucial, involving a low cost,
then there is a little brand preference.
ii. Personality Variables: Personal traits like ego, self-esteem, anxiety, dominance, authoritarian, etc.
influences a buyer’s decision-making while purchasing a product.
iii. Social Class: A buyer’s social group, including the family, friends and other reference groups impact
the selection or rejection of a particular brand.
iv. Culture: The buyer’s values, beliefs and ideas frame his/her purchase motive and inhibitors.
v. Organization: The buyer’s interaction with the social groups defines their authority, status and
power. The hypothetical constructs of a buyer are affected by such formal or informal
communications.
vi. Time Pressure: The buyer, at times, is under the pressure of taking a timely decision, which makes
him/her look for alternatives if the product of the preferred brand is unavailable at the moment.
vii. Financial Status: The buyer’s inability to purchase a product or unaffordability restricts him/her from
buying it.

The Howard Sheth Model majorly emphasizes repetitive buying behaviour of the consumers or industrial
buyers. This is an empirical approach towards understanding the buyer’s mind-set while purchasing a
product or service. It has been intensively applied and tested to check its viability. Still, the model lacks
reliability due to its dependency on the hypothetical constructs, which are to be pragmatically examined
METHODOLOGY
Information search
Information seeking occurs at various points in time, including before each purchase, consumers
have various amounts of information about available products stored in their memories at any given point in
time; and when they are exposed to information about products, they are likely to look or ask for something
they do not already know.
We all know that data today is a major key component for most businesses likewise the data collection here
helped me get insights about what were to be considered in order to close my deals keeping my budget as
the main priority. An observation/ Information search is called as a qualitative approach which is the richer
source of information. And there are several ways to gather information, they are:

1. Research
As we all know that research is the major activity that we carry out before we do anything for that matter. Its
bridges between the collection of relevant data where I went looking for which are the available brands that
falls under my budget and what all features must I consider as a primary concern to choose them. Following
which I broke up the data into segments which will help me in choosing the best among them. Later which
the chosen options I preferred the most specific and relevant information about the products for further
breaking down my list. Finally interpreting the data that is left to reach to a conclusion about which is the
final brand that I have chosen which will also bring in a perspective for the marketing problems and
opportunities. It included all three types of research which are Exploratory, Descriptive and Causal research.

The preferred features can be listed as

 Good Battery life
 Less weight
 Nice quality sound
 No lagging in voice
 Durability
 Active Noise cancellation

The available brands include Apple, Samsung, Xiaomi, Huawei, Boat and CrossBeats
 2. Social Groups
Social influence is defined as change in an individual's thoughts, feelings, attitudes, or behaviors that
results from interaction with another individual or a group. Social influence is distinct from conformity,
power, and authority. Conformity occurs when an individual expresses a particular opinion or behavior in
order to fit in to a given situation or to meet the expectations of a given other, though he does not necessarily
hold that opinion or believe that the behavior is appropriate. Power is the ability to force or coerce someone
to behave in a particular way by controlling her outcomes. Authority is power that is believed to be
legitimate (rather than coercive) by those who are subjected to it.
The fact that people act in accordance with a frame of reference produced by the groups to which
they belong is a long-accepted and sound premise (Merton and Rossi 1949). Many individuals simply did
not behave like the majority of people in their recognized groups (e.g., social class or educational level).
Though much of this uncharacteristic behavior was explain- able by constructs other than group
membership, the apparent instability of group influence created confusion.

Reference group influence consumers in three ways, they are as follows:

i. Informational: An individual would seek information about pool tables from fellow workers
who are familiar with them.
ii. Value-expressive: An individual would probably feel that purchasing a pool table would
enhance his or her image among other people.
iii. Utilitarian: An individual's decision about whether or not to buy a pool table would be
influenced by the expectations of family members.

3. Word of Mouth

Word of mouth and customer satisfaction play a very important role in determining market
perception about any product or brand. It is the market perception that determines the success of a company
and so it is very important for any company to measure the “willingness of existing users of a product to
recommend it to others”. The same is a lot of interest to customers as well for it helps them make the
purchase decision. It is true fact that if you are satisfied you recommended to others
 DISCUSSION GUIDE
A good discussion guide is arguably the most important part of once planning. It is the map that will lead you
the learnings you need, and will help ensure that your research sessions are productive. Discussion guides can
take many forms — some will be tight scripts that you will follow closely, and some will be rough outlines
that act as a quick reference tool for the person conducting research. In our experience, a discussion guide
that falls somewhere in the middle is preferable. Either way, their purpose is to keep research focused, and
moving towards the learning objectives you’ve outlined.

Some of the questions that were asked during the interactions with my reference groups were:
 Are you using any TWS headset?
 How was the experience
 What was the major issue you have faced?
 Is your problem being solved
 How is the quality of the product?

This guide helped facilitate the conversation and act as a reference tool for my research. It was not a
completely prescriptive script that I had to follow for my purchase decision. This guide helps us to react to
perspectives of the reference groups and is directed towards having a conversation that flows naturally in
order to create the most effective insights possible.

ANALYSIS
The buying process is purely based each individual consumer and their own past beliefs of being able to
understand the whole buying process of the consumer who was then considered as rational and cognitive
individual. Routinized, Limited and Extensive Problem-Solving decisions are the theories that are hard to
implement on all the products that we purchase

Main issue the 5 of the interviewees said that is was with price and many option which confused them

THEORETICAL AND PRACTICAL IMPLICATIONS

Choosing a right TWS headset at the price point of 12000 INR is not that easy, because every marketer offers
something or the other with all attributes that anyone wishes to possess. Though there are marginal differences,
there won’t be much of a customization done for the same. It becomes the buyers' responsibility to choose
rationally among the available options as every marketer chases the buyer.
The study tells that majority of consumers nowadays engage themselves in a little research before buying
anything but their decision would usually be an in-store one. It is evident that the consumers are hugely
influenced by store in experience and their exhibits.
 MANAGERIAL
RECOMMENDATIONS

The individual's complicated process of buying or Consumer Decision Making (CDM) process is one of the main
reasons why marketing started. Because it has implications for the marketers as they need to design strategies in such a
way that the consumer perceives a product's features or benefits as providing an answer to a perceived problem
and felt needs. Hence marketing strategies need to adapt both creativity and strategic moves, to differentiate it
from others.

The Brands need not focus on selling a product, rather should be focusing on building relationships and make
way to the customer to return for buying new products.
Care should be taken in product assortment and price ranges as we as company will surely want to target all
the segments

CONCLUSION

The highly social and psychological needs of the buyers is very

complex and hence, every company recognizes the importance of
buyers as well as the dynamic nature of their behavior. The approach
that is being used for understanding buyer behavior plays a major role.
Hence the Howard Sheth Model is useful to cluster down all the
possible intensions that can be seen in different customers and get
insights accordingly
REFERENCES

 Prakash, A. (2016). Howard sheth model of consumer behaviour. Deliberative Research, 30(1), 43.

 https://www.consumerpsychologist.com/cb_Introduction.html#:~:text=Consumer%20behavior%2
0involves%20the%20study,socially%20responsible%20and%20he althy%20eating.

 https://www.economicsdiscussion.net/term-paper/consumer-behaviour-term- paper/theory-of-
consumers-behaviour-utility-analysis-term-paper-
economics/27465#:~:text=The%20law%20of%20equimarginal%20utility%20states%20that%20th
e%20consumer%20will,each%20good%20is%20the%20same.

 https://theinvestorsbook.com/howard-sheth-
model.html#:~:text=Definition%3A%20The%20Howard%20Sheth%20Model,logic
al%20order%20of%20information%20processing.

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