report on consumer behaviour

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Human behaviour is guided by the search for pleasure
Given by Jeremy Bentham (1789)
Motive Force:
› “Maximum Pleasure with minimum effort”
Gives rise to material culture
› Earning and spending of money
People buy because of
› Beauty, Fun, Sensational Experiences, Thrill
Concept of Marginal Utility
› Based indirectly on hedonism
› Maximize consumption between choices till marginal utilities are
same across products
› Forms the basis of Economic Analysis
› Two Main Approaches
Ordinal Utility Approach
Revealed Preference Approach
› Lead to Macro-Economic Analysis of J.M. Keynes
Consumption Function and Aggregate Demand

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Propounded by George Katona in 1963
Consumers are Economic Agents; however they are
influenced by other forces:
› Social
› Political
› Psychological
Katona believed that Psychological factors can
mitigate the impact of economic factors

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Macro Economic Condition
› GDP, Employment, Inflation
Macro Economic Variables
› Taxes, Subsidies, Credit Policy, Other Rates of Interest
Personal Traits
› Motivation, Attitude, Aptitude, Perception, Expectation,
Knowledge
› Use of these in Personal Decision Making
Katona Believed that:
› “The consumer, based on his personality traits, behaves as per
the macro conditions and variables”
Actual Economic
Conditions
Psychological
Process
Consumer
Sentiments
Economic
Behaviour
Merits
› The first model to explicitly state that psychological processes
are important
Demerits
› Micro and Macro Framework have been mixed without
highlighting the roles they play
› Does not explain purchase decisions
› Taste and Preferences are unaccounted for

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Propounded by Francesco Nicosia in 1966
Assumes that
› Consumer seeks to realise well defined goals
› Consumer has no predisposition towards firms – either positive or
negative
Constitutes of Four Fields
› Firm and Consumer Traits
› Consumer Search and Evaluation
› Act of Purchase
› Feedback
Subfield One:
Firms Attributes
Subfield Two:
Consumer Attributes
Including Predisposition
Message
Exposure
Attitude
Search
Evaluation
Motivation
Action
Actual
Purchase
Experience
Consumption /
Storage
Field 4: Feedback
Field 3: Purchase
Field 2: Search and Evaluation
Field 1: Firm and Consumer

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Merits
› Brief and quite and general
› Firms communicate to Consumers
› Consumers deliberate activate the decision making process
› It contributed to the funnel approach
Demerits
› Not much detail explanation of the internal factors
› Assumes demand is generated due to communication
› Lumps all types of communication – informative and persuasive
– into single category
Promulgated by John A. Howard Jagdish N Seth in
1969
Assumes the following:
› Consumers have incomplete information about market
conditions
› Consumers have limited ability to understand and analyse the
conditions that confront them
› The objective of the consumer is a rational choice of brand
from those that are available and they know about
Three (3) types of Response Behaviour
› Extensive Problem Solving (EPS)
› Limited Problem Solving (LPS)
› Routine Response Behaviour (RRB)

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Merits
› It recognizes the influence of unsatisfactory experiential learning
on future purchase decisions.
› The entire process of search evaluation will be repeated
again and again until the consumer gets the satisfaction.
› Consumer are incessantly exposed to information.
Demerits:
› It does not discuss the influence of unsatisfactory experience
gained from the purchase.
› It over looks the dynamics of an oligopoly market competition.
› Model does not offer any method to measure variables/
parameters
› It leaves out unbranded products

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All the models are based on the process rather than the
cause and consequence of a decision
They do not formulate a crisp and well articulated
theory as to why do consumers purchase more of one
than the other goods?
Models are descriptive rather than being analytical
Howard and Seth model is the most realistic one
Managerial models have attempted to bring in realism
as compared to economic models
Propounded by James F Engel, David T Kollat Roger D
Blackwell in 1968
Underwent extensive revision and is currently known as
the Engel-Blackwell-Miniard Model (1990)
Will be studied in detail in the Consumer Behaviour

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