Theories and Models of

Consumer Behavior
Definition of Theory: To
researchers theory implies a
relationship among observable
facts, and an integration of these
facts in some meaningful way.

Perspective of traditional theories

Feed them with greater income and they
would automatically make more purchases.
At one time consumers were believed to be
the rational creatures who behaved
mechanistically or in compliance with the
laws of economics.
Reduce the supply of a market item and sit
back to enjoy the inevitable rise in demand
for that product.

Perspective of modern theories

Today, consumer study draws its theoretical
basis primarily from the social and
behavioral sciences.
While the laws may be less precise, they
have proven considerably more useful in
explaining the erratic (uncertain movement),
capricious (unaccountable change of mind or
conduct) and generally irrational behavior
that can be expected from consumers in the
real world.

Theory Building in Consumer

Behavior
The field of consumer behavior was described as an
interdisciplinary study drawing theory and findings
from anthropology, sociology, social psychology,
individual psychology, economics and marketing.

Yet there is no one accepted viewpoint as to which

influences are most important or how the various
cultural, sociological and psychological
determinants of buying behavior fit together.
Rather there are several broad comprehensive
theories for consumer decision process.

Theoretical Origins of Consumer

Behavior
The con research is moving increasingly in
the direction of scientific method and
empirical (observable and measurable)
results.
So theory building to explain and predict
con decisions closely resembles
theoretical approaches of physical
sciences.

The use/role of theory in science

To researchers, theory implies a relationship among
observable facts, and an integration of these facts in
some meaningful way.
Facts are only useful to science when they are
ordered.
Theory is useful in science in five ways:
1. It defines the empirical orientation of a science by
indicating the kinds of data that will be sought.
2. It provides a conceptual scheme for systematizing
and classifying data.
3. It summarizes facts into empirical generalizations.
4. It predicts facts.
5. It points out gaps in our knowledge.

Criteria of sound theory of buyer

behavior
Howard offers following criteria:
Theory must aid significantly in explaining behavior,
not merely describes it.
Theory must incorporate mainstream thinking from
the principal avenues of research.
Theory should have the property of suggesting clear
avenues for fruitful research.
Theory should include measures and definitions of
its elements.
A theory must incorporate known regularities of
consumer behavior.
A theory must be able to suggest new regularities to
be observed.

Different Types of Consumer

Behavior Theory

1. Economic Theories:

Utility Theory
Indifference theory
Rising Income theory

2. Psychological Theories:

Cognitive theory
Learning theory
Psychoanalytic theory

3. Social psychological theories:

Theory of achievement motivation

Cognitive dissonance theory

4. Sociological theories:

Theory of inner vs. other direction

Role theory.

1. Economic theoriesIntroduction
As early as Adam Smith (1776)
economists were constructing theories of
buyer behavior.
The classical position holds that
consumers make choices and purchasing
decisions solely on the basis of rational
self interest.

1.a. Utility theory

It assumes that consumers choices are
influenced by the utility concept.
The more one consumes an item the less
satisfying it becomes and at some point in
time addition of more unit of that item will
have no effect whatsoever upon total
utility.
Marketing significance of utility theory.

1.b. Indifference theory

This states basically that consumers form
preferences for some combinations of products over
others and view some combinations with complete
indifference.
All of the combinations of products to which a
consumer is indifferent form what is known as
indifference map and when plotted on a graph is
known as the indifference curve.
Above the curved indifference line are the
combinations of products the consumer tends to
prefer.
Below the line are combinations he/she inclined to
sidestep.
***** Marketing significance of Indifference theory.

1.c. Rising income theory

It is generally accepted that consumer behavior
patterns change as income rises.
Ernst Engel states that the percentage of income
spent on food tends to decrease as income
increases.
As income rises, family expenditures tend to
increase in all categories.
The percentage spent on food declines, percentage
spent on household remains constant, and
percentage spent on luxury increases.
*****Marketing significance of Rising income theory.

Evaluation of economic theories

(three dimensions)
1. Formulation of market laws:

a. Lowering the price of an item will increase its

sales.

b. When the prices of substitute products are

lowered, sales of an original item will decrease;
when the prices of complementary products are
lowered, sales of an original item will increase.

c. The higher the real income of consumers in

general, the higher the sales of an individual
product.

d. The greater the promotional effort, the higher

the sales.

 2. Contributions:

a. It is recognized by economic theories

that maximization of satisfaction is the
rational goal of consumer behavior.

b. The importance of buying power is

stressed in economic theories.

 3. Weaknesses:

a. The consumer is portrayed as rational

at all items is not true.

b. The consumer is presented in

economic theories as unsusceptible to
interpersonal influence. This proposition is
not correct.

c. The consumer is described as fully

aware of all factors in his market domain
which is not also true.

2. Psychological theories
2.a. Cognitive theory: It explains buying
activities as problem solving through:
(i) information processing; and
(ii) decision making.

 2.b. Learning theory: Buying behavior

occurs as a simple stimulus response
relationship and that responses which are
reinforced most positively and frequently
will become relatively permanent behavior.

 2.c. Psychoanalytic theory: Sigmund Freud

proposed this theory.
It describes buying activities through id,
ego, and super ego.
Id: repository for basic drive.
The superego: which struggles with the id to
repress the basic drives.
Ego: presides over the conflict and attempts
to find socially approved expression.

3. Social psychological theory

3.a. Theory of achievement motivation: McClelland
says that motivation is a determinant of buying behavior.
Different studies identified that:

(i) Men scoring high on need achievement are

inclined to favor products thought of as virile.

(ii) Men with low achievement tend to favor

products thought of as meticulous or dull.

(iii) High achievement needs have been found in

a large sample of people who prefer active outdoor
sports.

(iv) Individuals high in achievement needs are

light T.V. viewers and heavier users of magazines
and radios.

 3.b. Cognitive dissonance theory:

Dissonance occurs when an individual
consumers behavior is inconsistent with
the persons internal attitudes.
Marketers should try to create dissonance
in the minds of their competitors
customers.

4. Sociological theories
4.a. Theory of inner vs. other direction: it assumes
that societies around the world can be classified into
three categories:

(i) A tradition directed society refers to slow

changing, family oriented society in which people
are solely dependent on extended family ties and
experience little social mobility.

(ii) Inner directed describes a society

characterized by rapid industrialization, greater
mobility, and accumulation of capital.

(iii) The other directed society has surpassed the

need for industrialization and socialize their
individuals as consumers rather than producers.

 4.b. The Role theory: Erving Goffman

proposed this theory.
This theory characterizes individuals as
actors who play certain roles in the
presence of others to convey certain
impressions.
This process is known as role enactment.

 Researchers use pure theory to build

models of decision making and buying
activity.

Using Models in consumer behavior

Research
Models are useful to both con behavior students and
researchers in five ways:
1. They set a context of research by carefully
integrating all the components of a system under
scrutiny.
2. Models identify elements of a system and the
relationships among them.
3. They explain how a given system operates by
representing the flow of variables in a logical way.
4. They enable researchers to predict behavior that
will emanate (to take origin) from a system.
5. They aid researchers in theory building by
providing a framework for new hypotheses.

How Models are constructed ?

In two ways:
1. Abstraction in which an actual situation
is represented by a model.
The model builder starts by observing a
specific con situation and drawing
conclusions about variable relationships in
that situation a con choice process for
example which the builder then tests
empirically.
If testing indicates that this perception is
accurate, a general model may be
constructed on this.

Model adjustment

Perception
Of consumer

Situation

Recognition
of existing
of consumer

Verification
of consumer

Development Application
of consumer

relationships

consumer
model

model

relationship

Feedback

Realization approach The model builder

formulates a general theory which might apply to
some consumer behavior situation and construct a
model representing that theory.
Research findings are assembled that will establish the
existing con relationships of that situation and the
information is fed into the model.
Then the model is applied to an actual situation to
determine whether the theory works.
Feedback enables the builder to revise the model.
2.

Model development through realization

method

Model adjustment

Theoretical
Statement
About

Development
of
consumer

Recognition Application of
of existing
model to
consumer
existing

Verification

of
theoretical

con.
situation

model

relationships

consumer
relationships

Feedback

statement