Consumer Decision-Making Models - Essay Example

 Consumer Decision-Making Models Introduction Consumer behaviour is the emotional and psychological processes as well as the observable actions of buyers during the process of searching for information, purchasing and reacting after consumption of a particular product. It involves the manner consumers decide on how to use their resources like time, money and energy on the purchase and use of interrelated products. The aspects of consumer behaviour involves the overall purchasing action that is very clear to the marketer and the process of arriving at the decision to buy that involves the interaction of various complicated variables that are difficult for the marketer to see. Indeed, the buying pattern is the result of a very long process involving the sequential evaluation of the various factors. Consumer behaviour study establishes what the consumer is willing to buy, the reason they buy, the mode of buying, the time they buy, the place they buy and the frequency of buying. This essay, upon introducing some of the consumer behaviour models, aims at picking two brands in the same product category but from different companies and produce a comparison on how they use the various models of consumer behaviour in their marketing. It will also assess the relevance of the models in describing the way consumers respond to the actions taken by the marketers. The Economic Model The theory assumes that the consumer is rational and performs a good evaluation of all the available alternatives regarding the costs and the value acquired, followed by a good selection of the product that will give him greatest satisfaction. According to the model, consumers obey the doctrine of maximum utility that relies on the law of diminishing marginal utility. Here, the consumer, who has a limited buying power and a range of wants and tastes, will assign his income over a wide range of products at particular prices to optimise utility (Thaler 1980). The principle of equimarginal utility gives the consumer the capability of securing the highest utility from his limited buying power. This theory of consumer behaviour is simply unidimensional since it assumes that the consumer buying decision comes from the desire to maximize utility. This is because, for being a rational being, the consumer will only aim at achieving the highest benefits. Furthermore, the economic model as pointed by Thaler (1980) relies on various predictions that include the price effect of the product, the price effect of close substitutes and the purchasing power of consumers. It suggests that the lower the price of the product the more likely consumers are going to buy the product. The lower the price of substitutes the lesser consumers will buy the original product and vice versa. In addition, the income effect suggests that the higher the purchasing power of consumers the more they are going to buy the product. However, there are various views that challenge the credibility of the model in explaining the real behaviour of consumers in the market. The model, to some extent, does not give the real picture of the behaviour of consumers in the market. These criticisms argue that the economic model disregards the behavioural aspects that affect the consumer buying behaviour in the market. The model does not consider important factors such as motivation, perception, attitude, learning, personality as well as social and cultural factors (Lutz & Resek 1972). This therefore means that man is a very complicated being, a riddle and a puzzle. This means that there is the need of taking a multi-disciplinary method to fully, understand the behaviour of consumers. In addition, in the current environment, other factors such as technological aspects of the product, apart from psychological and socio- cultural aspects, affect the decision making pattern of consumers. Other factors such as efficient networks of distribution and effective product promotional campaigns affect the buying patterns of consumers. It is thus wrong to assume that consumers are rational and that the price of the product is not the only factor that determines the consumer behaviour. According to Rudarakanchana(2013), Samsung Electronics provides the highest subsidies with the aim of lowering its prices for cell phones compared to those of its closest competitor Apple Inc. The company strategised to make sure that the firm lowers its prices to gain a competitive advantage and survive the heavy competition from Apple and the other players in the industry. Consumers therefore are more likely to maximise utility by choosing Samsung Galaxy S4 rather than Apple iPhone 5 based on the price. This strategy, to some degree contributed to the dominance of the firm in the world of consumer electronics showing the relevance of the economic model in the behaviour of consumer electronics buyers (Rudarakanchana 2013). However, efficient distribution and scaling chains are also responsible for the good performance. In addition, recent reports produced regarding the performance of the two brands show that Apple brand continue to perform better and outweigh Samsung. This comes because of high quality innovated brands from Apple that continues to influence consumers in favour of the brand (Yarow 2014). Technology and innovation thus plays a very important role in influencing consumer decisions in the world of consumer electronic. Howard-Sheth Model The model describes and establishes a variation amongst three main stages of consumer decision-making process; extensive problem solving, limited problem solving and routinised response behaviour (Gronhaug 1977). The stage of extensive problem solving occurs a time when the consumer has either little or no knowledge about the product and no any belief concerning the brand of the product. It also includes a time when the consumer has no any specific preference over any specific brand. The consumer therefore seeks for information vigorously on the availability of various alternative brands in the given product category. In the limited problem solving stage, the consumer possesses some knowledge concerning the brand and holds some beliefs about the brands (Gronhaug 1977). Therefore, he is not capable of making a critical evaluation of differences in the brands to make preference. The consumer is yet to learn more concerning the brands before making a solid decision. The stage of routinised behaviour involves the condition when the consumer has acquired enough knowledge and holds concrete beliefs regarding the brands and the various alternatives in the product category and therefore fixed to purchase a particular product. The major variables that the model insists on are the inputs, the outputs, the external variables, the perceptual, and the learning constructs. The inputs include variables from the three major stimuli available in the environment in which the consumer lives. First is the significative stimulus that concerns the physical characteristics of the brand (Gronhaug 1977). The marketer on the other hand produces the symbolic stimuli through the supply of adequate information concerning the brand. The third type of stimulus is the social environment of the consumers that includes the family, social class and leaders. The perceptual and the learning constructs incorporate psychological factors that play a very significant role in the consumer decision-making process. The psychological factors consist of ideas and hence do not have a direct means of evaluating (Lutz & Resek 1972). Some of the factors are just perceptual and thus only focus on the manner the consumer receives and evaluates information from the marketer. For example, a condition of stimulus ambiguity happens when the consumer is in doubt concerning the information he has received from the marketers. In addition, a condition of perceptual bias happens when consumers distort the information they have received to suit his permanent wants and the experiences. The learning constructs carry out the function of the concept formation of consumers and incorporates the goals, the information regarding the brand in the market, the criteria used for evaluating the various variables and the intention to purchase the brand. The model describes a range of outputs that bears similar names to a portion of the perceptual as well as the learning variables, which includes attention, attitudes, brand comprehension, intentions and the decision of buying (Lutz & Resek 1972). The external variables do not play an important role in the process of decision-making. These variables include the significance of the purchase, the personal characters of the consumer, the time available for making the purchase and the availability of the funds. Apple iPhone 5 Samsung Galaxy S4 Sources;http://www.gsmarena.com/samsung_i9500_galaxy_s4-pictures-5125.php http://www.phonearena.com/phones/Apple-iPhone-5_id7378/photos The two brands show very similar features in appearance meaning that only the functionality of the brand and the level of satisfaction drawn from the brand determine the performance of the brand in the market. The consumers will therefore eager to acquire more information and establish the difference. The idea is evident with the rapid shifts in consumer interests between the two brands of Samsung Galaxy S4 and Apple iPhone 5. This is because of the desire of consumers to gain enough information concerning the functionality of the two brands and the ability of each one to satisfy their needs. In 2013, Samsung Galaxy S4 obtained dominance over Apple iPhone 5 as consumers had assigned equal weights concerning the functionality of the two brands hence preferred the cheaper brand Rudarakanchana(2013). However, after rapid innovation and continued awareness of the superiority of Apple iPhone 5 over Samsung Galaxy S4, they began purchasing Apple iPhone 5 to gain maximum satisfaction. In addition, the Apple brand enjoyed a favourable history of high quality that psychologically sets consumers in accepting it even with the minor alterations in its functionality (Yarow 2014). The theory has thus provided the best description of the behaviour of consumers concerning the purchase of the brands since price continued to lose its dominance in shaping the buying pattern of the products. Apple continues to rely mostly on innovation to gain high reputation and shape consumers’ belief in favour for the brand. The application of the Howard-Sheth Model is thus the best means of achieving dominance in the industry depending on the world trends in the market. The Engel – Kollat – Blackwell Model The model describes the consumer behaviour as a process of making decision in five distinct steps that occur over a period. In addition to the five key stages, the model incorporates various related factors such as such as input information, information processing, product evaluation, general motivating factors and international environment factors(Erasmus, Boshoff & Rousseau 2001). The first step of the five major steps is the problem recognition. During this stage, the consumer will first identify the difference between his real state and the ideal situation. On seeing the product, the consumer develops a feeling and desire to have the product. It is important to note that for the consumer to develop a feeling of desire to the product, which creates the need, he must perceive a significant difference between his real status and the ideal condition. Upon developing the desire, he will then start thinking of how to solve it. The second step involves the search for information where the consumer will want to acquire more information from several sources. The various sources that he may consult include salespersons, information from friends and relatives as well as information from the mass media or internet. The process on the other hand, takes place in various stages and the consumer gets adequate exposure to stimuli that grabs his attention, accepts it and stores in his memory. This method of processing the information is naturally, very selective and the consumer has the tendency of accepting the information that is conclusive and perceived by him (Peter, Olson & Grunert 1999). The next step is the process of evaluating the various alternatives of the brands available in the market. The method employed by the consumer in evaluating the various brands will vary depending on various factors such as the goals of the consumer, personality traits and the motives. The consumer also has some specific beliefs concerning the available brands based on their characteristics. The consumer will then give his response that may either be in favour for the brand or against the brand (Peter, Olson & Grunert 1999). Following this, concerns the choice of the consumer depending on his attitude or intention. The choice also depends on the normative conformity and the circumstances anticipated by the consumer. The normative conformity relates to the degree that the consumer receives influence from other people such as friends, relatives, colleagues and workmates. The choice of the consumer is also a function of his sensitivity of handling the anticipated conditions such as losing the job or funds reserved for a different urgent cause (Peter, Olson & Grunert 1999). Unless confronted by an anticipated condition, the consumer is likely to make a purchase decision. However, in the case of an anticipated circumstance, the consumer may not make a purchase decision. The last step comprises the outcomes after purchasing and using the brand. Again, the outcome either may be in favour of the brand or may act against the brand. The outcome may specifically, be negative if the consumer develops some doubt concerning his experience in using the brand and thus he will continue to seek for additional information that can help him remove the doubt from his memory (Peter, Olson & Grunert 1999). The model provides a good explanation on the consumer behaviour through inclusion of many variables. However, the major shortcoming is the incorporation of environmental variables without providing the specific effect on the behaviour of the consumer. This model has found very useful application in the marketing of the two brands from the two giant suppliers of consumer electronics in the world. Each firm has embarked in extensive marketing campaign to ensure that adequate information concerning the suitability of its brand reach consumers in the most efficient manner. The rapid shifts in consumer purchases between the two brands demonstrate the desire for consumers to get what adequately satisfies their needs (Rudarakanchana2013). Consumers are always moving towards the brand that can best satisfy their needs. The rapid growth in the market share of Apple iPhone 5 over Samsung Galaxy S4 demonstrates the response of consumers in favour of the brand after earning better results from the brand. The changing buying patterns demonstrate the idea of the continuouscycle of the decision making process of consumers. This therefore, means that every firm has realised the requirement that consumers must know every change imparted on any particular brand to develop a need for the brand (Yarow 2014). The psychoanalytical model According to this model, a consumer has a wide range of deeply established motives that influence him towards a particular purchasing decision. According to the theory, the consumer has a personal world with concealed worries, censored requirements and completely slanted longings. The purchasing decision of the consumer therefore base on the needs and the longings. According to model, the personality of the consumer has three distinct parts; the ‘id’ that is the foundation of the entire mental power that drives the consumer into making a decision (Reed 2002). The second part is the ‘super ego’ that is the inside representation of the individual conscience that has gained social approval. The third part is the ‘ego’ whose responsibility is to find satisfaction in a manner socially accepted. The ‘id’ simply represents the fundamental impulses, the instincts and the cravings for instantaneous and complete satisfaction. To note, the instincts may even consist of anti-social traits. The ‘super ego’ or the conscious provides a reflection to the consumer hasromanticised behaviour that is the coalision between the ‘id’ and the ‘super ego’ but resolved by ego (Foxall 1993). In other words, ‘ego’ plays the role of a mediator between ‘id’ and ‘super ego’ to arrive at an agreement that does not put any strain on the financial position of the buyer. This model has also found useful application in the marketing of the two brands from the two players in the industry. The addition of unique features and the idea of offering competitive prices for the brand aim at creating the needs and shaping the motives and beliefs of consumers and reducing them to comply with what the brand offers. This brings out the mediating effect that finally leads to purchasing the brand. Over time, the firm that achieves this objective in the best manner wins the war and gains a competitive advantage (Yarow 2014). Conclusion From the foregone discussion, it is evident that consumers are always influenced by various factors in the process of making the purchase decisions. In most cases, rational consumers will always want to compare products and services, focusing on various factors that can give them certain kinds of utilities and the value for their money. The economic model is based on the kind of satisfaction that the consumer gets from the different kinds of goods and services he is purchasing. Here, the consumer makes sure that the goods he is buying are those that give the maximum utility. In the second model, the knowledge and awareness that the consumer has for the different products being sold plays a central role in influencing the consumer’s purchasing behavior. If the consumer has full knowledge about the goods and services in the market, he makes informed decisions about the goods and services being bought. The same kind of understanding is evident in the Engel – Kollat – Blackwell Model. The psychoanalysis model explains that the consumer has certain needs and longing, which influences the kinds of goods and services being bought. All these models are vital in explaining the consumer’s purchasing decisions. It is important to note that the buying process has to be preceded by a series of thoughts in the consumers mind, in order on certain products. Bibliography Erasmus, A. C., Boshoff, E., & Rousseau, G. G. 2001, ‘Consumer decision-making models within the discipline of consumer science: a critical approach’, Journal of Family Ecology and Consumer Sciences, Vol. 29, pp 82. Foxall, G. R. 1993, ‘Consumer behaviour as an evolutionary process’, European Journal of Marketing, Vol. 27, NO.8, pp. 46-57. Gronhaug, K. 1977, ‘Exploring consumer complaining behavior: a model and some empirical results’, Advances in Consumer Research, Vol.4, No.1, pp. 159-165. Lutz, R. J., & Resek, R. W. 1972, ‘More on testing the Howard-Sheth model of buyer behavior’, Journal of Marketing Research, Vol. 9, No.3, pp. 344-345. Mason, R. 1984, ‘Conspicuous consumption: a literature review’, European Journal of Marketing, Vol. 18(3), 26-39. Peter, J. P., Olson, J. C., & Grunert, K. G. 1999,Consumer behavior and marketing strategy, McGraw-Hill, London. Reed, A. 2002, ‘Social identity as a useful perspective for self‐concept–based consumer research’, Psychology & Marketing, Vol. 19, No. 3, pp. 235-266. Rudarakanchana N. 2013, Samsung subsidizes mobile phones more than Apple and HTC, providing edge in price wars,International Business Times, London, Thaler, R. 1980, ‘Toward a positive theory of consumer choice’, Journal of Economic Behavior & Organization, Vol.1,No.1, pp. 39-60. Yarow J. 2014, It's Pretty Clear That Apple Is Winning The War With Samsung, Business Insider Inc, London, Read More