1. Important Models of Consumer Behavior

5. Economic Man theories A. Utility Theory (Bentham, Kotler)
Consumer always try to maximize benefit and minimize cost.
B. Rising Income and expenditure allocation
less income—higher % on necessities
more income—lower % on necessities and higher % on luxury and saving

6. Economic model Law of principal of maximum utility
Law of equi-marginal utility enables a consumer to secure the maximum utility from limited purchasing power
Price effect
Substitution effect
Income effect

7. Economic Man theories
Focal features—rational man, emphasizing buying power
--When prices go down, sales go up.
--When prices of substitutes go down, sales of original product go down.
--Consumers’ real dollar go up, the sales go up.
--Greater promotion leads to more sales.
Weaknesses:
--Not all consumers are rational, they don’t have complete MKT information to make sensible decisions.

9. Cognitive Approaches Information processing
Stimulus-Organism-Response (S-O-R)
--Theory of Buyer Behavior
(Figure 1.4 ,Bray, p.12/33)
--6 learning constructs
--5 buyers’ response variables

11. Psychological Approaches
1. Psychodynamic Approach (Sigmund Freud )
Human behavior is determined by biological drives, rather than individual cognition, or environmental stimuli.
Subliminal persuasion.
2. Behaviorism (Pavlov, Skinner)
Stimulus—Response, Mind is a black box
classical conditioning, operant conditioning

13. Contemporary models
Harward seth model--example : Customer lacks well defined evaluative criteria to judge the product . They search for information, and his own personality may modify his intake. Then they evaluate the brands available, and seeks greatest potential of satisfying his motives. 

17. Howard Sheth Model

18. Howard Sheth Model

19. Howard Sheth Model

20. Howard Sheth Model

21. Howard Sheth Model

22. Howard Sheth Model
Exogenous variables: These are list of a number of external variables (external to the buyer) which can significantly influence buyer decisions.
There is a absence of sharp distinctions between exogenous variables and other variables.
Some of the variables, which are not well defined, and are difficult to measure too. • The model is quite complex and not very easy to comprehend.

23. Howard Sheth Model

24. Engel, Blackwell and Minard model
This model talks of consumer behavior as a decision making process in the form of five steps (activities) and other related variables which occur over a period of time. •
5 steps involved in the decision process: • • • • • Problem Recognition Information Search Alternative Evaluation Choice Outcome
Information input
Information processing
Variables influencing decision making process

26. The EBM Model

27. The EBM Model
The model has emphasized on the conscious decision making process adopted by a consumer. • The model is easy to understand and is flexible. • This model recognizes that a consumer may not go through all the steps always.
This is because in case of repeat purchases the consumer may bypass some of the steps. •
One limitation, the inclusion of environmental variables and general motivating influences but not specifying the effect of these on the buyer behavior.

28. Comparing HS and EBM models
EBM model shares certain things with Howard-Sheth model.
The core of the EBM model is a decision process which is augmented with inputs from information processing and other influencing factors. • • • • •
Four sections of the Model: Input Information Processing Decision process and Variables influencing decision process.

29. The EBM Model when compared to the Howard Sheth model is more coherent and flexible than the latter. •
This model also includes human processes like memory, information processing and considers both the positive and negative purchase out comes.