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Unit 4
Jyostna Jain
 Consumer Decision making models: Howard Sheth Model, Engel Blackwell, Miniard Model,
Nicosia Models of Consumer Decision Making
 Diffusion of innovations Process of Diffusion and Adoption, Innovation, Decision process,
Innovator profiles
 E-Buying behaviour The E-buyer vis-a vis the Brick and Mortar buyer, Influences on E-
buying
 John Howard and Jagdish Sheth in 1969,presented their integrated model of buyer behavior.
 The model attemptsto represent the rational brand choice behaviours by buyer under the
circumstances involving incomplete information and limited abilities.
 The model proposes on three levels of decision making:
 1. Extensive problem solving :Limited information about brand
 2.limited problem solving: Uncertainity about best brand
 3.Routinized response behavior: Well-defined choice criteria.
 The model borrows the learning theory concepts to explain brand choice behavior.
 This model consists of four major sets of contructs:
a) Input variables: Stimuli present in buyer’s environment
b) Output variables: Buyer’s responses to stimulus inputs.
c) Hypothetic Contructs: Buyer’s learning,attitudes and opinions
d)Exogenous Variables: Purchase knowledge,financial status,personality traits
 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.
It 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.
The EBM Model when compared to the Howard-seth 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.
EBM model
This model attempts to explain buying behaviour by establishing a link between the
organisation and its prospective customer.
 It analyse human being as a system with stimuli as the input to the system and the human
behaviour as an output of the system.
The model suggests that message from the first influences the predisposition of the consumer
towards the product or services.
 Based on the situation, the consumer will have a certain attitude towards the product. This
may result in a search for the product or an evaluation of the product attributes by the
consumer.
If the customer satisfies with above it may result in a positive response, with a decision to buy
the product otherwise the reverse may occur.
Field 1:- the consumer attribute and the firm’s attributes. The advt. message sent from the
company will reach the consumer attributes.
Field 2:- it is related to the search and evaluation, undertaken by the consumer, of the advertised
product and also to verify if other alternatives are variable.
Field 3:- it explains how the consumer actually buys the product.
Field 4:- it is related to the uses of the purchased items. It can also be related to an output to
receive feedback on sales results by organisation.
 The flow is not completed and does not mention the various factors internal to the consumer.
 The assumption about the consumer being involved in the decision process with no
predisposition about the various brands is restricting.
 Overlapping between firm’s attributes and consumers attributes.
Diffusion is the process by which an innovation is communicated through certain channels over time among
the members of a social system
Innovation
Communication
Social
Time
Adopter category Description
Relative % within the population that
eventually adopts
Innovators
• Very eager to try new ideas.
• Risk takers.
• Educated, Higher income.
• Less reliant on group norms.
2.5%
Early adopters
• Admire technology.
• Reliant on group norms.
• Calculated risk.
• Opinion leaders.
13.5%
Early Majority
• Looks for innovation only if innovation is
viewed successful by others
• Price sensitive
• Rely on interpersonal sources
34%
Late majority
• Skeptical about innovation
• Rely on group norms,social pressure
• They enjoy less social status
• Below average income
34.0%
Laggards
• Least rely on group norms
• Tradition bound
• Dogmatic
• Ry the time they adopt,product is
outdated
16%
Awareness Interest Evaluation
AdoptionTrail
Name of the stage What happens during this stage Example
Awareness Consumer is first exposed to the product
innovation
Janet sees an ad for new MP3 player in a
magazine she is reading
Interest
Consumer is interested in the product and
searches for additional information
Janet reads about MP3player on the
manufacturer’s website and then goes to an
electronic shop near her apartment asks the
salesman to show her the unit.
Evaluation
Consumer decides whether or not to believe
that this product or service will satisfy the
need-a kind of “mental trail”
After talking to a knowledgeable friend Janet
decides that MP3 player will allow her to
download MP3 files that she has on her
computer
she also feels that the unit’s spaceis small
enough to easily fit in her backpack.
Trial
Consumer uses the product on limited basis Since an MP3 player cannot be tried like
small tube of toothpaste,Janet buys the MP3
player online from Amazon.com which
offers a 30 day full refund policy
Adoption
If trial is successful, customer may buy the
product. If unfavourable,consumer may
reject it
Janet finds that the MP3 player is easy to use
and that the sound quality is excellent. She
keeps the MP3 player
Innovation is change that creates a new
dimension of performance
Approaches to product Innovation
 Associating: associating is the potential to successfully link unrelated problem or ideas. Eg,
Steve Jobs used his calligraphy learning while preparing keyboard for Mac.
 Questioning: Innovators often ask questions that challenge common insight.
 Observing: Innovators usually look for fine behavioural components in the activities of
suppliers,consumers and competitors to identify and get idea regarding new ways of doing
things Eg: Once Ratan Tata observed a family consisting of four members on a single
motorbike,after this incident he was inspired to manufacture ‘Tata Nano ‘ which is the most
affordable car in India.
 Experimenting: They conduct experiments to find out unconventional responses.Eg: Howard
Shultz ,the founder of Starbucks roamed Italy visiting coffee bars.
Online shopping behavior (also called online buying behavior and Internet shopping/buying
behavior) refers to the process of purchasing products or services via the Internet.
Facilitates consumer
satisfaction
E-mail
Huge variety of
products
Facilitates E-share
trading
Facilitates E-banking
Global sources
Motivating
Entrepreneurs
Online Shopping
Advantages & Disadvantages
Convenience Fraud and Security
Information and Lack of full cost
reviews disclosure
Price selection Privacy
Hands-on inspection
24
E-buying
Convenience of
delivery
Cost
Time efficiency
Easy availability of
product
Saves time
Cash on delivery
Reviews,ratings and
opinions
E- buyer Brick and Mortar buyer
 E-buyer purchases product or services through internet  Buyer purchases product directly face to face from
physical store
 E- buyers are exposed to wide range of variety  Selected products with limited variety
 Difficult to return the product  Easy returns
 Has to bear delivery cost and chances of mishandling
the shipment
 No delivery cost and no mishandling
 Easy to compare price of product on various websites  Comparing prices between all stores is not possible
 24X7 availability  Can purchase only during fixed days and hours
 Problems of fraud and Hackers  No fraud and hackers
E- Buyer V/S Brick and Mortar buyer
Consumer behaviour unit 4
Consumer behaviour unit 4

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Consumer behaviour unit 4

  • 2.  Consumer Decision making models: Howard Sheth Model, Engel Blackwell, Miniard Model, Nicosia Models of Consumer Decision Making  Diffusion of innovations Process of Diffusion and Adoption, Innovation, Decision process, Innovator profiles  E-Buying behaviour The E-buyer vis-a vis the Brick and Mortar buyer, Influences on E- buying
  • 3.  John Howard and Jagdish Sheth in 1969,presented their integrated model of buyer behavior.  The model attemptsto represent the rational brand choice behaviours by buyer under the circumstances involving incomplete information and limited abilities.  The model proposes on three levels of decision making:  1. Extensive problem solving :Limited information about brand  2.limited problem solving: Uncertainity about best brand  3.Routinized response behavior: Well-defined choice criteria.
  • 4.  The model borrows the learning theory concepts to explain brand choice behavior.  This model consists of four major sets of contructs: a) Input variables: Stimuli present in buyer’s environment b) Output variables: Buyer’s responses to stimulus inputs. c) Hypothetic Contructs: Buyer’s learning,attitudes and opinions d)Exogenous Variables: Purchase knowledge,financial status,personality traits
  • 5.
  • 6.  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.
  • 7. It 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. The EBM Model when compared to the Howard-seth 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.
  • 9. This model attempts to explain buying behaviour by establishing a link between the organisation and its prospective customer.  It analyse human being as a system with stimuli as the input to the system and the human behaviour as an output of the system. The model suggests that message from the first influences the predisposition of the consumer towards the product or services.  Based on the situation, the consumer will have a certain attitude towards the product. This may result in a search for the product or an evaluation of the product attributes by the consumer. If the customer satisfies with above it may result in a positive response, with a decision to buy the product otherwise the reverse may occur.
  • 10. Field 1:- the consumer attribute and the firm’s attributes. The advt. message sent from the company will reach the consumer attributes. Field 2:- it is related to the search and evaluation, undertaken by the consumer, of the advertised product and also to verify if other alternatives are variable. Field 3:- it explains how the consumer actually buys the product. Field 4:- it is related to the uses of the purchased items. It can also be related to an output to receive feedback on sales results by organisation.
  • 11.
  • 12.  The flow is not completed and does not mention the various factors internal to the consumer.  The assumption about the consumer being involved in the decision process with no predisposition about the various brands is restricting.  Overlapping between firm’s attributes and consumers attributes.
  • 13. Diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system
  • 15.
  • 16. Adopter category Description Relative % within the population that eventually adopts Innovators • Very eager to try new ideas. • Risk takers. • Educated, Higher income. • Less reliant on group norms. 2.5% Early adopters • Admire technology. • Reliant on group norms. • Calculated risk. • Opinion leaders. 13.5% Early Majority • Looks for innovation only if innovation is viewed successful by others • Price sensitive • Rely on interpersonal sources 34% Late majority • Skeptical about innovation • Rely on group norms,social pressure • They enjoy less social status • Below average income 34.0% Laggards • Least rely on group norms • Tradition bound • Dogmatic • Ry the time they adopt,product is outdated 16%
  • 18. Name of the stage What happens during this stage Example Awareness Consumer is first exposed to the product innovation Janet sees an ad for new MP3 player in a magazine she is reading Interest Consumer is interested in the product and searches for additional information Janet reads about MP3player on the manufacturer’s website and then goes to an electronic shop near her apartment asks the salesman to show her the unit. Evaluation Consumer decides whether or not to believe that this product or service will satisfy the need-a kind of “mental trail” After talking to a knowledgeable friend Janet decides that MP3 player will allow her to download MP3 files that she has on her computer she also feels that the unit’s spaceis small enough to easily fit in her backpack. Trial Consumer uses the product on limited basis Since an MP3 player cannot be tried like small tube of toothpaste,Janet buys the MP3 player online from Amazon.com which offers a 30 day full refund policy Adoption If trial is successful, customer may buy the product. If unfavourable,consumer may reject it Janet finds that the MP3 player is easy to use and that the sound quality is excellent. She keeps the MP3 player
  • 19. Innovation is change that creates a new dimension of performance
  • 20. Approaches to product Innovation
  • 21.  Associating: associating is the potential to successfully link unrelated problem or ideas. Eg, Steve Jobs used his calligraphy learning while preparing keyboard for Mac.  Questioning: Innovators often ask questions that challenge common insight.  Observing: Innovators usually look for fine behavioural components in the activities of suppliers,consumers and competitors to identify and get idea regarding new ways of doing things Eg: Once Ratan Tata observed a family consisting of four members on a single motorbike,after this incident he was inspired to manufacture ‘Tata Nano ‘ which is the most affordable car in India.  Experimenting: They conduct experiments to find out unconventional responses.Eg: Howard Shultz ,the founder of Starbucks roamed Italy visiting coffee bars.
  • 22. Online shopping behavior (also called online buying behavior and Internet shopping/buying behavior) refers to the process of purchasing products or services via the Internet.
  • 23. Facilitates consumer satisfaction E-mail Huge variety of products Facilitates E-share trading Facilitates E-banking Global sources Motivating Entrepreneurs
  • 24. Online Shopping Advantages & Disadvantages Convenience Fraud and Security Information and Lack of full cost reviews disclosure Price selection Privacy Hands-on inspection 24
  • 25. E-buying Convenience of delivery Cost Time efficiency Easy availability of product Saves time Cash on delivery Reviews,ratings and opinions
  • 26. E- buyer Brick and Mortar buyer  E-buyer purchases product or services through internet  Buyer purchases product directly face to face from physical store  E- buyers are exposed to wide range of variety  Selected products with limited variety  Difficult to return the product  Easy returns  Has to bear delivery cost and chances of mishandling the shipment  No delivery cost and no mishandling  Easy to compare price of product on various websites  Comparing prices between all stores is not possible  24X7 availability  Can purchase only during fixed days and hours  Problems of fraud and Hackers  No fraud and hackers E- Buyer V/S Brick and Mortar buyer