Consumer Behavior: Models and Effects

• Consumer behavior involves studying how individuals or groups select, purchase, use, and dispose of products to satisfy their needs.

Key Consumer Behavior Models

• SOR Model: External stimuli influences internal processes and resulting responses.
• Decision-Making Models: Encompass both rational and emotional choices.
• Behavioral Learning: Habits are shaped through classical/operant conditioning.
• Cognitive Learning: Knowledge and beliefs influence behavior.

Emotion and Motivation in Consumer Behavior

• Emotions exert a powerful influence on consumer choices and can drive the purchase of luxury goods to signal group membership.
• Veblen Effect: Demand is dictated by a high price which symbolizes status.
• Bandwagon Effect: Consumption driven by the desire to align with a reference group.
• Snob Effect: Demand driven by exclusivity.
• Reactance: Motivational arousal stemming from restricted freedom, leading to a stronger desire for the restricted item. This can involve
  • Interdiction which increases desire.
  • Scarcity making goods more desirable.
  • Predictable persuasion efforts.
• Scarcity marketing leverages this threatened freedom to boost sales.

Self-Perception and Purchasing Decisions

• Ideal Self: How one aspires to be.
• Actual Self: One's real self-image.
• Products can aid in aligning with or building the self-image.
• Conscientiousness is influenced by sustainability marketing, while extroversion responds well to social campaigns.
• Personality and lifestyle influences responses to marketing stimuli. Lifestyles dictate how people allocate time and money.
• Psychographic Segmentation: Groups consumers based on their values, interests, etc.
• Consumers show a preference for brands with a clear purpose and align with their values.

Models Influencing Purchasing Decisions

• Involvement: The level of interest in consuming a product, where low involvement equates to low risk and less effort, and high involvement indicates the opposite.
• Types of Decision Making:
  • Extensive
  • Limited
  • Habitual
  • Impulsive

Elaboration Likelihood Model (ELM)

• Central Route: Involves deep thinking and leads to lasting attitudes.
• Peripheral Route: Relies on quick cues and results in short-lived attitudes.

Hierarchies of Effects (ABC Model) (HOE)

• Attitudes form based on involvement level.
• In CAB (Cognition-Affect-Behavior): learn → feel → do, indicating standard learning with high involvement.
• In CBA (Cognition-Behavior-Affect): learn → do → feel, which usually describes low involvement purchases.
• In ABC (Affect-Behavior-Cognition): feel → do → learn, representing experiential hierarchy.
• The components can be defined as:
  • Affect is feeling (heart).
  • Behavior is doing (head).
  • Cognition is learning (wallet).

Theory of Planned Behavior (TPB)

• Behavior influenced by intention, which is shaped by attitude towards behavior and link brand with positive emotions.
• Subjective Norms: What others think matters can create peer pressure through testimonials.
• Perceived Behavioral Control: How easy the behavior is, where products should be affordable and easily available.
• Attitude-Behavior Gap: Discrepancy between purchase intention and actual purchase behavior.

Five-Stage Model (Kotler/Keller)

• Problem Recognition: Noticing a need with a gap between the current and desired state.
• Information Search: Depends on involvement and access to information.
• Alternative Evaluation: Influenced by personality and buying habits.
• Product Choice: Intention doesn't always equal action due to peer pressure, stock availability, etc.
• Outcome: (Dis)satisfaction may result in cognitive dissonance.

Heuristics and Cognitive Biases

• Heuristics: Mental shortcuts for efficient judgments.
• Cognitive Biases: Thinking errors made during heuristics.
• Representativeness Heuristic: Estimating based on similarity.
• Availability Heuristic: Judgement based on how easily something comes to mind.
• Anchoring Heuristic: First info overly shapes decision.
• Recognition Heuristic: Choosing what feels familiar.

Mental Accounting and Cognitive Effects

• Mental Accounting: Money handled differently by category.
• Loss Aversion: Losses are felt more keenly than gains.
• Endowment Effect: Owned items seem more valuable than unowned.
• Sunk-Cost Fallacy: Continuing to invest due to past investments.
• Decoy Effect: An asymmetric option makes the target product more attractive.

Influence of Social Groups

• Conformity: Social pressure to behave in similar ways. Driven by:
  • Cultural Pressure
  • Fear of Deviance
  • Commitment
  • Group unanimity
  • Interpersonal influence
  • Environmental Cues
• Reference Group: The group people refer to when making choices.

Reference groups have two functions:

• Comparative, which provides benchmarks.
• Normative, which offers behavioral norms. Marketing efforts should know target's reference groups and opinion leaders.

Social Proof

• Social proof is an informational social influence.
• People copy others in times of uncertainty (Cialdini), leading to conformity and herd mentality.

Six types of social proof:

• From Customers: Reviews and testimonials.
• By Experts: Professional endorsements.
• Referrals from Friends: Word of mouth.
• Ratings & Reviews: Star ratings influencing trust
• Social Media Proof: Likes/shares/influencers.
• Certifications: Trust badges and 3rd party verification.