CONCEPT OF CONSUMER BEHAVIOR

The study of consumer behavior is the study of how individuals make decisions to spend of what they buy, why they buy it, when they buy it, where they buy it, where they buy it, how often they buy it, and how often they use it. The decision process and physical activity individuals engage in when evaluating, acquiring, using, or disposing of goods & services.

Models of consumer Behaviour

MARKETING STIMULI PRODUCT PRICE PLACE PROMOTION ECONOMIC TECHNOLOGICAL POLITICAL CULTURAL
PRODUCT PRICE PLACE PROMOTION ECONOMIC TECHNOLOGICAL POLITICAL CULTURAL

OTHER STIMULI

MARKETING STIMULI OTHER STIMULI

BUYERS DECISIONS PRODUCT CHOICE BRAND CHOICE DEALER CHOICE PURCHASE TIMING PURCHASE AMOUNT

Consumer products such as shampoo or tomato sauce are designed so that they appeal to consumers, encouraging them to buy those products. To that end, the industrial R&D organisation tends to focus on understanding and manipulating product attributes. However, buying behaviour is not only a function of the product: it is also, and in some cases perhaps more so, a function of the consumer, his social environment of other consumers, the competing products in the marketplace, and the brand marketing strategy. In order to design the best product, it is necessary to understand not just the physics and chemistry of the product, but also the psychology of consumers and the sociology of consumer groups or networks. Traditional marketing models tend to focus on the second element, and treat the large number of consumers in a macroscopic, averaged way. Alternatively, one can look at individual consumers and their buying behaviour, and try to derive observable large scale eects, like changes in market share. Ideally one would like to connect the microscopic consumer viewpoint to the macroscopic viewpoint of the brand manager.

Factors in the models

The main features which were included in the various models are: A. Loyalty Loyalty is the tendency for (some) consumers to stick to the same products. With this as a key eect, deterministic, continuous-time models will be systems of ordinary dierential equations; the stronger the loyalty, the slower the changes in numbers of people buying

particular products. For discrete-time models, the degree of loyalty corresponds to the size of diagonal elements in a transition matrix. Another aspect of loyalty, not allowed for in our models so far, would be a memory eect, to represent people returning to products they had previously used, after trying something new they then didnt like. This could be taken into account perhaps by using recurrence relations or dierential equations of higher than rst order (or even employing delay-dierential equations). B. Sociology Sociology in this context is concerned with how one persons buying is inuenced by that of others. With some sort of tendency of people to buy the same brands, there is a possibility of lock-in, with one product dominating the market, even if its competitors have more or less identical qualities (including price). This eect and its opposite, people wanting to be dierent, are easily modelled by ODE and discrete-time models. C. Psychology Psychology covers what, and how, aspects of the actual items on the shelves inuence people to make their choices, possibly buying something dierent from previously. (Advertising might be subsumed into these characteristics but could also possibly be considered as part of the sociological inuences, especially if the advertising takes the form of a well known gure endorsing a product.) More specically, the following four properties have been identied by Unilever as being important and their inuences were included in one or more models: