17.1 Theories of consumer behavior

Consumer behavior theories explain how people make purchasing decisions. From rational choice to psychoanalytic approaches, these models help marketers understand what drives consumers. Each theory offers unique insights, but also has limitations in fully capturing the complexity of human decision-making.

Marketers apply these theories to segment markets, create ads, develop products, and build loyalty programs. By understanding cognitive, behavioral, and social factors influencing consumers, businesses can tailor strategies to meet customer needs and preferences more effectively.

Consumer Behavior Theories

Key concepts of consumer behavior

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• Rational choice theory assumes consumers make decisions based on maximizing utility (satisfaction) and minimizing costs, have complete information, and stable preferences but doesn't account for emotional or social factors
• Theory of reasoned action (TRA) suggests behavior is determined by behavioral intention which is influenced by attitudes shaped by beliefs and evaluations of outcomes and subjective norms influenced by normative beliefs and motivation to comply
• Theory of planned behavior (TPB) extends TRA by adding perceived behavioral control referring to the perceived ease or difficulty of performing a behavior and accounts for situations where individuals have incomplete control over their behavior
• Engel-Kollat-Blackwell (EKB) model describes the consumer decision-making process in five stages: problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior while recognizing the influence of environmental factors (culture, social class) and individual differences (personality, lifestyle) on the decision-making process
• Maslow's hierarchy of needs proposes human needs are arranged in a hierarchy with basic physiological needs (food, water) at the bottom and self-actualization (personal growth) at the top, suggesting individuals must satisfy lower-level needs before focusing on higher-level needs, allowing marketers to appeal to different levels of needs in their strategies (safety features in cars, status symbols in luxury goods)

Approaches to consumer behavior

• Cognitive approach focuses on mental processes such as perception, learning, memory, and decision-making, assuming consumers are rational and engage in information processing (Rational choice theory, EKB model)
• Behavioral approach emphasizes the role of external stimuli and reinforcement in shaping behavior, suggesting behavior is learned through conditioning (classical conditioning, operant conditioning) and observation (observational learning)
• Psychoanalytic approach explores the influence of unconscious desires, motives, and conflicts on behavior, assuming behavior is driven by hidden, irrational forces (Freudian theory, neo-Freudian theories)
• Sociological approach examines the impact of social and cultural factors on consumer behavior, recognizing the influence of family, reference groups, social class, and culture (Social identity theory, cultural dimensions theory)

Application in marketing situations

• Market segmentation
  1. Use Maslow's hierarchy of needs to identify consumer segments based on their dominant needs (safety-conscious parents, status-seeking professionals)
  2. Develop targeted marketing strategies that appeal to specific need levels (emphasizing security features for safety-conscious segments, showcasing prestige for status-seeking segments)
• Advertising and promotion
  1. Apply the theory of reasoned action to create persuasive messages that influence attitudes (highlighting product benefits) and subjective norms (using celebrity endorsements)
  2. Use the EKB model to guide consumers through the decision-making process (providing detailed product information, offering risk-free trials)
• Product development
  1. Consider the cognitive approach when designing products that meet consumer needs and preferences (user-friendly interfaces, intuitive features)
  2. Incorporate insights from the psychoanalytic approach to create emotionally appealing products (packaging that evokes nostalgia, branding that resonates with unconscious desires)
• Customer loyalty programs
  1. Utilize the behavioral approach to reinforce desired behaviors through rewards and incentives (points for purchases, exclusive benefits for frequent customers)
  2. Apply social identity theory to create a sense of belonging and exclusivity among program members (tiered membership levels, personalized communications)

Strengths vs limitations of theories

• Rational choice theory
  • Strengths: Provides a clear and logical framework for understanding decision-making
  • Limitations: Assumes perfect information and stable preferences which may not reflect reality
• Theory of reasoned action and theory of planned behavior
  • Strengths: Account for the influence of attitudes, subjective norms, and perceived control on behavior
  • Limitations: May not fully capture the complexity of human decision-making and the role of emotions
• EKB model
  • Strengths: Offers a comprehensive view of the consumer decision-making process
  • Limitations: May oversimplify the non-linear and iterative nature of real-world decision-making
• Maslow's hierarchy of needs
  • Strengths: Provides a framework for understanding human motivation and targeting marketing efforts
  • Limitations: Lacks empirical support and may not apply universally across cultures and individuals
• Behavioral theories
  • Strengths: Offer insights into how external factors shape consumer behavior (product placement, sales promotions)
  • Limitations: May neglect the role of internal factors such as attitudes, beliefs, and emotions
• Psychoanalytic theories
  • Strengths: Provide a deeper understanding of the unconscious drivers of behavior (hidden desires, emotional associations)
  • Limitations: Difficult to empirically test and apply in marketing practice
• Sociological theories
  • Strengths: Recognize the importance of social and cultural factors in shaping consumer behavior (peer influence, cultural values)
  • Limitations: May overlook individual differences and the role of personal agency in decision-making