Kurdistan Regional Government – Iraq

Ministry of Higher Education and Scientific Research

University of Duhok / Management and Economics

Department: Economics

Report on/

(Consumer behaviour theories)

Submitted to:

Mr. Shimal Khalil Rashid

Prepared by:

Delvin Bilal Mohammed

First stage

2020 A.D. 2720 K. 1441 A.H

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 TABLE OF CONTENTS

Introduction ………………………………………………3

Chapter one ………………………………………4

1.0 Origins of consumer behaviour………………………………………4

1.1 Definition and explanation………………………………………5

1.2 The purchase decision and its context………………………………………6

1.3 The consumer's purchase decision process: an overview……………………….8

Conclusion…………………………………………………………13

REFERENCES……………………………………………………………………….14

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 Introduction
consumer's emotions, attitudes and preferences affect buying behaviour. Consumer behaviour
emerged in the 1940s and 50s as a distinct sub-discipline of marketing, but has become an inter-
disciplinary social science that blends elements from psychology, sociology, social
anthropology, anthropology, ethnography, marketing and economics (especially behavioural
economics).

The study of consumer behaviour formally investigates individual qualities such

as demographics, personality lifestyles, and behavioural variables (such as usage rates, usage
occasion, loyalty, brand advocacy, and willingness to provide referrals), in an attempt to
understand people's wants and consumption. Also investigated are the influences on the consumer,
from groups such as family, friends, sports, and reference groups, to society in general,
including brand-influencers and opinion leaders.

Research has shown that consumer behaviour is difficult to predict, even for experts in the field;
however, new research methods, such as ethnography and consumer neuroscience, are shedding
new light on how consumers make decisions. In addition, customer relationship
management (CRM) databases have become an asset for the analysis of customer behaviour.
The voluminous data produced by these databases enables detailed examination of behavioural
factors that contribute to customer re-purchase intentions, consumer retention, loyalty and other
behavioural intentions such as the willingness to provide positive referrals, become brand
advocates or engage in customer citizenship activities. Databases also assist in market
segmentation, especially behavioural segmentation such as developing loyalty segments, which
can be used to develop tightly targeted, customized marketing strategies on a one-to-one basis.

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 Chapter one

1.0 Origins of consumer behaviour

In the 1940s and 50's, marketing was dominated by the so-called classical schools of
thought which were highly descriptive and relied heavily on case study approaches with only
occasional use of interview methods. At the end of the 1950s, two important reports criticised
marketing for its lack of methodological rigor, especially the failure to adopt mathematically-
oriented behavioural science research methods.1 The stage was set for marketing to become more
inter-disciplinary by adopting a consumer-behaviourist perspective.

From the 1950s, marketing began to shift its reliance away from economics and towards other
disciplines, notably the behavioural sciences, including sociology, anthropology and clinical
psychology. This resulted in a new emphasis on the customer as a unit of analysis. As a result, new
substantive knowledge was added to the marketing discipline – including such ideas as opinion
leadership, reference groups and brand loyalty. Market segmentation, especially demographic
segmentation based on socioeconomic status (SES) index and household life-cycle, also became
fashionable. With the addition of consumer behaviour, the marketing discipline exhibited
increasing scientific sophistication with respect to theory development and testing procedures.2

In its early years, consumer behaviour was heavily influenced by motivation research, which had
increased the understanding of customers, and had been used extensively by consultants in
the advertising industry and also within the discipline of psychology in the 1920s, '30s and '40s.
By the 1950s, marketing began to adopt techniques used by motivation researchers including depth
interviews, projective techniques, thematic apperception tests and a range
of qualitative and quantitative research methods More recently, scholars have added a new set of
tools including: ethnography, photo-elicitation techniques and phenomenological interviewing.
Today, consumer behaviour (or CB as it is affectionately known) is regarded as an important sub-
1
Tadajewski, M., "A History of Marketing Thought," Ch 2 in Contemporary Issues in Marketing and Consumer Behaviour, Elizabeth
Parsons and Pauline Maclaran (eds), Routledge, 2009, pp 24-25
2
Sheth, J.N.,"History of Consumer Behavior: a Marketing Perspective", in Historical Perspective in Consumer Research: National and
International Perspectives, Jagdish N. Sheth and Chin Tiong Tan (eds), Singapore, Association for Consumer Research, 1985, pp 5-7.
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discipline within marketing and is included as a unit of study in almost all undergraduate
marketing programs.3

1.1 Definition and explanation

Consumer behaviour entails "all activities associated with the purchase, use and disposal of goods
and services, including the consumer's emotional, mental and behavioural responses that precede
or follow these activities." The term, consumer can refer to individual consumers as well as
organisational consumers, and more specifically, "an end user, and not necessarily a purchaser, in
the distribution chain of a good or service." Consumer behaviour is concerned with:4

 purchase activities: the purchase of goods or services; how consumers acquire products and
services, and all the activities leading up to a purchase decision, including information search,
evaluating goods and services and payment methods including the purchase experience
 use or consumption activities: concerns the who, where, when and how of consumption and the
usage experience, including the symbolic associations and the way that goods are distributed
within families or consumption units
 disposal activities: concerns the way that consumers dispose of products and packaging; may
also include reselling activities such as eBay and second-hand markets

Consumer responses may be:

 emotional (or affective) responses: refer to emotions such as feelings or moods,

 mental (or cognitive) responses: refer to the consumer's thought processes, their
 behavioural (or conative) responses: refer to the consumer's observable responses in relation to
the purchase and disposal of goods or services.

Definition of Consumer Behaviour According to American Marketing Association , consumer

behaviour can be defined as "the dynamic interaction of affect and cognition, behaviour, and
environmental events by which human beings conduct the exchange aspects of their lives."
3
Tadajewski, M., "A History of Marketing Thought," Ch 2 in Contemporary Issues in Marketing and Consumer Behaviour, Elizabeth
Parsons and Pauline Maclaran (eds), Routledge, 2009, p. 28
4
Kardes, F., Cronley, M. and Cline, T., Consumer Behavior, Mason, OH, South-Western Cengage, 2011 p.9; Sassatelli, R., Consumer
Culture: History, Theory and Politics, Sage, 2007, p. 10
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As a field of study, consumer behaviour is an applied social science. Consumer behaviour analysis
is the "use of behaviour principles, usually gained experimentally, to interpret human economic
consumption." As a discipline, consumer behaviour stands at the intersection of economic
psychology and marketing science.5

1.2 The purchase decision and its context

Understanding purchasing and consumption behaviour is a key challenge for marketers. Consumer
behaviour, in its broadest sense, is concerned with understanding both how purchase decisions are
made and how products or services are consumed or experienced. Consumers are active decision-
makers. They decide what to purchase, often based on their disposable income or budget. They
may change their preferences related to their budget and a range of other factors.6

Some purchase decisions involve long, detailed processes that include extensive information
search to select between competing alternatives. Other purchase decisions, such as impulse buys or
habitual purchases, are made almost instantaneously with little or no investment of time or effort
in information search.

Some purchase decisions are made by groups (such as families, households or businesses) while
others are made by individuals. When a purchase decision is made by a small group, such as a
household, different members of the group may become involved at different stages of the
decision process and may perform different roles. For example, one person may suggest the
purchase category, another may search for product-related information while yet another may
physically go to the store, buy the product and transport it home. It is customary to think about the
types of decision roles; such as:

The Initiator
the person who proposes a brand (or product) for consideration (something in return);
The Influencer

5
Foxal, G., "Foundations of Consumer Behaviour Analysis," Marketing Theory, Vol. 1, No. 2, pp 165–199
6
Lynn R. Kahle; Angeline G. Close (2011). Consumer Behavior Knowledge for Effective Sports and Event Marketing. New York:
Routledge. ISBN 978-0-415-87358-1.
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 someone who recommends a given brand;
The Decider
the person who makes the ultimate purchase decision;
The Purchaser
the one who orders or physically buys it;
The User
the person who uses or consumes the product.7

For most purchase decisions, each of the decision roles must be performed, but not always by the
same individual. For example, in the case of family making a decision about a dining-out venue,
the father or mother may initiate the process by intimating that he/she is too tired to cook, the
children are important influencers in the overall purchase decision, but both parents may act as
joint deciders performing a gate-keeping role by vetoing unacceptable alternatives and
encouraging more acceptable alternatives. The importance of children as influencers in a wide
range of purchase contexts should never be underestimated and the phenomenon is known
as pester power.

To approach the mental processes used in purchasing decisions, some authors employ the concept
of the black box, which represents the cognitive and affective processes used by a consumer
during a purchase decision. The decision model situates the black box in a broader environment
which shows the interaction of external and internal stimuli (e.g. consumer characteristics,
situational factors, marketing influences and environmental factors) as well as consumer
responses.[16] The black box model is related to the black box theory of behaviourism, where the
focus extends beyond processes occurring inside the consumer, and also includes
the relation between the stimuli and the consumer's response.

The decision model assumes that purchase decisions do not occur in a vacuum. Rather, they occur
in real time and are affected by other stimuli, including external environmental stimuli and the
consumer's momentary situation. The elements of the model include:
interpersonal stimuli (between people) or intrapersonal stimuli (within people), environmental
7
Oladeji Samuel, J and Bellman, S., Marketing Communications: Theory and Applications, Pearson Australia, 2005, p. 114
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stimuli and marketing stimuli.[17] Marketing stimuli include actions planned and carried out by
companies, whereas environmental stimuli include actions or events occurring in the wider
operating environment and include social factors, economic, political and cultural dimensions. In
addition, the buyer's black box includes buyer characteristics and the decision process, which
influence the buyer's responses.

The black box model considers the buyer's response as a result of a conscious, rational decision
process, in which it is assumed that the buyer has recognized a problem, and seeks to solve it
through a commercial purchase. In practice some purchase decisions, such as those made routinely
or habitually, are not driven by a strong sense of problem-solving. Such decisions are termed low-
involvement and are characterized by relatively low levels of information search and evaluation
activities. In contrast, high involvement decisions require a serious investment of time and effort in
the search and evaluation process.[18] Low involvement products are typically those that carry low
levels of economic or psycho-social risk. High involvement products are those that carry higher
levels of risk and are often expensive, infrequent purchases. [19] Regardless of whether the
consumer faces a high or low involvement purchase, he or she needs to work through a number of
distinct stages of a decision process.

1.3 The consumer's purchase decision process: an overview

The consumer buying process is usually depicted as consisting of 5 distinct stages:

The purchase decision begins with the problem recognition stage, which occurs when the
consumer identifies a need, typically defined as the difference between the consumer's current
state and their desired state. The strength of the need drives the entire decision process.
Information search is the phase where consumers scan both their internal memory and external
sources for information about products or brands that will potentially satisfy their need. The aim of
the information search is to identify a list of options that represent realistic purchase options.
Throughout the entire process, the consumer engages in a series of mental evaluations of
alternatives, searching for the best value. Towards the end of the evaluation stage, consumers form
a purchase intention, which may or may not translate into an actual product purchase. [20] Even
when consumers decide to proceed with an actual purchase, the decision-process is not complete
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until the consumer consumes or experiences the product and engages in a final post purchase
evaluation; a stage in which the purchaser's actual experience of the product is compared with the
expectations formed during the information search and evaluation stages. The stages of the
decision process normally occur in a fixed sequence.  However, information search and evaluation
can occur throughout the entire decision process, including post-purchase.

1.3.1 Problem recognition

The first stage of the purchase decision process begins with problem recognition (also known as
category need or need arousal). This is when the consumer identifies a need, typically defined as
the difference between the consumer's current state and their desired or ideal state. A simpler way
of thinking about problem recognition is that it is where the consumer decides that he or she is 'in
the market' for a product or service to satisfy some need or want. The strength of the underlying
need drives the entire decision process.

Theorists identify three broad classes of problem-solving situation relevant for

the purchase decision:

Extensive problem-solving
Purchases that warrant greater deliberation, more extensive information search and
evaluation of alternatives. These are typically expensive purchases, or purchases with high
social visibility e.g. fashion, cars
Limited problem-solving
Known or familiar purchases, regular purchases, straight re-buys. Typically low-priced
items.
Routinized problem-solving
Repeat purchases or habitual purchases

Consumers become aware of a problem in a variety of ways including:

Out-of-Stock/ Natural Depletion

When a consumer needs to replenish stocks of a consumable item e.g. ran out of milk or
bread.
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 Regular purchase
When a consumer purchases a product on a regular basis e.g. newspaper, magazine.
Dissatisfaction
When a consumer is not satisfied with the current product or service.
New Needs or Wants
Lifestyle changes may trigger the identification of new needs e.g. the arrival of a baby may
prompt the purchase of a cot, stroller and car-seat for baby.
Related products
The purchase of one product may trigger the need for accessories, spare parts or
complementary goods and services e.g. the purchase of a printer leads to the need for ink
cartridges; the purchase of a digital camera leads to the need for memory cards.
Marketer-induced problem recognition
When marketing activity persuades consumers of a problem (usually a problem that the
consumer did not realise they had). The consciously, and subconsciously, consumed content
in traditional as well as social media greatly plays the role of a stimulus for the consumer's
recognition of a new need.
New Products or Categories
When consumers become aware of new, innovative products that offer a superior means of
fulfilling a need. Disruptive technologies such as the advent of wireless free
communications devices can trigger a need for plethora of products such as a new mouse or
printer.
1.3.2 Information search

During the information search and evaluation stages, the consumer works through processes
designed to arrive at a number of brands (or products) that represent viable purchase alternatives.
Typically consumers first carry out an internal search that is, a scan of memory for suitable brands.
The evoked set is the set of brands that a consumer can elicit from memory and is typically a very
small set of some 3- 5 alternatives. 8  Consumers may choose to supplement the number of brands
8
Reilly, M. and Parkinson, T.L., "Individual and Product Correlates of Evoked Set Size For Consumer Package Goods", in Elizabeth C.
Hirschman and Moris B. Holbrook (eds), Advances in Consumer Research, Vol. 12, Provo, UT: Association for Consumer Research, pp
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in the evoked set by carrying out an external search using sources such as the Internet,
manufacturer/brand websites, shopping around, product reviews, referrals from peers and the like.
The readiness of information availability has raised the informedness of the consumers; the degree
to which they know what is available in the marketplace, with precisely which attributes and at
precisely what price.[26]

The fact that a consumer is aware of a brand does not necessarily mean that it is being considered
as a potential purchase. For instance, the consumer may be aware of certain brands, but not
favourably disposed towards them (known as the inept set). Such brands will typically be excluded
from further evaluation as purchase options. For other brands, the consumer may have indifferent
feelings (the inert set).[27] As the consumer approaches the actual purchase, he or she distills the
mental list of brands into a set of alternatives that represent realistic purchase options, known as
the consideration set.[28] By definition, the consideration set refers to the “small set of brands
which a consumer pays close attention to when making a purchase decision”.[29]

Specific brand names enter the consumer's consideration set based on the extent to which they
satisfy the consumer's purchasing objectives and/or the salience or accessibility of the brand at the
time of making the purchase decision.[30] By implication, brand names that are more memorable
are more likely to be accessible. Traditionally, one of the main roles of advertising and promotion
was to increase the likelihood that a brand name was included in the consumer's evoked set.
[31]
 Repeated exposure to brand names through intensive advertising was the primary method for
increasing top-of-mind brand awareness. However, the advent of the Internet means that
consumers can obtain brand/product information from a multiplicity of different platforms. In
practice, the consideration set has assumed greater importance in the purchase decision process
because consumers are no longer totally reliant on memory. This is marketing, which could be
defined as marketing as “The process by which companies create value for customers and build
strong customer relationships, in order to capture value from customers in return.” This definition
strongly implies that the relationship is built upon an exchange, and the "creation" of value. This
means that a need is built for a consumer, with the product presented or advertised to them through
an analytical study of the user's patterns of consumption, and their behaviors and habits. The
492-497, Online: http://acrwebsite.org/volumes/6440/volumes/v12/NA-12
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implication for marketers is that relevant brand information should be disseminated as widely as
possible and included on any forum where consumers are likely to search for product or brand
information, whether traditional media or digital media channels. Thus, marketers require a rich
understanding of the typical consumer's touchpoints.

Conclusion
An understanding of consumer behavior is an important part of comprehending the allo-cation of
resources by individuals. Consumption decisions are made based upon a logi-cal process valuing
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utility, price, and income alternatives. Firms seek to understand thisprocess in order to better serve
consumers. Firms employ brand managers to allocateresources to effectively serve consumers on a
product or service. These decisions mightinvolve redesigning products or better targeting
consumer markets with information.

References

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1. Tadajewski, M., "A History of Marketing Thought," Ch 2 in Contemporary Issues in
Marketing and Consumer Behaviour, Elizabeth Parsons and Pauline Maclaran (eds),
Routledge, 2009, pp 24-25
2. Sheth, J.N.,"History of Consumer Behavior: a Marketing Perspective", in Historical
Perspective in Consumer Research: National and International Perspectives, Jagdish N.
Sheth and Chin Tiong Tan (eds), Singapore, Association for Consumer Research, 1985, pp
5-7.

3. Tadajewski, M., "A History of Marketing Thought," Ch 2 in Contemporary Issues in

Marketing and Consumer Behaviour, Elizabeth Parsons and Pauline Maclaran (eds),
Routledge, 2009, p. 28
4. Kardes, F., Cronley, M. and Cline, T., Consumer Behavior, Mason, OH, South-Western
Cengage, 2011 p.9; Sassatelli, R., Consumer Culture: History, Theory and Politics, Sage,
2007, p. 10

5. Foxal, G., "Foundations of Consumer Behaviour Analysis," Marketing Theory, Vol. 1, No.
2, pp 165–199
6. Lynn R. Kahle; Angeline G. Close (2011). Consumer Behavior Knowledge for Effective
Sports and Event Marketing. New York: Routledge. ISBN 978-0-415-87358-1.

7. Oladeji Samuel, J and Bellman, S., Marketing Communications: Theory and Applications,
Pearson Australia, 2005, p. 114
8. Reilly, M. and Parkinson, T.L., "Individual and Product Correlates of Evoked Set Size For
Consumer Package Goods", in Elizabeth C. Hirschman and Moris B. Holbrook (eds),
Advances in Consumer Research, Vol. 12, Provo, UT: Association for Consumer Research,
pp 492-497, Online: http://acrwebsite.org/volumes/6440/volumes/v12/NA-12

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