Consumer theory mark dean lecture notes for fall 2009 introductory microeconomics brown university 1introduction in this section of the course we will examine the standard methods that economists use to model the behavior of consumers. The theory summarized here will be treated is greater detail in a forthcoming book by john a. There are two main approaches to the of consumer behavior of demand. Consumer behaviour is the study of how consumers make decisions about what they need, want, and desire. To determine consumer behavior, marketers use numerous consumer behavior models. Microeconomics of consumer theory the two broad categories of decisionmakers in an economy are consumers and firms. The concept of consumer surplus was introduced by a. Keywords consumer behaviour, consumer behaviour models, cognitive approach to models of. The main assumption or premises on which the cardinal utility analysis rests are as under.
Theory of consumer behavior definition and approaches. Apr 28, 2016 a cognitive approach to consumer behaviour posted by simon hall, 2nd may 2016 the field of consumer behaviour is the study of the processes involved when individuals or groups select, purchase, use or dispose of products, services, ideas or experiences to satisfy needs and desires. Consumer behaviour emerged in the 1940s and 50s as a distinct subdiscipline in the marketing area. If a brand can appeal to a deep wish, fantasy, aggression or some escape from life, then consumers may equate a brand or specific line of products with a desire. In this manner, market segmentation and marketing concept paved the way for the application of consumer behaviour principles to marketing strategy.
Consumers purchase products and services as and when need arises. According to belch and belch, whenever need arises. Four theories stand out as influential for marketers. The usual purpose of a theory is to explain empirical phenomena. Consumer behaviour is the study of individuals, groups and organizations decisions with regard to the selection, purchase, use, and disposal of goods, services, ideas, or experiences to satisfy their needs and wants. Scribd is the worlds largest social reading and publishing site. The behavior that consumers display in searching for, purchasing, using, evaluating, and. During past three decades many consumer behavior theories and models have been developed and become prominent research topics in various fields of. Consumer behaviour involves both individual and group processes. This article looks and consumer behaviour in general and also examines the various theories and models that are available to understand consumer behaviour. To register online tuitions on to clear your doubts. Understanding consumer behavior will assist business entities to be more practical at selling, designing, development of products or services, and every other different initiative that impacts their customers.
Marginal rate of consumer substitution mrcs absolute slope of the indifference curve may be different at every point along the curve. Meaning, map and properties consumers equilibrium marginal rate of substitution partpart 1 part. Keywords behaviour analysis, behavioural economics, consumer behaviour, consumer theory, marketing management allen, c. The first approach is the marginal utility or cardinalist approach. The main catalyst which triggers the buying decision of an individual is need for a particular productservice. The economic model, the learning model, the psychoanalytic model and the sociological model the influence of the various social sciences such as economics, psychology, sociology and anthropology has promoted marketing experts to propound certain models for explaining buyers behaviour. Doc consumer behaviour theories and models ravimohan. Pdf the different theories on consumer behavior and the relevant research conducted on the understanding of the consumer behavior. The theory of planned behavior tpb started as the theory of reasoned action in 1980 to predict an individuals intention to engage in a behavior at a specific time and place. The empirical phenomenon which we want to explain is the buying behavior of individuals over a period of time. If youre looking for a free download links of consumer behavior pdf, epub, docx and torrent then this site is not for you. Assuming that the individual cannot sell the sixth hamburger, he or she would not want it even for free. Hauser in a classic paper on the managerial significance of behavioral decision theory, itamar simonson 1993, p.
After the understanding of the consumer behavior, the. Another defect of the indifference curves approach is that it does not analyze the effects of advertising, of past behaviour habit persistence, of stocks, of the interdependence of the preferences of the consumers, which lead to behaviour that would be considered as irrational, and hence is ruled out by the theory. Alternatively we can say, the consumer is indifferent between a and b. Consumer attitudes influence purchasing behavior, where cognitive theory comes into play. He seeks to maximize satisfaction from the limited income which is at his disposal. It was pretty simple theory and was mostly dependent on consumer research and buying behavior. It then attempts to forecast emerging trends in consumer behavior research and theory as a consequence of new and emerging schools of marketing thought. Indifference curves 510 slope of indifference curves. The decisions that individuals make about what and how much to consume are among the most important factors that shape the evolution of the overall. Created by martin fishbein and icek ajzen in the late 1960s, the theory of reasoned action centers its analysis on the importance of preexisting attitudes in the decisionmaking process. Cardinal utility analysisapproach concept of utility.
In some situations, consumers do have clear and strong preferences for particular product or. Consumer buying behaviour refers to the buying behaviour of the ultimate consumer. Theory of choice a solving the consumer s problem ingredients characteristics of the solution interior vs corner solutions b constrained maximization for consumer c interpretation of the lagrange multiplier road map. Consumer theory is not flawless, though, as it based on a number of assumptions about human behavior. The theory was intended to explain all behaviors over which people have the ability to exert selfcontrol. This utility maximization conduct of the consumer is liable to the demand forced by his constrained income and the prices of the different things he wishes to expend. While no single theory is unifying, each one provides a unique piece of the puzzle in understanding the psychological processes of people and their patterns of consumption. From time to time, different theories have been advanced to explain consumer s demand for a good and to derive a valid demand theorem. Where utility theory views the consumer as a rational economic man zinkhan 1992, contemporary research on consumer behaviour considers a wide range of factors influencing the consumer, and acknowledges a broad range of consumption. The first model of consumer decision of making process was developed in 1963 by howard and later edited in 1969 which has become the current theory of consumer behavior.
Theory of reasoned action and theory of planned behavior student learning outcomes after reading this chapter the student will be able to. In other words, consumer behavior is the study of how consumers will make their buying decision and what those factors which support or influence these decisions. The second unit of the course introduces you to the analysis of consumer behavior. This chapter will focus on the area of consumer behaviour by first considering a. Consumer behavior theory of consumer behavior description of how consumers allocate incomes among different goods and services to maximize their wellbeing. Approaches and models while behavioural research still contributes to our understanding of human behaviour, it is now widely recognised as being only part of any possible full explanation. Contents introduction marginal utility analysis, law of marginal utility graphical representation ordinal utility and cardinal utility approach concept of consumer behavior budget line and budget set indifference curve analysis. The theory of consumer behavior considers how a consumer uses his income in order to accomplish the most astounding fulfillment or utility. The different theories on consumer behavior and the relevant research conducted on the understanding of the consumer behavior. Cardinal utility analysis is the oldest theory of demand which provides an explanation of consumer s demand for a product and derives the law of demand which establishes an inverse relationship between price and quantity demanded of. Pdf a study of theories on consumer behavior researchgate. The updated model provides an integration among the several psychological, social, and market pressure on the buyers choice and information howard and sheth, 1969.
Two important theories are i marginal utility analysis propounded by marshall, and ii indi. The concept of consumer surplus is related to our daily life expenses. Explain the concept of the theory of reasoned action and the theory of planned behavior. The theory soon became pretty prominent in the marketing field and is still followed. Income acts as a constraint in the attempt for maximizing utility. According to this theory the individual decision and behaviour are quite often. A major application is using freuds inputs to create brand image. A model is an attempt to diagram the elements and relationship among the.
The consumer has a given income which sets limits to his maximizing behaviour. Some of the most popular examples include psychoanalytic theory and pavlovian theory. Later on, alfred marshall developed it in his book, principle of economics published in 1890. History of consumer behavior, a marketing perspective. An overview of online consumer behaviour theory and model. Lecture 3 axioms of consumer preference and the theory. By a consumer we mean a person who has the opportunity to buy. The income constraint, in the case of two commodities, may be written. Consumer behavior i about the tutorial consumer behavior is about the approach of how people buy and the use merchandise and services. Consumer behavior research undertaken by present day marketers are based on scientific methods. Sigmund freuds theory states that behaviour is guided by subconscious needs. Planned behaviour theory of online consumer behaviour kautonen et al.
Furthermore, it is questionable whether the consumer is able to order his preferences as precisely and rationally as the theory implies. Id is the impulsive need of thirst, hunger and sex an individual has. There are two types of theories that explain consumer behavior the traditional or old theories and modern or contemporary theories. The role of theory in science marketers now a days use contemporary consumer behavior theories in explaining consumer behavior and undertaking marketing activities based on those theories. Behavioral decision theory a consumer behavior theory. Aug 24, 2018 consumer behavior can be defined as the study of psychological, physical and social actions when individuals buy, use and dispose of products, services, ideas, and practices. Consumer theory jonathan levin and paul milgrom october 2004 1 the consumer problem consumer theory is concerned with how a rational consumer would make consumption decisions. A consumer researchers today use two different types of rm to study cb. Explain how the constructs of attitude, subjective norm, volitional control, and behavioral control influence intention. The theory of consumer behavior the principle assumption upon which the theory of consumer behavior and demand is built is. Pdf in sum, the cardinal utility numbers generated by neoclassical utility functions provide more information than do their ordinal counterparts.
The essential component of human behavior, the consumers behavior restrictively, reflects peoples conduct when it comes to buying and or. Consumer can rank compare all available consumption bundles. Many factors, specificities and characteristics influence the individual in what he is and the consumer in his decision making process, shopping habits, purchasing behavior, the brands he buys or the retailers he goes. Lecture notes, consumer behavior textbook mkt 3230 studocu. Regional, ethnic, and religious influences on consumer behavior. Models of consumer behavior as the buying process is very important in marketing, it would be ideal to have a complete idea on buyer behavior model. Chapter 3 theory of reasoned action and theory of planned. The theories that decide on how a consumer comes to decide what he needs are discussed below. Utility hypothesis forms the basis of the theory of consumer behaviour. Consumer behaviour jane priest is a teaching fellow at edinburgh business school and teaches parts of the oncampus marketing course, as well as the consumer behaviour elective by distance learning. Consumer behaviour emerged in the 1940s and 50s as a distinct sub.
Several consumer behavior theories have emerged as marketers apply findings in fields like psychology and sociology to consumers wants, needs and identities. Theories of consumer behavior are a natural extension of human behavior theories. The theory of consumer behavior built on both the cardinal and ordinal approach is attribute d to modern economists such as alfred marshal, j. Mar 12, 2018 behavioral decision theory bdt was first introduced by an american psychologist, mr. The black box model is related to the black box theory of behaviorism, where. Cbse class 12 micro economics revision notes chapter 2. It is governed by three factors namely id, superego and ego. Each individual in each of these groups makes its decisions in order to achieve some goal a consumer seeks to maximize some measure of satisfaction from his consumption decisions while a firm seeks to maximize its profits. Although a behaviorist would seek stimulus and response relationships in the purchasing situation, the cogno scientist will attribute the buying behavior to the use of past experience and a set of specific attitudes. Food products with nutrition and health claims becici 12 october, 2009. Foundations of consumer behaviour analysis gordon r. So for any two bundles of goods a and b he can establish a preference ordering and choose. Theories of consumer behavior and methodology applied in. She is a key member of a team exploring how technology can be used to enhance the student learning experience.
Jun 04, 2018 other marketers have tried to apply the psychoanalytic theory to consumer behavior. The key component to this model is behavioral intent. In some situations, consumers do have clear and strong preferences for particular product or service characteristics. Lesson 10 theory of consumers be havior free download as powerpoint presentation. The purpose of this paper is to trace the historical dependence and allegiance of consumer behavior on the discipline and practice of marketing. After the understanding of the consumer behavior, the different. Consumer behaviour is defined as all psychological social and physical behaviour of potential customers as they become aware of, evaluate, purchase, consume, and tell others about products and services. For any two bundles of goods a and b which are identical the consumer will consider a to be at least as good as b a is weakly preferred to b.
Consumer behaviour is the study of individuals, groups, or organizations and all the 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. Lecture notes consumer behaviour chapter 15 c06 solution manual consumer behavior. Consumer behavior is best understood in three distinct steps. Understanding consumer theory individuals have the freedom to choose between different bundles. In a laymans language consumer behaviour deals with the buying behaviour of individuals. Pavlovian theory is a learning procedure that involves pairing a stimulus with a conditioned response. Buying having and being exam 9 december 2018, questions and answers exam 8 december, questions and answers exam 9 december 2018, questions and answers exam 8 december, questions and answers. Also the preferences of the consumers change continuously under the influence of various factors, so that any ordering of these preferences, even if possible, should be considered as valid for the very short.
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