Module 1.1 - Consumer Behaviour

1.1: Consumer Behaviour Models – Economic, Psychological, Input-process-output, Howard-Sheth and Industrial buying Behaviour Models. Consumer research process-Understanding consumer through Research process.

Learning Objectives

After studying this unit, students should be able to:

• Understand the concept of consumer behaviour models.
• Explain the Economic, Psychological, Input-Process-Output, Howard-Sheth, and Industrial Buying Behaviour Models.
• Understand the Consumer Research Process.
• Appreciate the importance of consumer research in marketing decisions.

1. Consumer Behaviour Models

Meaning of Consumer Behaviour Models

A consumer behaviour model is a simplified representation of how consumers make purchase decisions. It explains the factors that influence consumers before, during, and after buying a product or service.

Models help marketers:

• Understand consumer decision-making.
• Predict consumer behaviour.
• Develop effective marketing strategies.
• Improve customer satisfaction.

2. Economic Model of Consumer Behaviour

Meaning

The Economic Model assumes that consumers are rational decision-makers. They compare the costs and benefits of different products and choose the one that provides the maximum satisfaction (utility) at the lowest possible cost.

The model is based on the assumption that consumers have:

• Complete information about products.
• Limited income.
• The ability to compare alternatives rationally.

The Economic Model, one of the oldest models of Consumer Behaviour tries to explains what a person is likely to buy and in what quantity. This model takes into consideration the behaviour of an economic man, who would give foremost importance to the monetary or financial considerations while making a decision. The ultimate objective of an individual, as per this model, is the maximization of satisfaction by investing the minimum money resources for the satisfaction of needs and wants.

Despite having certain limitations, it is one of the widely used models of consumer behaviour and is a must know for all the students of marketing and business management. 

Main Features

• Consumers act rationally.
• Price is the most important factor.
• Consumers aim to maximize utility.
• Consumers compare quality and price before purchasing.
• Income influences buying decisions.

Advantages

• Simple and easy to understand.
• Useful for pricing decisions.
• Explains purchasing of essential goods.

Limitations

• Consumers do not always behave rationally.
• Ignores emotions and social influences.
• Brand image and advertising often affect decisions.

Example

A student wants to buy a smartphone and compares:

• Price
• Features
• Battery life
• Warranty

The student chooses the phone that offers the best value for money.

3. Psychological Model of Consumer Behaviour

Meaning

The Psychological Model explains that buying decisions are influenced by internal psychological factors rather than only price.

Consumers are affected by:

• Motivation
• Perception
• Learning
• Personality
• Attitudes
• Beliefs

Main Components

A. Motivation

Needs and desires drive buying behaviour.

Example:
Buying a raincoat during the rainy season.

B. Perception

Consumers interpret information differently.

Example:
Two people may view the same advertisement differently.

C. Learning

Past experiences influence future buying.

Example:
A customer who had a good experience with a brand is likely to buy it again.

D. Personality

Each individual has unique characteristics.

Example:
An adventurous person may prefer trekking equipment.

E. Attitude

Consumers develop positive or negative opinions about products.

Example:
Someone who believes organic food is healthier is more likely to buy it.

Advantages

• Explains emotional buying behaviour.
• Helps marketers understand consumer preferences.
• Useful for advertising and branding.

Limitations

• Human behaviour is difficult to predict.
• Psychological factors differ among individuals.

4. Input–Process–Output Model

The Input–Process–Output (IPO) Model explains consumer decision-making as a sequence of inputs, mental processing, and outputs.

A. Input

Inputs are the external factors that influence consumers.

They include:

Marketing Inputs

• Product
• Price
• Place
• Promotion

Socio-cultural Inputs

• Family
• Friends
• Culture
• Social class
• Reference groups

B. Process

The process refers to how consumers think before making a purchase.

It includes:

Need Recognition

Realizing a need exists.

Information Search

Searching for information from:

• Friends
• Internet
• Advertisements
• Reviews

Evaluation of Alternatives

Comparing brands and products.

Purchase Decision

Selecting one product.

C. Output

The output is the consumer's final response.

It includes:

• Purchase
• Satisfaction
• Dissatisfaction
• Repeat purchase
• Brand loyalty
• Feedback

Diagram

INPUT

↓

Marketing Inputs

Socio-cultural Inputs

↓

PROCESS

Need Recognition

Information Search

Evaluation

Purchase Decision

↓

OUTPUT

Purchase

Satisfaction

Repeat Purchase

Brand Loyalty

Example

A student sees an advertisement for a laptop.

Input:
Advertisement + friends' recommendations.

Process:
Compares brands and prices.

Output:
Purchases the laptop and recommends it to friends if satisfied.

5. Howard–Sheth Model

Meaning

The Howard–Sheth Model, developed by John A. Howard and Jagdish N. Sheth (1969), is one of the most comprehensive models of consumer behaviour.

It explains how consumers move from awareness of a product to the final purchase decision, considering both external influences and internal psychological processes.

Major Components

A. Inputs

• Physical characteristics of products
• Brand information
• Advertisements
• Social influences

B. Perceptual and Learning Constructs

Consumers:

• Receive information
• Interpret it
• Learn from previous experiences
• Form attitudes

C. Outputs

• Attention
• Brand comprehension
• Purchase intention
• Purchase behaviour
• Satisfaction

Simplified Flow

Inputs

↓

Perception

↓

Learning

↓

Attitude Formation

↓

Purchase Decision

↓

Satisfaction

Importance

• Explains complex buying decisions.
• Useful for expensive products.
• Widely used in marketing research.

Example

Buying a car involves:

• Collecting information.
• Comparing brands.
• Test driving.
• Discussing with family.
• Purchasing.
• Evaluating satisfaction.

6. Industrial Buying Behaviour Model

Meaning

Industrial buying behaviour refers to the decision-making process followed by organizations when purchasing products or services for business purposes.

Unlike individual consumers, industrial buyers often involve multiple people and follow formal purchasing procedures.

Characteristics

• Professional buying.
• Large purchase quantities.
• Long-term supplier relationships.
• Technical evaluation.
• Formal procedures.
• Multiple decision-makers.
• Emphasis on quality, reliability, and cost.

Buying Process

1. Problem Recognition
2. Need Description
3. Product Specification
4. Supplier Search
5. Proposal Evaluation
6. Supplier Selection
7. Order Placement
8. Performance Review

Example

A college purchasing computers for a new laboratory follows these steps:

• Identifies the need.
• Specifies technical requirements.
• Invites quotations.
• Compares suppliers.
• Places the order.
• Reviews supplier performance after installation.

7. Consumer Research Process

Meaning

Consumer research is the systematic process of collecting, analyzing, and interpreting information about consumers to understand their needs, preferences, motivations, and buying behaviour.

Consumer research helps businesses make informed decisions and develop products and marketing strategies that satisfy customers.

Understanding the consumer through the research process means using a systematic, step‑by‑step approach to collect, analyse, and interpret information about consumers’ needs, motives, attitudes, and buying behaviour, and then using those insights to guide marketing decisions.

In Consumer Behaviour, this research process is the primary tool by which marketers move from assumptions about consumers to evidence‑based understanding of how and why they buy.

Consumer research is a specialised part of market research that focuses on the inclinations, motivations, and purchase behaviour of a defined target group of consumers.

It uses systematic methods—such as surveys, interviews, observations, and experiments—to generate information about what customers need, how they perceive brands, and how they make purchase decisions.

By studying these aspects, organisations can design products, set prices, choose channels, and develop promotions that are more customer‑centric and likely to satisfy consumer needs and increase loyalty.

Objectives of Consumer Research

Typical objectives of consumer research include understanding consumer needs and preferences, mapping the decision‑making process, measuring attitudes towards products and brands, and evaluating the effectiveness of advertising and promotions.
The importance of consumer research lies in its ability to reduce decision‑making risk: findings allow firms to identify profitable segments, refine brand positioning, improve customer satisfaction, and forecast future tastes and preferences.
For example, before launching a new service for college students, consumer research can reveal what features they value most (price, convenience, digital support), enabling more precise targeting and product design.

• Understand consumer needs.
• Identify buying patterns.
• Measure customer satisfaction.
• Improve products and services.
• Predict future consumer behaviour.
• Support marketing decisions.

Overview of the consumer research process

Most authors describe the consumer research process as a sequence of logically ordered steps, typically including: defining the problem or research objectives, collecting secondary data, designing primary research, sampling, data collection, data analysis, report preparation, and follow‑up or implementation.

Although the number and naming of steps may vary (six‑step, eight‑step models, etc.), all emphasise moving from a clearly stated problem, through rigorous data collection and analysis, to practical recommendations for marketing action.

At each stage, the researcher must consciously link activities back to the central purpose of understanding the consumer—how they think, feel, and behave in the marketplace.

Steps in the Consumer Research Process

Step 1: Problem or opportunity identification and formulation/Define the problem
The process begins when a company recognises a consumer‑related problem (e.g., declining sales, poor brand image) or opportunity (e.g., demand for a new product category) and decides that systematic research is needed.
Problem identification is followed by problem formulation—translating the broad issue into specific research objectives and, often, working hypotheses about consumer behaviour (for instance, “students perceive our brand as too expensive”).
Example: A regional supermarket chain notices that urban households are shifting to online grocery platforms; the research problem is formulated as “understanding factors influencing consumers’ preference for online versus in‑store grocery shopping.”

Clearly identify the research problem.

Example:
Why are sales of a particular product declining?

Step 2: Set Research Objectives

Developing research objectives means clearly defining what information is required and at what level of detail—for example, “to measure awareness of Brand X among 18–25‑year‑olds” or “to identify key attributes influencing choice of mobile phones.”

Well‑formulated objectives guide the entire research design: they determine which variables to study, which methods to use, and how findings will be evaluated; a statement of objectives ensures that only relevant data about consumers are collected.

In Consumer Behaviour, research objectives often focus on psychological constructs like attitudes, motives, risk perception, and involvement, because these variables strongly shape consumer decision‑making.

Specify what the research aims to achieve.

Example:

• Identify reasons for low sales.
• Understand customer preferences.

Step 3: Collecting and evaluating secondary data

Secondary data are information that already exist, collected for some other purpose, and may come from internal sources (company sales records, CRM databases) or external sources (government statistics, industry reports, journals, online analytics).

In consumer research, the researcher first reviews secondary data to see what is already known about the target consumers, market trends, and competitors, evaluating this information for reliability, adequacy, and relevance to the research objectives.

Example: Before studying youth attitudes towards eco‑friendly apparel, the researcher might analyse industry reports on sustainable fashion trends and internal sales data by age group to identify preliminary patterns

Step 4: Develop Research Design

The research design is the overall plan specifying how the research objectives will be achieved and what type of study will be conducted—exploratory, descriptive, or causal.

Descriptive designs answer questions like “who, what, when, where, and how” (e.g., profiling heavy users of a brand), while causal designs test cause‑and‑effect relationships (e.g., the impact of price changes on purchase intention) using experimental methods.

In consumer behaviour, exploratory designs (using focus groups or in‑depth interviews) are often used initially to explore motives and attitudes, followed by descriptive surveys or experiments to quantify and test those insights across a larger sample.

Plan how the research will be conducted.

Decide:

• Data sources
• Research methods
• Sampling
• Budget
• Time

Step 5: Choosing methods – qualitative and quantitative research

Consumer research relies on both quantitative and qualitative methods, each offering a different type of insight about consumers.

Quantitative methods generate numerical data—through structured surveys, experiments, or large‑scale observations—allowing researchers to estimate proportions, measure relationships, and test hypotheses statistically (e.g., percentage of consumers preferring Brand A).

Qualitative methods (such as focus groups, in‑depth interviews, projective techniques, and ethnographic observation) capture the “voice of the consumer,” exploring deeper motivations, feelings, beliefs, and meanings that underlie observed behaviour.

Step 6: Selecting the sampling procedure

Because it is usually impractical to study every member of the target population, consumer research uses a sample—a subset of consumers chosen to represent the larger group.

Sampling decisions include defining the population (e.g., all BBA students in Hassan), choosing sample size, and selecting a sampling method (probability methods like random sampling, or non‑probability methods like convenience or quota sampling).

Proper sampling ensures that conclusions about attitudes or behaviour (for example, level of satisfaction with a café brand) can be generalised with reasonable confidence to the wider population of interest.

Step 7: Collecting primary data

Primary data are original data collected directly from consumers for the specific research project; they are gathered when secondary data are insufficient to answer the research questions.
Common primary data collection methods in consumer research include questionnaires and surveys (personal, telephone, mail, online), individual interviews, focus group discussions, observation of customers in natural or controlled settings, and experiments.
For instance, a retailer may conduct an online survey among university students to measure their satisfaction with loyalty programmes, and organise focus groups to explore why they feel emotionally attached (or not) to the brand.

Primary Data

Collected directly from consumers.

Methods:

• Surveys
• Interviews
• Questionnaires
• Observation
• Focus groups

Secondary Data

Already available information.

Sources:

• Government reports
• Company records
• Research journals
• Websites
• Census reports

Step 8: Data processing and analysis/Analyze data

Once data are collected, they must be edited, coded, tabulated, and analysed using appropriate statistical or qualitative techniques to convert raw responses into meaningful information about consumers.

Quantitative analysis may use percentages, measures of central tendency (mean, median, mode), measures of dispersion (standard deviation), cross‑tabulation, chi‑square tests, regression, or multivariate analysis to examine relationships among consumer variables.

Qualitative analysis involves interpreting transcripts and notes to identify themes, patterns, and underlying motives; the analyst summarises how consumers talk about the product or brand and what this reveals about their attitudes and decision processes.

Organize and interpret collected data.

Common techniques:

• Tables
• Charts
• Graphs
• Statistical analysis

• Draw meaningful conclusions.

  Example:
  Consumers prefer affordable products with better quality.

Step 9: Preparing and presenting the research report

The research report organises all stages and findings in a structured document, typically including an introduction, statement of objectives, methodology, sampling details, data presentation, key findings, conclusions, and recommendations.

For managers, the most useful part of the report is the interpretation of results in terms of actionable consumer insights—for example, “students perceive our brand as outdated; they prefer modern, minimalist designs and digital engagement.”

A clear, well‑written report allows decision‑makers to understand how the research was conducted, evaluate the credibility of the conclusions, and plan marketing strategies based on solid evidence about consumers.

Present findings and suggest improvements.

Example:

• Reduce prices.
• Improve product quality.
• Increase promotional activities.

Step 10: Follow‑up and implementation

Some models explicitly add a follow‑up step, emphasising that research must be translated into practical actions such as repositioning the brand, redesigning packaging, changing communication strategies, or entering new segments.

Follow‑up includes monitoring whether actions taken on the basis of consumer research actually improve performance (e.g., increased satisfaction scores, higher repeat purchase rates) and whether further research is needed.

This cyclical perspective shows that understanding consumers is an ongoing process: organisations continually gather feedback, learn, adapt, and refine their strategies as consumer preferences and market conditions evolve.

Diagram of Consumer Research Process

Identify Problem

        ↓

Set Objectives

        ↓

Research Design

        ↓

Collect Data

        ↓

Analyze Data

        ↓

Interpret Findings

        ↓

Report & Recommendations

Importance of Consumer Research

• Reduces business risk.
• Improves customer satisfaction.
• Supports product innovation.
• Helps understand market trends.
• Enhances marketing effectiveness.
• Builds competitive advantage.
• Assists in customer segmentation and targeting.

How the research process helps understand consumer behaviour

At each stage, the research process links back to core consumer behaviour concepts—needs, motives, attitudes, perceptions, learning, personality, and social influences.

For example, exploratory qualitative research may reveal that students buy premium coffee not only for taste but also for social status and “experience,” while descriptive surveys measure how widespread this motive is and which demographic groups show it most strongly.

By combining different methods and data sources within a rigorous process, marketers can build rich consumer profiles, identify segments, and map the consumer decision‑making journey from need recognition through information search, evaluation of alternatives, purchase, and post‑purchase evaluation.

Illustrative example

Suppose a company wants to introduce a new budget smartphone targeting final‑year BBA students in Hassan.

It identifies the problem/opportunity: “What features and price‑points will attract students to our phone rather than existing brands?”

It studies secondary data, such as existing market reports on youth smartphone usage, then designs a descriptive survey and focus groups as part of its research design.

A sample of students is selected from several colleges; primary data are collected via online questionnaires on usage patterns and focus groups exploring attitudes to brands and features.

Data analysis reveals that students value battery life, camera quality, and data‑plan affordability more than advanced gaming features; the report recommends specific product configurations and promotional messages centred on “all‑day battery and clear selfies at a student‑friendly price.”

Through this application of the consumer research process, the company gains a deep, evidence‑based understanding of its target consumers and can design a marketing mix aligned with their real needs and behaviour, rather than relying on guesswork.

Summary

• Consumer behaviour models explain how consumers make purchasing decisions.
• The Economic Model assumes rational decision-making focused on maximizing value.
• The Psychological Model highlights the role of motivation, perception, learning, personality, and attitudes.
• The Input–Process–Output Model shows how external stimuli are processed into purchase decisions and post-purchase behaviour.
• The Howard–Sheth Model provides a comprehensive explanation of consumer decision-making, particularly for complex purchases.
• The Industrial Buying Behaviour Model explains organizational purchasing, involving formal procedures and multiple decision-makers.
• The Consumer Research Process is a systematic approach to understanding consumers, enabling organizations to make informed marketing decisions.

Key Terms

• Consumer Behaviour Model
• Economic Model
• Psychological Model
• Input–Process–Output Model
• Howard–Sheth Model
• Industrial Buying Behaviour
• Consumer Research
• Primary Data
• Secondary Data
• Research Design
• Brand Loyalty
• Customer Satisfaction

Review Questions

Short Answer Questions

1. Define a consumer behaviour model.
2. Explain the assumptions of the Economic Model.
3. What psychological factors influence consumer behaviour?
4. Describe the three stages of the Input–Process–Output Model.
5. List the major components of the Howard–Sheth Model.
6. What are the characteristics of industrial buying behaviour?
7. Define consumer research.
8. Distinguish between primary and secondary data.

Essay Questions

1. Explain the Economic and Psychological Models of consumer behaviour with suitable examples.
2. Discuss the Input–Process–Output Model with a neat diagram.
3. Explain the Howard–Sheth Model and its relevance in understanding consumer decision-making.
4. Describe the Industrial Buying Behaviour Model and the stages involved in the industrial buying process.
5. Explain the Consumer Research Process and discuss how it helps organizations understand consumer behaviour.