2.2 Consumer Behaviour Model
The belief in the post world war2 era was to create new models to gain competitive advantage and advertising was the way to convince the consumer to purchase the product (Engel et al, 1995). Several analysts, in their research to capture consumer behaviour, developed consumer behaviour models. More effective marketing strategies were developed as a result of these models (Du Pleiss et al 1990, pp: 9).
Nicosia was one of the first analysts to develop a model for consumer behaviour more than thirty years ago (Dubois, 2000). The model aimed towards rationalising how companies influenced consumers by the medium of advertising and promotional activities. However, the model lacked in clarity with regards to the definitions of the variables and the relationships between variables in the model. Another criticism of this model is that the no repeat purchase behaviour was included (Du Pleiss et al, 1990). The model was never updated and therefore might not apply fully in the case of modern consumer behaviour (Dubois, 2000).
Howard and Sheth developed another model in 1969 (Dubois, 2000) to analyse the consumer decision making process. Dubois (2000) stated that the model is a comprehensive one with well defined variables and their links. The model acknowledged the repeat purchase concept and included the same. Pastrana (2003) further stated that the model included the satisfaction component as well as illustrated the importance of feedback on purchasing experience.
Although, there are few critics of the Howard-Sheth model, an important observation is that there is no update of the model since 1990. The model was deemed complex for use in everyday situations by Du Pleiss (1990, pp: 24).
A comprehensive consumer behaviour model was developed by Engel et al (2001) and is depicted in the below (fig 2.) The model has regularly been updated since 1968 (Dubois, 2000 pp: 301).
The model is a framework for understanding the consumer behaviour process in its entirety. The model provides in depth understanding of (Dubois, 2000 pp: 301):
(1) Explanations for behaviour
(2) A frame of reference for organising and stimulating research
(3) A foundation for management information systems
The decision making process of a consumer is the central theme of this model (Dubois, 2000 pp: 301). The five key steps identified by Engel et al are- problem/need recognition, search, alternative evaluation (pre-purchase), choice/purchase and outcomes (post-purchase evaluation).
These activities are influenced by three different groups of factors, namely individual differences, environmental influences and psychological processes (Engel et al 1995, pp: 143). The model has a strong emphasis on cognitive phenomenon, majorly on information processing and memory factors (Dubois, 2000, pp: 302).
This section discussed very briefly the research in the consumer decision making models till date while discussing three important models in this context. The Engel et al model was discussed in a bit more depth as it is considered to be a more comprehensive model of consumer behaviour.
The scope of this research is to study the group of factors influencing the decision making process of an Indian urban consumer whilst selecting a bank. The Engel et al model provides an initial framework to identify these factors. The following section discusses these factors in detail.
2.3. Consumer behaviour concepts: An analysis of the key factors affecting consumer behaviour
Bagozzi et al (2002) suggested that consumer behaviour consists of the psychological and social processes that people undergo in the acquisition, use and disposal of products, services, ideas and practices.
Dubois (2000, pp: 10) suggests, consumption and purchase are more or less directly coherent with individual characteristics such as motivation, perception and attitudes. These factors associated with one's personality are the first set of factors dictating one's buying behaviour. The second sets of factor are more to do with the people associated with the individual. Their opinions and suggestions could play a major role in the consumption/usage pattern of the person. These people include- family, friends, colleagues, etc. Social class, lifestyle and culture are the third level of factors which influence the consumers buying decision. These factors are derived from the socio-cultural context in which they occur (Dubois, 2000 pp: 10).
In the consumer behaviour model (Engel et al) discussed in the previous section, there are three different groups which would affect the individual differences, environmental influences and psychological processes. Each of these groups will be discussed in detail below.
2.3.1. Individual differences
22.214.171.124 Consumer resources
The first individual difference identified by Engel et al (1995 pp: 295) is consumer resources. Consumer resources constitute temporal perspective, information reception and processing capabilities and capital.
Economists from the eighteenth century were the first ones to address the concept of buying behaviour (Dubois, 2000 pp: 14-15) leading rise to the maximisation of utility theory- whereby the consumer would divide his resources amongst the purchases he has to make on the basis of incremental satisfaction dependant on its price. Ernst Engel studied the food consumption of a sample population in the 19th century and postulated a law that states demand for food is income inelastic. The rise in food demand is not in proportion with income and the consumption of food may change in different ways. Today economic resources such as income, assets and credit facilities can be used for measurement of expenditure.
Hawkins et al (2007 pp: 541) describe the temporal perspectives as situational characteristics that explain the effect of time on consumer behaviour. The amount of time available for the consumer to make a decision has significant effect on the decision taken. Increased time pressure would imply shorter information search, leading to less information availability resulting in suboptimal purchase (Hawkins et al 2007 pp: 541). This is particularly relevant with regards to the current study as the consumer would not evaluate the options available in the banking sector and restrict his/her decision to the recognised or 'older' brands in the market. Recommendation by family/ peers, which would be reviewed further section, might be accepted by the consumer without review of his alternatives.
Engel et al., (1995 pp: 323) interpreted the information reception and processing as 'Cognitive resources represent the mental capacity available for undertaking various information-processing activities'. In this context on can assess the role of attention. Attention is a process through which an individual focuses on certain stimuli rather than other, as quoted by Celsi and Olson (1988). Dubois (2000 pp: 68) explored the concept of attention by analysing the influence of factors linked with stimulus or individual factors. He concluded that a consumer's attention is gained voluntarily or can be provoked. Voluntary attention is gained when the consumer is searching for information while the stimulus injected would result in the necessary provocation of the consumer to gain attention. Although marketers can control the stimuli they are rarely in control of the individual characters which influence attention.
For example, a consumer might not comprehend the stimulus provided by a bank in the form of an advertisement and ignore it completely. On the other hand, another consumer might consider the advertisement and search for further information regarding the bank. This lack of attention or careful consideration is associated with the mental processing of the advertisement by the individual consumer
Hawkins et al. (2001 pp: 362) defined motive as 'a construct representing an unobservable inner force that stimulates and couples a behavioural response and provide specific direction to that response'. The definition relates to motive as internal drive and therefore, motivation can be looked at as the process which influences people to act in a specific manner (Dubois, 2000 pp: 22).
McGuire, as stated by Neal et al. (2006, pp: 300), developed classification system for motives which included four categories of motivation. This classification system is considered to be more specific than Maslow's hierarchy of needs, which was designed by Maslow to account for most of human behaviour in general terms. Maslow's theory assessed motives on the basis of the critical value associated by the consumer to need/want and stated that consumer first satisfies his primary needs and then moves up the luxury ladder. McGuire assessed the motives depending upon whether the motive was cognitive or affective and whether the motive was striving to maintain the current status or for the purpose of growth. (Neal et al. 2006 pp: 300)
Sheth et al. (1999 pp: 343) suggested that consumers go through a motivational process that is initiated by a stimulus and the resulting arousal will lead the person to behave in a specific way. The state achieved from this process might lead to satisfaction. Sheth et al further state the result of the arousal depends upon the consumer's goals and will lead to approach or avoidance motivation. While approach motivation implies the desire to achieve the set goal, avoidance motivation will come into picture when the consumer wants to avoid the object.
A number of motives are activated in different situations and consumers could face something called as motivational conflict. The resolutions of these motivational conflicts would affect the consumption pattern.
Solomon (1994, pp: 91) describes three motivation conflicts that a customer might face:
(1) Approach-approach conflict refers to the situation when the consumer needs to make a decision between two equally matched alternatives
(2) Approach-avoidance conflict is a situation when the consumer wants to buy a product but has a dilemma due to the guilt involved in buying it
(3) Avoidance-Avoidance conflict refers to when the consumer has to choose between two alternatives, which are both undesirable.
Marketers need to analyse the situations that may result into these motivational conflicts and providing solutions on them would attract consumers facing these conflicts (Neal et al .2006, pp: 310).
Consumer behaviour literature addresses the impact that knowledge has on a consumer decision and that is the second individual difference as stated by Engel et al.
Engel et al (1995 pp: 144) have defined knowledge as '' the information stored in memory, and it encompasses a vast array such as the availability and characteristics of products and services, where, and when to buy; and how to use products'. The part of the information, which deals with consumer activities, is called consumer knowledge.
McNeal and McDaniel (1981) explored the concept of consumer knowledge in consumer behaviour and stated how this concept is interwoven with the other terms which are usually referred to in consumer behaviour literature. They determined six commonly used and 10 uncommonly used concepts from consumer behaviour which have knowledge embedded in them. They are mentioned in the following table:
Due to the limitation of the study the researcher will not engage into discussing these terms and their association with knowledge in depth and detail. The engagement of these terms with the concept of knowledge can be summarised with the help of the discussion by Engel et al. and Peter and Olson.
Engel et al. (1995 pp: 344) studied three different aspects of consumer knowledge, namely how much a consumer knows about a product category, what his/ her buying knowledge is and whether the usage of the product is known. These three aspects encompass the concepts of attributes, facts, information, learning and understanding as stated by McNeal and McDaniel. Thus, a consumer selecting a particular bank needs to have the knowledge of the products offered by the bank, understand their relevance to his needs and also how to make maximum utilisation of the same.
Peter and Olson (1993 pp: 87) explored the concept by analysing the knowledge of a consumer at different levels of abstraction. The concrete level referring to the physical attributes of the product and the abstract level referring to the power of the product. By power of product, Peter and Olson meant whether the consumer was fully aware of the underlying benefits to the consumer. For example, a bank could offer an automatic overdraft facility on the account after a year's association.
Peter and Olson (1993 pp: 93) also discussed the concept of benefits perceived by the consumer while purchasing a product. The concepts of beliefs, expectations, intention as stated by McNeal and McDaniel address perceived customer benefit while discussing knowledge. 'Benefits represent the desirable consequences consumers seek when buying and using products and brand', (Peter & Olson, 1993:93).
An attitude can be simply explained is the way a consumer thinks, feels about and acts towards some aspect of his/her environment (Neal et al. 2006 pp: 333). Dubois (2000 pp: 109) describes attitude as 'manifestation of one's frame of mind or intentions'. It can also be stated as inclination or a tendency of a consumer to respond towards a product or a product in a particular manner (Dubois, 2000 pp: 109).
It is considered to be a difficult task to change a customer's attitude once formed (Engel et al., 1995 pp: 144).
Sheth et al. (1999, pp: 390) recognised three aspects of attitude, namely cognitions, affects and conation. Knowledge, beliefs and expectations that are associated by the consumer with a brand/product form the cognitive component of attitude. If we consider the example of Barclays Bank, the attitude of an Indian consumer towards it will be based on what he/she knows regarding Barclays- that it is foreign bank, it is originally from UK, is a recent entrant in the banking sector in India, etc. The impression of the consumer is constituted consumer's image regarding Barclays as a bank (Dubois, 2000 pp: 79). Emotions and feelings (negative or positive) towards the brand/product form the affective component of attitude. It is linked with the evaluation of the image of the brand or the product involved. Finally, the conative component is associated with the end action that the consumer might take and is linked with behavioural intentions (Dubois, 2000 pp: 110).
The three components of attitude may appear in different sequences and form different hierarchies.
Ray (1973) developed three hierarchy models.
(1) The learning hierarchy referring to the sequence in wherein cognition is developed via certain communication resulting in a change in affect and all culminating into a change in behaviour.
(2) A dissonance-attribution hierarchy which states that a consumer's action comes first followed by change in the attitude and creation of awareness. These three will result in understanding of product/ brand image.
(3) The low involvement theory: Certain level of belief/ awareness about a product will be developed first followed by the action of the consumer resulting in the development/change in the attitude of the consumer.
The theories of attitude components hierarchy can be used by the marketers to change consumer attitude, changing a particular component changes other components in the hierarchy resulting in the change of attitude.
126.96.36.199 Personality, values and lifestyle
Hilgard, quoted in Dubois (2000, pp: 38), defines personality as 'the collection of an individual's stable and co-ordinated response to their environment.' This response will be the same for an individual in same situations or circumstances. Hawkins et al. (2001, pp: 378) conclude that consumers purchase products that the strongly identify with or the ones which they perceive to solve/improve upon their weakness.
`There are various theories in consumer behaviour that analyse the concept of personality. Individual personality theories, as discussed by Neal et al (2006, pp: 312), consider the traits or characteristics formed at younger age and deem them unchangeable over the years. Individual personality theories do not acknowledge the effect of the external environment or situation/circumstances that the consumer faces. Single trait theory states that only one characteristic of an individual is important and dominant, whereas multiple trait theory considers several characteristics/ traits in combination that form a substantial portion of the personality. (Neal et al. 2006, pp: 312)
Social learning theories also attempt to analyse the concept of personality. As situations change, the reaction of the individual also changes. Social learning theories emphasise on environment as the determinant of behaviour. (Neal et al. 2006, pp: 313)
Dubois (2000, pp: 43) reports that the link found by researchers between purchasing behaviour and personality has not been convincing. However, he argues that inconsistent empirical results from the research studies are more to do with failure methodologies applied and less with the personality concept being defective. Dubois found the idea, that an individual develops a set of responses towards his environment over his lifetime which affects his purchasing behaviour, reasonable. However, Dubois was not convinced with the idea of using a generic instrument to assess a particular event (Dubois 2000, pp: 44). Mowen (1993, pp: 219) also stated that marketers cannot predict future behaviour from a single situation measurement of a personality. To counter this, Dubois (2000, pp: 44) warranted the adaptation these instruments in the consumption context and suggested the widening of the observation studies.
Engel et al. (1995, pp: 443) identified values as set of activities which are deemed acceptable by an individual. Social values are the activities which are classified as normal or natural by the society or group, while personal values are associated with normal behaviour as assessed by the individual.
Sheth et al. (1999, pp: 63) present a further classification of the personal values of an individual, namely social and emotional. An individual would purchase products which are associated with the norms of people in the same group and is referred to as social value. Emotional satisfaction of a product is achieved if a product is purchased on the basis of emotional values.
Marketers need to assess these values in order to understand how an individual would seek a product.
Lazer was one of the first consumer researchers to address the concept of lifestyle in context with consumer behaviour. He defined lifestyle as 'the distinctive or characteristic mode of living, in its aggregate and broadest sense, of a whole society or segment thereof. It is concerned with those unique ingredients or qualities which describe the style of life of some culture or group, distinguish it from others. It embodies the patterns that develop and emerge from the dynamics of living in a society. Lifestyle, therefore, is the result of such forces as culture, values, resources, symbols, licence and sanction. From a marketing perspective, the aggregate of consumer purchases and the manner in which they are consumer, reflect a society's lifestyle.' (Quoted in Dubois, 2000 pp: 177)
Hawkins et al. (1998 pp: 433) explanation of lifestyle analyses the definition provided by Lazer. Lifestyle can be referred to as the way an individual lives, determined by the individual's past experience, characteristics and current situation. Hawkins et al. (1998 pp: 433) further state culture, values, demographics and social class influence the lifestyle as social interaction plays an important role in characterising an individual's lifestyle.
As Hornik (1989) pointed out, marketing communication will be more effective if they are able to analyse the consumer lifestyles reasonably well.
2.3.2. Environmental differences
Culture can be assessed as an abstract construct influencing humans and can be defined and discussed in different forms. Culture can be analysed on the basis of its parts and components like social and economic systems, family, religion, education, language and communication and technology (Baligh, 1994). All these macro-environmental influences construct 'the objective reality' in which the consumer decides to buy a product. Internalize beliefs, values, logic and decision rules of a culture form the 'subjective reality' of an individual consumer.
Thus, one can state that people's economic behaviour reflects the overall culture in which it is embedded and cannot be considered as directionless (Baligh, 1994).
Stemmed from these basic components, people's economic behavior is not directionless but instead reflective of the culture in which it is embedded (Baligh, 1994).
As such, culture can be seen as an underlying framework, consisting of the objective reality as manifested in societal institutions and the subjective reality that comprises socialized predispositions and beliefs that guide individuals' perceptions of observed events and personal interactions, and the selection of appropriate responses in social situations (Johansson, 1997, p. 68).
Although culture is abstract, it does have definite characteristics (Strauss and Quinn, 1992; Rohner, 1984). First, it is shared across members of a society. It is this sharing that distinguishes cultural phenomena from individual phenomena (McCort and Malhotra, 1993). Culture is reflected in people's general tendencies and/or preferences for particular states of affairs, specific social process, and general rules for selective attention, interpretation of environmental cues, and responses (Tse et al., 1988). Second, culture is a learned phenomenon. It is manifested in learned behaviour acquired through socialization (Hofstede and Bond, 1988; Ward et al., 1987). Humans learn norms through imitation or by observing the process of reward and punishment in a society of members who adhere to or deviate from the group's norms (Engel et al., 1995, p. 613). In this sense, culture is observable and amenable to empirical description.
Meanings, values, ideas and beliefs of a social group are expressed through various cultural artifacts, such as products, information and communication technologies (Hasan and Ditsa, 1999). Douglas and Isherwood (1979) posit that people from different cultures use products as a means of communication. According to McCracken (1986), in a consumer society, cultural meaning moves from the culturally constituted world (the original location of cultural meaning) to consumer goods (carrying and communicating cultural meaning) and then from these goods to the individual consumer. The nature of cultural influence can be seen as a circular process from which meaning is created, maintained and transmitted within a society (McCort and Malhotra, 1993).
'Culture refers to a set of values, ideas, artifacts, and other meaningful symbols that help individuals communicate, interpret, and evaluate as members of society.' (Engel et al., 2001pp: 314.)
Peter and Olson (1993:414) identified several issues, which must be taken into account, when culture is analysed. These issues include the fact that sub-cultures of small groups can be analysed, that a shared meaning among the group being analysed is critical and that social groups differ in the amount of freedom they have to adapt to various cultures.
From the above discussion, it can be observed that the culture of single working women must be comprehensively understood, in order to effectively market to them.
188.8.131.52 Social class
is the second environmental variable, which may affect consumer behaviour. 'Social class is defined as relatively permanent and homogeneous divisions in a society into which individuals or families sharing similar values, lifestyles, interests, wealth, status, education, economic positions, and behaviour can be categorized.' (Engel et al., 2001:346.)
Various factors will determine an individual's social class. These can be divided into three groups, namely economic variables (occupation, income and wealth), interaction variables (personal prestige, association and socialisation) and political variables (power, class and mobility). The likelihood of an individual changing her social class is very small (Engel et al., 1995:682).
Solomon (1994:407) posits that social class will affect the access to resources. The argument was made that the people who have the resources (for example money) can be grouped into one class and that the people who lack the resources will be grouped into another class. The people who have little money will serve the people with more money, to help them remain in their position. People of the same social class will also have the same tastes and preferences.
People of the same social class will work in the same kinds of occupations and will socialise with each other. These people will have the same lifestyles and earn the same incomes. Marketers need to take this fact into account, when they market to consumers.
184.108.40.206. Personal influence
is the third environmental factor, which has the potential to influence consumer behaviour. It refers to the impact, which other people have on the individual's life and how this may influence their behaviour. The individual may behave in a way she perceives as being expected of her. There are three types of reference group influence. The first type involves normative compliance. When an individual is forced to perform a certain activity, to enable her to belong to the group, normative compliance is experienced. The need to conform will be the strongest, when the benefit gained by the compliance will outweigh the cost involved. The value-expressive influence is the second type of reference group influence. In this type of influence, the individual needs to be psychologically associated with the group. This requires that the individual must have the same value system as the rest of the group. The reward will be an improvement in image and respect (Engel et al., 1995:716).
Particular to the financial industry, the single working woman may have a credit card facility. The extra points she can earn by using it may result in receiving paid airfares to exotic destinations. This could suit the image of an independent world explorer, which she may wish to create.
The third type of reference group influence is called informational influence.
An example, with regard to this study, would be if the single working woman does what her financial adviser recommends, due to her lack of knowledge of the subject. The danger exists that an individual may also, because of a lack of knowledge, adhere to word-of-mouth influence. Whether an individual would listen to a trusted friend's advice, by word-of-mouth, rather than to a financial adviser who practices informational influence, will have to be investigated in the future.
is the next environmental influence, which may affect consumer behaviour. Family can be defined as a group of two or more persons related by blood, marriage, or adoption who reside together. Certain aspects will affect the consumer behaviour of a family. These include the age of the head of the house, whether a couple is married, whether they have children and whether they work. If a family has children, there would be, for example, a need to purchase clothing and medicines (Engel et al., 1995:743).
There are also three factors, which may explain the behaviour of families. Cohesion refers to the emotional relationship among family members. Family members can bevery close to each other on an emotional level. This constitutes a high level of cohesion. Adaptability refers to the extent to which a family can change, when different demands are created in the family. This involves a change in the role structure and authority in the family. Communication is the third factor in this process. If the members of the family are able to communicate effectively with each other, the result will be an increase in cohesion and adaptability (Engel et al, 2001pp: 362).
Members of a family can play different roles in the purchasing process. Instrumental roles refer to the money an individual has to pay when purchasing the product. A family member who helps the buyer to make the decision performs the expressive role. The role involves giving emotional assistance when needed. It can be observed that families are important social systems for two consumer-related reasons, as defined by Du Plessis et al. (1990:173):
A huge amount of product consumption is generated by families together and certain product purchases, which are considered as activities performed by one individual, can become family matters, when the family performs the roles described above.
The single working woman may be influenced by her uncle's or brother's advice on which kind of investment to make. Knowledge of the single working woman and her purchase behaviour is important, but knowledge of the family members who play a role in her life is also important, to enable the development of an effective marketing strategy. These factors will be taken into account in the empirical part of this study.
is the last environmental influence, which may have an impact on the purchase behaviour and decision-making process of the individual. 'Situational influence can be viewed as the influence arising from factors that are particular to a specific time and place that are independent of consumer and object characteristics.' (Engel et al. 1995, pp: 794)
According to Engel et al. (1995:794), a consumer can experience three different types of situations:
The first one involves the communication situation. Particular to this study, should the female, for example, while in a hairdressing salon hear an advertisement about a certain policy broadcast over the radio, she would not pay much attention to the advertisement, because of the noise present. If, however, she should listen to the same advertisement on the radio in her car, she may pay more attention to the advertisement of the product.
The second type of situation involves the purchase situation. Particular to this study, it would involve a company asking higher prices for their products in a special situation. Cold drink bought at the movies versus at the grocery store, would be a good example. In the financial world, the broker can be so friendly and care-giving that it may result in the female purchasing the product which he recommends, although it is not her first choice.
The last situation refers to where the product is used and how that will influence the purchase behaviour. Due to the lack of practicality of this situation in financial terms (a female will consume her life policy when she dies), this situation will not be further discussed.
220.127.116.11 Socio-Economic factors and the Indian consumer
After discussing the theoretical aspects of the effect of external environment on the consumer decisions, the researcher deems it right to discuss India as the environment. The effects of family, culture, reference groups, subcultures, external cultural influences are all unique to individual societies and countries.
Changes occurring in a man's psychic structure were attributed to the socio-economic development of capitalism by sociologist George Simmel (Slattery, 2003).
The philosophy of consumer capitalism has become central to the developing countries as more people are affected and the process of consumption and its related services become the dominant social activity. The society has created its own characteristics and philosophical framework defining social ranks and exclusivities, with membership and identification assessed by the level of consumer participation.
India is the second most populous country in the world with an estimated population of more than 1.2 billion (www1: census.gov, viewed on 03 Feb 2010) and it may at the