Unit 1: Introduction Consumer Psychology

A. Historical antecedents
B. Understanding consumer behaviour, varied theoretical approaches
C. Methodological issues in understanding consumer behaviour
D. Consumer behavior: buyers and users, organizations as buyers, bounded rationality and related
consumer behavior

A. Historical antecedents
Consumer psychology, as a subfield of psychology, delves into the mental processes and behaviors that
guide individuals in making purchasing decisions. Understanding the "why" behind consumer choices
has become an obsession for modern businesses. But this fascination with the intricacies of the
consumer mind predates the sleek advertisements and sophisticated algorithms of today's marketplace.
Delving into the historical antecedents of consumer psychology is like unearthing a hidden map, guiding
us through the intellectual landscape that shaped how we think about, analyze, and ultimately influence
the decisions we make as consumers.

I. Early Foundations (5th Century BC to 18th Century):

• Aristotle: In the dawn of philosophical inquiry, Aristotle's Nicomachean Ethics laid the
groundwork by exploring the role of desire, highlighting the interplay of rational and emotional
forces that guide our choices, even when buying that third pair of shoes.
• Adam Smith: Centuries later, Adam Smith's The Wealth of Nations introduced the economic
perspective, suggesting that self-interest drives our purchasing decisions, a notion that still
resonates with marketers crafting value propositions for the ever-calculating consumer.

II. Philosophical and Economic Influences (19th Century):

• Jeremy Bentham: Utilitarianism, championed by Bentham, proposed that maximizing pleasure

and minimizing pain are fundamental human motivators. This principle found its way into early
marketing strategies, influencing how products were designed and messages crafted to tap into
these deep-seated desires.
• Karl Marx: Not everyone found the consumer story so rosy. Marx's critical lens exposed the
influence of social class and power dynamics on consumption, reminding us that the
marketplace is not a level playing field, prompting ethical considerations that remain relevant
even today.
III. Formalization of the Field (20th Century):

• Walter Dill Scott: This pioneer of consumer psychology delved into the world of advertising and
persuasion, dissecting the psychological impact of marketing messages on consumers. His work
paved the way for understanding how messages can influence decision-making, laying the
foundation for the advertising industry we know today.
• Edward Thorndike: Thorndike's research on learning and reinforcement shed light on how past
experiences and rewards shape our purchasing habits. He provided essential insights into how
consumers form preferences and develop brand loyalty, shaping the field's understanding of
consumer learning processes.
• Psychoanalytic Influence (1899): Freud's psychoanalytic theories, notably in "The Interpretation
of Dreams," shaped consumer psychology with concepts like the unconscious mind and
emotional drives.
• Edward Bernays: often referred to as the "father of public relations" and a significant figure in
shaping early consumer psychology. Bernays, nephew of Sigmund Freud, applied his uncle's
psychoanalytic theories to understand and influence consumer behavior. He believed that
emotions and unconscious desires played a powerful role in making choices, paving the way for
targeted marketing campaigns that appealed to these hidden motivators.
• Motivation-Need Theories (1943): Maslow's hierarchy of needs, outlined in "A Theory of Human
Motivation," provided a framework for understanding consumer motivation hierarchically.
• Neuromarketing: Neuromarketing, in consumer psychology, uses neuroscience to uncover
subconscious reactions to marketing stimuli. By analyzing brain activity, marketers tailor
strategies to align with consumers' emotional and cognitive responses, enhancing engagement.
• Digital Revolution: In consumer psychology, the digital revolution has shifted consumer
interactions online, impacting decision-making, user preferences, and responses to digital
advertising. Understanding digital consumer experiences is vital for marketers navigating the
evolving landscape.
• Cross-Cultural Perspectives: Cross-cultural consumer psychology explores how cultural factors
influence preferences, decision-making, and responses to marketing. Acknowledging cultural
nuances helps marketers design campaigns that resonate with diverse audiences, considering
variations in communication, symbolism, and societal norms.

Conclusion: A Legacy that Illuminates the Present

Exploring the historical antecedents of consumer psychology is not just an academic exercise; it is a
journey that enriches our understanding of the present. From the early musings of philosophers to the
systematic investigations of early researchers, each era has contributed a crucial piece to the puzzle of
consumer behavior. By appreciating these foundational contributions, we gain a deeper perspective on
the current state of the field, allowing us to navigate the ever-evolving landscape of the marketplace
with greater insight and, perhaps, a touch more awareness of the ethical considerations that come with
influencing the human desire to buy.
B. Consumer Behavior

Definition

According to Leon Schiffman, consumer behavior is defined as: The behavior that consumers display in
searching for, purchasing, using, evaluating, and disposing of products and services that they expect will
satisfy their needs.

This definition encompasses several key aspects of consumer behavior:

• The entire consumer journey: From the initial search for a product or service to its eventual
disposal, Schiffman emphasizes the dynamic and holistic nature of consumer behavior.
• Consumer expectations: The definition highlights that consumers expect products and services
to fulfill their needs, whether functional, emotional, or social.
• Action verbs: Using verbs like "searching," "purchasing," and "evaluating" emphasizes the active
role consumers play in the process.
• Focus on satisfaction: Ultimately, Schiffman suggests that consumer behavior is driven by the
pursuit of satisfaction, both in the moment and over time.

Theoretical Approaches

Understanding consumer behavior is central to navigating the ever-evolving marketplace. Numerous

theoretical approaches have emerged to shed light on the complex decision-making processes,
motivations, and influences that shape our purchasing choices. Here's an overview of some key
frameworks:

1. Economic Approaches:

• Utility Theory: Assumes individuals aim to maximize their satisfaction or "utility" when making
choices. Focuses on rational decision-making and weighing costs and benefits.
• Behavioral Economics: Integrates psychological insights into economic models, acknowledging
bounded rationality and biases that influence decisions. Examples include prospect theory and
anchoring heuristics.

2. Psychological Approaches:

• Motivation Theory: Explores the internal drives and needs that propel us to consume specific
products or services. Examines Maslow's hierarchy of needs, Herzberg's two-factor theory, and
other motivational models.
• Cognitive Theory: Investigates how consumers process information, learn, and remember.
Examines attention, perception, memory, and decision-making processes within the consumer's
mind.
 • Personality Theory: Links personality traits and dispositions to consumer preferences and
choices. Explores how individuals with different personalities engage with brands and products.

3. Social Approaches:

• Social Learning Theory: Emphasizes the role of observation, imitation, and social reinforcement
in shaping consumer behavior. Explains how cultural norms, trends, and influence from peers
and family impact our choices.
• Diffusion of Innovations Theory: Tracks the spread of new products or ideas within social
networks, identifying early adopters, influencers, and laggards in the adoption process.

4. Experiential Approaches:

• Sensory Marketing: Focuses on how sensory experiences (sight, smell, touch, taste, sound)
influence consumer emotions, perceptions, and behavior at the point of purchase.
• Consumer Culture Theory: Examines the symbolic meanings and interpretations consumers
associate with products and brands, understanding how they shape social identities and
relationships.

5. Integrated Approaches:

• Holistic or Multi-Disciplinary Approaches: Combine insights from various theoretical

frameworks to provide a more comprehensive understanding of consumer behavior, recognizing
the interplay of personal, social, cultural, and economic factors.

Choosing the most relevant approach depends on the specific research question or marketing challenge.
Each framework offers a valuable lens through which to analyze consumer behavior, illuminating
motivations, decision-making processes, and ultimately, guiding successful product development,
marketing strategies, and customer engagement.

By diving deeper into these theoretical approaches, businesses can gain invaluable insights into the
minds of their consumers, crafting campaigns that resonate with their needs, desires, and motivations,
and ultimately fostering stronger connections and driving success in the competitive marketplace.
C. Methodological issues in understanding consumer behaviour
Understanding consumer behavior is crucial for businesses, marketers, and researchers. However, there
are several methodological issues that can pose challenges in studying and interpreting consumer
behavior. Here are some key methodological issues in understanding consumer behavior:

1. Self-Report Bias: Consumers may provide inaccurate information when asked about their
preferences, attitudes, or purchasing intentions due to social desirability or memory limitations.
Self-reporting methods like surveys and interviews may not always reflect actual behavior.

Example: In a survey about healthy eating habits, respondents may overstate their adherence to
a nutritious diet due to social desirability, potentially leading to inaccurate conclusions about
actual eating behaviors.

2. Sampling Bias: Obtaining a representative sample of the target population can be challenging. If
the sample is not diverse or does not adequately represent the entire consumer base, the
findings may not be generalizable to the broader population.

Example: If an online survey is used to study smartphone usage, the sample may
disproportionately include younger individuals who are more likely to use online platforms,
resulting in findings that may not be representative of the entire population's smartphone
habits.

3. Contextual Factors: Consumer behavior is often influenced by contextual factors such as the
environment, social setting, and timing. Studies conducted in controlled environments may not
capture the complexity and variability of real-world situations.

Example: Observing consumer reactions to a new product in a controlled lab setting may not
accurately reflect how they would respond in a real-world retail environment, where factors like
product placement, promotions, and in-store atmosphere come into play.

4. Cultural Differences: Consumer behavior varies across cultures, and methods used in one
cultural context may not be applicable or valid in another. Researchers need to consider cultural
nuances and adapt their methodologies accordingly.

Example: A marketing campaign that resonates well in one country may be culturally
inappropriate or ineffective in another. Failure to account for cultural nuances can lead to
misinterpretation of consumer responses.

5. Temporal Issues: Consumer behavior can change over time due to evolving trends, economic
conditions, or external events. Longitudinal studies are essential to track changes, but they
come with the challenge of participant attrition and the cost of maintaining research continuity.
 Example: A study on consumer preferences for mobile phone features may become outdated
quickly, as technological advancements lead to rapid changes in consumer expectations and
behaviors within a short time frame.

6. Ethical Concerns: Ethical considerations arise when studying consumer behavior, especially in
areas like privacy invasion, informed consent, and the use of sensitive information. Researchers
must navigate these ethical issues while gathering data.

Example: Collecting personal data for targeted advertising without transparent consent can
raise ethical concerns. Consumers may feel violated if their online behavior is tracked without
their knowledge, impacting the validity of the collected data.

7. Technology and Method Innovation: The rapid evolution of technology introduces new
methods for studying consumer behavior, but researchers may struggle to keep up with these
innovations. Adopting and adapting to new technologies can be time-consuming and resource-
intensive.

Example: Traditional survey methods may struggle to capture the nuances of consumer
interactions on emerging social media platforms. Researchers need to adapt methodologies to
include newer data collection methods, such as sentiment analysis on social media.

8. Causation vs. Correlation: Establishing causation between variables in consumer behavior is

challenging. Correlations may be observed, but inferring causation requires rigorous
experimental designs, which may be difficult to implement in real-world settings.

Example: While there may be a correlation between an increase in advertising spending and
higher sales, it's essential to conduct controlled experiments to establish causation and rule out
other factors that may influence sales.

9. Response Bias: Participants may alter their behavior when they know they are being observed
or studied, leading to response bias. This can impact the external validity of findings when
applied to real-world situations.

Example: In a focus group discussing online shopping habits, participants may alter their
responses if they believe the information could be traced back to them, leading to a discrepancy
between reported and actual behavior.

10. Limited Generalizability: Findings from specific studies may have limited generalizability to
different demographic groups, product categories, or market segments. Researchers should be
cautious when extrapolating results beyond the scope of their study.
 Example: A study on consumer preferences for electric cars in a specific region may not be
applicable to a region with different infrastructure, cultural attitudes, or government incentives
that influence electric vehicle adoption.

Addressing these methodological issues requires a thoughtful and multidimensional approach,

combining diverse research methods, considering cultural contexts, and staying attuned to the dynamic
nature of consumer behavior.

D. Consumer behavior: buyers and users, organizations as buyers,

bounded rationality and related consumer behavior

a. Buyers and Users

According to Schiffman, the buyer is the individual or group that actually makes the purchase decision,
while the user is the person or entity that consumes or uses the product or service. This distinction is
crucial in understanding the dynamics of consumer behavior. Schiffman's framework highlights the
following points:

1. Buyer:
o The entity responsible for the decision-making process, including selecting a product,
brand, or service to purchase.
o May or may not be the ultimate consumer or user of the product.
o Influenced by various factors such as personal needs, preferences, and external
influences like advertising and peer recommendations.
2. User:
o The individual or group who consumes or uses the product or service.
o Might or might not be the same as the buyer.
 o Their preferences, needs, and satisfaction with the product can influence future
purchasing decisions and brand loyalty.

Understanding the relationship between buyers and users is essential for marketers to tailor their
strategies effectively. For instance, marketing efforts may need to appeal to the buyer's decision-making
factors while ensuring that the product meets the needs and preferences of the actual user. This
distinction helps marketers create targeted and relevant campaigns to address the perspectives of both
the buyer and user in the consumer decision-making process.

b. Organizations as buyers

The organizational consumer which includes both profit and not – for profit businesses, government
institutions, all of which must buy products and services in order to run the organization.

Organizations, when acting as buyers in the business-to-business (B2B) context, exhibit distinct features
that influence their purchasing behavior. Here are key features of organizations as buyers:

1. Organizational Buying Process: Organizations typically follow a structured and formalized

buying process involving problem recognition, information search, evaluation of alternatives,
purchasing decision, and post-purchase evaluation.
2. Multiple Decision-Makers: B2B purchases often involve multiple individuals or departments
within the organization. Decision-makers may include procurement professionals, technical
experts, and top-level management.
3. Rational Decision-Making: Organizational buying decisions are generally rational and based on
careful analysis of costs, benefits, and performance criteria. Emotions play a lesser role
compared to consumer buying decisions.
4. Long-Term Relationships: Organizations tend to establish long-term relationships with
suppliers, emphasizing reliability, quality, and consistent delivery. Relationship-building is a
critical aspect of B2B transactions.
5. Volume Purchases: Organizations typically buy products or services in larger quantities due to
the scale of their operations. Bulk purchasing may lead to negotiations for discounts and
favorable terms.
6. Complex Buying Criteria: B2B purchases often involve complex technical specifications,
performance requirements, and contractual agreements. The evaluation process considers
factors such as functionality, reliability, and after-sales support.
7. Professional Purchasing: Organizations usually have dedicated procurement professionals or
purchasing departments responsible for sourcing, negotiating, and managing supplier
relationships. These professionals apply expertise in negotiation and supply chain management.
8. Strategic Considerations: B2B purchases are often strategic decisions that align with the overall
goals and objectives of the organization. Considerations may include how the purchase
contributes to cost savings, innovation, or competitive advantage.
 9. Customization and Adaptability: Organizations may require customized solutions to meet
specific business needs. Suppliers must demonstrate flexibility and adaptability to cater to the
unique requirements of organizational buyers.
10. Risk Mitigation: Organizations are risk-averse, and purchasing decisions involve assessing and
mitigating potential risks related to product performance, delivery delays, and financial stability
of suppliers.

Understanding these features is crucial for businesses aiming to market and sell products or services to
other organizations. Tailoring strategies to accommodate the unique characteristics of organizational
buying behavior is essential for success in the B2B marketplace.

c. Bounded rationality and related consumer behavior

Bounded rationality is a concept in behavioral economics that suggests individuals, when making
decisions, operate within cognitive limitations, processing only a limited amount of information and
often relying on heuristics or rules of thumb. This concept has profound implications for understanding
consumer behavior. Here are several aspects of bounded rationality and its connection to consumer
behavior:

1. Limited Information Processing: Bounded rationality implies that consumers cannot process all
available information when making decisions. In real-world scenarios, consumers often face
information overload, leading them to rely on simplified decision-making processes.
2. Use of Heuristics: Consumers, due to bounded rationality, frequently employ heuristics or
mental shortcuts to simplify decision-making. Examples include relying on brand familiarity,
price as an indicator of quality, or recommendations from trusted sources.
3. Satisficing Behavior: Bounded rationality leads consumers to engage in satisficing behavior,
where they aim for decisions that are "good enough" rather than optimal. This involves selecting
the first option that meets the minimum criteria, saving time and cognitive effort.
4. Impulse Buying: Limited cognitive resources can contribute to impulse buying behavior.
Consumers, under time constraints or influenced by situational factors, may make quick,
emotionally driven purchases without thoroughly evaluating alternatives.
5. Brand Loyalty and Inertia: Bounded rationality influences brand loyalty and consumer inertia.
Consumers may stick to familiar brands or products to avoid the cognitive effort required to
explore new options, even when better alternatives may exist.
6. Frame Dependence: Bounded rationality makes consumers susceptible to how information is
presented or framed. The framing effect, where the same information presented differently
influences decision-making, highlights how cognitive limitations impact consumer choices.
7. Decision Regret: Consumers experiencing bounded rationality may face decision regret when
outcomes do not meet expectations. This regret can arise from the inability to thoroughly
evaluate alternatives and anticipate potential consequences.
 8. Influence of Context: Bounded rationality emphasizes the significance of the decision-making
context. Consumers may make different choices based on contextual cues, such as the
environment, time constraints, or the presence of persuasive marketing messages.
9. Nudging and Choice Architecture: Recognizing bounded rationality, marketers and policymakers
use strategies like nudging and choice architecture to guide consumers toward certain decisions.
These interventions leverage cognitive biases to influence consumer behavior subtly.
10. Learning and Adaptation: Bounded rationality acknowledges that consumers learn and adapt
over time. As individuals gain experience with products or services, they may develop more
efficient decision-making processes within the constraints of their cognitive abilities.

Understanding bounded rationality in the context of consumer behavior provides insights into the ways
individuals make choices, helping businesses tailor their marketing strategies and products to align with
the cognitive constraints and decision-making patterns of their target audience.