Essay/Term paper: Theory of varied consumer choice behaviour and it's implicati

Essay, term paper, research paper:  English Term Papers

INTRODUCTION

For decades, scholars and practitioners have been frustrated by the very limited capacity of either psychological or marketing models to predict individual choices on particular occasions. This paper discusses a theory which explains the degree to which the extant models omit important influences that produce varied individual choice behaviour. The focus of this paper is on the sequences of product purchases. Discretionary actions and activities are also covered.


THE THEORETICAL AND APPLIED RELEVANCE OF VARIED BEHAVIOUR

The assumption that consumers make rational, utility-maximizing choices has played an important role in economic thought. As long as preferences remain unchanged, the consumer is expected to choose the most preferred of the available products. Thoughts about consumers" behaviour towards substitutes hold a similar position. If a consumer"s preference for the most preferred alternative product declines or the product is currently unavailable, the consumer is expected to choose a close substitute. From the firm"s strategic point of view, this means that the marketer of a secondary brand should make its brand similar to the most popular brand.

Careful consideration of the preceding description of consumer choice behaviour and the firm"s selection of a strategy immediately leads one to question the general applicability of these assumption / thought. Although consumers often display stable preferences, sound choice behaviour seldom remains constant. Instead, consumers frequently change their choices of products or brands. Furthermore, the choices made on different occasions often involve two very different products or brands. In summary, changing, varied behaviour is the rule. Managers often avoid the use of simple "me-too" brands, recognizing that consumers are seeking more than simple substitutes. This tendency is seen directly in a number of product categories in which successful products are seldom replaced with highly similar products. Instead, a degree of product newness is viewed as being essential to maintain consumer interest.

The theory of consumer choice behaviour that is presented in this paper is designed to explain the typical degree of variability that consumers exhibit in a series of related choices. Should this theory more accurately describe individual choices, than the meaning and predictive power of many models must be questioned. For example, the results from all preference-based mapping methods, such as MDPREF (Carroll, 1972) and the Schonemann-Wang (1972) models, should be interpreted with great care. In these cases, the analyst must resist jumping to the conclusion that the choice objects that appear close to each other have similar characteristics. All simple attribute-based choice models, such as the widely used conjoint method, must also be interpreted carefully. Here one must resist the assumption that the set of most preferred items will necessarily have similar characteristics. Typically, the set of most preferred or most frequently chosen products will contain items that are very different. These products do not necessarily satisfy the notion that the objects" attributes will surpass the total utility produced. For example, sometimes a consumer may want a cold beverage and at other times the same consumer may want a hot beverage. Furthermore, the more of one kind of beverage that an individual consumes, the less likely the consumer will make the same choice on the next occasion. Unlike the reasons that produce constant-purchase and / or constant-use behaviour, different motives produce changes in purchase and use. To predict the choice made on the next occasion, one needs to account for the consumer"s prior choice behaviour.
A THEORY OF VARIED CONSUMER BEHAVIOUR

Psychologists have long recognized that individual judgements and choices contain an important random element that leads to inconsistent behaviour. Thurstone"s Law of Comparative and Categorical Judgement modelled individual judgements and choices. The random component present in most contexts of interest to marketing professionals include larger variables that are too costly to measure or for which practical measurement methods have not been developed. Consider the purchase of breakfast cereal. At the point of purchase, a favourite brand may be out of stock, the customer may be distracted, the shopper"s child may make the selection, or a clerk restocking part of the assortment may contain choice. Although this list contains only a few of the conditions which can affect consumer choice, it demonstrates the difficulty of observing and recording all of the relevant influences. All unmeasurable influences are labelled inexplicable causes of varied behaviour.

There are two important types of explicable causes of varied behaviour. The first type of the explicable cause of varied behaviour has to do with an individual"s motives that indirectly or incidentally produce patterns of varied behaviour, while the second one has to do with an individual"s direct motives where varied behaviour is valued. Purchasing for multiple uses in an example of the first type of motive. An example of the first type of motive is the purchasing of one kind of paint for prime raw wood and another kind of paint to obtain a durable finish coat. An example of the second type of motive is the purchasing of a new piece of clothing to keep up with the current trend or to relieve the boredom produced by repeatedly wearing an older style. These two types of motive for varied behaviour are explored in more detail in the following subsecctions.
INDIRECT VARIED BEHAVIOUR

There are two major kinds of motives that indirectly produce varied behaviour. These have to do with multiple needs and changing conditions. Multiple needs may arise due to multiple users, multiple uses by the individual, and multiple contexts in which the product class is used. Although only one member in a household may need low-calorie products, a record of the beverage purchases made by the principal household purchasing agent will typically show occasional change from high- to low- calorie products and / or the simultaneous purchase of both high- and low-calorie beverages. In a similar manner, when an individual uses a food product such as rice in separate dishes and as an ingredient in other dishes, from time to time purchases may change from instant rice to regular rice or to wild rice so that the most suitable product will be available to use. Closely related is the use of the product in multiple contexts. Here, an individual may buy a common table wine to serve at regular evening meals but buy a premium wine to serve to guests at a dinner party.

Changing conditions include new choice sets, changing tastes, and new constraints. Over time, more classes of choice objects are presented to the consumer with new and / or changed alternatives. The products in a product class, the candidates available to voters, and the services offered by financial institutions all illustrate the a choice set. A previously preferred product may no longer be available, a candidate"s declining health may encourage voters to switch loyalties, and a new financial service may offer important advantage to a large number of individuals who use the older services. Changes in individual choice behaviour can also be due to changes in individual tastes or preferences. As individuals mature, their needs change, and as individuals are exposed to persuasive messages about products, candidates, or services, their preferences may change. Finally, an individual may change his or her choices due to new constraints such as a new legislation or changes in their disposable personal income.
DIRECT VARIED BEHAVIOUR

Direct varied behaviour is primarily motivated by the desire for variety. Two kinds of motives must be recognized. The first category deals with the interpersonal variety or change that takes place to the individual"s own possessions and experiences. The second category deals with the interpersonal variety or change that occurs to possessions and experiences of others.

Interpersonal variety can result when an individual becomes bored with repeated exposures to similar possessions or activities. For example, a record collection that contains the works of one or a few artists may be diversified for the sake of variety or contrast. An individual may switch away from a favourite brand to gain information about new products or to help reconfirm their regular purchase pattern. Notice that the decisions motivated in this way have little or no social content, but that the varied behaviour provides a direct personal reward.

Satiation may induce changes in choice behaviour. It is assumed that preferences and choices are based on the attributes delivered by choice objects. An individual usually wants to maintain some most-preferred level of each attribute, such as the levels of calories and protein provided by food and drink. A small excess or deficiency will not greatly reduce utility but large excesses or shortages may be very undesirable. These kinds of relationships are shown graphically in appendix 1.
In appendix 1, attribute A is less important than attribute B. Also, the utility derived from attribute A is less sensitive to departures from the ideal level than is the case for attribute B.

Rarely will a given choice object deliver just the mix of attribute needed to keep the relevant attributes near their ideal levels. For this reason, individuals must change their choice from time to time to maintain desirable levels of each attribute. With this in mind, consider an individual who wants to maintain his or her physical fitness and who acquires products and services with attributes that contribute their desire to maintain their physical fitness. When past choices lead to an excessive focus on fitness, this individual will tend to choose products and activities that contribute to other desired attributes or goals, such as intellectual stimulation and artistic interests. As satiation or deprivation grows, the individual is progressively more strongly motivated to choose different alternatives so that an ideal balance of each attribute can be attained.

Seeking interpersonal variety has a strong social content. Here, the individual is faced with maintaining a balance between two conflicting motives. First, the need for affiliation encourage one to change his or her choices to keep in phase with the changing behaviour of valued peers and / or differentiate them self from the behaviour of undesirable others. Second, the need for distinction and individuality motivates changes in behaviour that will create desirable differences between the individual and his or her valued peers. These separate forms of interpersonal varied behaviour can only be understood as they relate to the possessions and actions that have social meaning to the individual. Interpersonal form of varied behaviour do not share this social dimension but both the interpersonal motives are higher-older processes such that the predictions of an individual"s choice on the next occasion cannot be fully understood without knowledge of the possessions or past actions of one or more individuals.
THE UNIFIED THEORY

The elements motivating varied behaviour, can be summarized in the simple diagram of Appendix 2. The portion of the theory dealing with explicable direct causes of varied behaviour involves consideration of the post-decision level of the attributes provided by alternative choice objects in relation to the desired levels of these attributes. The potential utility provided by any choice can be expressed as the sum of the post-choice improvements in the level of each attribute. This improvement is measured by the closeness of the post-choice levels of the N object"s attributes to the ideal levels of these attribute and by similar measures covering information, affiliation, and distinction. See appendix 3. Note that the weights indicate the importance of each attribute "i".

The model appears to be computationally feasible and is likely to produce improved predictions of individual choice, especially in those cases where interpersonal and / or interpersonal motives are important.
SOME KEY MEASUREMENT ISSUES

Variety has been treated as a primitive term. There are two measures of - structural variety and temporal variety.

Structural variety is defined on an unordered set of objects at a point in time. The more distinct the characteristics possessed by each object, the greater the potential variety possessed by the set. For example, a set of marbles that vary in size, weight, material, colour, and surface treatment can differ along just these five dimensions. By way of contrast, residential structures or automobiles can vary along dozens of important characteristics or dimensions. These facts lead to a geometric representation of variety in which objects can be plotted or located along each dimension, just as one might locate cities by their longitude and latitude on a common map. The larger the average distance between objects located in a perceptual map spanned by the attributes of the objects, the greater the objects" structural variety.

Temporal variety is concerned with the variety of a temporally ordered set such as the recreational activities that an individual engages in during a week or the amount of books that an individual reads over a period of time. Here, it is natural to consider the structural variety (the degree of difference or similarity among objects) but the variety conveyed by the sequence presents additional aspects that must be considered. How often each object or element appears in the sequence and the differences between contiguous objects or elements in the sequence must be considered.

The two types of variety is concerned with a set of objects, either at a point in time or over a given time interval. The two measures of variety are either object or element specific, but they become individual specific as well when the owner of a collection of objects is identified. In general, we expect the distribution of individuals" variety measures to vary across the types of objects or elements being observed.
IMPLICATION OF VARIED CONSUMER BEHAVIOUR

Consumer behaviour varies from one individual to another individual. In conclusion, the following is a list of varied consumer behaviour implications :

1. In most settings and for a major portion of all buyers, strong brand loyalty is unattainable. Unproductive efforts to increase market shares and / or brand loyalty should be avoided.
2. When large numbers of buyers want a different brand on successive purchase occasions, a dominant market share cannot be attained by a single brand. Instead, carefully positioned multiple-brand or multiple-product offerings are required.
3. Buyers" needs for information and stimulation determine the rate and type of new product introductions that should be made in product classes dominated by direct, interpersonal variety motives.
4. Buyers" needs for socially relevant independence and identification determines the types of new products and the rate with which they should be introduced in product classes dominated by interpersonal motives. Not only must the behaviour of buyers be monitored but also the behaviour of relevant social influences must also be understood.
5. The motives for varied behaviour should be recognized and exploited in marketing communications. For example, a small-market-share brand can emphasize the change-of-pace or boredom-chasing benefits of occasionally switching to that brand.
6. Since variety segments can be effectively developed, product positioning efforts and marketing communications should exploit the homogeneity of each segment and the between-segment differences.
7. The scope and nature of the uncontrollable and inexplicable influences must be recognized by decision-makers to they can concentrate their efforts on those factors which are subject to managerial control.

APPENDIX 1

APPENDIX 2


Causes of Varied Consumer Behaviour


Inexpliccable - Stochactis elements
or omitted variables


Multiple Users

Multiple Uses

Varied Multiple Contexts
Consumer Indirect
Behaviour
Changing Choice Sets

Changing Tastes

Changing Constraints
Explicable

Stimulation

Information

Direct Satiation

Affiliation

Distinction

APPENDIX 3




N
Object Ulitility = w (reduction in the distance from the desired level of
i = 1 attribute i to its expected post-choice level)

+ N+1 (reduction in the distance from the desired level of
information to its expected post-decision level)

+ N+2 (reduction in the distance from the desired level of
affiliation to its expected post-decision level)

+ N+3 (reduction in the distance from the desired level of
distinction to its expected post-decision level)
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