Consumer Behavior

Most consumption activities are the result of several
motives operating at the same time. Researchers specially
trained in uncovering motives often use qualitative
research techniques in which consumers are encouraged to
reveal their thoughts (cognitions) and feelings (affect)
through probing dialogue. Focus groups and in-depth
interviews give consumers an opportunity to discuss products
and express opinions about consumption activities.
Trained moderators or interviewers are often able to tap
into preconscious motives that might otherwise go undetected.
Sentence completion tasks (e.g., Men who wear
Old Spice are …) or variants of the thematic apperception
tests, in which respondents are shown a picture and asked
to tell a story surrounding it, are additional techniques
that provide insight into underlying motives.
Consumer motives or goals can be represented by the
values they hold. Values are people’s broad life goals that
symbolize a preferred mode of behaving (e.g., independent,
compassionate, honest) or a preferred end-state of
being (e.g., sense of accomplishment, love and affection,
social recognition). Consumers buy products that will
help them achieve desired values; they see product attributes
as a means to an end. Understanding the means-end
perspective can help marketers better position the product
and create more effective advertising and promotion campaigns.
Consumer Information Processing. The consumer information-
processing approach aids in understanding consumptive
behavior by focusing on the sequence of mental
activities that people use in interpreting and integrating
their environment.
The sequence begins with human perception of
external stimuli. Perception is the process of sensing,
selecting, and interpreting stimuli in one’s environment.
We begin to perceive an external stimulus as it comes into
contact with one of our sensory receptors—eyes, ears,
nose, mouth, or skin. Perception of external stimuli influences
our behavior even without our conscious knowledge
that it is doing so. Marketers and retailers understand this,
and they create products and stores specifically designed
to influence our behavior. Fast-food chains paint their
walls in “hot” colors, such as red, to speed up customer
turnover. Supermarkets steer entering customers directly
into the produce section, where they can smell and touch
the food, stimulating hunger. A hungry shopper spends
more money.
Close your eyes and think for a moment about the
hundreds of objects, noises, and smells surrounding you at
this very moment. In order to function in this crowded
environment, we choose to perceive certain stimuli while
ignoring others. This process is called selectivity. Selectivity
lets us focus our attention on the things that provide
meaning for interpreting our environment or on the
things that are relevant to us, while not wasting our limited
information-processing resources on irrelevant items.
Did you even notice that after you decide on, say,
Florida, for your vacation destination, there seems to be
Feedback
Decision Making Consumption Behavior
Feedback
Feedback
Cognitive Inputs
Including
• Motivation
• Information Processing
• Attitudes
Social Inputs
Including
• Groups
• Family
• Culture
• Subculture
Model of consumer behavior
Figure 1

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 143
Consumer Behavior
an abundance of ads for Florida resorts, airline promotions
for Florida, and articles about Florida restaurants
and attractions everywhere? Coincidence? Not really.
There are just as many now as there were before, only now
you are selectively attending to them, whereas you previously
filtered them out. Marketers continuously struggle
to break through the clutter and grab consumers’ attention.
Advertising and packaging is designed to grab our
attention through a host of techniques, such as the use of
contrast in colors and sound, repetition, and contextual
placement.
Did you watch television last night? You may have
paid attention to many of the ads you saw during the commercial
breaks; you may even have laughed out loud at a
few of them. But how many can you recall today? Consumers’
ability to store, retain, and retrieve product information
is critical to a brand’s success. When information is
processed, it is held for a very brief time (less than 1
minute) in working, or short-term, memory. If this information
is rehearsed (mentally repeated), it is transferred to
long-term memory; if not, the information is lost and forgotten.
Once transferred to long-term memory, information
is encoded or arranged in a way that provides meaning
to the individual. Information in long-term memory is
constantly reorganized, updated, and rearranged as new
information comes in, or learning takes place.
Information-processing theorists represent the storage
of information in long-term memory as a network
consisting of nodes (word, idea, or concept) and links
(relationships among them). Nodes are connected to each
other depending on whether there is an association
between concepts, with the length of the linkages representing
the degree of the association. Figure 2 illustrates a
network model of long-term memory. When Trice
cofounded Laura’s Wholesome Junk Food, part of her
challenge was to change consumers’ knowledge structures
for the concept of a healthful treat, “Healthy foods and
gourmet/comfort foods have often been thought of as separate
entities. A person allows an occasional ‘treat’ of
something with the assumption that the treat is a) not
healthy, and b) needs to be severely limited. By opening
up to the concept that being health conscious can also be
Good
tasting
Bite-lettes
Healthy
treat
Laura's
Wholesome
Junk Food
Gourmet/Comfort
snack foods
Vegan
Unhealthy
Decadent
Wheaf-free
Sweetened
with fruit
juice Can be
enjoyed
frequently
Can be
enjoyed once
in a while
High in
refined sugar
High in
unhealthy fat
Associative network for Laura's Wholesome Junk Food
Figure 2

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Consumer Behavior
decadent, consumers have a new freedom to choose to
incorporate treats and great tasting food for their families,
their activities and for entertaining” (Trice, 2005).
The complete network brought to mind when a
product is activated is called the product schema. Knowing
the set of associations that consumers retrieve from
long-term memory about a particular product or category
is critical to a successful marketing strategy. For new products
or services, marketers must first select the set of associations
they want consumers to have. This is called
positioning the product, or selecting the brand image.
Trice’s unique positioning as a “wholesome junk food”
was accomplished by establishing a link between the concepts
healthful and decadent treat. The brand position is
then translated into clever ads, reinforced on product
packaging, and integrated into all promotion and communication
strategies.
Over time, a brand’s image can fade or become
diluted. Sometimes consumers associate concepts that are
not favorable to a brand. When this occurs, marketers
reposition the brand, using advertising and other marketing
tools to help consumers create new links to positive
association and discard links to the unfavorable ones. By
rotating such catchy phrases as “Are your french fries
lonely?” and “Your fish stick improvement system” on
their ketchup labels, Heinz was able to reposition their
ketchup as a more exciting, youth-oriented, and sparky
brand.
Strategies for successful brand extensions also depend
on the brand schema. Generally speaking, a brand extension
is more likely to be successful if the set of associations
for the extension matches the set of associations of the
core product. Would Lifesavers brand toothpaste sell?
Probably not, because the associations for Lifesavers
(sweet, candy, sugar, fruity) are not the same as those for
toothpaste (mint, clean, noncandy). On the other hand, a
Lifesavers brand sugared children’s cereal with colorful,
fruity rings has a much better match of associations.
Attitude Formation and Change. The set of beliefs consumers
have stored in long-term memory provides
another critical function to marketers: It provides the basis
for a consumer’s attitude toward a brand or an ad. An attitude
is an overall evaluation of an object, idea, or action.
Attitudes can be positive or negative, and weakly or
strongly held. The statement “I love Ben & Jerry’s Vanilla
Toffee Crunch” is a strong, positively valenced attitude
toward a product. The statement “I dislike the new Toyota
ad” is a weak, negatively valenced attitude toward an
advertisement. Marketers work hard to continuously
monitor consumer attitudes toward their products.
Among other things, attitudes can indicate problems with
a product or campaign, success with a product or campaign,
likelihood of future sales, and overall strength of
the brand or brand equity.
A popular perspective is that attitude has three components:
cognitive, affective, and conative. The cognitive
component reflects the knowledge and beliefs one has
about the object (e.g., “Two pieces of Jolt chewing gum
contains as much caffeine as one cup of coffee”), the affective
component reflects feelings (e.g., “I like the energy
boost I get after chewing Jolt Gum”) and the conative
component reflects a behavioral tendency toward the
object (e.g., “I will buy Jolt Gum to take with me into my
classes for exams”). Thus, attitudes are predispositions to
behave in a certain way. If you have a favorable attitude
toward a politician, you will likely vote for him or her in
the next election. Because of this, many marketers use attitude
measures for forecasting future sales.
It is important to note, however, that the link
between attitudes and behavior is far from perfect. Consumers
can hold positive attitudes toward multiple brands
but intend to purchase only one. External economic,
social, or personal factors often alter behavioral plans.
Attitudes are dynamic, which means they are constantly
changing. As an individual learns new information,
as fads change, as time goes on, the attitudes one
once held with confidence may no longer exist. Did you
ever look at old photos of yourself and wonder “What was
I thinking wearing clothes like that? And look at my hairstyle!”
UNDERSTANDING CONSUMERS:
EXTERNAL FACTORS
In addition to the internal factors, consumer behavior is
also shaped to a large extent by social factors, such as culture,
family relationships, and other aspects of the external
environment. Awareness of these influences can help
marketers to identify groups of consumers who tend to
think, feel, or act similarly and separate them into unique
market segments. Aspects of the marketing program such
as product design, advertising, and pricing can then be
tailored to meet the unique needs, values, and goals of
these distinct groups.
Group Influences on Individual Consumer Behavior.
Group influences on consumer behavior can affect motivation,
values, and individual information processing;
they can come from groups to which consumers already
belong or from groups to which they aspire to belong.
Groups can exert a variety of influences on individuals,
including: (1) informational influences, where the group
acts as a source for expert opinions; (2) comparative influences,
such that the group provides opportunities to manage
the individual’s self-concept with respect to the group’s

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Consumer Behavior
identity; and (3) normative influences, whereby the group
specifies guidelines and sanctions for appropriate or inappropriate
individual behaviors.
The influence of groups on consumer behavior tends
to vary with a variety of group- and product-related factors.
For example, the more the group is perceived to be a
credible, valued source of approval or disapproval to the
consumer, the more likely that consumer is to conform to
group values. In addition, the more frequently group
members interact, and the more outwardly visible use of
the product is to group and nongroup members, the
greater the group’s influence on individual consumption
behavior.
Family Influences on Consumer Behavior. Families have
a particularly significant influence on consumer behavior.
For example, consumption behavior often changes substantially
as family status changes over time. Thus, young
unmarried adults, who are often focused on individual
self-definition, tend to purchase products that enhance or
define their self-concepts. In contrast, couples with children
may be more interested in purchasing items or experiences
that can be shared by all family members and, as a
result, may spend less on individually oriented products.
Family membership also leads to a greater need for
joint rather than individual decision making, further complicating
consumer behavior at the household level. For
example, the person who buys a product may not be the
ultimate consumer of the product. Or perhaps the husband
and wife have differing levels of involvement with
certain product decisions, leading to different types of
separate decision processes that must be integrated before
a choice is ultimately made.
Understanding the dynamics involved in joint decision
making and which family members influence which
types of decisions has important implications for marketers
interested in directing marketing efforts to the right
person. Importantly, these family dynamics and lifestyle
transitions are complicated by the decline in traditional
households and the accompanying rise in nontraditional
family structures, such as cohabitating couples or couples
integrating families from previous marriages.
Cultural and Subcultural Influences on Consumer
Behavior. Culture comprises the common meanings and
socially constructed values accepted by the majority of
members of a society or social group. It includes such
things as shared values, beliefs, norms, and attitudes, as
well as affective reactions, cognitive beliefs, and patterns
of behavior. Typically, when we think of culture, we tend
to think of differences among individuals from different
countries or regions of the world. With the increasing
globalization of the world economy, understanding differences
and similarities in consumer behavior across cultures
becomes increasingly meaningful, with important
implications about the degree to which marketing strategies
can be standardized across countries and cultures, or
localized to reflect country- or region-specific cultural distinctions.
One important cultural difference is the degree to
which the self is defined as independent from others versus
interdependent with important others. Individualistic
societies, such as the United States, tend to foster an independent
sense of self, with the self believed to be a set of
internal attributes unique to each person. Collectivist
societies, however, such as China, foster an interdependent
sense of self, with the self believed to be inseparable
from others and the social context; person-specific attributes
are less important in self-definition than are interpersonal
relations. These differences in self-definition affect a
variety of consumer behaviors, including emotional reactions
to advertisements, the degree to which information
from others is valued when making consumption decisions,
and gift-giving behavior.
In addition to cultural differences that exist across
countries, marketers are also increasingly recognizing the
importance of subcultural differences within a society.
Subcultures are distinctive groups within a society that
share common meanings. Subcultures can often be identified
based on demographic characteristics, such as geographic
location (e.g., the southern United States),
ethnicity (e.g., Hispanic Americans), or age (e.g., baby
boomers). Subcultures can also be identified based on
common lifestyles.
The start of the twenty-first century saw a growing
emphasis on lifestyle segments based on food restrictions
and food choices. For example, vegetarians, vegans, those
who eat only organically grown food, and those who
require gluten-free food are rapidly growing segments of
the population. There are some national retailers, such as
Whole Foods Market, who serve a multitude of these specialized
segments.
There are also more targeted specialized products and
services, such as Gluten-Free Living, a national magazine for
people who follow a gluten-free diet (http://www.glutenfreeliving.
com). Importantly, identification of lifestyle subcultures,
and the corresponding development of an
inventory of shared meanings, is typically more difficult
than the development of such understanding of subcultures
based on observable demographic characteristics.
Increasingly, Internet marketers have come to realize
the value of subculture segments and have tailored product
offerings and/or Web site content to appeal to particular
subcultures, most often demographically based, and
to foster a greater sense of community and connection
among subculture members. For example, iVillage.com

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Consumer Bill of Rights
features content of particular interest to women and offers
forums for discussion of issues relevant to its users. Similarly,
Hispanic.com aims to provide services and information
to Hispanic Americans as well as to provide a virtual
meeting space for Hispanic Americans to meet and help
one another. These represent early attempts to use the
Internet to target and serve multicultural populations.
Future sites are likely to target more narrowly defined subcultures
(e.g., Hispanic Americans with an interest in
gourmet cooking) and to focus on reaching more lifestylebased
subcultures.
THE CONSUMER DECISIONMAKING
PROCESS
What consumers think and the social environment they
live in determine what they buy and how that purchase
decision is made. Typically, the decision process is
described as a series of five stages. The first stage, need
recognition, occurs when consumers perceive a difference
between their ideal and actual states. Need recognition is
often prompted by persuasive advertising. Consumers
then begin the information search process by conducting
an internal search of their own knowledge structures, followed
by an external search for information from friends,
family members, salespeople, and advertisements. This
step can clarify the problem, providing criteria to use for
assessing product alternatives and resulting in a subset, or
“consideration set,” of potential choices.
These options are then assessed more completely in
the third stage, alternative evaluation. In this stage, products
in the consideration set are compared with one
another. Sometimes a simple heuristic rule of thumb, such
as “I’m going to buy the cheapest product” is used. At
other times a more complex strategy, such as a weightedaverage
model that compensates for product strengths and
weaknesses, is used.
After examining each alternative, consumers are
ready to purchase, the fourth step in the decision process.
Finally, after buying, the consumers enter the postpurchase
phase of the process, during which the performance
of the chosen alternative is evaluated in light of prior
expectations. Consumers will be satisfied with the product
if it meets or exceeds expectations; dissatisfaction occurs if
the product does not meet expectations.
This model of consumer behavior, while very useful,
is highly simplified and does not always accurately reflect
the decision process consumers follow. Consumers may
not always proceed linearly through the five steps as
described, and sometimes they may skip certain steps
entirely. The model, however, is a close approximation of
the process for most consumers for most purchase occasions.
We are all consumers. Understanding why we behave
as we do is integral to an efficient transfer of goods and
services in a market-driven economy and helps consumer
needs get fulfilled. As Weinthal pointed out, “Since both
founders of Laura’s Wholesome Junk Food had dietary
restrictions of their own and knew many individuals with
limitations on what they could eat, we wanted to make
the Bite-lettes accessible to as many people as possible. By
making products that are all kosher, vegan, sweetened primarily
with fruit, then adding a wheat-free flavor and
three gluten-free ones, Laura’s made something for almost
every consumer” (Trice, 2005).
SEE ALSO Marketing
BIBLIOGRAPHY
Trice, Laura M.D. (2005). Personal correspondence.
Wilkie, William L. (1994). Consumer Behavior (3rd ed.). New
York: Wiley.
Lauren G. Block
Patricia Williams
CONSUMER BILL OF
RIGHTS
Webster’s dictionary defines consumerism as “a movement
for the protection of the consumer against defective products,
misleading advertising, etc.” Limited consumer protection
was present until the 1950s and early 1960s. In
the 1950s, a significant breakthrough occurred with the
establishment of the product-liability concept, whereby a
plaintiff did not have to prove negligence but only had to
prove that a defective product caused an injury. In his
1962 speech to Congress, President John F. Kennedy outlined
four basic consumer rights, which later became
known as the Consumer Bill of Rights. In 1985, the
United Nations endorsed Kennedy’s Consumer Bill of
Rights and expanded it to cover eight consumer rights.
Consumer protection can only survive in highly industrialized
countries because of the resources needed to finance
consumer interests.
Kennedy’s Consumer Bill of Rights included the
right to be informed, the right to safety, the right to
choose, and the right to be heard. The right to be
informed involves protection against misleading information
in the areas of financing, advertising, labeling, and
packaging. Several laws of the 1960s and 1970s were
aimed at this right. The Cigarette Labeling Act (1965),
Fair Packaging and Labeling Act (1966), and the Wholesome
Meat Act (1967) all addressed packaging. This legislation
dealt with the accurate identification of the

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Consumer Price Index
content of the product and any dangers associated with
the product. The Truth-in-Lending Act required full disclosure
of all costs and the annual percentage rate on
installment loans. Prior to Truth-in-Lending, the actual
cost was hidden and confusing to calculate. Another significant
piece of legislation, the Magnuson-Moss Warranty
Act, requires a warranty that states that a product
will meet performance standards and affirms that a warranty
can be stated or implied. Other regulation took
place at the state level. Forty states have a cooling-off law,
which allows a consumer to change his or her mind when
purchasing products from direct salespeople.
The second consumer right, the right to safety, is
aimed at injuries caused by using products other than
automobiles. To address this problem, the government
established the Consumer Product Safety Commission
(CPSC) in 1972. The CPSC has jurisdiction over 13,000
diverse products. The powers of the CPSC include the
right to require warning labels, to establish standards of
performance, to require immediate notification of a defective
product, and to mandate product testing. However,
its greatest power is product recall.
The right of consumer choice means the consumer
should have a range of products from various companies
to choose from when making a purchasing decision. To
ensure these rights, the government has taken a number of
actions, such as imposing time limits on patents, looking
at mergers from the standpoint of limiting consumer
choice, and prohibiting unfair price cutting and other
unfair business practices.
The final consumer right is the right to be heard.
Presently, no government agency is responsible for handling
consumer complaints. However, a number of government
agencies do attempt to protect certain consumer
rights. The Office of Consumer Affairs publishes a Consumer’s
Resource Handbook listing agencies that work in
the area of consumer rights. In addition, a number of consumer
groups issue complaints to the government and
industry groups.
The growth of consumerism in the United States has
not been without opposition. Although corporations have
taken positive steps in many areas, they have also opposed
advancement of some consumer rights. Because corporations
can have deep pockets, they are able to appeal court
cases and slow down litigation. Today, however, because of
past successes, the need for consumer protection is not
nearly as great as it was in previous years.