Consumer behavior: yesterday, today, and tomorrow

Business Horizons, May-June, 1991 by Judith Lynne Zaichkowsky

The individual-oriented consumer behavior of the post will change a more collective style in the 1990s.

As the new decade creeps in and the new century approaches, a time has come to reflect upon and predict the consumer's behavior in the marketplace. Many things have changed since the end of mass marketing and the beginning of market segmentation. Under mass marketing, Henry Ford gave the consumer the Ford in any color as long as it was black. After World War II, marketers switched from making products they wanted to making products the consumer wanted. Finding out what the consumer wants to purchase and why is what consumer behavior is all about.

Our theoretical models of how consumers make purchase decisions have evolved from the economic paradigm of the 1940s, through the irrational consumer of the 1950s and 1960s, to the information processor of the 1970s, up to the 1980s cognitive miser. Tomorrow's consumers will undoubtedly have a distinctive theoretical decision model that will grow out of the future decision making environment. It is the purpose of this article to outline that future. But first, let us take a brief look at how the study of consumer behavior has evolved since its inception.

THE ECONOMIC PARADIGM

The 1940s view of the consumer in the marketplace was rooted in economic theory. Most scholars of economics probably still hold to the theory of Economic Man. In this paradigm, purchasing decisions are the result of largely "rational" and conscious economic calculations. The individual buyer seeks to spend his income on those goods that will deliver the most utility (satisfaction) according to his tastes and relative prices. This is a normative rather than a descriptive model of behavior, because logical norms are provided for buyers who want to be "rational."

The model suggests useful behavioral hypotheses, such as: (a) the lower the price of the product, the higher the sales; (b) the lower the price of substitute products, the lower their sales; (c) the lower the price of complementary products, the higher their sales, provided they are not "inferior" goods; and (d) the higher the promotional expenditures the higher the sales. In striving to meet these hypotheses, consumers are not only assumed to be aware of all available alternatives in the marketplace; they are also assumed to be able to rationally rank order the available alternatives by preferences. This is the case of perfect information in the marketplace and unlimited ability of tile consumer.

In applying these assumptions to actual consumption, several problems became apparent. First of all, consumers do not have perfect information in the marketplace. Second, they do not all have the same information about the existing alternatives or attributes of known alternatives. instead, each consumer has fragmented knowledge of his or her own set of known alternatives; as a result, consumers can not always rank a set of alternatives available to them. In addition, preferences often violate utility theory, because different people prefer different styles, have different tastes, and hence make choices built on preferences rather than objective information such as price.

Problems arise with applying economic theories to gifts. Increasing the price of goods may actually make them more desirable, defying basic economic theory. Hence, inverted demand curves reflect products where increasing prices stimulate increasing sales. Perfume is a perfect example of this type of good. Most perfume or cologne is bought as a gift, and the connotations of bringing home a $2 bottle of cologne or a $50 bottle for a loved one are implicit. A relationship may not last upon receipt of the cheaper good. Hence the economic model ignores the fundamental question of how product and brand preferences are formed.

THE IRRATIONAL CONSUMER

After becoming aware that goods have "hidden meaning," scholars of consumer behavior in the 1950s took to the notion of the consumer as an irrational, impulsive decision maker. Consumers were seen as passive, open, and vulnerable to external influences. This position was an obvious reaction to the "economic man" and also represented a time when business schools were developing. Earlier, faculty trained in economics were the first to be hired, but in the 1950s psychologists were added to the payroll. Their insights from Freud to Maslow, from personality to motivation theory, seemed ever so relevant to our study of the consumer.

The two major psychological theories underlying this era were the Pavlovian learning model and the Freudian psychoanalytic model. The Pavlovian model is based on four central concepts-those of drive, cue, response, and reinforcement. Drive or motives can be primary, such as hunger and sex, or secondary, such as fear. A drive is very general and impels a particular response only in relation to a particular configuration of cues. The Pavlovian model emphasizes the desirability of repetition in advertising. Repetition fights the tendency for learned responses to weaken in the absence of practice and provides reinforcement.