Nicosia Model of Consumer Behavior

Nicosia Model of Consumer Behavior was developed in 1966, by Professor

Francesco M. Nicosia, an expert in consumer motivation and behavior. This model
focuses on the relationship between the firm and its potential consumers. The model
suggests that messages from the firm (advertisements) first influences the
predisposition of the consumer towards the product or service. Based on the
situation, the consumer will have a certain attitude towards the product. This may
result in a search for the product or an evaluation of the product attributes by the
consumer. If the above step satisfies the consumer, it may result in a positive
response, with a decision to buy the product otherwise the reverse may
occur. Looking to the model we will find that the firm and the consumer are
connected with each other, the firm tries to influence the consumer and the
consumer is influencing the firm by his decision.

The Nicosia model of Consumer Behavior is divided into four major fields:

1. Field 1: The firm’s attributes and the consumer’s attributes. The first field is
divided into two subfields. The first subfield deals with the firm’s marketing
environment and communication efforts that affect consumer attitudes, the
competitive environment, and characteristics of target market. Subfield two specifies
the consumer characteristics e.g., experience, personality, and how he perceives
the promotional idea toward the product in this stage the consumer forms his
attitude toward the firm’s product based on his interpretation of the message.
2. Field 2: Search and evaluation. The consumer will start to search for other firm’s
brand and evaluate the firm’s brand in comparison with alternate brands. In this case
the firm motivates the consumer to purchase its brands.
3. Field 3: The act of the purchase. The result of motivation will arise by convincing
the consumer to purchase the firm products from a specific retailer.
4. Field 4: Feed back of sales results. This model analyses the feedback of both the
firm and the consumer after purchasing the product. The firm will benefit from its
sales data as a feedback, and the consumer will use his experience with the product
affects the individuals attitude and predisposition’s concerning future messages from
the firm.

With this model Nicosia was able to represent consumer’s behavior when receivers of a
message and has agents in the buying process generated by that flow of information from a
company.

The Nicosia model of consumer behavior offers no detail explanation of the internal factors,
which may affect the personality of the consumer, and how the consumer develops his
attitude toward the product. For example, the consumer may find the firm’s message very
interesting, but virtually he cannot buy the firm’s brand because it contains something
prohibited according to his beliefs. Apparently it is very essential to include such factors in
the model, which give more interpretation about the attributes affecting the decision
process.

With this model Nicosia was able to represent consumer’s behavior when receivers of a
message and has agents in the buying process generated by that flow of information from a
company.

The Nicosia model of consumer behavior offers no detail explanation of the internal factors,
which may affect the personality of the consumer, and how the consumer develops his
attitude toward the product. For example, the consumer may find the firm’s message very
interesting, but virtually he cannot buy the firm’s brand because it contains something
prohibited according to his beliefs. Apparently it is very essential to include such factors in
the model, which give more interpretation about the attributes affecting the decision
process.

Customer-Based Brand Equity (CBBE) Model

Two questions often arise regarding brands: ‘What makes a brand strong?’ and
‘How do you build a strong brand?’ To answer these questions, this section
introduces the customer-based brand equity (CBBE) model. This model
incorporates theoretical advances and managerial practices in understanding and
influencing consumer behaviour. Although useful perspectives concerning brand
equity have been put forth, the CBBE model provides a unique point of view as to
what brand equity is and how it should be built, measured and managed.
The Customer-Based Brand Equity model approaches brand equity from the
perspective of the consumer – whether this be an individual or an organization.
Understanding the needs and wants of consumers and organizations and devising
products and campaigns to satisfy them are at the heart of successful marketing. In
particular, two fundamental questions faced by marketers are: ‘What do different
brands mean to consumers?’ and ‘How does the brand knowledge of consumers
affect their response to marketing activity?’
 The basic premise of the Customer-Based Brand Equity model is that the power
of a brand lies in what customers have learned, felt, seen and heard about the brand
as a result of their experiences. In other words, the power of a brand lies in what
resides in the minds of customers. The challenge for marketers in building a strong
brand is ensuring that customers have the right type of experiences with products
and services and their accompanying marketing campaigns so that the desired
thoughts, feelings, images, beliefs, perceptions and opinions become linked to the
brand. Customer-Based Brand Equity is defined as the differential effect that
brand knowledge has on consumer response to the marketing of that brand. A brand
is said to have positive customer-based brand equity when consumers react more
favorably to a product and the way it is marketed when the brand is identified than
when it is not (eg, when the product is attributed to a fictitious name or is unnamed).
Thus, a brand with positive customer-based brand equity might result in consumers
being more accepting of a brand extension, less sensitive to price increases and
withdrawal of advertising support or more willing to seek the brand in a new
distribution channel. On the other hand, a brand is said to have negative customer-
based brand equity if consumers react less favorably to marketing activity for the
brand compared with an unnamed or fictitiously named version of the product.

There are three ingredients to this definition:

 differential effect;
 brand knowledge;
 consumer response to marketing.

First, brand equity arises from differences in consumer response. If no differences

occur, then the brand name product is essentially a commodity. Competition, most
likely, would then be based on price. Second, these differences in response are a
result of consumers’ knowledge and experience of the brand. Thus, although
strongly influenced by the marketing activity of the firm, brand equity ultimately
depends on what resides in the minds of consumers. Third, the differential response
by consumers that makes up the brand equity is reflected in perceptions,
preferences and behavior related to all aspects of the marketing (eg, choice of a
brand, recall of copy points from an ad, actions in response to a sales promotion or
evaluations of a proposed brand extension). The simplest way to illustrate what is
meant by customer-based brand equity is to consider some typical results of product
sampling or comparison tests. For example, with blind taste tests, one group of
consumers samples a product without knowing which brand it is, whereas another
group samples the product knowing which brand it is. Invariably, differences arise in
the opinions of the two groups even though they are consuming the same product.

Howard Sheth Model of Consumer Behavior

John Howard and Jagadish Sheth put forward the Howard Sheth model of
consumer behavior in 1969, in their publication entitled, ‘The Theory of buyer
Behaviour’.

The Howard Sheth Model is a sophisticated integration of the various social,

psychological and marketing influences on consumer choice into a coherent
sequence of information processing. It aims not only to explain consumer behavior
in terms of cognitive functioning but to provide an empirically testable depiction of
such behavior and its outcomes (Howard 1977).

The logic of the Howard Sheth model of consumer behavior summarize like this.
There are inputs in the form of Stimuli. There are outputs beginning with attention to
 a given stimulus and ending with purchase. In between the inputs and the outputs
there are variables affecting perception and learning. These variables are termed
‘hypothetical’ since they cannot be directly measured at the time of occurrence.

The Howard Sheth model of consumer behavior suggests three levels of

decision making:

1. The first level describes the extensive problem solving. At this level the consumer
does not have any basic information or knowledge about the brand and he does not
have any preferences for any product. In this situation, the consumer will seek
information about all the different brands in the market before purchasing.
2. The second level is limited problem solving. This situation exists for consumers
who have little knowledge about the market, or partial knowledge about what they
want to purchase. In order to arrive at a brand preference some comparative brand
information is sought.
3. The third level is a habitual response behavior. In this level the consumer knows
very well about the different brands and he can differentiate between the different
characteristics of each product, and he already decides to purchase a particular
product.

According to the Howard Sheth model of consumer behavior there are four major
sets of variables; namely:

1. Inputs: These input variables consist of three distinct types of stimuli (information
sources) in the consumer’s environment. The marketer in the form of product or
brand information furnishes physical brand characteristics (significative stimuli) and
verbal or visual product characteristics (symbolic stimuli). There are impersonal
sources like mass media communication and advertising, over which the firm has no
control. However, the information sources also include sales and service personnel
who can add and help the marketing efforts of the firm. The third type is provided by
the consumer’s social environment (family, reference group, and social class). This
social source is personal and the company/marketer has no control over this
 source. All three types of stimuli provide inputs concerning the product class or
specific brands to the specific consumer.
2. Perceptual and Learning Constructs: The central part of the model deals with the
psychological variables involved when the consumer is contemplating a decision.
Some of the variables are perceptual in nature, and are concerned with how the
consumer receives and understands the information from the input stimuli and other
parts of the model. For example, stimulus ambiguity happened when the consumer
does not understand the message from the environment. Perceptual bias occurs if
the consumer distorts the information received so that it fits his or her established
needs or experience. Learning constructs category, consumers’ goals, information
about brands, criteria for evaluation alternatives, preferences and buying intentions
are all included. The proposed interaction In between the different variables in the
perceptual and learning constructs and other sets give the model its distinctive
advantage.
3. Outputs: The outputs are the results of the perceptual and learning variables and
how the consumers will response to these variables (attention, brand
comprehension, attitudes, and intention).
4. Exogenous(External) variables: Exogenous variables are not directly part of the
decision-making process. However, some relevant exogenous variables include the
importance of the purchase, consumer personality traits, religion, and time pressure.
The decision-making process, which Howard-Sheth Model tries to explain, takes
place at three Inputs stages: Significance, Symbolic and Social stimuli. In both
significative and symbolic stimuli, the model emphasizes on material aspects such
as price and quality. These stimuli are not applicable in every society. While in social
stimuli the model does not mention the basis of decision-making in this stimulus,
such as what influence the family decision? This may differ from one society to
another.

Most scholars agree that the study of consumer behavior was advanced and given
an impetus by Howard Sheth Model. The major advantage and strength of the
model lied in the precision with which a large number of variables have been linked
in the working relationships to cover most aspects of the purchase decision and the
effective utilization of contribution from the behavioral sciences.

Finally, no direct relation was drawn on the role of religion in influencing the
consumer’s decision-making processes. Religion was considered as external factor
with no real influence on consumer, which give the model obvious weakness in
anticipation the consumer decision.
 VALS FRAMEWORK OF MARKET SEGMENTATION

Vals which is also known as values attitude and lifestyle is one of the primary
ways to perform psychographic segmentation. All three terms are intangible in
nature and therefore give an idea of the inert nature of the consumer. If you know
what your consumer is thinking, you would know what kind of promotions or
communications will attract him most. And how do you know what the consumer is
thinking? By determining his vals – Values, attitudes and lifestyle.

VALS is different for different people. Lets take income as an example. If you are a
person with high income your lifestyle would probably include habits of the SEC A
class such as dining out of home frequently and that too in top class restaurants,
wearing only branded clothes and buying the best cars out there. Whereas if you are
a middle class income group consumer, you would be more wary of spending
money and would rather concentrate on savings.

So now how does VALS affect a marketer? Lets say you were a banker. What would
you sell someone who had a high income lifestyle? You would sell them investment
options and would also dedicate a relationship manager to take care of their needs.
In fact, the bankers also have a term for high income individuals known as HNI –
high networth individuals. But, if your lifestyle was that of a low income customer,
you are more likely to be targeted for savings

History of the term VALS

VALS is actually a proprietary term of SRI international. The term was developed by
Social scientist and futurist Arnold mitchell. Arnold mitchell actually developed the
vals framework to determine different classes of people who had varying values,
attitudes and lifestyle. These people were determined by the resources they had at
their disposal as well as the amount of primary innovation they could accept or
create. Thus the people with low resources were low on innovation and the ones
with higher resources were higher in innovation. This formed the basis of the VALS
framework.

The VALS framework

As mentioned in the history of VALS, The VALS framework was developed

keeping a consumers resources as well as his capacity to accept innovation in
mind. The X axis consisted of primary motivation (explained below) and the Y
axis consisted of resources such as income, education, confidence etc. Thus
these two factors were determined to be critical to define the values attitude
and lifestyle of any consumer.
 Resources – Included resources available to an individual such as income,
education, intelligence, emotional support, etc.
 Primary motivation – Which determined what actually drives the individual.
Is it knowledge, the desire to achieve something or is it to be social.

After researching above 1500 consumers, Arnold mitchell actually divided

consumers into 9 different types based on the amount of resources they had
as well as their capacity for primary motivation. These classes of consumers
based on their VALS were.

9 types of Consumers as per VALS framework

1. Innovators – The class of consumer at the top of the vals framework. They
are characterized by High income and high resource individuals for whom
independence is very important. They have their own individual taste in things
and are motivated in achieving the finer things in life.
2. Thinkers – A well educated professional is an excellent example of Thinkers
in the vals framework. These are the people who have high resources and are
motivated by their knowledge. These are the rational decision
making consumers and are well informed about their surroundings. These
consumers are likely to accept any social change because of their knowledge
level.
3. Believers – The subtle difference between thinkers and believers is that
thinkers make their own decisions whereas believers are more social in
nature and hence also believe other consumers. They are characterized by
lower resources and are less likely to accept innovation on their own. They
are the best class of word of mouth consumers.
4. Achievers – The achievers are mainly motivated by – guess what –
Achievements. These individuals want to excel at their job as well in their
 family. Thus they are more likely to purchase a brand which has shown its
success over time. The achievers are said to be high resource consumers but
at the same time, if any brand is rising, they are more likely to adopt that
brand faster.
5. Strivers – Low resource consumer group which wants to reach some
achievement are known as strivers. These customers do not have the
resources to be an achiever. But as they have values similar to an achiever,
they fall under the striver category. If a striver can gain the necessary
resources such as a high income or social status then he can move on to
becoming an achiever.
6. Experiencers – The group of consumers who have high resources but also
need a mode of self expression are known as Experiencers. Mostly
characterized by young adults, it consists of people who want to experience
being different. This class of consumers is filled up with early adopters who
spend heavily on food, clothing and other youthful products and services.
7. Makers – These are consumers who also want self expression but they are
limited by the number of resources they have. Thus they would be more
focused towards building a better family rather than going out and actually
spending higher amount of money. Making themselves into better individuals
and families becomes a form of self expression for the Makers.
8. Survivors – The class of consumers in the Vals framework with the least
resources and therefore the least likely to adopt any innovation. As they are
not likely to change their course of action regularly, they form into brand
loyal customers. An example can include old age pension earners living
alone for whom the basic necessities are important and they are least likely to
concentrate on anything else.

Thus the vals framework can be used primarily to classify consumers based
on their values, attitudes and lifestyle. Once the classification has been done,
you know which types of customers you want to target. Depending on your
target customers vals, you can make up your marketing strategy and your
promotional message such that it hits your audience at the right spot.