Customer
choice
models
Presented to: Dr. Mohammed
Nassar
Dr. Sarah Awad
Presented by: Maryam Hassan
Introduction
- A customer choice model is a statistical
model used to analyze and predict
customer behavior and decision-making
processes.
- It is a type of marketing research that
seeks to understand how customers
make choices among different products
or services in a particular market.
Models of customer choice
Neoclassical Stimulus Means-End Elaboration
model organism chain model likelihood
response model
model
01
Neoclassical
model
Neoclassical model
The Neoclassical Model is a fundamental concept that explains consumer choice based
on rational decision making and utility maximization. Here are the key elements of this
model:
Rational Behavior: Assumes that consumers are rational and make decisions that
maximize their utility (satisfaction) given their budget constraints.
Utility Maximization: Consumers aim to achieve the highest level of satisfaction
from their purchases by allocating their resources (income) efficiently.
Marginal Utility: The additional satisfaction gained from consuming one more unit
of a good or service. Consumers compare the marginal utility per dollar spent on
different goods to decide how to spend their income.
Neoclassical model
Budget Constraints: Consumers face a limited budget, which restricts the combination
of goods and services they can purchase. They aim to maximize their utility within
these constraints.
Indifference Curves: Graphical representations of different combinations of goods that
provide the same level of utility to the consumer. The point where the budget line is
tangent to the highest possible indifference curve represents the optimal consumption
bundle.
Preferences: Assumes that consumer preferences are complete (able to compare and
rank all possible bundles) and transitive (consistent in their rankings).
Example:
Imagine a consumer deciding between spending their
money on either coffee or tea.
They will allocate their budget to maximize their
satisfaction, considering the prices of coffee and tea, their
preferences, and the marginal utility they get from each
additional cup of coffee or tea.
If the consumer derives more satisfaction per dollar spent
from coffee than tea, they will buy more coffee until the
marginal utility per dollar spent is equal for both products.
02
Stimulus
organism
response
model
Stimulus organism response model
The Stimulus-Organism-Response (S-O-R) Model is a psychological framework
used to understand how external stimuli affect an individual's internal state and lead to
behavioral responses.
Components of the S-O-R Model
Stimulus (S):
External factors or inputs that can influence an individual's behavior. These can
include physical stimuli (e.g., products, advertisements) and social stimuli (e.g.,
word-of-mouth, social norms).
Stimulus organism response model
Organism (O):
The internal processes and states within an individual that mediate the relationship
between the stimulus and the response. This includes cognitive processes (e.g.,
perception, thinking) and emotional processes (e.g., feelings, moods).
Response (R):
The behavior or action taken by the individual as a result of the internal processes.
This can include purchasing a product, forming an attitude, or engaging in a
behavior.
Example: Online Shopping Experience
Stimulus:
A consumer sees an advertisement for a new gadget on
social media.
Organism:
Cognitive Processes: The consumer processes the
information in the ad, evaluating the gadget's features
and comparing it to other products.
Emotional Processes: The ad evokes positive emotions
by highlighting the gadget's benefits and showcasing it
in an appealing manner.
Response:
The consumer decides to purchase the gadget online.
03
Means-End
chain model
Means-End chain model
The Means-End Chain Model is a theoretical framework used in marketing to
understand the connections between consumers' personal values, the benefits they seek
from products, and the attributes of those products. It helps to explain how product
attributes lead to consumer benefits and ultimately satisfy personal values.
Components of the Means-End Chain Model
Product Attributes:
These are the tangible features of a product, such as size, color, design, price, and
functionality.
Means-End chain model
Functional and Psychological Benefits:
The advantages that consumers perceive from using the product, which can be
functional (practical benefits) or psychological (emotional or social benefits).
Personal Values:
The core values or goals that are important to consumers, such as security,
accomplishment, happiness, or social recognition.
Example: Eco-Friendly Water Bottle
Product Attributes:
Made from sustainable materials, reusable, BPA-free,
stylish design.
Functional and Psychological Benefits:
Functional: Reduces plastic waste, safe for health,
easy to carry.
Psychological: Satisfaction from making
environmentally friendly choices, feeling responsible
and ethical.
Personal Values:
Environmental sustainability, health, and well-being,
social responsibility.
04
Elaboration
likelihood
model
Elaboration likelihood model
The Elaboration Likelihood Model (ELM), is a dual-process theory that explains
how attitudes are formed and changed. It focuses on how consumers process
persuasive messages and the likelihood that they will elaborate on these messages.
Here are the key components:
1- Central Route:
Description: Involves deep, thoughtful consideration of the content of the message.
Process: Consumers who are motivated and able to process information will
carefully evaluate the arguments presented.
Outcome: Leads to long-lasting attitude change that is resistant to counter-
persuasion, as the attitudes formed are based on thorough analysis.
Elaboration likelihood model
2- Peripheral Route:
Description: Involves superficial processing, where the focus is on cues outside
the content of the message.
Process: Consumers who are not motivated or unable to process information will
rely on peripheral cues such as the attractiveness of the spokesperson, the number
of arguments presented, or the overall presentation.
Outcome: Leads to temporary attitude change that is susceptible to counter-
persuasion, as the attitudes formed are not based on detailed analysis.
Example:
With ELM, Doritos can create persuasive messages
and design promotions tailored to its target audience.
For instance, they use their crisp packaging to make
an impactful visual statement and advertise on
television utilizing both Central Route and peripheral
route of persuasion.
By leveraging these two channels of involvement at
once, Doritos can create a comprehensive marketing
mix that resonates with consumers and drives sales.
Thank you
