HOWARD - SHETH MODEL of CONSUMER BEHAVIOUR

The Howard Sheth theory of buyer behaviour 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 behaviour in terms of cognitive functioning but to provide an empirically testable depiction of such behaviour and its outcomes (Howard 1977).
Utilizing the learning theory thoroughly and systematically, John Howard came out with the first truly integrative model of buyer behaviour. He was the first to introduce the difference between problem solving behaviour, limited problem solving and automatic response behaviour. The model is essencially an attempt to explain brand choice behaviour over time and therefore specially pertinent to our field. Focussing on repeat buying, the model relies on four major components - stimulus inputs, hypothetical constructs, response outputs and exogenous variables.

This are the three levels of decison making:

1.      Extensive problem solving - early stages of decision making in wich the buyer has little information about brands and has not yet developed well defined and structured criteria by wich to choose among products.

2.     Limited problem solving - this is a more advance stage, choice criteira are well defined but the buyer is still undecided about wich set of brands will best serve him. Thus the consumer still experiences uncertainty about wich brand is best.

3.     Routinized response behaviour - buyers have well defined choice criteria and also have strong predispositions toward the brand. Little confusion exists in the consumer's mind and he is ready to purchase a particular brand with little evaluation of alternatives.

 The model then borrows from learning concepts to explain brand choice behaviour over time as learning takes place and the buyer moves from exclusive to routinized problem solving behaviour. here the four major components get involved.

The Input Variables


The input variables consist of informational cues about the attributes of a product or brand( i.e.quality, price,distinctiveness, service and availability). This informational cues may be significative if they influence the consumer directly through the brand's attributes or symbolic if they derive from the same factors as they are portrayed in the mass media and by salespeople, influencing the consumer in a indirect way. these two sources are commercial, in that the represent the efforts of the firm to build and project these values in the product. A third set of informational cues may come from the buyer's social environment, including the family, reference groups and social class - wich are influences that are internalized by the consumer before they can affect the decision process.


Hypothetical Constructs

Hypothectical constructs have been classified in two groups - perceptual constructs and learning constructs. The first delas with with the way the individual perceives and responds to the information from the input variables, accounting for stimulus ambiguity and perceptual bias. The second deals with the stages from the buyer motives to his satisfaction in a buying situation.The purchase intention is an outcome of the interplay of buyer motives, choice criteria, brand comprehension, resultant brand attitude and the confidence associated with the purchase decision. The motives are general or specific goals impelling to action, impinging upon the buyer intention are also the attitudes about the existing brand alternatives in the buyer's evoked set, wich result in an arrangement of an order of preference regarding brands. Brand comprehension and the degree of confidence that the buyer has about it, choice criteria and buying intentions, converge upon the inetention to buy.

As a feedback component of learining, the model includes another learning construct-satisfaction wich refers to the post purchase evaluation and resultant reinforcing of brand comprehension, attitudes ect. (shown by broken lines in the figure).

Output Variables

The five output variables in the right hand portion of the model are buyer's observable responses to stimulus inputs. They are arrangend in order from Attention to Actual Purchase. The purchase is the actual, overt act of buying and is the sequencial result of the attention (buyers total response to information intake), the brand comprehension, brand attitude ( reffering to the evaluation of satisfying potential of the brand) and the buyer intention ( a verbal statement made in the light of the above externalising factors that the preferred brand will be bought the next time the buying is necessitated.

Exogenous Variables

The model also includes some exogenous variables which are not defined but are taken as constant. These influence all or some of the constructs explained above and through them, the output. Some exogenous variables are importance of the purchase, time at the disposal of the buyer, personality traits, financial status etc.

Most scholars agree that the study of consumer behaviour was advanced and given an impetus by Howard Sheth Model. The major advantage and strenght of the theory 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 behavioural sciences. The  weakness stems from the fact that, there being substantial measurement error, the theory cannot be realistically tested. The distinction between the exogenous and endogenous variables is not clear cut. And some of these variables do not lend themselves easily to measurement and other defy precise definition.

In spite all limitations, the model because of its comprehensive coverage of almost all aspects of the purchase decision and operational explanation of the underlying stimuli and responses have given a useful frame of reference for the study of buying decision over time.

Jagdish Sheth model of INDUSTRIAL BUYING BEHAVIOUR

The purpose of this article is to describe a model of industrial (organizational) buyer behavior. Considerable knowledge on organizational buyer behavior already exists¹ and can be classified into three categories. The first category includes a considerable amount of systematic empirical research on the buying policies and practices of purchasing agents and other organizational buyers. ² The second includes industry reports and observations of industrial buyers. ³ Finally, the third category consists of books, monographs, and articles which analyze, theorize, model, and sometimes report on industrial buying activities. ⁴ What is now needed is a reconciliation and integration of existing knowledge into a realistic and comprehensive model of organizational buyer behavior.
It is hoped that the model described in this article will be useful in the following ways: first, to broaden the vision of research on organizational buyer behavior so that it includes the most salient elements and their interactions; second, to act as a catalyst for building marketing information systems from the viewpoint of the industrial buyer; and, third, to generate new hypotheses for future research on fundamental processes underlying organizational buyer behavior

A Description of Industrial Buyer Behavior

The model of industrial buyer behavior is summarized in Figure 1. Although this illustrative presentation looks complex due to the large number of variables and complicated relationships among them, this is because it is a generic model which attempts to describe and explain all types of industrial buying decisions. One can, however, simplify the actual application of the model in a specific study in at least two ways. First, several variables are included as conditions to hold constant differences among types of products to be purchased (product-specific factors) and differences among types of purchasing organizations. These exogenous factors will not be necessary if the objective of a study is to describe the process of buying behavior for a specific product or service. Second, some of the decision-process variables can also be ignored if the interest is strictly to conduct a survey of static measurement of the psychology of the organizational buyers. For example, perceptual bias and active search variables may be eliminated if the interest is not in the process of communication to the organizational buyers.

This model is similar to the Howard-Sheth model of buyer behavior in format and classification of variables. ⁵ However, there are several significant differences. First, while the Howard-Sheth model is more general and probably more useful in consumer behavior, the model described in this article is limited to organizational buying alone. Second, the Howard-Sheth model is limited to the individual decision-making process, whereas this model explicitly describes the joint decision-making process. Finally, there are fewer variables in this model than in the Howard-Sheth model of buyer behavior.

Organizational buyer behavior consists of three distinct aspects. The first aspect is the psychological world of the individuals involved in organizational buying decisions. The second aspect relates to the conditions which precipitate joint decisions among these individuals. The final aspect is the process of joint decision making with the inevitable conflict among the decision makers and its resolution by resorting to a variety of tactics.

Psychological World of the Decision Makers

Contrary to popular belief, many industrial buying decisions are not solely in the hands of purchasing agents. ⁶ Typically in an industrial setting, one finds that there are at least three departments whose members are continuously involved in different phases of the buying process. The most common are the personnel from the purchasing, quality control, and manufacturing departments. These individuals are identified in the model as purchasing agents, engineers, and users, respectively. Several other individuals in the organization may be, but are typically not, involved in the buying process (for example, the president of the firm or the comptroller). There is considerable interaction among the individuals in the three departments continuously involved in the buying process and often they are asked to decide jointly. It is, therefore, critical to examine the similarities and differences in the psychological worlds of these individuals.

Based on research in consumer and social psychology, several different aspects of the psychology of the decision makers are included in the model. Primary among these are the expectations of the decision makers about suppliers and brands [(1) in Figure 1]. The present model specifies five different processes which create differential expectations among the individuals involved in the purchasing process: (1a) the background of the individuals, (1b) information sources, (1c) active search, (1d) perceptual distortion, and (1e) satisfaction with past purchases. These variables must be explained and operationally defined if they are to fully represent the psychological world of the organizational buyers.

Expectations

Expectations refer to the perceived potential of alternative suppliers and brands to satisfy a number of explicit and implicit objectives in any particular buying decision. The most common explicit objectives include, in order of relative importance, product quality, delivery time, quantity of supply, after-sale service where appropriate, and price. ⁷ However, a number of studies have pointed out the critical role of several imp licit criteria such as reputation, size, location and reciprocity relationship with the supplier; and personality, technical expertise, salesmanship, and even life style of the sales representative. ⁸ In fact, with the standardized marketing mix among the suppliers in oligopolistic markets, the implicit criteria are becoming marginally more and more significant in the industrial buyer’s decisions.

Expectations can be measured by obtaining a profile of each supplier or brand as to how satisfactory it is perceived to be in enabling the decision maker to achieve his explicit and implicit objectives. Almost all studies from past research indicate that expectations will substantially differ among the purchasing agents, engineers, and product users because each considers different criteria to be salient in judging the supplier or the brand. In general, it is found that product users look for prompt delivery, proper installation, and efficient serviceability; purchasing agents look for maximum price advantage and economy in shipping and forwarding; and engineers look for excellence in quality, standardization of the product, and engineering pretesting of the product. These differences in objectives and, consequently, expectations are often the root causes for constant conflict among these three types of individuals. ⁹

Why are there substantial differences in expectations? While there is considerable speculation among researchers and observers of industrial buyer behavior on the number and nature of explanations, there is relatively little consensus. The five most salient processes which determine differential expectations, as specified in the model, are discussed below.

Background of Individuals

The first, and probably most significant, factor is the background and task orientation of each of the individuals involved in the buying process. The different educational backgrounds of the purchasing agents, engineers, and plant managers often generate substantially different professional goals and values. In addition, the task expectations also generate conflicting perceptions of one another’s role in the organization. Finally, the personal life styles of individual decision makers play an important role in developing differential expectations. ¹⁰

It is relatively easy to gather information on this background factor. The educational and task differences are comparable to demographics in consumer behavior, and life style differences can be assessed by psychographic scales on the individual’s interests, activities, and values as a professional.

Information Sources and Active Search

The second and third factors in creating differential expectations are the source and type of information each of the decision makers is exposed to and his participation in the active search. Purchasing agents receive disproportionately greater exposure to commercial sources, and the information is often partial and biased toward the supplier or the brand. In some companies, it is even a common practice to discourage sales representatives from talking directly to the engineering or production personnel. The engineering and production personnel, therefore, typically have less information and what they have is obtained primarily from professional meetings, trade reports, and even word-of- mouth. In addition, the active search for information is often relegated to the purchasing agents because it is presumed to be their job responsibility.

It is not too difficult to assess differences among the three types of individuals in their exposure to various sources and types of information by standard survey research methods.

Perceptual Distortion

A fourth factor is the selective distortion and retention of available information. Each individual strives to make the objective information consistent with his own prior knowledge and expectations by systematically distorting it. For example, since there are substantial differences in the goals and values of purchasing agents, engineers, and production personnel, one should expect different interpretations of the same information among them. Although no specific research has been done on this tendency to perceptually distort information in the area of industrial buyer behavior, a large body of research does exist on cognitive consistency to explain its presence as a natural human tendency. ¹¹

Perceptual distortion is probably the most difficult variable to quantify by standard survey research methods. One possible approach is experimentation, but this is costly. A more realistic alternative is to utilize perceptual mapping techniques such as multidimensional scaling or fact or analysis and compare differences in the judgments of the purchasing agents, engineers, and production personnel to a common list of suppliers or brands.

Satisfaction with Past Purchases

The fifth factor which creates differential expectations among the various individuals involved in the purchasing process is the satisfaction with past buying experiences with a supplier or brand, Often it is not possible for a supplier or brand to provide equal satisfaction to the three parties because each one has different goals or criteria. For example, a supplier may be lower in price but his delivery schedule may not be satisfactory. Similarly, a product’s quality may be excellent but its price may be higher than others. The organization typically rewards each individual for excellent performance in his specialized skills, so the purchasing agent is rewarded for economy, the engineer for quality control, and the product ion personnel for efficient scheduling. This often results in a different level of satisfaction for each of the parties involved even though the chosen supplier or brand may be the best feasible alternative in terms of overall corporate goals.

Past experiences with a supplier or brand, summarized in the satisfaction variable, directly influence the person’s expectations toward that supplier or brand. It is relatively easy to measure the satisfaction variable by obtaining information on how the supplier or brand is perceived by each of the three parties.

Determinants of Joint vs. Autonomous Decisions

Not all industrial buying decisions are made jointly by the various individuals involved in the purchasing process. Sometimes the buying decisions are delegated to one party, which is not necessarily the purchasing agent. It is, therefore, important for the supplier to know whether a buying decision is joint or autonomous and, if it is the latter, to which party it is delegated. There are six primary factors which determine whether a specific buying decision will be joint or autonomous. Three of these factors are related to the characteristics of the product or service (2a) and the other three are related to the characteristics of the buyer company (2b).

Product-Specific Factors

The first product-specific variable is what Bauer calls perceived risk in buying decisions. ¹² Perceived risk refers to the magnitude of adverse consequences felt by the decision maker if he makes a wrong choice, and the uncertainty under which he must decide. The greater the uncertainty in a buying situation, the greater the perceived risk. Although there is very little direct evidence, it is logical to hypothesize that the greater the perceived risk in a specific buying decision, the more likely it is that the purchase will be decided jointly by all parties concerned. The second product-specific factor is type of purchase. If it is the first purchase or a once-in- a-lifetime capital expenditure, one would expect greater joint decision making. On the other hand, if the purchase decision is repetitive and routine or is limited to maintenance products or services, the buying decision is likely to be delegated to one party. The third factor is time pressure. If the buying decision has to be made under a great deal of time pressure or on an emergency basis, it is likely to be delegated to one party rather than decided jointly.

Company-Specific Factors

The three organization-specific factors are company orientation, company size, and degree of centralization. If the company is technology oriented, it is likely to be dominated by the engineering people and the buying decisions will, in essence, be made by them. Similarly, if the company is production oriented, the buying decisions will be made by the production personnel. ¹³ Second, if the company is a large corporation, decision making will tend to be joint. Finally, the greater the degree of centralization, the less likely it is that the decisions will be joint. Thus, a privately-owned small company with technology or production orientation will tend toward autonomous decision making and a large-scale public corporation with considerable decentralization will tend to have greater joint decision making.

Even though there is considerable research evidence in organization behavior in general to supp ort these six factors, empirical evidence in industrial buying decisions in particular is sketchy on them. Perhaps with more research it will be possible to verify the generalizations and deductive logic utilized in this aspect of the model.

Process of Joint Decision Making

The major thrust of the present model of industrial buying decisions is to investigate the process of joint decision making. This includes initiation of the decision to buy, gathering of information, evaluating alternative suppliers, and resolving conflict among the parties who must jointly decide.
The decision to buy is usually initiated by a continued need of supply or is the outcome of long-range planning. The formal initiation in the first case is typically from the production personnel by way of a requisition slip. The latter usually is a formal recommendation from the planning unit to an ad hoc committee consisting of the purchasing agent, the engineer, and the plant manager. The information-gathering function is typically relegated to the purchasing agent. If the purchase is a repetitive decision for standard items, there is very little information gathering. Usually the purchasing agent contacts the preferred supplier and orders the items on the requisition slip. However, considerable active search effort is manifested for capital expenditure items, especially those which are entirely new purchase experiences for the organization. ¹⁴
The most important aspect of the joint decision-making process, however, is the assimilation of information, deliberations on it, and the consequent conflict which most joint decisions entail. According to March and Simon, conflict is present when there is a need to decide jointly among a group of people who have, at the same time, different goals and perceptions. ¹⁵ In view of the fact that the latter is invariably present among the various parties to industrial buying decisions, conflict becomes a common consequence of the joint decision-making process; the buying motives and expectations about brands and suppliers are considerably different for the engineer, the user, and the purchasing agent, partly due to different educational backgrounds and partly due to company policy of reward for specialized skills and viewpoints.

Interdepartmental conflict in itself is not necessarily bad. What matters most from the organization’s viewpoint is how the conflict is resolved (3). If it is resolved in a rational manner, one very much hopes that the final joint decision will also tend to be rational. If, on the other hand, conflict resolution degenerates to what Strauss calls “tactics of lateral relationship,” ¹⁶ the organization will suffer from inefficiency and the joint decisions may be reduced to bargaining and politicking among the parties involved. Not only will the decision be based on irrational criteria, but the choice of a supplier may be to the detriment of the buying organization.

What types of conflict can be expected in industrial buying decisions? How are they likely to be resolved? These are some of the key quest ions in an understanding of industrial buyer behavior. If the inter-party conflict is largely due to disagreements on expectations about the suppliers or their brands, it is likely that the conflict will be resolved in the problem-solving manner. The immediate consequence of this type of conflict is to actively search for more information, deliberate more on available information, and often to seek out other suppliers not seriously considered before. The additional information is then presented in a problem-solving fashion so that conflict tends to be minimized.

If the conflict among the parties is primarily due to disagreement on some specific criteria with which to evaluate suppliers—although there is an agreement on the buying goals or objectives at a more fundamental level—it is likely to be resolved by persuasion. An attempt is made, under this type of resolution, to persuade the dissenting member by pointing out the importance of overall corporate objectives and how his criterion is not likely to attain these objectives. There is no attempt to gather more information. However, there results greater interaction and communication among the parties, and sometimes an outsider is brought in to reconcile the differences.

Both problem solving and persuasion are useful and rational methods of conflict resolution. The resulting joint decisions, therefore, also tend to be more rational. Thus, conflicts produced due to disagreements on expectations about the suppliers or on a specific criterion are healthy from the organization’s viewpoint even though they may be time consuming. One is likely to find, however, that a more typical situation in which conflict arises is due to fundamental differences in buying goals or objectives among the various parties. This is especially true with respect to unique or new buying decisions related to capital expenditure items. The conflict is resolved not by changing the differences in relative importance of the buying goals or objectives of the individuals involved, but by the process of bargaining. The fundamental differences among the parties are implicitly conceded by all the members and the concept of distributive justice (tit for tat) is invoked as a part of bargaining. The most common outcome is to allow a single party to decide autonomously in this specific situation in return for some favor or promise of reciprocity in future decisions.

Finally, if the disagreement is not simply with respect to buying goals or objectives but also with respect to style of decision making, the conflict tends to be grave and borders on the mutual dislike of personalities among the individual decision makers. The resolution of this type of conflict is usually by politicking and back-stabbing tactics. Such methods of conflict resolution are common in industrial buying decisions. The reader is referred to the sobering research of Strauss for further discussion. ¹⁷

Both bargaining and politicking are nonrational and inefficient methods of conflict resolution; the buying organization suffers from these conflicts. Furthermore, the decision makers find themselves sinking below their professional, managerial role. The decisions are not only delayed but tend to be governed by factors other than achievement of corporate objectives.

Critical Role of Situational Factors

The model described so far presumes that the choice of a supplier or brand is the outcome of a systematic decision-making process in the organizational setting. However, there is ample empirical evidence in the literature to suggest that at least some of the industrial buying decisions are determined by ad hoc situational factors (4) and not by any systematic decision-making process. In other words, similar to consumer behavior, the industrial buyers often decide on factors other than rational or realistic criteria.

It is difficult to prepare a list of ad hoc conditions which determine industrial buyer behavior without decision making. However, a number of situational factors which often intervene between the actual choice and any prior decision-making process can be isolated. These include: temporary economic conditions such as price controls, recession, or foreign trade; internal strikes, walkouts, machine breakdowns, and other production-related events; organizational changes such as merger or acquisition; and ad hoc changes in the market place, such as promotional efforts, new product introduction, price changes, and so on, in the supplier industries.

Implications for Industrial Marketing Research

The model of industrial buyer behavior described above suggests the following implications for marketing research.

First, in order to explain and predict supplier or brand choice in industrial buyer behavior, it is necessary to conduct research on the psychology of other individuals in the organization in addition to the purchasing agents. It is, perhaps, the unique nature of organizational structure and behavior which leads to a distinct separation of the consumer, the buyer, and the procurement agent, as well as others possibly involved in the decision-making process. In fact, it may not be an exaggeration to suggest that the purchasing agent is often a less critical member of the decision-making process in industrial buyer behavior.

Second, it is possible to operationalize and quantify most of the variables included as part of the model. While some are more difficult and indirect, sufficient psychometric skill in marketing research is currently available to quantify the psychology of the individuals.
Third, although considerable research has been done on the demographics of organizations in industrial market research—for example, on the turnover and size of the company, workflows, standard industrial classification, and profit ratios—demographic and life-style information on the individuals involved in industrial buying decisions is also needed.

Fourth, a systematic examination of the power positions of various individuals involved in industrial buying decisions is a necessary condition of the model. The sufficient condition is to examine trade-offs among various objectives, both explicit and implicit, in order to create a satisfied customer.
Fifth, it is essential in building any market research information system for industrial goods and services that the process of conflict resolution among the parties and its impact on supplier or brand choice behavior is carefully included and simulated.

Finally, it is important to realize that not all industrial decisions are the outcomes of a systematic decision-making process. There are some industrial buying decisions which are based strictly on a set of situational factors for which theorizing or model building will not be relevant or useful. What is needed in these cases is a checklist of empirical observations of the ad hoc events which vitiate the neat relationship between the theory or the model and a specific buying decision.