The model of consumer behaviour that explains buying through conspicuous consumption and the influence of social class and reference groups is the:

Freudian (psychoanalytic) model

In the Howard-Sheth model, the three levels of consumer decision making are:

Extensive problem solving, limited problem solving, routinised response behaviour

Straight rebuy, modified rebuy, new task

Cognitive, affective, behavioural

David Aaker's model of brand equity comprises brand loyalty, brand awareness, perceived quality, brand associations and:

Other proprietary brand assets such as patents, trademarks and channel relationships

Procter and Gamble's practice of giving each product its own name, so that the failure of one does not damage the others, is the:

Corporate-plus-individual name strategy

Consumer and Industrial Buying Behaviour, Brand Management, and Logistics and Supply Chain Management

Unit 7 opens with three marketing topics the paper asks by model and by name: the theories and models of consumer behaviour and the buying-centre view of industrial purchasing; brand management — what a brand does, how equity is defined and measured by Aaker, Keller and the agency models, and the strategy decisions on names, extensions and loyalty; and logistics and supply chain management with its drivers and design choices. Each is given as a table of the named models with the distinguishing point the examiner tests.

1. Consumer buying behaviour: theories and models

Consumer behaviour is the study of how individuals, groups and organisations select, buy, use and dispose of goods, services, ideas or experiences to satisfy their needs and wants. The stimulus-response or 'black box' model frames it: marketing stimuli (the four Ps) and environmental stimuli (economic, technological, political, cultural) enter the buyer's black box — characteristics (cultural, social, personal, psychological) and the decision process — and produce responses (product, brand, dealer, timing, amount). The five-stage buying process — problem recognition, information search, evaluation of alternatives, purchase decision, post-purchase behaviour — is qualified by involvement: high-involvement purchases run all five stages (complex buying), low-involvement ones skip search and evaluation (habitual buying), and Assael's matrix crosses involvement with brand differences to give complex, dissonance-reducing, habitual and variety-seeking behaviour. Influences are cultural (culture, subculture, social class), social (reference groups — membership, aspirational, dissociative; opinion leaders; family — the family of orientation and of procreation, with husband-, wife- and joint-dominant decisions; roles and status), personal (age and life-cycle stage, occupation, economic circumstances, personality — brand personality (Aaker's sincerity, excitement, competence, sophistication, ruggedness) — and self-concept, lifestyle and values) and psychological (motivation, perception, learning, memory — associative network models, brand associations — and attitudes).

Models of consumer behaviour
Model	Root	What it says
Economic (Marshallian)	Marginal utility theory	The rational buyer maximises utility within a budget; price and income drive choice; the equi-marginal principle
Learning (Pavlovian)	Classical conditioning	Drive, cue, response, reinforcement; repetition builds habit — the rationale for repetitive advertising and brand consistency
Psychoanalytic (Freudian)	Id, ego, superego; unconscious motives	Buyers are moved by symbolic and unconscious meanings; the basis of motivation research (Dichter) and projective techniques
Sociological (Veblenian)	Veblen's Theory of the Leisure Class	Consumption is shaped by culture, class, reference groups and family — conspicuous consumption, status goods
Howard-Sheth model (1969)	Comprehensive learning model	Inputs (significative, symbolic, social stimuli), perceptual and learning constructs (attention, motives, brand comprehension, attitude, intention, confidence), outputs (attention through purchase), exogenous variables; three levels — extensive, limited and routinised problem solving
Engel-Kollat-Blackwell (EKB, 1968; now Engel-Blackwell-Miniard)	Decision-process model	Input, information processing, decision process (need recognition, search, alternative evaluation, purchase, outcomes — satisfaction or dissonance), variables influencing the process; the source of the five-stage process
Nicosia model (1966)	Flow-chart, firm-consumer interaction	Four fields — the firm's message and the consumer's attitude, search and evaluation, the act of purchase, feedback to the firm and to the consumer's predispositions
Attitude and adoption models	Fishbein's multi-attribute expectancy-value model; Ajzen's theory of planned behaviour; Rogers' diffusion of innovations	Attitude = Σ belief × importance; intention shaped by attitude, subjective norm and perceived control; adopter categories and the innovation characteristics — relative advantage, compatibility, complexity, divisibility, communicability

⚠️ Industrial buying is a different animal

Organisational buying (Webster and Wind, 1972) is the decision-making process by which formal organisations establish the need for purchased products and services and identify, evaluate and choose among brands and suppliers. It differs from consumer buying in fewer and larger buyers, close supplier-customer relationships, professional purchasing, multiple buying influences, multiple sales calls, derived demand (from the demand for the final product), inelastic and fluctuating demand (the acceleration effect), geographical concentration, direct purchasing, reciprocity and leasing. Buying situations (Robinson, Faris and Wind's buygrid, 1967): straight rebuy (routine reorder), modified rebuy (changed specifications, price or supplier) and new task (the most decisions, running through eight buyphases — problem recognition, general need description, product specification, supplier search, proposal solicitation, supplier selection, order-routine specification, performance review). The buying centre (Webster and Wind) holds seven roles — initiators, users, influencers, deciders, approvers, buyers and gatekeepers; Sheth's model (1973) of industrial buyer behaviour stresses joint decisions and the psychological worlds of participants; systems buying and systems selling, value analysis, vendor rating and e-procurement complete the set. A question giving 'derived demand' or 'buying centre' is on this side; one giving 'reference groups' or 'family life cycle' is on the consumer side.

2. Brand management: role of brands, brand equity and its models

A brand is a name, term, sign, symbol or design, or a combination of them, intended to identify the goods or services of one seller and to differentiate them from those of competitors (AMA). For consumers a brand identifies the source, assigns responsibility, reduces search cost and risk, signals quality and carries symbolic meaning; for firms it simplifies handling and tracing, offers legal protection through trademarks, secures loyalty and price premiums, creates barriers to entry, and is a source of competitive advantage and financial value. Branding is endowing products with the power of a brand by teaching consumers 'who' the product is, what it does and why it matters; brand elements are the name, logo, symbol, character, slogan, jingle, packaging and URL, chosen to be memorable, meaningful, likeable, transferable, adaptable and protectable. Brand equity is the added value endowed to products and services, reflected in how consumers think, feel and act toward the brand and in the prices, share and profitability it commands — a customer-based view (Keller: the differential effect that brand knowledge has on consumer response to marketing) and a financial view (the brand as an intangible asset valued by Interbrand, Kantar BrandZ and Brand Finance through earnings attributable to the brand). Brand valuation, brand audits and brand tracking studies measure it; the brand value chain (Keller and Lehmann) links marketing investment to customer mindset to market performance to shareholder value.

Brand equity models
Model	Author	Structure
Brand equity as five assets	David Aaker, Managing Brand Equity (1991)	Brand loyalty, brand awareness, perceived quality, brand associations, and other proprietary assets (patents, trademarks, channel relationships); Aaker's brand identity system (core and extended identity; brand as product, organisation, person, symbol) and the Brand Equity Ten measures
Customer-based brand equity (CBBE) pyramid	Kevin Lane Keller (1993, 2001)	Four steps and six building blocks from base to apex: identity — salience (who are you?); meaning — performance and imagery (what are you?); response — judgements and feelings (what about you?); relationships — resonance (what about you and me? — loyalty, attachment, community, engagement); brand knowledge = awareness (recall, recognition) + image (associations)
BrandAsset Valuator (BAV)	Young and Rubicam	Four pillars — energised differentiation and relevance make brand strength (future growth); esteem and knowledge make brand stature (current power); plotted on a power grid from new to leadership to eroding
BrandZ (BrandDynamics)	Millward Brown and WPP (now Kantar)	The BrandDynamics pyramid — presence, relevance, performance, advantage, bonding — later meaningful, different, salient; annual ranking of the most valuable global brands
Brand resonance and brandz variants; Interbrand valuation	Interbrand (annual Best Global Brands since 2000)	Financial analysis (economic profit), role of brand (share of demand attributable to brand), brand strength (ten factors, discount rate) — a discounted-earnings brand value

3. Developing a branding strategy: brand name decisions, extensions and loyalty

A branding strategy (brand architecture) decides which brand elements the firm applies across its products — whether to develop new elements, apply existing ones, or combine the two — and yields the brand portfolio (all brands in a category) and the brand hierarchy (corporate, family, individual and modifier levels). Brand positioning uses a competitive frame of reference, points of parity (category and competitive) and points of difference that are desirable, deliverable and differentiating, and a brand mantra of three to five words (Nike's 'authentic athletic performance'). The strategy decisions the syllabus names run in sequence. Brand sponsor: manufacturer's (national) brand, distributor's (private label, store) brand, or licensed brand; co-branding (ingredient branding — 'Intel Inside') and brand alliances. Brand name decision: individual names (Procter and Gamble — each product stands alone, failure does not hurt the house), blanket family name or 'branded house' (Tata, Godrej, Amul — low launch cost, transfer of goodwill), separate family names for product lines (Aditya Birla's Louis Philippe, Van Heusen), and corporate name combined with individual names or sub-brands (Maruti Suzuki Swift, Kellogg's Corn Flakes); a 'house of brands' (Unilever, HUL) sits at one end and a 'branded house' (Virgin) at the other. Good names suggest benefits and qualities, are easy to pronounce, recognise and remember, are distinctive, extendable, translatable and protectable. Brand development: line extension (existing brand, new variant in the same category — flavours, sizes), brand extension or category extension (existing brand into a new category — Dettol soap from Dettol antiseptic), multibrands (new brands in the same category — flanker and fighter brands), new brands (new name in a new category), and brand extension's risks — dilution of the parent, cannibalisation, failure feeding back ('brand extension trap'), against its gains of lower launch cost and transferred awareness and image. Brand loyalty is the consumer's commitment to repurchase, from behavioural (repeat purchase) to attitudinal (preference and attachment); Aaker's loyalty pyramid runs non-customers, switchers or price buyers, habitual buyers, satisfied buyers with switching costs, friends of the brand, and committed buyers; the loyalty ladder (Christopher, Payne and Ballantyne) runs prospect, customer, client, supporter, advocate, partner; loyalty is built through satisfaction, switching costs, loyalty programmes, community and consistent brand experience, and measured by share of wallet, repeat rate, Net Promoter Score and customer lifetime value. Brand revitalisation, brand reinforcement, brand crisis management and brand retirement complete the life-cycle of a brand.

🧠 Line extension versus brand extension

Same brand, same category, new variant — line extension (a new flavour of an existing biscuit). Same brand, new category — brand or category extension (a biscuit brand launching a beverage). New brand, same category — multibranding. New brand, new category — new brand. Kotler's 'brand extension' covers both line and category extensions in the broad sense; the paper usually means the category jump. Vertical extensions move the brand up-market (premium) or down-market (economy), the latter risking the parent's image.

4. Logistics and supply chain management: drivers, value creation and supply chain design

A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request — suppliers, manufacturers, transporters, warehouses, distributors, retailers and customers — and the flows of product, information and funds among them (Chopra and Meindl). Supply chain management is the coordination of these flows across firm boundaries to maximise supply chain surplus, the difference between the value to the customer and the total cost incurred; logistics is the part of it that plans, implements and controls the efficient forward and reverse flow and storage of goods, services and information between origin and consumption (the Council of Supply Chain Management Professionals) — inbound, outbound and reverse logistics, with order processing, warehousing, inventory management, transportation (rail, road, water, air, pipeline, intermodal), materials handling and packaging as its functions. Value is created by matching supply with demand at the lowest total cost — the trade-off between responsiveness (short lead times, variety, high service, innovation) and efficiency (low cost) that Fisher's framework (1997) resolves by product type: functional products with predictable demand need an efficient chain, innovative products with unpredictable demand a responsive one. The decision phases are strategy or design (long-term structure — location, capacity, make or buy, outsourcing), planning (a year — demand forecast, inventory and production policies) and operation (weekly and daily — orders, scheduling, shipments).

The drivers of supply chain performance (Chopra and Meindl)
Driver	Type	Decisions	Responsiveness versus efficiency
Facilities	Logistical	Role (flexible or dedicated), location (centralised or decentralised), capacity (excess or tight), methodology	Many, local, spare-capacity facilities are responsive; few, central, fully used ones are efficient
Inventory	Logistical	Cycle inventory, safety inventory, seasonal inventory, level of product availability	More inventory raises responsiveness at a carrying cost
Transportation	Logistical	Mode (air fastest and dearest, water slowest and cheapest), route and network design, in-house or outsourced	Faster modes are responsive; consolidation and slow modes are efficient
Information	Cross-functional	Push versus pull, coordination and information sharing, forecasting and aggregate planning, enabling technologies (EDI, ERP, RFID, the internet), sales and operations planning	Good information improves both at once — it is the driver that shifts the frontier
Sourcing	Cross-functional	In-house or outsource, supplier selection and evaluation, single or multiple sourcing, procurement process	Low-cost global sourcing is efficient; local responsive suppliers are responsive
Pricing	Cross-functional	Pricing and economies of scale, everyday low pricing versus high-low pricing, fixed versus menu pricing	Pricing shapes demand to match supply — revenue management

ℹ️ Supply chain design choices and the bullwhip

Design chooses the push-pull boundary (make-to-stock before it, make-to-order after it — Dell moved it to the customer order), the degree of postponement (delaying differentiation, as with dyeing garments after demand is known), the distribution network (manufacturer storage with direct shipping or in-transit merge, distributor storage with carrier or last-mile delivery, retail storage with customer pickup), the number and location of facilities (the centralisation trade-off — pooling cuts safety stock by roughly the square root of the number of locations consolidated), third-party and fourth-party logistics (3PL executes, 4PL orchestrates), and vertical integration versus outsourcing. The bullwhip effect (Forrester; Lee, Padmanabhan and Whang, 1997 — the Procter and Gamble Pampers case) is the amplification of order variability upstream, caused by demand-forecast updating, order batching, price fluctuation and rationing and shortage gaming, and cured by information sharing, vendor-managed inventory, continuous replenishment, everyday low pricing and smaller batches. The SCOR model (plan, source, make, deliver, return, enable) and the Beer Game are the standard teaching tools; agile, lean and 'leagile' chains, risk and resilience after 2020, and green or closed-loop chains are the current themes.

Key takeaways

The black-box model turns stimuli into responses through buyer characteristics and the five-stage process; the named models are Marshallian (economic), Pavlovian (learning), Freudian (psychoanalytic), Veblenian (sociological), Howard-Sheth, EKB and Nicosia.
Industrial buying has derived demand, fewer and larger buyers and a buying centre of seven roles; the buygrid's three situations are straight rebuy, modified rebuy and new task, and the new task runs eight buyphases.
Aaker's brand equity has five assets — loyalty, awareness, perceived quality, associations, proprietary assets; Keller's CBBE pyramid climbs salience, performance and imagery, judgements and feelings, resonance; BAV is Young and Rubicam's four pillars; BrandZ is Kantar's.
Name strategies are individual, blanket family, separate family and corporate-plus-individual; a line extension stays in the category, a brand extension jumps category; dilution and cannibalisation are the risks; Aaker's loyalty pyramid runs from switchers to committed buyers.
SCM maximises supply chain surplus across firm boundaries and logistics is its flow-and-storage part; Chopra and Meindl's six drivers are facilities, inventory, transportation, information, sourcing and pricing; Fisher matches functional products to efficient chains and innovative ones to responsive chains; the bullwhip amplifies orders upstream.

Practice questions (9)

Attempt each one before opening the answer. Every explanation names the tempting wrong option as well as the right one, because that is where marks are lost.

The model of consumer behaviour that explains buying through conspicuous consumption and the influence of social class and reference groups is the:
1. Veblenian (sociological) model
2. Marshallian (economic) model
3. Pavlovian (learning) model
4. Freudian (psychoanalytic) model
Show answer
Answer: A — Veblenian (sociological) model
Veblen's Theory of the Leisure Class saw consumption as social display. Marshall's buyer maximises utility, Pavlov's learns by repetition and reinforcement, Freud's is moved by unconscious and symbolic motives.
In the Howard-Sheth model, the three levels of consumer decision making are:
1. Extensive problem solving, limited problem solving, routinised response behaviour
2. Straight rebuy, modified rebuy, new task
3. Awareness, trial, adoption
4. Cognitive, affective, behavioural
Show answer
Answer: A — Extensive problem solving, limited problem solving, routinised response behaviour
Howard and Sheth (1969) tied the depth of decision making to the buyer's experience with the product class. Straight, modified rebuy and new task are the buygrid's industrial buying situations; awareness-trial-adoption is a diffusion sequence; cognitive-affective-behavioural are the components of attitude.
In an organisational buying centre, the person who controls the flow of information to other members — such as a purchasing agent who decides which salespeople get to see the engineers — plays the role of:
1. Gatekeeper
2. Decider
3. Influencer
4. User
Show answer
Answer: A — Gatekeeper
Webster and Wind's buying centre has initiators, users, influencers, deciders, approvers, buyers and gatekeepers. Deciders choose, influencers shape specifications, users work with the product; the gatekeeper controls access and information.
David Aaker's model of brand equity comprises brand loyalty, brand awareness, perceived quality, brand associations and:
1. Other proprietary brand assets such as patents, trademarks and channel relationships
2. Brand resonance
3. Energised differentiation
4. Brand salience
Show answer
Answer: A — Other proprietary brand assets such as patents, trademarks and channel relationships
Aaker's five asset categories (1991). Resonance and salience are blocks of Keller's CBBE pyramid; energised differentiation is a pillar of Young and Rubicam's BrandAsset Valuator.
In Keller's customer-based brand equity pyramid, the apex — 'what about you and me?' — is:
1. Brand resonance
2. Brand salience
3. Brand performance
4. Brand judgements
Show answer
Answer: A — Brand resonance
The pyramid climbs salience (identity), performance and imagery (meaning), judgements and feelings (response) to resonance (relationships) — behavioural loyalty, attitudinal attachment, sense of community and active engagement.
A soap brand launching a hand sanitiser under the same brand name is an example of:
1. Brand (category) extension
2. Line extension
3. Multibranding
4. Co-branding
Show answer
Answer: A — Brand (category) extension
The existing brand enters a new product category. A line extension would be a new soap variant; multibranding introduces a new brand in the same category; co-branding pairs two brands on one offering.
Procter and Gamble's practice of giving each product its own name, so that the failure of one does not damage the others, is the:
1. Individual brand name strategy
2. Blanket family name strategy
3. Corporate-plus-individual name strategy
4. Licensed brand strategy
Show answer
Answer: A — Individual brand name strategy
Individual names insulate the house from a product failure at the cost of separate launch spending — the 'house of brands'. A blanket family name (Tata, Amul) transfers goodwill; corporate-plus-individual combines them (Maruti Suzuki Swift).
According to Fisher's framework, a supply chain for innovative products with unpredictable demand should be designed to be primarily:
1. Responsive
2. Efficient
3. Vertically integrated
4. Fully outsourced
Show answer
Answer: A — Responsive
Fisher (1997) matched functional products (predictable demand, long life cycles) to efficient chains that minimise cost, and innovative products (unpredictable demand, short cycles, high margins) to responsive chains that minimise stock-outs and markdowns through speed and flexibility.
The amplification of order variability as one moves upstream from retailer to manufacturer to supplier in a supply chain is called the:
1. Bullwhip effect
2. Postponement effect
3. Square-root law
4. Push-pull boundary
Show answer
Answer: A — Bullwhip effect
Lee, Padmanabhan and Whang (1997) traced the bullwhip to forecast updating, order batching, price fluctuations and shortage gaming, and prescribed information sharing, vendor-managed inventory and everyday low pricing. Postponement delays differentiation; the square-root law describes inventory pooling; the push-pull boundary is a design choice.