The Marshallian Economic was propounded by Alfred Marshall in order to propose the buying preferences of customers in the situation of product purchase (Biswas, 2012). Based on the gaps found in the Marshallian Economics, Psychoanalytic Theory and Pavlovian Theory of customer behaviour model were developed to fill them. The customers are given utmost preference in this economic model. Moreover, the model finds aggressive use in e-retailing services.
However, the benefits of the Marshallian Economic model are subjected to adverse opinions. Arguments persist regarding the utmost priority given to individuals in this model. Secondly, the concept of utility and the idea that customers are always aware of their preferences, hence consciously conduct utility analysis of products they purchase (Daniela, 2011). These two major demerits of Marshallian Economics have given way to Psychoanalytic Theory and Pavlovian Theory in e-retail.
Understanding Psychoanalytic theory
The Psychoanalytical Theory was first presented by the eminent scholar Sigmund Freud in the late 19th Century. However, in the later years, there remain further refinements in the theory. The uniqueness of this theory is that it serves dually as a therapy as well as a theory according to the situation. The theory aims at giving an explanation to human behaviour, and in doing so it proposes that humans tend to get motivated by components that are unseen and controlled by rational mind and consciousness (Friedlander, 2013).
According to this theory, components like id, ego and superego affect human motivation. While ‘Id’ is that primaeval part of the human mind which seeks immediate fulfilment of biological or instinctual desires, super-ego intends to impose social, ethical and moral constraints on human behaviour. On the other hand, the ego is the rational and conscious human mind which aims to cite balance between ‘Id’ and ‘super-ego’ while performing an activity.
Thus, when ‘Id’ compels the individual will capitalize on all possible means in order to accomplish a desire. But when ‘super-ego’ dominates, an individual will rather let go of the urge to accomplish his desire than to defame socially, morally or ethically. On the other hand, a mind driven by ego will try to strike a uniform balance between ‘Id’ and ‘super-ego by’ finding an alternative way of accomplishing the desire without compromising or without entering into any unethical practices (Fonagy, 2010).
Thus, it can be said that the psychoanalytic theory is actually an investigation into the unconscious human mind where basic emotions like sex, the feeling of safety, affiliation and similar psychological needs dominate. This psychoanalytic theory is widely used to decipher consumer behaviour. According to this theory, the personality of an individual has an immense influence on his buying behaviour. Thus, the specific components of the theory, ‘id’, ‘super-ego’ and ‘ego’ cast their influence on buying behaviour as per their dominance (Chatzidakis, 2015).
Understanding Pavlovian theory
The Pavlovian Theory of the Classical Conditioning theory is a theory that relates to automotive or reflexive learning. The theory was propounded by the Russian psychologist Ivan Pavlov in 1980s. The major focus of this theory is to connect a stimulus with a conditioned response. In order to establish the theory of conditioned learning, Pavlov conducted an experiment on a dog when he found that it would salivate when food was brought to him.
Later on, Pavlov found that the dog would salivate when at the sight of the person who would bring food to it. Thus, the food would become the stimulus here and the salivation of the dog became the conditioned response to this stimulus (Moore, 2011). Pavlovian Theory also finds use in explaining consumer behaviour. When this theory is applied into marketing strategies, the marketers use a specific brand image, themes and endorser’s image as a stimulus to influence the purchase and repurchase decision of the target consumers (Shankar et al., 2010).
Application of the Psychoanalytic theory
Zivame, an online startup retailer of women’s innerwear from India founded in 2011 sells women innerwear and underwear. The sole focal customer of this online store is women of different age groups. The store makes use of the Psychoanalytic Theory as its promotion strategy to draw customer attention.
To offer every woman the confidence, comfort & choice she deserves.Zivame
It is apparent from their slogan that wise use of ‘Id’ component of the Psychoanalytic Theory used by the online retailer in order to accomplish the unconscious psychological desire of affiliation among its women customers.
Furthermore, the tagline also generates a feeling of empowerment among the women audience where buying innerwear is usually a secret affair in India. In such a scenario, an emphatic tagline that equates the act of purchasing boldly from a digital store and the act of self-independence appeals to the psychological needs of the consumers. The positive after-effects remain justified through the recovery of the Indian lingerie seller with a 56% increase in its revenue earned in the financial year 2017-2018 as compared to the preceding financial year (Martins, 2018).
Application of the Pavlovian theory
Pavlovian conditioning used by Big Basket, an online grocery retailing store in India founded in 2011. The fundamental principle of Pavlovian Theory is that a stimulus excites a specific response in the subject. Thus, in this case, the company has put significant emphasis on the influential role brand endorser among the targeted customers. Hence, the Indian actor Shahrukh Khan was assigned to endorse the brand as a part of their strategy. Moreover, as a stimulus, the store features the actor to offer the lowest ever prices on its merchandise from 1st to the 10th of every month.
The purpose of such offers through a celebrity brand endorser is to lure customers to the store during this period and inspire them to make purchases. Besides helping in the increase in sales volume, the application of the theory has also helped Big Basket getting customer attention. Thus, it can be well concluded that the desired response to the stimulus has been achieved by Big Basket. The e-retail store saw a 35% hike in revenue earned in 2019 as compared to the previous year (The Economic Times, 2019).
- Biswas, T. (2012) ‘The Marshallian Consumer’, Review of Economic Analysis, 4(165–174).
- Bushong, B. et al. (2010) ‘The physical presence of a good increases willingness-to-pay’, American Economic Review, 100(4).
- Chatzidakis, A. (2015) ‘Guilt and ethical choice in consumption: A psychoanalytic perspective’, Marketing Theory, 15(1).
- Daniela, M. (2011) ‘Fundamental Theories on Consumer Behaviour: An Overview of the Influences Impacting Consumer Behaviour’, Ovidius University Annals, Economic Sciences Series, 11(2).
- Fonagy, P. (2010) ‘Psychoanalytic theories’, The Corsini encyclopedia of psychology, (1–4).
- Friedlander, K. (2013) A Psycho-Analytical Approach to Juvenile Delinquency: Theory, Case Studies, Treatment. Routledge.
- Martins, M. (2018) ‘Zivame revenue jumps 56% to Rs 87 crore’, Fashion Network, October. Available at: https://in.fashionnetwork.com/news/Zivame-revenue-jumps-56-percent-to-Rs-87-crore,1027364.html#.XThHMvkzbIU.
- Moore, M. (2011) ‘Psychological theories of crime and delinquency’, Journal of Human Behavior in the Social Environment, 21(3).
- Shankar, V. et al. (2010) ‘Mobile marketing in the retailing environment: current insights and future research avenues’, Journal of interactive marketing, 24(2).
- Tauber, A. I. (2010) Freud, the reluctant philosopher, Princeton University Press.
- The Economic Times. (2019) ‘BigBasket’s wholesale unit revenue up 35%’, The Economic Times, 23 January. Available at: https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/bigbaskets-wholesale-unit-revenue-up-35/articleshow/67358734.cms?from=mdr.