MBA - Sales & Marketing - SEM IV

Subject Name: Consumer Behaviour

Module 4: CONSUMER DECISION MAKING
PROCESSES
 CONSUMER DECISION MAKING PROCESSES:
• Consumer Decision-Making Process. The consumer decision-making process
consists of five steps, which are need recognition, information search,
evaluations of alternatives, purchase and post-purchase behavior. These steps
can be a guide for marketers to understand and communicate effectively to
consumers.
•
• The consumer decision making is a complex process with involves all the stages
from problem recognition to post purchase activities. All the consumers have
their own needs in their daily lives and these needs make them make different
decisions. These decisions can be complex depending on the consumer’s opinion
about a particular product, evaluating and comparing, selecting and purchasing
among the different types of product. Therefore, understanding and realizing the
core issue of the process of consumer decision making and utilize the theories in
practice is becoming a common view point by many companies and people.
 CONSUMER DECISION MAKING PROCESSES:
• There is a common consensus among many researchers and academics that consumer purchasing
theory involves a number of different stages. Depending on the different factors and findings,
numerous researchers and academics developed their own theories and models over the past years.
However, according to Tyagi and Kumar (2004), although these theories vary slightly from each other,
they all lead to almost the same theory about the consumer purchasing theory which states that it
involves the stages of search and purchase of product or service and the process of evaluation the
product or service in the post-purchase product.
•
• Five Stage Model initially proposed by Cox et al. (1983) is considered to be one of the most common
models of consumer decision making process and it involves five various stages. These stages are:
recognition of need or problem, information search, comparing the alternatives, purchase and post-
purchase evaluation. This simple model clearly illustrates and explains how the consumers make a
purchasing decision.
• Furthermore, Blackwell et al (2006) highlights the argument why this model is more precise and
clear compared to the other similar models is that because this model’s core focus is on motivational
factors which helps the user to understand the reasons behind the purchasing decision easier.
 CONSUMER DECISION MAKING PROCESSES:
• Problem/Need Recognition: Recognition of need or a problem is the first stage
of the model. According to Bruner (1993) recognition of a problem arises in the
situation where an individual realizes the difference between the actual state
of affairs and desired state of affairs. Neal and Quester (2006) further state that
the recognition of a problem or need depend on different situations and
circumstances such as personal or professional and this recognition results in
creation of a purchasing idea. For instance, consumer may recognize the need
to buy a laptop when there is need to carry it use it in different places which is
convenient compared to a desktop computer.
•
• Solomon et al (2006) classifies the human needs into two different categories
depending on their nature. The following categories are mentioned:
psychological and functional or physical needs. The authors state that the
psychological needs are the outcome of emotional feeling of consumers
whereas functional or physical needs are usually the results of necessity.
•
 CONSUMER DECISION MAKING PROCESSES:
• The human need has no limit therefore; the problem recognition is a repetitive in
nature. According to Maslow theory, human being is always dissatisfied, when an
individual’s one need is satisfied another one will come out and this trend continues
repetitively.
• Information Search: The next stage of the model is information search. Once the need
is recognized, the consumer is likely to search more product-related information before
directly making a purchase decision. However, different individuals are involved in
search process differently depending on their knowledge about the product, their
previous experience or purchases or on some external information such as feedback
from others.

• Search of information process itself can be divided into two parts as stated by Oliver
(2011): the internal search and external search. In internal search, the consumers
compare the alternatives from their own experiences and memories depending on their
own pastexperiences and knowledge. For example, searching for fast food can be an
example for internal search because customers often use their knowledge and tastes to
choose the right product they need rather than asking someone for an advice
 CONSUMER DECISION MAKING PROCESSES:
• Search of information process itself can be divided into two parts as stated by Oliver
(2011): the internal search and external search. In internal search, the consumers
compare the alternatives from their own experiences and memories depending on their
own past experiences and knowledge. For example, searching for fast food can be an
example for internal search because customers often use their knowledge and tastes to
choose the right product they need rather than asking someone for an advice. On the
other hand, external search ends to be for bigger purchases such as home appliances or
gadgets. For instance, consumers who wish to buy new furniture or a mobile phone
tend to ask friends’ opinion and advices or search in the magazines and media before
making a purchasing decision.

• Winer (2009) argues that with the enhancing role of internet in professional and
personal lives of people, increasing numbers of individuals are turning to various
resources in internet when searching for information about product categories or
specific brands. The author specifically highlights the role of online user reviews and
forums in terms of their significant impact upon information search stage of consumer
decision making process among internet users.
•
 CONSUMER DECISION MAKING PROCESSES:
• Winer (2009) argues that with the enhancing role of internet in professional
and personal lives of people, increasing numbers of individuals are turning to
various resources in internet when searching for information about product
categories or specific brands. The author specifically highlights the role of
online user reviews and forums in terms of their significant impact upon
information search stage of consumer decision making process among internet
users.
•
• Colleagues, peers, friends and family members are highlighted as another
important source of information by Kahle and Close (2006). Moreover,
according to Kahle and Close (2006) the nature of influence of peers, friends
and family members upon information search and consumer decision making
process in general depends on a range of factors such as the nature of
relationships, the level of personal influence, the extent of ‘opinion leadership’
associated with specific individuals etc.
•
 CONSUMER DECISION MAKING PROCESSES:
• Evaluation of Alternatives: After gathering enough information at the first stage the consumer gets into
comparing and evaluating that information in order to make the right choice. In this stage the consumer
analyzes all the information obtained through the search and considers various alternative products and
services compares them according to the needs and wants. Moreover, another various aspects of the
product such as size, quality, brand and price are considered at this stage. Therefore, this stage is considered
to be the most important stage during the whole consumer decision making process.
•
• Furthermore, according to Ha et al (2010), the process of evaluation of alternatives can sometimes be
difficult, time consuming and full of pressure for a consumer. This is because it is quite hard to find an ideal
product or service that satisfies the needs of the customer as there are numerous factors that hinder the
consumer purchasing decision making process. For instance, when it comes to online hotel reservation or
furniture purchasing evaluation process, it can be quite complex. Several factors and aspects need to be
considered before making a purchasing decision. Factors such as age, culture, taste and budget have all
impact on the evaluation process by the consumer. For example, when purchasing a furniture, the young
people consider the factors such as convenience and price where as the old people are likely to consider the
quality and design.
 CONSUMER DECISION MAKING PROCESSES:
• Purchase Decision: Once the information search and evaluation process is over, the
consumer makes the purchasing decision and this stage is considered to be the most
important stage throughout the whole process. In this stage, the consumer makes decision
to make a final purchase as he or she has already reviewed all the alternatives and came
to a final decision point. Purchased further can be classified into three different types:
planned purchase, partially purchase and impulse purchase (Kacen, 2002).
•
• Kacen’s view is further supported by Hoyer and Macinnis (2008) stating that there are a
number of factors that can affect the purchasing process. For example, the desired
product may not be available at the stock. In this case the purchase process is delayed and
consumer
•
 CONSUMER DECISION MAKING PROCESSES:
• Post-Purchase Evaluation: The final stage in the consumer decision making process is
post-purchase evaluation stage. Many companies tend to ignore this stage as this takes
place after the transaction has been done. However, this stage can be the most important
one as it directly affects the future decision making processes by the consumer for the
same product. Therefore this stage reflects the consumer’s experience of purchasing a
product or service. This view is further supported by Ofir (2005) mentioning that the
consumer decision making process is a repetitive action and a good experience is vital in
reducing the uncertainty when the decision to purchase the same product or service is
considered the ext time.
• The opinions of peers, friends and family regarding the purchases made is specified as one
of the most important factors affecting the outcome of post-purchase evaluation by
Perrey and Spillecke (2011). This point is further expanded by Trehan and Trehan (2011),
according to whom peer opinions regarding product evaluations tend to impact customer
level of satisfaction regardless of their level of objectivity.
 CONSUMER DECISION MAKING PROCESSES:
• PROBLEM RECOGNITION:
•
• Business managers need
to be skilled, have
expertise in problem
recognition and solution
techniques to be the
greatest help in guiding
their company towards
greater success.
 CONSUMER DECISION MAKING PROCESSES:
• In problem recognition, the consumer recognizes a problem or need or want. The buyer
recognizes a difference between his or her actual state and some desired state.
•
• The need can be generated by internal stimuli when one of the person’s normal needs
• hunger, thirst, sex, etc. rises to a high level sufficient to become a drive. A need can also be
generated by external stimuli.
•
• At this stage, the marketer should evaluate the consumer’s perspective by considering the
basic questions like −
•
– What kinds of needs or problems or efforts arise.
– What brought them about and
– How it led the consumer towards the particular product.
 Maslow’s Hierarchy of Needs:

• American Psychologist Abraham

Harold Maslow believes that, needs
are arranged in a hierarchy form.
Only after a human has achieved the
needs at a certain stage, does he
move to the next one. The pyramid
diagram showing the Maslow needs
hierarchy.
 Maslow’s Hierarchy of Needs:

• According to Maslow's theory, when a human being goes up the levels of the hierarchy has
fulfilled the needs and wants in the hierarchy, one may ultimately achieve self- actualization.
Maslow in the end concluded that, self-actualization was not a regular outcome of satisfying
the other human needs. Human needs as identified by Maslow are as follow −
•
– At the bottom of the hierarchy level are the "Basic needs or Physiological needs" of a
human being − food, water, shelter, sleep, sex etc.
– The next level is "Safety Needs − Security, Order, safety and Stability". These two steps
are important for the physical survival of the person.
– The third level of need is "Love and Belonging", which are psychological needs; when
individuals have taken care of themselves physically, they are ready to share themselves
with others, such as with family, friends and relatives.
 SEARCH AND EVALUATION:

• PURCHASING PROCESSES:

• Buying Process Defined. A buying

process is the series of steps that a
consumer will take to make a
purchasing decision. A standard
model of consumer purchase
decision-making includes
recognition of needs and wants,
information search, evaluation of
choices, purchase, and post-
purchase evaluation.
 SEARCH AND EVALUATION:
• Far too often, retailers think that consumer buying is randomized. That certain products appeal to
certain customers and that a purchase either happens or it doesn’t. They approach product and
service marketing in the same way, based on trial and error. What if there were a distinctive set of
steps that most consumers went through before deciding whether to make a purchase or not?
What if there was a scientific method for determining what goes into the buying process that could
make marketing to a target audience more than a shot in the dark? The good news? It does exist.
The actual purchase is just one step. In fact, there are six stages to the consumer buying process,
and as a marketer, you can market to them effectively.
•
• Problem Recognition: Put simply, before a purchase can ever take place, the customer must have a
reason to believe that what they want, where they want to be or how they perceive themselves or
a situation is different from where they actually are. The desire is different from the reality – this
presents a problem for the customer.
 SEARCH AND EVALUATION:
• Information Search: Once a problem is recognized, the customer search process begins. They know
there is an issue and they’re looking for a solution. If it’s a new makeup foundation, they look for
foundation; if it’s a new refrigerator with all the newest technology thrown in, they start looking at
refrigerators – it’s fairly straight forward.
•
• As a marketer, the best way to market to this need is to establish your brand or the brand of your
clients as an industry leader or expert in a specific field. Methods to consider include becoming a
Google Trusted Store or by advertising partnerships and sponsors prominently on all web materials
and collaterals. Becoming a Google Trusted Store, like CJ Pony Parts – a leading dealer of Ford
Mustang parts – allows you to increase search rankings and to provide a sense of customer security
by displaying your status on your website.
•
• Increasing your credibility markets to the information search process by keeps you in front of the
customer and ahead of the competition.
 POST PURCHASE BEHAVIOR:

• These statements are even more

important to reckon with in the last
stage of the Buyer Decision Process:
Post-Purchase Behavior. Simply
defined, Post-Purchase Behavior is the
stage of the Buyer Decision Process
when a consumer will take additional
action, based purely on their
satisfaction or dissatisfaction
 POST PURCHASE BEHAVIOR:
• What is the meaning of post purchase dissonance?
• Buyer's remorse. From Wikipedia, the free encyclopedia. ... Buyer's remorse is thought to stem from
cognitive dissonance, specifically post-decision dissonance, that arises when a person must make a difficult
decision, such as a heavily invested purchase between two similarly appealing alternatives.
• Post-Purchase Behavior: All the activities and experiences that follow purchase are included in the post
purchase behavior. Usually, after making a purchase, consumers experience post-purchase dissonance. They
sometimes regret their decisions made. It mainly occurs due to a large number of alternatives available,
good performance of alternatives or attractiveness of alternatives, etc.
• The marketers sometimes need to assure the consumer that the choice made by them is the right one. The
seller can mention or even highlight the important features or attributes and benefits of the product to
address and solve their concerns if any.
• A high level of post-purchase dissonance is negatively related to the level of satisfaction which the consumer
draws out of product usage. To reduce post-purchase dissonance, consumers may sometimes even return or
exchange the product.
 MODELS OF CONSUMER DECISION MAKING:
• Consumer Decision Making Models. 3. Stimulus-Response Model Of Buyer Behavior.
• ... This model is based on the four interactive components with the central component identified as 'buyer
characteristics and decision process
•
Understanding buyer behaviors plays an important part in marketing. Considerable research on buyer
behavior both at conceptual level and empirical level has been accumulated. There are two types of buyers
– Industrial (organizational) buyer
– Individual consumer
• Organizational buying behavior has many distinctive features
– First, it occurs in a formal organization which is caused by budget and cost.
– Second, in some conditions, joint decision-making process may occur, and this is not possible in
individual buying behavior.
– Finally, conflict occurs and they are hard to avoid in the joint decision making process.
 CONSUMERS AND THE DIFFUSION OF
• What is diffusion of an innovation? INNOVATIONS
• Diffusion of innovations is a theory that seeks to explain how, why, and at what rate new ideas and
technology spread. ... Rogers proposes that four main elements influence the spread of a new idea: the
innovation itself, communication channels, time, and a social system.
• What is diffusion in consumer behavior?
• Diffusion is the process by which a new idea or new product is accepted by the market. The rate of diffusion
is the speed with which the new idea spreads from one consumer to the next. The definition of the term
innovation can be:
• Firm oriented(new to the firm),
• Product oriented(a continuous innovation, a dynamically continuous innovation, or A discontinuous
innovation),
• Market oriented(how long the product has been on the market or an arbitrary percentage of the potential
target market that has purchased it), or
• Consumer oriented (new to the customer).
• Market-oriented definitions of innovation are most useful to consumer researchers in the study of the
diffusion and adoption of new products.
 CONSUMERS AND THE DIFFUSION OF
INNOVATIONS
• Five Product Characteristics influence the consumers acceptance of a new product:
•
– Relative Advantage
– Compatibility
– Complexity
– Trial ability
– Observability
• Diffusion researchers are concerned with 2 aspects of communication – the channels through which word
about a new product or service is spread to the public and the types of messages that influence the
adoption or rejection of new products or services
• Diffusion is always examined in the context of a specific social system, such as a target market, a community,
a region or even a nation.
• Time is an integral consideration in the diffusion process. Researchers are concerned with the amount of
purchase time required for an individual customer to adopt or reject a new product/service, with the rate of
adoptions and with the identification of sequential adopters.
T h a n k Yo u !