Consumer decision

making process
• The consumer decision-making process can seem mysterious, but all consumers go through
basic steps when making a purchase to determine what products and services will best fit
their needs.

• Think about your own thought process when buying something—especially when it’s
something big, like a car. You consider what you need, research, and compare your options
before making the decision to buy. Afterward, you often wonder if you made the right call.

• The consumer decision process also called the buyer decision process, helps markets identify
how consumers complete the journey from knowing about a product to making the purchase
decision. Understanding the buyer buying process is essential for marketing and sales. The
consumer or buyer decision process will enable them to set a marketing plan that convinces
them to purchase the product or service for fulfilling the buyer’s or consumer’s problem.
• 5 Stages of the consumer decision process (buyer decision process)
are;

• Problem Recognition or Need Recognition.

• Information Search.
• Evaluation of Alternatives.
• Purchase Decision.
• Post-Purchase Evaluation.
1. Problem recognition

• The first step of the consumer decision-making process is recognizing the

need for a service or product. Need recognition, whether prompted
internally or externally, results in the same response: a want. Once
consumers recognize a want, they need to gather information to
understand how they can fulfill that want, which leads to step two.
• But how can you influence consumers at this stage? Since internal stimulus
comes from within and includes basic impulses like hunger or a change in
lifestyle, focus your sales and marketing efforts on external stimulus.
• The need may have been triggered by internal stimuli (such as hunger or
thirst) or external stimuli (such as advertising or word of mouth).
Artificially created needs are often driven by marketing strategies
designed to make consumers feel that they require a product they
previously did not consider necessary.
• Here are some examples:
• Bottled Water: The need for bottled water was created by marketing campaigns emphasizing purity and safety, despite
the widespread availability of safe tap water in many regions.
• Smartwatches: Before their introduction, most people relied on traditional watches or their smartphones for
timekeeping and notifications. The need for smartwatches was driven by marketing that highlighted fitness tracking,
health monitoring, and convenience.
• Home Assistants (e.g., Amazon Echo, Google Home): These devices created a need for voice-controlled assistance and
smart home integration, offering conveniences that many people didn't feel they needed before their introduction.
• High-End Cosmetics and Skincare Products: Many luxury skincare and cosmetic brands create a perceived need for anti-
aging, wrinkle-reducing, and skin-perfecting products through aggressive marketing and celebrity endorsements.
• Energy Drinks: The market for energy drinks was created by convincing consumers that they needed a quick energy
boost for their busy lifestyles, even though traditional methods like drinking coffee or getting adequate sleep
sufficed.Diet and Health Supplements: Many supplements are marketed as essential for health and wellness, creating a
perceived need for vitamins, minerals, and other supplements that most people can get from a balanced diet.
• Luxury Vehicles: Marketing campaigns create a perceived need for luxury vehicles by associating them with status,
success, and superior quality, despite the availability of more affordable and functional cars.These products often
become integrated into daily life, creating long-term consumer habits and dependencies.
2. Information search
• When researching their options, consumers again rely on internal and external factors,
as well as past interactions with a product or brand, both positive and negative. In the
information stage, they may browse through options at a physical location or consult
online resources, such as Google or customer reviews.

• Your job as a brand is to give the potential customer access to the information they
want, with the hopes that they decide to purchase your product or service. Create a
funnel and plan out the types of content that people will need. Present yourself as a
trustworthy source of knowledge and information.

• Another important strategy is word of mouth—since consumers trust each other more
than they do businesses, make sure to include consumer-generated content, like
customer reviews or video testimonials, on your website.
• Policy bazaar is an excellent example of a company whose business
model revolves around providing information, specifically in the
insurance and financial services sector. Here's a detailed look at how
Policybazaar operates
Insurance Aggregators
• Coverfox: Overview: An Indian insurance comparison platform that
offers a wide range of insurance products, including health, life,
motor, and travel insurance.Business Model: Similar to Policybazaar, it
provides detailed comparisons, personalized recommendations, and
earns commissions from insurers for policies sold.
• Compare Policy:Overview: An online insurance comparison portal that
helps users compare and buy insurance policies.Business Model:
Focuses on providing comprehensive information on various
insurance products and earning commissions on policy sales.
Financial Product Comparison
• BankBazaar:Overview: An Indian platform that provides information and comparisons for various
financial products, including loans, credit cards, and insurance.
• Business Model: Offers detailed comparisons, personalized recommendations, and earns revenue
through lead generation and commissions from financial institutions.
• Policygenius:Overview: A U.S.-based online insurance broker that helps users compare and purchase
various insurance products.Business Model: Provides information and comparisons for life, health,
auto, and home insurance, earning commissions on policy sales.
• Travel and General Product Comparison
• TripAdvisor:Overview: A global travel platform that aggregates reviews and compares prices for hotels,
flights, restaurants, and activities.Business Model: Earns revenue through advertising, lead generation,
and commissions on bookings made through the platform.

• Kayak:Overview: A travel search engine that compares prices for flights, hotels, car rentals, and
vacation packages.Business Model: Generates revenue through advertising, referral fees, and
commissions from travel service providers.
General E-commerce and Product
Comparison
• NerdWallet Overview: A U.S.-based personal finance company that
provides information and comparisons for various financial products,
including credit cards, loans, and insurance. Business Model: Earns
revenue through affiliate marketing and lead generation by
connecting users with financial service providers.
• Money SuperMarket: Overview: A UK-based price comparison
website for financial services, including insurance, loans, credit cards,
and utilities.
• Business Model: Generates revenue through commissions from
service providers for each customer referral or completed transaction.
Consumer Reviews and
Recommendations
• Yelp: Overview: A platform that provides user-generated reviews and
recommendations for local businesses, including restaurants, shops,
and services.
• Business Model: Generates revenue through advertising, premium
business accounts, and transaction fees.
• https://www.yelp.com/
• Angie's List:Overview: A website that offers reviews and ratings for
service providers in various industries, including home improvement
and healthcare.Business Model: Earns revenue through membership
fees, advertising, and lead generation for service providers.
Sources of Information
• Personal sources: This includes family, friends, neighbors, acquaintance,
etc.
• Commercial source: This includes advertising, salespeople, dealers,
packaging, display, etc.
• Public sources: This includes mass media, consumer rating organizations,
etc. they also become confidential to provide information.
• Experimental sources: This includes handling, examining, using,
• The most effective sources, however, tend to be personal. Personal sources
appear to be even more important in influencing the purchase of services.
Commercial sources normally inform the buyer, but personal sources
legitimize or evaluate products for the buyer.
• How long the consumer will search for information and how intense his search process will
depend on his buying the product and the importance of purchase to him.
• The consumer may go for both internal as well as an external search of information. Information
search is a mental process, and physical activity performed to make decisions and attain the
desired goals.
• Such a search requires time, energy, as well as money. It may also require a consumer to forego
more desirable activities.
• Time consumers spent seeking information, and the amount of information a consumer seeks
depends on many factors.
• A consumer may seek information from within, or he may search externally. If he tries to
recollect his memory to help him decide on the brand to buy, he searches internally.
• Past purchase experience may help him decide on the desired course of action related to his
perceived problem. If he fails to arrive at an appropriate solution to his problem, he may go for
an external search.
Alternatives evaluation

• At this point in the consumer decision-making process, prospective

buyers have developed criteria for what they want in a product. Now
they weigh their prospective choices against comparable alternatives.
• Alternatives may present themselves in the form of lower prices,
additional product benefits, product availability, or something as
personal as color or style options. Your marketing material should be
geared towards convincing consumers that your product is superior to
other alternatives. Be ready to overcome objections—e
• Consumer evaluation processes can be explained with the help of some basic concepts.
• First, it is assumed that each consumer sees a product as a bundle of product attributes. For
refrigerators, product attributes might include cooling capacity, size, space, price, and other
features. Buyers will pay more attention to those attributes relevant to their needs.
• Second, the importance of depending upon their needs and wants.
• Third, the consumer will develop a set of brand beliefs about where each brand stands on each
attribute. The set of beliefs buyers hold about a particular brand is called brand image. Based on
the buyer’s experience and the effects of selective perception, distortion, and retention, the
consumers’ beliefs may differ from actual attributes.
• Fourth, the consumer’s expected total product satisfaction will vary with the changes at the
levels of different attributes.
• Fifth, the consumer develops attitudes toward the different brands through some evaluation
procedure. Buyers use one or more of several evaluation procedures, depending on the
consumer and the buying decision.
Purchase decision

• This is the moment the consumer has been waiting for: the purchase.
Once they have gathered all the facts, including feedback from
previous customers, consumers should arrive at a logical conclusion
on the product or service to purchase.

• If you’ve done your job correctly, the consumer will recognize that
your product is the best option and decide to purchase it.
• Product choice – Selecting the product , Design , model ,color

• Brand choice – Most products are offered by different companies

• Dealer choice – online vs offline, which retailer to select

• Purchase amount – finalize the price that which you want to purchase
• Payment method – Multiple methods of payments and discounts are
linked to these methods of payment, Method of payment plays an
important role costly goods like car bike, EMI and Finance is also a
growing choice of poularity
Post-purchase evaluation

• This part of the consumer decision-making process involves reflection from

both the consumer and the seller.

• Did the purchase meet the need the consumer identified?

• Is the customer happy with the purchase?
• How can you continue to engage with this customer?
• Post-purchase engagement could include follow-up emails, discount coupons,
and newsletters to entice the customer to make an additional purchase. You
want to gain life-long customers, and in an age where anyone can leave an
online review, it’s more important than ever to keep customers happy.
• In the buyer decision process’s final stage, post-purchase-purchase behavior, the
consumer takes action based on satisfaction or dissatisfaction.
• In this stage, the consumer determines if they are satisfied or dissatisfied with the
purchasing outcome. Here is where cognitive dissonance occurs, “Did I make the right
decision.”
• At this stage of the buyer decision process, consumers take further action after purchase
based on their satisfaction or dissatisfaction.
• What determines whether the buyer is satisfied or dissatisfied with a purchase?
• The answer lies in the relationship between the consumer’s expectations and the
product’s perceived performance.
• If the product falls short of expectations, the consumer is disappointed; if it meets
expectations, the consumer is satisfied; if it exceeds expectations, the consumer is
delighted.
• Cognitive dissonance is the discomfort a person feels when their
behavior does not align with their values or beliefs.

• Post-purchase dissonance is a feeling of anxiety, regret, discomfort, or

uneasiness that a customer may experience after making a purchase.
• Competing brands can play havoc on a customer’s anxiety levels post
purchase. If they see a competitor product now, they might wish
they’d bought this instead. This is called “buyer’s remorse”.
Why is post-purchase marketing
important?
• Post-purchase marketing is your brand’s opportunity to influence how
your customer feels about their purchase.

Done well, post-purchase marketing can:

1. encourage your customer to feel good about what they’ve bought
2. combat buyer’s remorse
3. increase the likelihood your customer will buy from you again
4. Post-purchase marketing also represents an opportunity to turn happy
customers into brand advocates through reviews and social sharing.
ways to win Customer by post-
purchase marketing
• Refund policy
• Easy Returns process
• How-to use product guides
• Complementary product
• Loyalty programme
• Product satisfaction feedback
• Refer a friend and get rewarded
• Social media and user-generated content
• Replenishment reminder
• Customer retention refers to the rate at which customers stay with a
business in a given period of time. This is often referred to as churn
rate
• Customer satisfaction is defined as a measurement that determines
how happy customers are with a company's products, services, and
capabilities. Customer satisfaction information, including surveys and
ratings, can help a company determine how to best improve or
changes its products and services
• Customer satisfaction is important because it helps you solve
problems, prevent churn, and identify happy customers that can
become your advocates and evangelists. It’s an essential step in the
process of building customer loyalty, creating customer delight, and
generating positive word-of-mouth.
• Customer satisfaction helps you understand where you excel.
• Customer satisfaction leads to higher customer loyalty and advocacy
• Customer satisfaction increases customer retention and reduces
churn.
• Customer satisfaction leads to a longer customer lifetime value
• Customer lifetime value (CLV or CLTV) is a metric that indicates the
total revenue a business can reasonably expect from a single
customer account throughout the business relationship.
• The customer lifetime value formula is Customer Lifetime Value =
Customer Value x Average Customer Lifespan. The CLV result is the
revenue you expect an average customer to generate during their
relationship with your business