UNIT-IV

CONSUMER DECISION MAKING PROCESSES

UNIT-IV: CONSUMER DECISION MAKING PROCESSES: Problem recognition, search

and evaluation, purchasing processes, post purchase behavior, models of consumer decision
making, consumers and the diffusion of innovations.

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.
 1. 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.

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.
2. 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.

3. 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.

4. 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).

5. 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..

Simply, if the consumer is satisfies with the purchase it is likely that the purchase may
be repeated while if they have a negative experience from the purchase it is unlikely that the
consumer may make the decision to buy the same product from the same seller or even may
not buy the product at all.
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.

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.
 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.
  The fourth level is achieved when individuals feel comfortable with what they have
achieved. This is the "Esteem" level, the need to be capable and recognized, such as
position, status and level of success.
 The fifth level is the "Cognitive" or the "self-actualization" level, where individuals
intellectually stimulate themselves and explore for their growth.

Finally, there is the "Aesthetic" level, which is the need for harmony, unity, order and beauty.

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.

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.

1. 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.
 However, for the marketer, this creates an opportunity. By taking the time to “create a
problem” for the customer, whether they recognize that it exists already or not, you’re
starting the buying process. To do this, start with content marketing. Share facts and
testimonials of what your product or service can provide. Ask questions to pull the potential
customer into the buying process. Doing this helps a potential customer realize that they have
a need that should be solved.

2. 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.

Increasing your credibility markets to the information search process by keeps you in
front of the customer and ahead of the competition.

3. Evaluation of Alternatives: Just because you stand out among the competition doesn’t
mean a customer will absolutely purchase your product or service. In fact, now more than
ever, customers want to be sure they’ve done thorough research prior to making a purchase.
Because of this, even though they may be sure of what they want, they’ll still want to
compare other options to ensure their decision is the right one.
 4. Purchase Decision: Somewhat surprisingly, the purchase decision falls near the middle of
the six stages of the consumer buying process. At this point, the customer has explored
multiple options, they understand pricing and payment options and they are deciding whether
to move forward with the purchase or not. That’s right, at this point they could still decide to
walk away.
If a customer walks away from the purchase, this is the time to bring them back.
Retargeting or simple email reminders that speak to the need for the product in question can
enforce the purchase decision, even if the opportunity seems lost. Step four is by far the most
important one in the consumer buying process. This is where profits are either made or lost.

5. Purchase: A need has been created, research has been completed and the customer has
decided to make a purchase. All the stages that lead to a conversion have been finished.
However, this doesn’t mean it’s a sure thing. A consumer could still be lost. Marketing is just
as important during this stage as during the previous.

Marketing to this stage is straightforward: keep it simple. Test your brand’s purchase
process online. Is it complicated? Are there too many steps? Is the load time too slow? Can a
purchase be completed just as simply on a mobile device as on a desktop computer? Ask
these critical questions and make adjustments. If the purchase process is too difficult,
customers, and therefore revenue, can be easily lost.
6. Post-Purchase Evaluation: Just because a purchase has been made, the process has not
ended. In fact, revenues and customer loyalty can be easily lost. After a purchase is made, it’s
inevitable that the customer must decide whether they are satisfied with the decision that was
made or not. They evaluate.

If a customer feels as though an incorrect decision was made, a return could take
place. This can be mitigated by identifying the source of dissonance, and offering an
exchange that is simple and straightforward. However, even if the customer is satisfied with
his or her decision to make the purchase, whether a future purchase is made from your brand
is still in question. Because of this, sending follow-up surveys and emails that thank the
customer for making a purchase are critical.

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
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.

In order to understand the organizational buying behavior, we first consider who will
be involved in the buying process and what are their expectations. At least, purchasing
agents, engineers, and final consumers will participate in the buying process.

The potential of different decision maker are different in different situations. In this
model, there are five different sets of variables determining the expectations of the
individual
− The individuals' background, information sources, vigorous search, the selective bend of
the information based on their previous information and expectations, satisfaction with
previous purchase. Except the perceptual distortion, the other four variables that are easy to
gather information.

The second part of the model is regarding the industrial buying processes −
Independent decision which means that the decision is delegated to one department, joint
decision processes.

The product-specific factors (the perceived risk, the type of purchase, and time
pressure) and the company-specific factors (company orientation, company size, and
degree of centralization) will determine the type of factor.

The greater the apparent risk, the more preferred to joint decisions. If it is a life-time
capital buy, the more likely the joint decision will take place.

If the decision has to be made at an emergency, it is likely to entrust to one party. A

small and privately-owned company with product or technology orientation will lean
towardsindependent decisions.

While a large public company with decentralization will tend to have joint decision
process.

Economic Man Model: In this model, consumers follow the principle of maximum utility
based on the law of diminishing marginal utility. Economic man model is based on the
following effects −

Price Effect − Lower the price of the product more will be the quantity purchase.
Substitution Effect − Lower the price of the substitute product, lower will be the
utility of the original product purchase.
Income Effect − When more income is earned, or more money is available,
quantity purchased will be more. The economic theory of buyer’s decision-making
was based on the following assumptions −
3. Evaluation
4. Trial
5. Adoption

To make it more realistic, an enhanced model is recommended as one that considers the
possibility of a pre existing need or problem, the likelihood that some form of evaluation
might occur through the entire process, and that even after adoption there will be post
adoption or purchase evaluation that might either strengthen the commitment or
alternatively lead to discontinuation of the product/service.

Companies marketing new products are vitally concerned with identifying the
consumer innovator so that they may direct their promotional campaigns to the people
who are most like to try new products, adopts them and influences others.

Consumer Research has identified a number of consumer related characteristics,

including product interest, opinion leadership, personality factors, purchase and
consumption traits, media habits, social characteristics, and demographic variables that
distinguish consumer innovators from later adopters. These serve as useful variables in the
segmentation of markets for new product introductions.

----OOO----