Chapter 2

Consumer Decision MakingProcess

The process by which a person is required to make a choice from various alternative options is referred to as
decision-making.
 Decision making Process: Customer decisions are those decisions customers make in the marketplace
as users, payers and buyers. Decisions are often guided by mental budgeting.–Customer sets a budget
for a particular product or service.
 The most basic and important requirement for the marketer is to understand how consumers make
choices.
 Making a decision is a rational and conscious process in which the consumer evaluates each of the
available alternatives to select the best amongst them.

Consumer Information Processing Model

Traditionally, consumer researchers have approached decision making process from a rational perspective. This
dominant school of thought views consumers as being cognitive (i.e. problem-solving) and, to some but a lesser
degree, emotional. Such a view is reflected in the stage model of a typical buying process (often called the
consumer information processing model) depicted in Figure

Problem Recognition

Information Search

Evaluation and Selection of Alternatives

Decision Implementation

Post-purchase Evaluation

The Consumer Information Processing Model

Step 1-Problem Recognition

A customer problem could be any state of deprivation, discomfort or wanting, both physical and psychological
–e.g. ‘We’re out of milk and bread and I’m hungry!’ Realisation by customer that he/she needs to buy something to
get back to normal state of comfort both physically and psychologically could be the recognition of problem.

let’s explore some examples of what a business can do in the need recognition stage.

* Create a brand awareness campaign on social media to place your product/service in front of as
many eyes as possible.
 YouTube Video ad explaining the unique features of a business.

Stimuli for problem recognition

 The different stimuli, which leads to the recognition of problems are:
· Internal stimuli: It may include perceived states of physical or psychological discomfort such as hunger or
boredom
· External stimuli: It may include marketplace information· e.g. the smell of freshly baked bread
 Primary versus secondary demand: Primary demand is for a product category while secondary demand is for
a specific brand within the category.

Step 2-Information Search

When a consumer discovers a problem, he/she is likely to search for more information.
 Ex: We may simply pay more attention to product information of a personal computer.
 You become more attentive to computer ads, computers purchased by your friends, and peer conversations
about computers.
 Or, you may more actively seek information by visiting stores, talking to friends, or reading computer
magazines, among others. Through gathering information, the consumer learns more about some brands that
 compete in the market and their features and characteristics. Theoretically, there is a set of brands
available to you, but you will become aware of only a subset of the brands (awareness set) in the market.
Some of these brands may satisfy your initial buying criteria, such as price and processing speed
(consideration set). As you proceed to more information search, only a few will remain as strong candidates
(choice set).

Step 3-Evaluation and Selection of Alternatives

There is no single, simple evaluation process applied by all consumers or by one consumer in all buying situations.
One dominant view, however, is to see the evaluation process as being cognitively driven and rational.
 Under this view, a consumer is trying to solve the problem and ultimately satisfying his/her need. In other
words, he/she will look for problem-solving benefits from the product.
 The consumer, then, looks for products with a certain set of attributes that deliver the benefits.
 Thus, the consumer sees each product as a bundle of attributes with different levels of ability of delivering
the problem solving benefits to satisfy his/her need.
Step 4 – Purchase Decision Implementation

To actually implement the purchase decision, however, a consumer needs to select both specific items (brands) and
Specific outlets (where to buy) to resolve the problems. There are, in fact, three ways these decisions can be made:

1) simultaneously
2) Item first, outlet second; or 3) outlet first, item second. In many situations, consumers engage in a simultaneous
selection process of stores and brands.

For example, in your personal computer case, you may select a set of brands based on both the product’s technical
features (attributes) and availability of brands in the computer stores and mail-order catalogs you know well. It is
also possible; that you decide where to buy (e.g., Computer world in your neighborhood) and then choose one or
two brands the store carries. Once the brand and outlet have been decided, the consumer moves on to the
transaction (“buying”).

Following are the stages in Post Purchase behav.

Purchase
Product Use
Disposition
Evaluation
Dissatisfaction
Repeat Purchase
Motivation
Post-purchase Dissonance

Post-purchase Dissonance
According to the research, the likelihood of experiencing this kind of dissonance and the magnitude of it is a
function of:
· The degree of commitment or irrevocability of the decision,
· The importance of the decision to the consumer,
· The difficulty of choosing among the alternatives, and
· The individual’s tendency to experience anxiety. Because dissonance is uncomfortable, the consumer may use
one or more of the following approaches to reduce it by
· Increase the desirability of the brand purchased.
· Decrease the desirability of rejected alternatives.
· Decrease the importance of the purchase decision.
· Reject the negative data on the brand purchased.
If the dissonance about the purchase is not reduced, the anxiety may transform into dissatisfaction (general or
specific). Certainly, this negative experience leads to new problem recognition, and the consumer will engage in
another problem solving process.

Step 5-Post-purchase Evaluation

The type of preceding decision-making process directly influences post-purchase evaluation processes.
 Directly relevant here is the level of purchase involvement of the consumer.
  Purchase involvement is often referred to as “the level of concern for or interest in the purchase” situation,
and it determines how extensively the consumer searches information in making a purchase decision.
Although purchase involvement is viewed as a continuum (from low to high), it is useful to consider two
extreme cases here. Suppose one buys a certain brand of product (e.g., Diet Pepsi) as a matter of habit
(habitual purchase). For him/her, buying a cola drink is a very low purchase involvement situation, and
he/she is not likely to search and evaluate product information extensively. In such a case, the consumer
would simply purchase, consume and/or dispose of the product with very limited post-purchase evaluation,
and generally maintain a high level of repeat purchase motivation Process.

Factors influencing consumer decision making:

a. Individual differences
b. Environmental influences
c. Psychological processes.
.
a. Individual Differences
There are five major categories of individual differences, which affect behaviour, viz.

(A). Demographics, psychographics, values and personality: The decision processes and buying behaviour gets
very much affected by how people differ. These variables include what has come to be known as psychographic
research to probe into those individual traits, values, beliefs, and preferred behaviour patterns that correlate with
behaviour in market segments.
(b). Consumer resources: Each person brings three primary resources into every decision-making situation:
(1) Time, (2) money, and (3) information reception and processing capabilities or attention. Generally there are
distinct limits on the availability of each, thus requiring some careful allocation.
(c). Motivation: Psychologists and marketers alike have conducted a wide variety of studies to determine what
takes place when goal-directed behavour is energized and activated.
(d). Knowledge: Knowledge is defined as information stored in memory. It encompasses a vast array of items such
as the availability and characteristics of products and services; where and when to buy; and how to use products.
One main goal of advertising and selling is to provide relevant knowledge and information to consumers so as to
assist them with decision-making, especially in extended problem solving.
(e). Attitudes: Behaviour is strongly influenced by attitudes toward a given brand or product. An attitude is simply
an overall evaluation of an alternative, ranging from positive to negative. Once formed, attitudes play a directive
role on future choice and are difficult to change. Nevertheless, attitude change is a common marketing goal.

b. Environmental Influences:
In addition to individual variables, the decision process behaviour of consumers is also influenced by
environmental factors which include culture, social class, family, personal influence and situation.
(a). Culture: Culture refers to the values, ideas, artifacts, and other meaningful symbols that help individuals
communicate, interpret, and evaluate as members of society.
(b). Social class: Social classes are divisions within society that comprise individuals sharing similar values,
interests, and Behaviour. Socioeconomic status differences may lead to differing forms of consumer behaviour, say
for example, the types of beverages served, the make and style of car driven, the kind of food liked, and the styles
of dress preferred
(c). Family: Since the field of consumer research was founded, the family has been a focus of research. As you
have learnt in earlier chapters, the family often is the primary decision making unit, with a complex and varying
pattern of roles and functions. Cooperation and conflict often occur simultaneously with interesting behavioural
outcomes.
(d). Personal influence: As consumers, those with whom we closely associate often affect our behaviour. This is
referred to as personal influence. Consumers often respond to perceived pressures to conform to the norms and
expectations provided by others-seeking and taking their counsel on buying choices, observing what others are
doing as information about consumption choices, and comparing their decisions to those of others.
(e). Situation: Behaviour change as situations change. Sometimes these changes are erratic and unpredictable, such
as job layoff, and at other times, they can be predicted by research.
c. Psychological Processes:
At the end, those who wish to understand and influence consumer behaviour must have a practical grasp of three
basic psychological processes:
(a). Information processing: Communication is a bottom-line marketing activity. Therefore, consumer researchers
have long been interested in discovering how people receive, process, and make sense of marketing
communications.
(b). Learning: Anyone attempting to influence the consumer is trying to bring about learning, the process by
which experience leads to changes in knowledge and behaviour.

(c). Attitude and behaviour change: changes in attitude and behaviour are an important marketing objective that
reflects basic psychological influences and have been the subject of decades of intensive research
Types of decision process
 Sometimes consumers undertake a complex decision process requiring substantial amounts of time and
energy. In situations in which consumers are making a decision for the first time, actions must be based on
some form of problem solving.
 When this process is very complex, it is called extended problem solving (EPS).
 Limited problem solving (LPS), however, represents a lower degree of complexity.
 At the lowest end of the continuum stands what is known as Routinised response behaviour (RRB)

Difference in these three major types of buying behaviour

(1) Routinised response behavior (RRB)/ Habitual buying behavior: This is the simplest type of behaviour.
This occurs when the consumer already has some experience of buying and using the product.

 Usually, this kind of behaviour is adopted for the purchase of low cost, frequently used items.
 Most of the time the buyers do not give much thought, or search and also do not take a lot of time
to make the purchase buyer is familiar with the various brands available and the attributes of each and
has well-established criteria for selecting their own brand. In such a case, the marketer has to ensure two
tasks:

(a) The marketer must continue to provide satisfaction to the existing customers by maintaining quality,
service and value.

(b) He must try to attract new customers by making use of sales promotion techniques like points of
purchase displays, off-price offers, etc., and also introduce new features to the products.

(2) Limited problem solving (LPS)/ Dissonance reducing buying behavior: In this type of buying behavior, the
consumer is familiar with the product and various brands available, but has no established brand preference. Here
the buyer is more complex as compared to routine buying behavior because the consumer is confronted with an
unfamiliar brand in a familiar product class. The consumer would like to gather additional information about the
brands to arrive at his brand decision.

 For instance, a housewife buys refined vegetable oils for her cooking and she may be familiar with the
concept of vegetable oil, vanaspati and ghee. She may also know that Dhara, Dalda and Sundrop are some
of the leading brands available. But to establish her choice of brand, she would like to check with her
friends and regularly store information about the attributes of each. This buying behavior as described
limited problem solving because the buyers are in a situation where they are fully aware of the product class
but not familiar with all the brands and their features.

 Limited problem solving also takes place when a consumer encounters an unfamiliar or new brand in a
known product category. The housewife, who buys refined vegetable oil, on her next visit to the market, sees
a new brand of oil, Saffola.

 Apart from buying a new brand, this brand of oil also claims the unique attribute of being low in cholesterol.
To arrive at a decision, whether or not to buy this brand, the housewife needs to gather information about the
new brand, which will allow her to compare it with the known brands. Here the marketer’s job is to design a
communication programme, which will help the buyer to gather more information, increase his brand
comprehension and gain confidence in the brand.

(3) Extensive problem solving (EPS)/Complex buying behavior: This buying is referred to as a complex buying
behavior because the consumer is in an unfamiliar product class and is not clear about what criteria to consider for
buying. Extensive problem solving occurs when the consumer is encountering a new product category. He needs
information on both the product category as well as the various brands available in it.
The marketing strategy for such buying behavior must be such that it facilitates the consumer’s information
gathering.

Repeat Purchases
Most purchases are repeated over time. When repeat purchases occur, there are two possibilities: (a) repeated
problem solving, and (b) habitual decision-making.
(a) Repeated Problem solving: Repeat purchases often require continued problem solving. Several factors
including dissatisfaction with a previous purchase resulting in a brand switch or retail stock outs when the retailer
doesn’t have product available can lead to this outcome.
(b) Habitual decision making: It takes different forms, depending on the decision process followed in the
initial purchases:
 Brand loyalty/Company loyalty: Consumers have certain expectations about the products they buy and the
retailers from whom they buy. The satisfaction that consumers experience when their expectations are met or
exceeded often results in loyalty to that product or retailer. For the most part, consumers want to reward
these companies with continued use over time—that is, brand or company loyalty, which can be highly
resistant to change.
 Inertia: There are certain categories of products in which there is limited brand loyalty, for instance
toothpaste. Where any degree of loyalty does not exist, it mostly consists of several brands, all of which are
about equal. Buying habits of this type are based on inertia and are unstable.

Impulse Buying
Impulse purchases are the least complex form of LPS but differ in some forms important ways. This kind of buying
may be explained as an unplanned, spur-of-the-moment action triggered by product display or point-of-sale
promotion. The main characteristics of Impulse buying are:
A sudden and spontaneous desire to act accompanied by urgency.
A state of psychological disequilibrium in which a person can feel temporarily out of control.
The onset of conflict and struggle that is resolved by an immediate action.
Minimal objective evaluation exists-emotional considerations dominate.
A lack of regard for consequences.

Variety Seeking
Consumers often express satisfaction with their present brand but still engage in brand switching. The motive is
variety seeking, which occurs most often when there are many similar alternatives, frequent brand shifts, and high
purchase frequency.
It can occur simply because someone is bored with his or her current brand choice, or it can be prompted by
external cues as store stock outs or coupons that promote switching. In the case of bread, the only decision
variables may be which brand, quantity and retail outlet. But in the case of buying a sofa set the decision variables
are far more in number. These
may be:
Ready-made or made to order
From a furniture shop or to be built at home
Type of material for frame: wood, steel, aluminum
Type of material for cushion: cloth, rexine, leather
Design: with or without armrests, height, depth of seat, seating capacity, loose or fixed cushion.
Thus, depending on the type of decision being made, the degree and strength of active reasoning will vary.

There are three factors, which influence the degree of active reasoning that is undertaken by the consumer in his
process of decision-making. These are:
i. Involvement
ii. Alternative differentiation, and
iii. Time pressure
i. Involvement: The degree of personal involvement is a key factor in shaping the type of decision process that
consumers will be followed. Involvement is the level of perceived personal importance and/or interest evoked by
a stimulus within a specific situation. When a product is perceived to be of great importance to the customer, such
as personal clothing, or its purchase involves a great deal of money or risk such as jewellery, car, house, company
shares, the level of involvement in making the decision is likely to be very high. The consumer is likely to spend a
great deal of time before arriving at the final decision.
 Several factors exist that determine the degree of involvement consumers have in making a decision. Some
of them are as under:
(i). Personal factors: The degree of involvement tends to be higher when the outcome of the decision affects the
person directly. Personal factors include self-image, health, beauty, or physical condition. Without activation of
need and drive, there will be no involvement, and it is strongest when the product or service is perceived as
enhancing self image.
ii) Number of Brands Purchased in a given time period such as consumer commitment or loyalty to brands and the
number of brands purchased in a particular time period.