THE CONSUMER DECISION Chapter-4

MAKING PROCESS
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INTRODUCTION
Marketers need to understand the dynamics of the
consumer decision making process. While the process
and the internal and external factors affecting
decision making would vary from person to person
and within the same person from situation to situation,
the study of consumer behavior attempts to draw
certain generalizations.
The major decisions taken by a consumer relate to
what he buys (products and services as also the brands),
how much he buys (quantity),
where he buys (place),
when he buys (time) and
how he buys (payment terms).
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DECISION
A decision is defined as choosing an option of the
few/many available. Decision making is the process of
choosing between two or more alternatives; It is the
selection of an alternative out of the few/many choices
that are available.
Decision making is:
a) a goal oriented process.
b) it is a problem solving process: helps take advantage
of opportunities and fight threats.

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 DECISION MAKING
Decisions Making can be of two types,
a) Programmed decision making, and,
b) Non-programmed decision making.
a) Programmed decision making: This is applied for problems that are routine and
regular. Such problems are simple to deal with and guidelines to sort out such
problems exist. Such decisions are made without much thought.
With respect to marketing, these are decisions related to day to day purchases or
convenience and shopping goods; these are generally low involvement purchases.
They may also be habitual in nature, and brand loyalty could easily develop.
Examples: Purchases made for staples, toiletries etc.
b) Non-programmed decision making: This is applied for problems that arise
suddenly and are unique or novel. As the problem is sudden and novel, it is complex
and requires a lot of information gathering, deliberation and thought.
With respect to marketing, these are decisions related to infrequent purchases or
specialty goods and emergency goods; these are high involvement purchases.
Examples: Purchases made for laptops, real estate etc.
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LEVELS OF DECISION MAKING
We may define three kinds or levels of consumer decision making
Extensive problem solving (EPS) : In EPS, the consumer is unfamiliar with
the product/service category; he is not informed of the product or service
offering, and thus, the situation requires extensive information search and
evaluation.
The consumer is not aware:
- about the various decision criteria used to evaluate the product or service
offering.
- of the various brands that are available and from which to evaluate.
The result is that the purchase process involves significant effort on part of
the consumer. He has to gather knowledge about (i) the decision criteria; (ii)
the brands available; and (iii) make a choice amongst the brands.
The types of products and / situations where we generally have EPS:
1. These goods are ones of high involvement; they are expensive; they are
infrequently bought; there is considerable amount of risk involved.
2. These are generally first time purchases
Examples: Jewellery, electronic goods, Real estate and property etc.
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CONT
(ii) Limited problem solving (LPS) : The consumer is familiar of the
product or service offering; but he is unaware of the various brands.
The consumer:
- is aware of some brands and also of the various criteria used to evaluate
the product or service offering.
- is unaware of the new brands that have been introduced.
- has not evaluated the brands amongst the awareness set and has not
established preferences amongst the group of brands.
He has to gather knowledge to add/modify the existing knowledge that he
has in his memory. Thereafter he has to make a decision.
The types of products and / situations where we generally have LPS:
1. These goods are ones of low involvement; they are generally
moderately priced; they are frequently bought; there is lesser amount of
risk involved.
2. These are generally recurring purchases.
Examples: A laptop replacing a desktop, a second TV for the home. 6
 CONT
(iii) Routinized problem solving (RPS): The consumer is well informed and
experienced with the product or service offering. The consumer is aware of
both the decision criteria as well as the various brands available.
Here, the goods are ones of low involvement; they are inexpensive; they are
frequently bought; there is no risk involved. These are routine purchases and
are a direct repetition, where the consumer may be brand loyal.
The types of products and / situations where we generally have RPS:
1. These goods are ones of low involvement; they are inexpensive; they are
frequently bought; there is no risk involved.
2. These are routine purchases and the consumer is brand loyal.
Examples: Staples, Cold drinks, Stationery etc.

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BUYING ROLES
Buying Roles viz., Initiator, Influencer, Decider, Buyer and, User.
The marketer needs to understand these roles so as to be able to frame
suitable strategies to target them.
a) Initiator: The person who identifies a need and first suggests the idea of
buying a particular product or service.
b) Influencer: The person(s) who influences the buyer in making his final
choice of the product.
c) Decider: The person who decides on the final choice: what is to be
bought, when, from where and how.
d) Buyer: The person who enters into the final transaction and exchange
process or is involved in the physical activity of making a purchase.
e) User: The person(s) who actually consumes the product or service offering.

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STAGES IN CONSUMER DECISION
MAKING PROCESS
There are five stages in the consumer decision making
process. These are
1. Need recognition/Problem recognition
2. Pre-purchase information search
3. Evaluation of alternatives
4. Purchase decision
5. Post-purchase outcome and reactions

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 NEED RECOGNITION/PROBLEM
RECOGNITION
This is a stage of perceiving a deficiency/need. A need could be triggered off
by an internal stimulus or an external stimulus.
For example, a person is thirsty and feels like having a cola drink. The stimulus is
internal. On the other hand, while walking across the street, he sees a hoarding
which shows a person having a frosted, chilled cola, and he too desires to have
the same, the need is said to have been stimulated by an external stimuli.
A need or problem recognition could be Simple or Complex.
a) Simple: They occur frequently as a routine and can be dealt with
automatically without much effort.
b) Complex: They occur infrequently as unique and non-routine and need
considerable effort to be solved.

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 PRE-PURCHASE INFORMATION
SEARCH
After a need is recognized, the consumer goes for an information search, so as to
be able to make the right purchase decision. He gathers information about the:
(i) product category and the variations
(ii) various alternatives
(iii) various brands.
The amount of information a consumer will gather depends on the following:
i) the consumer: demographics (age, gender, education), psychographics (learning,
attitudes, involvement, personality type)
ii) product category: differentiation and alternative brands available, risk, price,
social visibility and acceptance of the product.
iii) situation: time available at hand, first time purchase, quantity of information
required, availability of information.

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CONT
Types of Search Activity
(i) Specific: This type of search activity is specific to the problem and/
immediate purchase; it is spurred as the need arises, and the consumer actively
seeks information.
Example: student enters college and needs to buy a laptop so that he can
work on his assignments.
(ii) Ongoing: Here the search activity is a gradual process that could span
over time.
Example: the same student, has been thinking of purchasing the laptop since
the past five years, and over these past 5-6 years, he has been gathering
information specific to the laptop as a product category and also about the
various brands available.
(iii) Incidental: This is a byproduct of another search activity or experiences.
Consumers absorb information from their day to day routine activities and
experiences.
Example: the student goes to a mall; he has gone there to help his mother buy
a microwave oven; there in the store, he attends a demonstration of a new
laptop that is being launched.
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INFORMATION SOURCES
The information sources are of two types:
i) Internal sources: This includes the consumer and his self. He recalls information that is
stored in his memory (comprising information gathered and stored, as well as his
experiences, direct and indirect).
Internal sources seem sufficient when:
- it is a routine purchase
- the product is of low involvement
ii) External sources: External sources are resorted to in cases where:
- past knowledge and experience is insufficient.
- the product is of high involvement and the risk of making a wrong decision is high.
External sources of information include:
-Interpersonal communication (family, friends, work peers, opinion leaders etc.)
-Marketing communication or commercial information (advertisements, salespeople,
company websites, magazines etc.)
-Other public sources (editorials, trade magazines and reports, consumer awareness
programmes on TV, Internet etc.)
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 EVALUATION OF ALTERNATIVES
: Once the consumer has gathered information and identified the alternatives, he
compares the different alternatives available on certain criteria. This involves:
i) Generation of choice alternatives;
ii) Identification of evaluative criteria: Attributes and Benefits;
iii) Application of Decision Rules.
i) Generation of choice alternatives: While generation of alternatives, a
consumer moves from an evoked set towards the choice set.
- Evoked set/Consideration set: This is the set of alternatives that he actively
considers while making a purchase decision; these exist either in his memory or
feature prominently in the environment. The consumer perceives them to be
acceptable.
- Inept set: These are those alternatives from the evoked set that the consumer
excludes from further consideration, as he perceives them to be inferior and
unacceptable.
-Inert set: These are those alternatives from the evoked set that the consumer
excludes from further consideration, as he is indifferent towards them and
perceives them as ones without much advantages or benefits.
- Choice set: This comprises the final set of one or two brands from which he
finally decides.
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Identification of Evaluative Criteria: Attributes and Benefits: These are
objective and subjective parameters of the brand that the consumer
regards as important, and uses as standards to discriminate among the
various alternatives. The consumer evaluates the different alternatives on
one or few or many of these features and then makes a final choice. They
are features that a consumer considers in choosing among alternatives;
these could be functional/utilitarian in nature (benefits, attributes,
features), or subjective/emotional/hedonic (emotions, prestige etc.). The
major evaluative criteria are:
- Economic: Price, Value (Product Attributes, Brand image, Evaluation of
Quality, Price, & Features).
- Behavioral: Need/motivation, Personality, self-concept and self-image,
Lifestyle etc.
- Social influences: Group influences, environmental issues etc.

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Application of Decision Rules to make a final choice amongst
alternatives: The consumer uses certain decision rules. The decision rules
help a consumer simplify the decision process; the various evaluative
criteria are structured and integrated so as to simplify the evaluation
process. There can be two kinds of Decision Rules, viz., Compensatory
rules and Non-compensatory rules.
Compensatory rules: Under compensatory rules, the various evaluative
criteria are listed as attributes. These attributes are scored and rated for
the various alternative brands. A lower rating on an attribute may be
offset by a higher rating on another; i.e. a higher rating on one attribute
would compensate for a lower rating on another. Based on the final
scores, the brands are ranked; the one with the highest score, being
regarded as the best. The consumer would then select the brand that
scores the highest among the various alternatives that have been
evaluated. Compensatory rules could assume two forms: simple and
weighted.

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Non-Compensatory rules: Here, a negative evaluation of any one attribute
eliminates the brand from consideration. A lower rating on an attribute cannot be
offset by a higher rating on another; i.e. a higher rating on one attribute would
not compensate for a lower rating on another. The consumer would then select the
brand that scores the highest among the various alternatives that have been
evaluated. Non-compensatory rules could assume three forms: conjunctive,
disjunctive and lexicographic.
Conjunctive rule: A minimally acceptable cut off point is established for each
attribute. The brands are evaluated, and, the brand that falls below the minimally
acceptable limit on any of the attributes is eliminated/rejected.
Disjunctive rule: a minimally acceptable cut off point is established for each
attribute. The brands are evaluated, and, the brand that falls above the cut off
point on any of the attributes is selected.
Lexicographic rule: The various attributes are ranked in terms of perceived
importance. First, the brands are evaluated on the attribute that is considered the
most important. If a brand ranks considerably high than the others on this attribute,
it is selected. In case the scores are competitive, the process may be repeated with
the attribute considered next in importance.

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PURCHASE DECISION
After the consumer has evaluated the various alternatives, he selects a particular brand.
Consumer purchases may be trials/first purchases or repeat purchases.
Trials/First purchase: Trials could be elicited through market testing, or through
promotional tactics such as free samples, coupons, etc.
Repeat purchases: If the consumer is satisfied, he would buy the brand again. Repeat
purchases lead to brand loyalty.
The consumer may further have to make decisions on:
a) where to buy from? (Place: Real/brick and mortar or virtual/online);
b) whom to buy from? (Which store: Depends on reputation of seller, past experience,
etc.)
b) when to buy? (Time: Emergency or Routine; During season, off season, sale, rebate
etc.)
It is noteworthy that a purchase intention (desire to buy the most preferred brand) may
not always result in a purchase decision in favor of the brand; it could get moderated
by (i) Attitudes of others; and (2) Unexpected situational factors.

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POST-PURCHASE OUTCOME AND
REACTIONS
The post purchase outcome and reactions contains two stages; Stage I
comprises Post purchase Cognitive Dissonance, and Stage II comprises
Product usage and reaction.
Stage I: Post purchase Cognitive Dissonance: This is a feeling of
tension and anxiety that a consumer experiences after the purchase of
a product. The consumer begins to have a feeling of uncertainty with
respect the performance of the product and begins to doubt his
purchase decision whether the decision was the right one?. He
begins to ask himself the following questions:
a) Have I made the right choice?
b) Have I purchased the right brand?
c) Have I got value for money?

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Stage II: Product usage and reaction: After the purchase, the consumer
uses the product and re evaluates the chosen alternative in light of its
performance viz. a viz. the expectations. This phase is significant as it (i)
acts as an experience and gets stored in the memory; (ii) affects future
purchase decisions; (iii) acts as a feedback. There could be three
situations that can arise:
-Performance meets expectations: This leads to a neutral feeling;
Customer may think of more suitable alternatives next time.
-Performance exceeds expectations: The customer is satisfied and this
leads to a positive feeling. He would tend to repeat purchase and it
would lead to brand loyalty. He would also spread positive word of
mouth.
-Performance falls short of expectations: Here, the customer is dissatisfied
and this leads to a negative feeling. The customer would search for other
alternatives, express grievances, spread negative word of mouth and
may even resort to legal action.

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 IMPLICATIONS FOR A MARKETER
1. Need/Problem recognition:
-A marketer can create an imbalance between the actual and desired state; it would trigger of the
purchase decision process.
He can launch newer models; marketing communication has a big role to play.
He can focus on both functional (utilitarian) and emotional (hedonic) benefits that the product purchase could offer.
He can activate a need through communication (advertisements, sales promotion, point-of-purchase stimuli, opinion leaders and
reference groups).

2. Pre-purchase information search: -Marketing communication has an important role at this stage.
The marketer can identify the sources of information that the people generally access and use these
to present information about his product and service offering.
The marketer can also identify the functional or hedonic utility and use appeals accordingly. -This
would help create the right kind of cognitive and emotional touch point so as to elicit a favorable
behavior (purchase).
The marketer should be able to provide the right kind of information at the right place and at the
right time.
The marketer must make sure that his product and service offering forms a part of the evoked
/consideration set.
a) For high involvement products: the marketer should ensure that information is available.
b) For low involvement products: he should use emotional appeals, POP stimuli etc.

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3. Evaluation of alternatives:
-The marketer should be careful that his product is:
i) positioned and promoted well;
ii) is readily available and displayed well;
iii) the product features prominently in the evoked/consideration set; and,
iv) he highlights those attributes and benefits that are regarded as most
important to the consumers, and which they are most likely to evaluate while
selecting an alternative.
-The marketer should inform and educate the customer about the various criteria to use for
evaluation of alternatives.
-While doing so an intelligent marketer should focus on those attributes, where his product is better
and/superior.

4. Purchase decision: - The marketer should be careful to stock the product at

the right place at the right time so that the consumer who has made a decision in
favour of the brand can have access to the product; Else the consumer may have
to change his decision at the last moment. - As far as trial and first time
purchases are concerned, the marketer should encourage trials through market
testing, or through promotional tactics such as free samples, coupons, etc. - For
repeat purchases:
i) the marketer should make sure that he has satisfied the customer at the first time.
ii) that his offering is a part of the evoked/consideration set. He should aim towards creation of
brand loyalty.
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v) Post-purchase outcome and reactions: - The marketer can play an
important role in reducing the dissonance that the consumer faces and
reassuring him that the choice he made was the right one.
i) The marketer can communicate with the customer about the various
attributes/features and benefits that the product has to offer in
comparison with other alternatives.
ii) He can follow up with the customer and address queries and
concerns if any (eg. follow up calls).
iii) Marketers assurances with respect to warranties, guarantees and
exchange can also pacify the cognitive dissonance state.
iv) Company websites with FAQs (frequently asked questions);
satisfied customers comments and blogs; and customer care
information (eg. toll free numbers etc) can also prove to be helpful.
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