© 2018. Upgrad Education Pvt. Ltd. All Rights Reserved

Imagine you wake up in the morning and realise that you have overslept and are running late for work. You
know that to reach your office on time, you have to take a cab today instead of a bus, which has multiple
stops. You have both Ola and Uber apps installed on your phone. You compare the prices of the two and
the time each will take for pickup. Based on these factors, you decide to take an Ola Cab and pay via cash
when you reach the office.

In this process, there were steps involved from the moment you realised that you’d need a cab to rating your
cab ride. This sequence of steps that you followed is the consumer decision-making process. Let’s learn
about the stages in the process and how external and internal influencers impact them.

The Consumer Buying Decision-Making Process is used by businesses to identify and track the
decision-making process of their prospective customers.

Typically, there are five steps involved in this.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

For instance, again, look at the process of booking a cab. You can clearly see the journey you followed.
Since you were already late for work, the primary motivator for you was the need to reach your office faster;
this triggered your need to book a cab to reach the office. Although you had various apps on your phone, if
you were not already aware of Ola and Uber, you would have searched for information on booking cabs
online. Once you became aware that Ola and Uber were two of your alternatives, you evaluated which one
would be better for you, based on factors such as the time the cab would take to reach your pickup location,
or the cost, which was the other influencer in your decision making process. After zeroing in on one of these,
you booked a cab and chose to pay for the service. After your cab ride ended, you rated your experience
and entered the post purchase stage.

Let’s take another example to understand these stages in detail. Imagine that Sanjeev, who participates in
half-marathons every year to meet his health and social needs, when he is about to start his preparations for
an upcoming marathon, notices that his running shoes look old and torn. This triggers his need to purchase a
new pair of sports shoes.

1. Need Recognition Stage:

The first stage of the consumer buying decision-making process is finding out what the customer wants.
They feel like something is missing or that they require something to get back to feeling normal.

In our example, Sanjeev realises the need to purchase new sports shoes as his old shoes are torn.

2. Information search Stage:

The second stage of the process is the information search stage. In this stage, information is gathered on
good brands that offer the service the consumer is looking for.

In our example, Sanjeev may ask his friends, family members, and experienced people, such as his gym

trainer or other sports enthusiasts in his social circle, about the best brand of sports shoes: what type of
shoes are preferred for the track and what the approximate price range is for each brand. Here, his learning
process is influenced by family and friends, who are external influencers.

He also visits 2-3 showrooms of various brands such as Nike, Adidas, Puma, and Reebok, to view sports
shoes, and even visits some renowned sports equipment showrooms.

3. Evaluation of Alternatives Stage:

The third stage of the process is the evaluation of alternatives stage, in which you ask questions that assess
whether a product is a good fit to meet your requirements. You try to answer the question, ‘Which of these
options is better for me?’

Once you decide what will satisfy your want or need, you begin to look for the best deal. This can be based
on several external influencers such as price, reviews from your social circle, quality, and the features of the
product, or internal factors such as your own experience with a particular brand or your perception of a
particular product.

Going back to our example, since Sanjeev is a regular runner, his running experience will definitely be a
motivator in this stage; his learning of the product features will be influenced by the salesperson in the
showroom, the ads of the brands that he is considering, and many other factors.

During this stage, comparisons are made between various options, based on parameters such as product
features, price, brand, etc., which are further based on his learning of the different options he has, such as
Puma, Adidas, and Nike.

4. Purchase Stage:

The next stage in the process is the purchase stage. In this stage, the customer decides, based on the
knowledge gathered in the previous stages, what to purchase and from where to purchase the product they
want from the alternatives they have. Generally, the decision to purchase is driven by discounts on the
product.

For instance, in our example, Sanjeev decides to purchase white Nike running shoes. His decision to
purchase this product was influenced by many factors. First, he received positive feedback from gym trainers
and sports enthusiasts. Second, when he was evaluating his alternatives, he noticed a 30 percent discount
on the product. And third, after trying it out in the showroom, he himself felt that the shoes will meet the
requirements of running on a track.

5. Post Purchase Stage:

The last stage in the consumer decision-making process is the post-purchase stage. In this stage, the
purchased product is reviewed, and questions such as "Did the product deliver on the promises of the
marketing/advertising campaigns? Did the product match or exceed expectations?" are asked.

If a customer feels that a product has exceeded the promises made by advertisements, and his/her own
expectations, he/she becomes a promoter of the brand: influencing other potential customers in their
decision making journeys, therefore increasing the chances of the product being purchased by more people.

To finish our customer journey example, imagine Sanjeev ran with the Nike shoes he bought and liked them
very much, based on his comfort and performance while wearing them. Since he had a great experience with
the product, it is highly likely that he would recommend them to a friend who is in the alternatives evaluation
stage of her journey, and Sanjeev himself will look to the same product when he feels the need to buy sports
shoes again.


Suppose you want to buy a smartphone; you will search for smartphones on Google. You will compare the
alternatives that Google displays, based on price, specifications, and the e-commerce website. For user
reviews, you can visit forums where people share their reviews of products online.


After you have decided on the best smartphone that meets your needs and budget, you can buy the same
directly from Amazon or any other website that offers it at a lower price. So, what you did in this scenario is
the process that will be followed most of the time by your customers when they look for a product online. As
more and more consumers are moving online, as a business, you need to prepare yourself and be present at
each stage of their decision-making process. But, before you understand how you can prepare your firm for
this, let’s first understand consumer behaviour in the digital landscape in detail.

Now, imagine Karthik plans a trip with his friends to Jim Corbett national park. One of the reasons for his visit
is that he wishes to venture into wildlife photography.

Although he has a phone with a camera, he feels a better camera is needed for this purpose. In the year
2000, he would have gone to stores of companies such as Kodak, Canon, and Fuji to find the camera that
matches his requirements and budget. He would have asked for reviews from his friends who had some
experience in wildlife photography.

After considerable research on cameras, the user experiences of others, and comparisons of different
cameras, based on his own learning of the specs that are important in a camera, he would probably have
gone to a store and bought the one that he thought suited his needs best.

All in all, it would definitely have been an extremely time-consuming process back in 2000.

However, Karthik faces a very different situation today. The moment he feels the need to buy a camera, he
searches for wildlife photography cameras on Google.

Based on the results that Google displays, he compares the alternatives in terms of prices, specifications,
and e-commerce retailers.

For user reviews, he can visit forums where people share their reviews of products online, such as Quora.

After he has zeroed in on the best camera that meets his needs and budget, which is decided based on his
socioeconomic grade, he can simply buy the same on Amazon or any other website that will deliver the
camera in time and at the lowest cost.


The steps that he follows - from deciding to buy a camera to actually ordering it - in both instances, are
almost the same. But in the second case, the time and effort it takes are much lesser than in the first case.

In terms of the steps, in both cases, Karthik realised the need to buy a camera. He searched for the best
wildlife camera brands. He compared the prices and how well each camera meets his requirements. He also
looked at reviews in both the cases. After all these evaluations, he bought a camera, and if he liked what he
bought, he probably promoted it by word of mouth, via an online review, or both. Now, as you may recall, this
is the journey followed by B2C consumers in the purchase of almost every product.

However, what exactly do you think makes the online purchase journey faster than the one offline?

The consumer journey in the digital context is smaller since each stage is very tightly integrated with the
next.

Let’s consider this model of the customer journey. Traditionally, it’s the outer blue circle where the need is
recognised. Then, you consider the product and search for information online; you evaluate all your
alternatives and eventually purchase and experience the product. But what really differs in the digital context
is the inner red circle.

Due to better access, consumers can message each other with information on the product and brand, and on
top of this, they have the ability to influence other consumers. This is why you see a dotted line from the
inner circle to the outer circle, at every stage. It’s how consumers impact and interact with other consumers.

For example, a consumer in the alternatives evaluation stage may post their evaluation process online; this,
in turn, will act as an external influencer to another consumer who is currently in the information search stage
of the journey. So, in the digital context, through the inner circle, a consumer informs others and advocates
the positives or negatives of a product. They then influence other buyers to enter the same digital process.


Long story short, the digital consumer is better informed, more communicative, and more in control of his/her
purchase.

Suppose you are at work, and you order a new watch from Amazon. You place an order for a Fossil watch
that costs 15000 rupees, and you receive the order the next day.


Now, suppose you want to order a new printer for your office. You can order this too from Amazon by
following the same process you followed to order the watch. But, you won't follow the same procedure
since there are approvals needed from your company. This brings us to the differences between the
decision-making process of consumers in the B2C domain and that of consumers in the B2B domain. You
already learnt about the B2C buying decision-making process in the previous segment. So, in this segment,
you will learn about B2B buying behaviour in detail.

The B2B Decision Making process is slightly different from the B2C decision making process and includes
the following stages:

1. Need recognition Stage:

This stage is similar to the need recognition stage in the B2C buying process. A consumer working in any

organisation recognises that there is a need for a particular product or service.

Let’s consider an example of this:

Recall Sanjeev, who heads the department of procurement at UpGrad. The IT head comes to Sanjeev and
informs him that they need to enhance the security of UpGrad’s computers; he proposes to have a firewall
installed on all office devices. If you think about it, this maps to the security needs mentioned in Maslow’s
Hierarchy of needs.

2. Description and Quantification of a need:

Next, the buying centre or the team which sits to make the buying decision for the firm discusses different
parameters such as the features the product should have, the quantity in which it should be purchased, and
more.

In our example of UpGrad, Sanjeev’s team will sit with the IT team and discuss the features required in the
firewall, depending on the existing infrastructure at UpGrad’s Mumbai office.

3. Search for information and potential suppliers:

In the third stage, the people involved in the buying process find information on the products that will meet
their needs and the vendors that can supply them with these products.

Most of the time, buyers visit online sites to find vendors and products. Sometimes they also attend industry
trade shows and conventions, and contact suppliers they have worked with previously.

In our example, someone from the IT team and Sanjeev will both look for various vendors such as Cisco,
Fortinet, Skybox Security, etc., and from the offerings of these vendors, they will look for different firewall

software products. Sanjeev will also talk to some vendors the firm has worked with in the past, regarding the
same. Vendors are shortlisted at this stage.

4. Requests for Proposals (RFP):

Once the requirements and products are finalised and 3-4 vendors are selected, each selected or qualified
vendor is sent a request for proposal (RFP), which is an invitation to submit a bid/quotation to supply goods
or services.

An RFP outlines what a firm requires from its vendors’ products, with regard to quality, price, payment or
financing options, expected delivery time, after-sales service, customisation needs, return policies, and, in
some cases, information on the products’ disposal processes.

Going back to our example, Sanjeev provides RFPs to vendors such as Cisco, Fortinet, and Skybox Security.

5. Evaluation of proposals and vendor selection:

During this stage, the proposals’ evaluations take place, and the vendor or vendors are selected.

During the evaluations of these proposals, different organizations can give importance to different parts of a
proposal. For instance, price might be a significant factor for some firms, while others may focus on how
readily the product is delivered to them.

In our case of the Firewall Software requirement at UpGrad, once the proposals of various vendors are
evaluated by Sanjeev, they will be passed to the IT team, who will select the best vendor based on
parameters like Cost, features, and availability.

The IT team will then forward the shortlisted proposal to the Finance Department of UpGrad, and justify the
requirements.

6. Establishment of a Routine order:

In this stage, the actual order placement is done. The product need not always be a one-time requirement for
the firm. For instance, printer cartridges are a routine requirement for firms. So at this stage, a routine order is
placed. Some buyers order products continuously by having their vendors electronically monitor their
inventories for them and ship replacement items when needed, as in the case of Walmart and P&G.

P&G continuously monitors the inventory of its products in Walmart and replenishes the stock when it attains
a certain minimum prescribed limit.

In the UpGrad case, Cisco is the vendor selected, and an order for 300 laptop firewall installations is placed.
The price agreed upon is 25 Lakh for two years, and warranties and other legal requirements are discussed.
A software installation completion deadline of 15 days is finalised. The order is a one-time order placed
through SAP software.

7. Post purchase evaluation Stage:

During the last stage of the B2B buying process, post purchase performance is evaluated, and feedback for
the same is provided to the vendor. Companies may run employee surveys to see how satisfied employees
are with the newly purchased product.


In our UpGrad example, the performance of the firewall software is evaluated for 3 months, and feedback is
sent to the vendor. If UpGrad is happy with the performance, it may choose to use Cisco’s firewall software
for its Bangalore office too.

So far you saw the decision-making process of a consumer in the offline and online spaces, and for a firm in
the B2B space. Now, let’s consider this from the perspective of a business.


How can a business influence these consumers along the customer journey from the ‘need recognition’
stage to the product purchase stage? This brings us to the purchase funnel that firms use.

Firms should try to reach potential customers where they are in their decision making journey and should
ensure that the right message is sent at the right time.

Let’s now consider an example where the consumer decision journey starts from the stage in which the
consumer feels the need to purchase a car, and ends when they actually buy the car, from the perspective of
a car company such as Toyota.

Typically, Toyota, while driving prospective customers along the journey, has to also make them aware of its
cars, talk about the models’ features so that the customers consider them during their alternatives evaluation
stage, and lastly, convert them into actual customers when they are in the purchase stage of their journey,
thereby driving sales through them. However, this isn’t the end; it is also important for Toyota to delight its
customers through satisfactory after-sales service, so that the customers can act as their promoters in their
social circles, during the post purchase stage of their journey. There are four stages in the customer’s
purchase journey

Awareness
Consideration
Purchase
Delight

When Toyota designed this ad campaign, it did not assume that just 1 person would go through all the 4
stages of purchase shown above.

The ads were viewed by millions of people every day on the web, on mobiles, outdoor hoardings, in
newspapers, etc.


Through these ads, millions were made aware of the car by viewing the ads multiple times and reflecting on
them.

Of these millions, thousands must have considered the car when they were evaluating their alternatives, and
thus, they must have visited Toyota showrooms.

In these showrooms, sales executives informed them about the car and shared the brochure on it. People
would have also taken the model for test drives that the company offers.

Toyota may have also influenced people who were considering its car by offering seasonal discounts on it.

Through these discounts, of the thousand people who visited the showrooms, hundreds might have
eventually gone ahead and purchased the car.

Once the car was bought, Toyota would have delighted its customers by offering the first three servicings for
free. So, of the people who bought the car, a few who would have had a good experience with it would
promote it in their social circles.


Now, if you take a look at the entire process from awareness to delight, the number of people just kept
dropping off.

If you were to arrange the stages from awareness to purchase and draw a chart according to the number of
people at each stage, this would form a funnel. It is called the Purchase Funnel, and is a very useful tool to
understand what message to deliver and how to attract potential customers along their decision making
process.

Obviously, a car company is just one example. The funnel can be applied to several other businesses too,
but not all.

Recall your purchase decision journey when you booked an Ola Cab. Now, let’s look at this through the
firm’s perspective.

After you identified the need to book a cab online, you moved to the information search stage, in which you
searched for online cab booking sites and got results such as Ola cabs, Uber cabs, Meru cabs, TABCAB, and
many more.

You probably looked at the first 2-3 search results and ignored the rest. So, in the purchase funnel, the first
stage is the awareness stage in which firms create awareness for their products. While doing so, they must
always try to rank in the top 3 search results. They can achieve this by using Search Engine Optimisation or
SEO, which will be discussed in detail in a later part of this program.

The next stage while booking the Ola cab was the evaluation of alternatives, in which you reviewed the
options of travelling by Ola or Uber. In the purchase funnel, this stage is the Consideration stage, in which
firms try to explicitly mention their product features so that consumers consider them for evaluation. In our
Cab booking example, Ola and Uber mentioned their features, such as Free Wifi, safer cars, pocket friendly
rides, and many more.


The next stage involved in booking the cab was the purchase stage or when you actually book the Ola cab.
In the purchase stage of the funnel, firms try to ensure that customers select their products. They do this by
offering discounts. For instance, Ola Cabs offers 50 rupees off on your first ride.

The last stage of your online cab booking journey was the post purchase stage, in which you evaluated your
journey by giving it a rating, such as 5 stars if you were satisfied. In the purchase funnel, the last stage is
Delight, where companies try to promote their products through their existing customers.

Ola does this by giving you referral offers such as refer a friend and get 100 rupees off when your friend
books a cab through your referral; at the same time, your friend also gets 100 off on his first ride.


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© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

© 2018. UpGrad Education Pvt. Ltd. All Rights Reserved.

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