Unit 5: Consumer Decision-

Making Process
Class 19PY/AC/FC35

Credits 5

End Sem Exam Yes

Semester 3

5.1 Stages of Decision Making

The consumer decision-making process is of an individual who is facing a clearly
recognized problem and is carefully involved in evaluating the attributes of a set of
products, brands, or services and very deliberately & rationally choosing the one
that would deliver the maximum satisfaction at the lowest rate.

A consumer evaluates the level of effort required to make a certain choice, then
selects a strategy best suited for the occasion.

This process or sequence is referred to as constructive processing.

This means that consumers adjust the degree of ‘cognitive effort’ to the task at hand
(from low-intensity →high-intensity) eg: daily items vs gadgets or luxury

There are various types of consumer decision-processes

Habitual purchase decision-making or nominal decision making

Limited decision making

Extended decision making

A consumer moves from a low level of involvement with a purchase to a high level
of involvement

Purchase decision-making becomes progressively complex

Unit 5: Consumer Decision-Making Process 1

 Habitual Purchase Decision-Making or Nominal Decision-making
Low purchase involvement

Recognition of a need is likely to lead directly to an intention to buy

They are at low prices and frequently purchased products which are consumed on
an ongoing basis and involve nominal decision-making

Limited Decision-Making
This is usually more straightforward and simple

It involves internal (long-term memory) and external (ads etc) information search
which is limited considering a few alternatives

There are simple rules on few attributes and little post-purchase evaluation

There is no motivation to search for information or evaluate attributes of the product

by the use of ‘mental shortcuts’

When a consumer notices a point-of-purchase display (POP), the consumer

might not give it much thought but purchases the item (billing counter)

The consumer picks the product based on memory, advertisement, or reference

groups

Sometimes, a purchase is made not with dissatisfaction with the existing brand that
is used but just for a change

Extended Decision-Making (High Involvement Purchase)

This corresponds closely to traditional decision-making perspectives

This decision involves internal and external information followed by a rigorous

evaluation of several alternatives

Evaluation is based on attributes of each brand against the other and is measured
by the desired characteristics

Such complex decisions are relatively few

Post-purchase evaluation is more likely to be as complex and dissonance-causing

It can be changed by certain emotional decisions

Unit 5: Consumer Decision-Making Process 2

 Though decision-making is cognitive, there is a large emphasis on emotions or
feelings rather than products or service attributes

Stages of Decision Making

Problem recognition
there is a need that arises and how is the consumer going to satisfy this need?

The gap between the actual and desired state.

A consumer recognizes a need to buy a product.

The consumer perceives a difference of sufficient magnitude

between what is perceived as the desired state of affairs and
what is the current state of affairs, enough to arouse and activate
the decision process to achieve the desired or actual state.

The current state is the way a consumer perceives their feelings and situations
to be at the present time and the desired state refers to the way a consumer
wants to feel or be at the present time.

Marketers develop products and services to help consumers solve problems.

They also attempt to help consumers anticipate and recognize problems,

sometimes well in advance of their occurrence.

It is very rare that we do not face multiple problems, and we solve these
problems by consuming products or services.

For eg: running out of milk or cooking oil; this is a routine problem which is
quickly recognized, defined and resolved.

However, if for eg: a refrigerator breaks down, it is an unplanned problem

which is easily recognized but much more difficult to resolve.

For eg: recognition of the need for a laptop may take longer since it may
evolve slowly over time.

Consumers may also feel lonely and experience boredom and anxiety and these
feelings are recognized as problems, which they resolve with purchasing
behaviour.

Unit 5: Consumer Decision-Making Process 3

 Fixing boredom by going to a movie

Consumers feel restless and cannot recognize the problem, and end up
trying inappropriate solutions like watching TV, reading a book or eating
snacks

A person can also feel that their expression of desired state is not right and is
unable to define what is wrong; in such situations, information search is more
rigorous.

Some of these cases of problem recognition & definition may be complex, time-
consuming and make consumers uneasy or anxious.

Problem Recognition Process

Highly relevant consumer behaviour concepts such as information

processing and the motivation process are important in this initial stage.

Consumers must be aware of the problem through information processing

arising as a result of internal or external stimuli.

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 This leads to motivating consumers; they are aroused and activated to
engage in some goal-directed activity; purchase decision-making.

This kind of action in response to problem recognition depends on the

magnitude of the discrepancy between the current and desired state and
also the importance of the problem to the consumer.

For eg: consumers facing other needs like food, clothing would not
attach importance to frivolous discrepancies

Consumers confronting time/budget constraints are likely to solve only the

most important problems in order of priority.

Without perception of a problem by the consumer, there is no recognition of

an existing problem and hence no need to engage in the decision-making
process.

Since the consumer does not perceive any discrepancy, the current state is
satisfactory and does not need decision-making

A problem exists any time the desired state is perceived as being greater
than/less than the actual state.

For eg, a desired state of being engrossed in a novel exceeds the actual
state of being bored

But a desired state of having a medium level of stimulation as compared

to overstimulation in the actual state if one’s friends show up for a
surprise party

It is the consumer’s perception of the actual state that stimulates problem

recognition and not some objective reality.

Relative importance is also a critical concept in several purchase decisions

because almost all customers have budget or time constraints.

Types of consumer problems and their recognition

Problems of which consumers are aware or will become aware shortly are
called inactive problems.

This is similar to being aware of a need and having latent needs about which
there is no awareness.

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 Hawkins, Coney and Best developed a classification system of situations
based on the factors of immediacy of required solutions and whether or not
the problem was expected (1980).

Immediacy of problem solution is a relevant aspect in determining how soon

a solution is needed and this will influence the length of time involved in
decision making & intensity of decision effort.

Problem expectation can influence aspects such as the use of information

sources and the number of alternatives considered and evaluated

The importance of the problem will be a significant factor that will affect
decisions within each category and the use of different decision process
strategies.

Routine problems

A difference between actual and desired state is expected to be felt and

would call for an immediate solution.

Eg: Buying groceries, repairs; convenience goods

Stimulates purchase of goods and services with a minimum time lag

between purchase and actual consumption

Emergency problems

Unit 5: Consumer Decision-Making Process 6

 They are possible but unexpected and necessarily need immediate
solutions.

Eg: accidents, death, tickets

Planning Problems

When a problem is expected in the future an immediate solution is not

called for.

Eg: planning for a child’s future, consumer has to change car because of
forthcoming pollution norms

Consumers’ planning problems may sometimes lead to a pre-need

purchase, i.e., buying in anticipation of future use or sometimes even
postponing the purchase

May lead to more complicated and difficult purchasing problems later or

even inability to purchase

For eg: some insurance policies are not available to consumers after
a certain age, or if consumer has terminal cancer

Evolving Problems

The problem is unexpected and there is no need for an immediate

solution

For eg: fashion adoption occurs generally over extended periods of

time for many consumers (late majority and laggards)

For many consumers, there is no immediate desire to switch to new

fashion items, though over a period of time, a discrepancy between the
actual and desired state may occur and at some point, the consumer
may decide to purchase the innovation item.

Situations that can cause problem recognition

There are a lot of situations that can create a discrepancy that influences
consumer desires, perception of the existing state or both.

1. Depletion of stocks

Consumers use or consumer certain types of goods everyday on an

ongoing basis such as groceries, toiletries and other convenience

Unit 5: Consumer Decision-Making Process 7

 goods.

As soon as an item nearly runs out, the consumer almost reflexively

recognizes the problem and must repurchase in order to continue
fulfilling his/her need for the item.

As long as the basic need for the item remains, problem recognition will
keep recurring as a result of its consumption.

Eg: Perishable goods

2. Dissatisfaction with goods in stock

Consumers frequently feel dissatisfied with products they own.

Having a product or service and then understanding the consumer

doesn’t like the product or service anymore.

Eg: clothes, cosmetics, appliances

Fashion no longer in style, current house is too small, computer is too

slow

3. Environmental Changes

Family characteristics changes, different family cycle and changes in

reference groups.

Different life cycle stages stimulate needs for different types of products

Changes due to birth or death, which stage of the cycle they are on,
reference group refers to looking at the hierarchy and class.

4. Change in Financial Situation

Any change in financial status almost always has an important

relationship with problem recognition.

Salary increase, promotion, bonuses and inheritances, etc. generally

trigger spending on non-routine purchases.

For eg: after a promotion, customer wants new car/after losing job, there
are a new set of problems to be recognized

5. Marketer initiated activities

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 This can be companies, marketers or advertisers attempting to make
consumers aware of their known and latent problems and convince
them that they (brands, products or services) have the right solution to
meet their needs.

Advertising and other promotions focus on helping consumers in

perceiving a difference of sufficient intensity between their desired state
(ownership of the product) and their actual state (not owning the
product).

Not all marketer-controlled messages succeed in this objective because

of the consumers’ tendency of selective exposure and selective
perception.

Eg: Environmental-friendly products

Approaches to activating problem recognition

There are two basic approaches to activating problem recognition:

1. Generic problem recognition

Focuses on helping consumers feel a discrepancy that a number of

brands within a product category can reduce.

Generally, a marketer will use this approach when the problem is either
latent or of low importance and one of the following conditions exists.

Product is in the early stage of its life cycle

The marketer has very high market share

After problem recognition, consumers’ external search tends to be

limited

It is a situation of industry-wide cooperative effort

Several banks offering personal loans to consumers use telephone

sales programs and attempt to evoke problem recognition because the
salesperson can limit external search to one bank.

There is also cooperative advertising campaigns at promoting milk or

egg consumption.

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 An increase in generic problem recognition generally leads to expansion
of total market for the category.

In certain cases, when a firm has the dominant market share in a

product category, it may focus on generic problem recognition hoping
that sales increase will probably come to their brand.

However, it is also possible that a large market share firm can lose
share to other marketers offering brands in the same product category if
problem recognition campaign is not done carefully.

2. Selective problem recognition

Focuses on a discrepancy that only a particular brand can solve

Marketers use this approach to causing problem recognition in an

attempt to increase or maintain market share.

It is possible that the consumer may develop a disposition to act.

However, buying disposition may not get converted into actual buying
because of a change of mind, insufficiency of funds, forgetting about the
intention, or non-availability of the product.

Furthermore, in the process of shopping, the consumer may develop

new beliefs about product availability and attributes of other alternatives.

Generally, consumers are likely to fulfil those buying intentions that they
view as consistent with their long-term best interests.

Marketing Strategy and problem recognition

Marketers use a variety of approaches to determine consumers’ problems.

Generally, they conduct surveys or use focus groups to determine the

problems consumers face.

Both surveys or focus groups tend to use one of the following approaches:

1. Activity analysis: this approach focuses on a particular activity such as

cleaning the house, preparing meals or traveling by train, etc. The
survey or the focus group is conducted to determine what problems
consumers face in the course of performing the activity.

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 2. Product Analysis: Product analysis focuses on examining the purchase
and/or use of a particular product, service or brand. Respondents may
be asked about problems they encounter while using the product or
consuming the service.

3. Problem Analysis: Problem analysis starts with a list of problems and

the respondents are asked to identify which activities, products or
brands they associate with the problem listed.

4. Human Factors Research: This is helpful in identifying consumers’

functional problems of which they are not aware. It is employed to
determine the effect of lighting, temperature, sound and product design
on human capabilities such as vision, fatigue, response time and
flexibility etc. Such research usually makes use of observational
methods such as video recording, time-lapsing and slow-motion
photography. For eg: computer usage can influence vision adversely.
Computers can also cause carpel tunnel syndrome.

5. Emotion Research: It is believed that emotions often have a very

powerful effect on problem recognition. Marketers use focus group
research, personal interviews or projective techniques to determine
consumers’ emotions associated with a particular product, or products
that generate or reduce certain emotions.

Problem recognition depends on the importance and magnitude of discrepancy

between actual and desired state.

Thus, marketers can seek to influence the degree of discrepancy by altering

consumers’ desired state or the perceptions about the current state, or influence
the perceptions about the importance of an existing discrepancy.

Marketers also attempt to influence the desired state by advertising the

attributes and benefits of products or services and hope that consumers will be
influenced, to a degree, that they will desire these benefits.

Marketers also attempt to influence consumers’ perceptions about their existing

state. (like in personal care products)
Information search
Scouting information for the product a consumer wants to purchase

Unit 5: Consumer Decision-Making Process 11

 Once consumers recognise their problems and have no inhibiting constraints to
take the next step in their decision making process, they need adequate
information to choose the appropriate solution

An attempt is made to gain knowledge about the product.

Problem recognition is an ongoing process for consumers and they use internal
and extenral searches to solve these problems.

Information search takes time, energy, money, giving up desirable activities and
may involve mental/physical activities

Benefits of information search often exceed the costs

For eg: search may lead to finding better price, higher quality, greater
confidence in the product choice

Consumers vary in propensity to actively seek information

Some are active searchers of info and want to interact with the firm while others
buying the same product spend little/no effort to acquire product/brand info
before making a purchase

Nature of Information Search

The process of information research refers to what the

consumer surveys in his or her environment for appropriate
information to make a reasonable purchase decision.

Generally, when a consumer recognises a problem, in a reflexive manner, they

first think/remember how they usually solve this type of problem

Consumers may deliberately search for information even in the absence of

problem recognition

Ongoing Search Activities

Ongoing search activities are undertaken without the recognition if any

immediate purchase problem

The purpose is to acquire info for possible future use and because the
process itself is pleasurable

Unit 5: Consumer Decision-Making Process 12

 For eg, a college student being interested in automobiles and may
regularly read magazines/visit fairs to learn more & for future use

First stage after problem recognition?

First stage is recalling and reviewing relevant information stored in the long-
term memory to determine if a satisfactory solution is known, what are the
characteristics of alternative solutions and how to compare suitability of
each solution

Recall may be immediate or may occur slowly as a result of conscious effort

to bring the information to mind

This is internal search

Internal Search, that is, from long-term memory is recalling to satisfy

solutions.

If internal search fails to come up with appropriate solutions, External

Search is the process of getting information from a variety of sources to
solve the problem.

Nominal decision making

Previously stored info in the consumer’s long term memory resolved

many problems

For eg: for headache relief, consumer recalls a brand of remedy

which they view as a satisfactory solution based on earlier
experience

No further info search for a solution or evaluation is likely to occur

Consumer purchases the recalled brand: this type of purchase decision

is nominal decision-making

Limited Decision Making

Consumer’s attention is attracted by in-store display of mosquito

repellant, reads about attributes and recalls that they do not like the
aroma of the brand they are currently using (unresolved problem), buys
the new brand

Unit 5: Consumer Decision-Making Process 13

 Does not seek additional info from any other source and is satisfied with
whatever attributes they read

The concerned customer could have also gone to other stores enquiring
if there are any other brands with different aromas or lower prices (both
internal and external search)

These are both limited decision-making

Extended decision making

Represents a significantly more involved purchase situation

Relative importance of external info search tends to increase here

Bettman, Luce and Payne found that internal info often provides some
or all of the appropriate alternatives in case of even extended decision-
making

In general, the type of info sought by a consumer depends on what they

already know

According to Howard and Sheth, when the consumer has little

knowledge about available alternatives, the tendency is to learn about
the existence of alternatives and developing appropriate evaluative
criteria

After acquiring sufficient info in these areas, they are likely to redirect
efforts towards learning more about the attributes of available
alternatives in order to evaluate them.

External Information
Can refer to any of the following:

1. The opinions, beliefs, attitudes, behaviours and feelings of relatives, friends,

neighbours and strangers contacted on the internet

2. Professional info contained in handouts, pamphlets, articles, magazines,

journals, books, Internet and provided by personal professional contacts

3. Direct experiences with the product or service through trial, inspection or

observation

Unit 5: Consumer Decision-Making Process 14

 4. Marketer-initiated info included in advertisements, displays, websites and
also by sales personnel.

The types of decision-making play an important role.

Types of information consumers seek, in the external world

The appropriate evaluative criteria for the solution of the problem

Whether the search is internal or external for information it is determined

by appropriate evaluative criteria.

Eg: consumer wants to purchase a computer and does not have

much information about the latest developments.

Probably the first thing he thinks of is what features she/he wants in

a computer.

The consumer engages in internal search to determine what

features or attributes are required to meet her/his application needs.

The standards and specifications that the consumer uses in evaluating

products or brands

Evaluative criteria may vary from consumer to consumer.

In case of computer, one consumer may be most interested in the

processor speed and the monitor size while another may assign
more importance to RAM, graphic capabilities and LCD monitor.

Unit 5: Consumer Decision-Making Process 15

 The desired features will form the evaluative criteria for the consumer.

To be more assured, the consumer might engage in external search to

find out what features a good computer should have.

This may lead to checking from knowledgeable friends, read reviews in

computer magazines such as Digit or PC Quest, visit some websites of
computer marketers, or visit some computer stores.

The consumer may, for instance, determine six evaluative criteria but
each is likely to differ in importance and usually one or two criteria will
be more important than others.

Marketers are interested in influencing consumers to use evaluative

criteria that favour their brand's strengths.

Realising that consumers have different

application needs and their criteria may be different, Dell computers and
some others encourage consumers to choose the configuration of the
computer they want.

The number and type of evaluative criteria may vary depending on the
product category.

For example, while buying grocery products or other products consumed

regularly and on an ongoing basis, consumers generally use few
evaluative criteria.

However, in case of major purchases such as car, computer, or other

durable appliances, more evaluative criteria would typically be used in
making a purchase decision.

This shows that consumers generally tend to use few evaluative criteria
for low involvement purchases and more evaluative criteria for high-
involvement products.

James F. Engel and Roger D. Blackwell (Consumer Behaviour, 4th ed.

1982) have noted that there is some evidence to suggest that the
evaluative criteria may be as high as nine but, generally, the number of
most important evaluative criteria used is six or fewer.

Looking at the continuum of low involvement to high involvement.

Unit 5: Consumer Decision-Making Process 16

 The existence of appropriate alternative solutions

Once the consumer has established the evaluative criteria, she/he

probably starts searching for the appropriate alternative which could be
brands or perhaps stores.

As a result of internal search or inquiry, the consumer may recall or

learn that the available brands of computers include IBM, Compag, Dell,
Wipro, Zenith, Vintron and Apple.

Of course, the consumer is unlikely to be aware of all the brands in the

market.

Wayne D, Hoyer and Deborah J. McInnis (Consumer Behaviour, 2nd ed.

2001) note that consumers tend to recall a subset of two to eight brands.

The seven brands of computers that the consumer has recalled of or

learnt about as potential solutions, are known as the awareness set or
the consideration set.

Awareness set is composed of evoked set, inept set and inert set.

D. R. Lehman and Y. Pan note that these three categories of the

awareness
set are of considerable importance to marketers

Evoked set comprises those brands that the consumer will evaluate for
the solution of a particular problem.

If a consumer does not have a evoked set for computers (desktop or

laptop), or lacks confidence about the adequacy of her/his evoked set,
she/he would probably engage in external search to learn about
additional alternatives.

The consumer's evoked set is of particular importance in structuring

further information search and making a purchase decision.

Those brands that the consumer finds totally not worthy of any
consideration constitute the inept set.

The consumer actively dislikes or avoids these brands to the extent that
even if positive information is readily available, she/he tends not to
process it.

Unit 5: Consumer Decision-Making Process 17

 Generally, inept set is made up of brands that have been rejected from
purchase consideration because of an unpleasant experience or
negative feedback from reliable others.

Evoke sets are brands that are considered

inept sets are brands that can be avoided

inert sets are brands that can be brought up later

The consumer's inert set includes alternatives that she/he is aware of

but would not consider buying and these brands are treated with
indifference.

The consumer does not have any positive or negative evaluative opinion
about these brands.

Consumers will generally accept favourable information about brands in

the inert set and which may be acceptable when preferred brands are
not available.

Generally, consumers make final evaluations and make purchase

decision from the brands in the evoked set and, due to this reason,
marketers must strive to help consumers in not only recalling their brand

Unit 5: Consumer Decision-Making Process 18

 in response to recognised problem but also consider the brand a worthy
potential solution.

The performance level or attributes of each alternative on each evaluative

criterion

Consumers compare brands in the evoked set to make their choice.

This process of evaluation requires consumers to collect information

about each brand on each relevant evaluative criterion.

In case of computer purchase, the consumer might collect information

about the price, processor, memory, graphic card, monitor,
accompanying software and warranty etc., for each brand.

Marketers are particularly interested in knowing as to how consumers

process information about brands in the evoked set.

There are two general approaches for evaluation: brand processing or

attribute processing.

Brand processing involves assessment of one brand at a time;

examining several attributes of that brand, then assess several
attributes for a second brand in the evoked set and so on.

In case of attribute processing, the consumer examines a specific

attribute and then compares other brands on that attribute.

In this manner, one by one, a second, third, or fourth attribute may be

selected for comparison of brands under consideration.

These two evaluative approaches are termed as Choice by Processing

Brands (CPB) and Choice by Processing
Attributes (CPA).

In most cases, consumers usually process information by adopting CPB

strategy. Michael L Ursic and James G. Helgeson note that consumers
use CPA approach in the early stages of decision-making process and
adopt CPB in later stages.

It is likely that knowledgeable and experienced consumers with regard

to a product and its purchase might rely more on CPB approach.

Unit 5: Consumer Decision-Making Process 19

 An important point is that criteria on which products are perceived as
different from one another often carry more weight in the decision
process than do those where the alternatives are similar.

For example, if all brands of computers in the evoked set are rated
equally well on one attribute (processor speed), the consumer will have
to find other reasons to choose one over another.

Consumer’s sources of information

Long-term memory

Information that is stored under long-term memory from earlier

searches, personal experiences and low-involvement learning

Personal sources
These include family, friends, neighbours and peer groups when seeking
information

Independent sources
Such sources include newspapers, magazines, journals, consumer reports
and government agencies

Market controlled sources

These include advertising, salespersons, direct mail, etc

Unit 5: Consumer Decision-Making Process 20

 Experiential sources
This refers to inspection of products or product trial

Internet as a source of information

It is assumed that every educated person today knows that Internet

represents information, e-commerce, e-mail and entertainment.

The Internet or World Wide Web is a network of computers that is

accessible to anyone with a computer, modem, telephone connection
and an Internet account.

The Internet consists of websites that are specific addresses or files in

the network and search engines (programmes designed to search the
various websites and provide address of and/or access to those with the
requested attributes).

According to recent figures (Reader's Digest, July 2002), there are an

estimated 6.4 million PCs in India as against 16.3 million in China.

The number of Internet users in India is estimated to be about 10 million

and 30 million in China.

According to D. L. Hoffman and T. P. Novak, the Internet is altering

consumer information search in ways that are not yet fully understood.

As pointed out earlier, Internet also contains marketer-provided

information (Exhibit 20.1).

A home page or Internet Presence Site (IPS) is a website created and

maintained by an organisation or an individual, providing detailed
information about companies and its products, or independent data from
other sources.

Internet also contains personal sources of information on bulletin boards

and chat sessions.

Consumers visit marketer-maintained websites mostly to gain

information about products or for seeking information about the
company.

Unit 5: Consumer Decision-Making Process 21

 There are other reasons too, such = searching for discounts or coupons,
buying products, or entering contests.

Consumers learn about these websites because they see them

mentioned in traditional media such as magazines, newspapers, TV,
direct mail, or billboards etc., or friends recommend some sites.

L. M. Maddox and D. Mebes have found that the presence of website

address in an advertisement appears to enhance several aspects of a
company's image such as being customer-oriented, responsive,
sophisticated and successful.

Consumers are also exposed to ads on the Internet while searching for
general information or visiting entertainment sites.

When clicked, banner ads take consumers to the company of products

home page, or to some special advertisement.

Expansion of Internet is taking place in

terms of its usage, capabilities and characteristics.

Internet usage is rapidly increasing in developed and developing

economies, including India, and it is becoming absolutely necessary for
companies dealing in consumer products.

Internet users tend to be younger and upscale consumers and they are
likely to view a company without a website as old fashioned and out-of-
date.

Some company websites provide only company and product information

and are said to be "passive sites."

For example, 3Com site is a "passive site" as it does not provide non-
product related inducements to visit the site.

It has many useful features for consumers who already possess or are
contemplating to buying a 3Com product.

Some other companies, besides providing information about products

and company, contain additional features and activities such as
contests, entertainment and other relevant information, designed to
draw consumers to the website and are called "active sites."

Unit 5: Consumer Decision-Making Process 22

 Such sites help marketers in developing a relationship with customers
over time.

Active sites should generally have a natural tie-up to the activities that
they provide for consumers.

Pepsizone India, hosted by Yahoo.co.in, is an "active site" and provides

several naturally related activities (Exhibit 20.2).

J. Eighmey and others have noted that irrespective of whether a site is

passive or active, it needs to be easy to access and negotiate, up-to-
date, logical and address the needs of customers.

If a product purchase or use is involving in nature, the site needs to be

more complete and interactive.

It should provide answers to questions related to the consumer's

intended product uses, physical attributes etc., advantages of different
models of the product and recommend one or more from the marketer's
line.

It is the consumer's prerogative to decide how many and which sources of

information to
use.

According to C. B. Jarvis, a purchase decision requires a subset of

decisions associated with information search.

At some point in time, consumers acquire information from external sources

that gets stored in long-term memory.

For most consumers usually this stored information, referred to as internal

information, serves as the primary source of information most of the time as
is evident in nominal or limited decision-making.

Of the five sources of information mentioned above, marketer-controlled

sources represent just one potential source.

A. A. Wright and J. G. Lynch, Jr, found that marketer-controlled messages

have only limited direct value for consumer decisions.

It is possible that consumers may report only limited direct influence by

marketer-controlled sources of information; other evidence indicates that the

Unit 5: Consumer Decision-Making Process 23

 influence may be stronger.

L. M. Lodish et al report that there is substantial evidence indicating that

advertising for consumer non-durables can have significant effect on sales
even in the short run.

Consumers tend to view personal sources, such as friends, as more

important in case of professional services.

It is, however, interesting to note that marketing activities of organisations

influence all of the five sources of consumers’ information.

Marketing activities, such as product attributes, promotional messages and

product distribution determine the basic information available about the
product in the market.

Product reports that appear in magazines or journals, which are

independent sources of information, are based on functional attributes of the
product.

Similarly, friends, family members, or neighbours - all personal sources of

information - also base their word-of-mouth information either on personal
experience with the product, views of others who have had contact with the
product or marketer controlled promotional messages.

It is understandable that in many situations consumers may not use

marketer-controlled information as the immediate input in making a
purchase decision.

However, C. F. Mela, S. Gupta and D, R. Lehman report that there is no

doubt that repeated exposure to ad messages influences the perceived
product need, the development of awareness and evoked sets, the
evaluative criteria and the beliefs about the performance levels of each
brand.

Extent of external information search

Marketers are particularly interested in knowing how much external

information search consumers tend to undertake.

For relatively low-priced products such as soft drinks, Namkeen (traditional

Indian salted preparations that come in many different varieties), toothpaste,

Unit 5: Consumer Decision-Making Process 24

 soaps and detergents
etc., there may be very little external search just before the purchase.

In fact, this would be the case with all purchases involving nominal or limited
decision-making.

External information search is more likely in case of major purchases such

as expensive appliances, professional services and
autos etc.

Researchers have used different measures of. external information search

such as number of stores visited, number of alternatives considered,
number of personal sources used and overall or some combination of these
measures.

Research supports one observation that external information search is

biased towards limited search and a larger proportion of consumers
undertake little external search just before the purchase.

Generally, consumers tend to consider more alternatives as the price of the

product increases.

Based on research studies, consumers have bees classified as (1) non-

searchers, (2) limited information searchers and (3) extended information:
searchers.

An individual consumer might behave as a non-searcher for one purchase,

limited information searcher for another purchase and extended information
searcher for yet anothes purchase.

Market mavens tend to have the characteristic of being extended

information seekers

Most consumers undertake minimal information search just before

purchasing consumes durables and the amount of information search for
less important products is almost insignificant.

Limited information search, however, does not necessarily signify lack of

sound purchase decision.

According to G. Punj, limited information search does not mean that a

substantial amount of internal information is not being used for making a

Unit 5: Consumer Decision-Making Process 25

 purchase decision.

Low priced products have very little external search just before the purchase

External information search is more likely in major purchases, expensive

appliances, professional services

No. of stores visited

No. of alternatives considered

No. of personal sources used

Cost-benefit view of external search

The amount of external search varies considerably among consumers and

across different purchase situations (Table 20.1).

One explanation for this variation lies in the differences between the
consumers in terms of their perceptions of the resulting benefits and the
costs associated with particular purchase situation.

This explanation holds that consumers will undertake external search and
continue as long as they perceive the benefits of search to be greater than
the costs involved

External information search can accrue certain tangible benefits such as

lower price or better quality; or intangible benefits in the form of risk
reduction or enjoyment.

It is for this reason that many consumers do very little or no external search
before buying major appliances they do not perceive any important benefits
by undertaking external search.

Products consumer is looking for, different purchase situations and cost

involved

Four basic factors influence the perceived benefits and costs of search:

Market condition

Price Range

Price range among equivalent brands

Unit 5: Consumer Decision-Making Process 26

 If the cost of the product is not too high and the price variation is
large, the consumer will seek more information.

For high intensity products, if variation is low to moderate, the

consumer settles down for his/her first choice.

Alternatives to the product

If the no. of alternatives, outlets and brands are more, the

consumer is unlikely to take on more external information
search.

Distribution outlets/Showrooms

The location of stores and outlets

If they are at distances that are far away from each other, then
the consumer might not put in that much of an effort to visit.

Effort refers to time, energy and money.

When they are closer to each other, i.e., proximity, this

increases extended information search

Availability of information

Overload of information can be overwhelming for the consumer

so the search for more information is halted.

Likewise, if there is continued exposure of required information,

there will not be an added external information search

Product characteristics

Product differentiation and range of prices are the main emphasis in

information search

If the product price is high, there is a huge differentiation among

alternatives

There is likely to be increased external search

Product class influences search efforts

Product shopping can be a positive or negative experience

Unit 5: Consumer Decision-Making Process 27

 Shopping for clothes, phones, music are positive products

Repair and various other kinds of services to fix products that

cannot be used are termed as negative products

Situational factors

They can impact the process of information search behaviour

If the need is urgent, or the available time is limited, the extent of

search can decrease

Consumers’ emotional and physical state also influences the degree

of search

Pleasant physical surroundings in a store increases consumers’

physical ability to continue information search

Promotional offers, special discounts, alternative prices, unlikely

increase information search

Consumer characteristics

The consumer’s perception of a product and their expected benefits,

cost of search and need for a certain degree of external search for
information

A consumer with repeated purchase of a brand will not engage in

external search

A consumer with limited purchase experience of a brand is more

likely to engage in external search

Eg: buying a sound system, computer, etc.

When products are totally unfamiliar, a consumer may be

overwhelmed with information or lack motivation or the ability to
engage in external search, and if the ability to process information is
limited, the consumer slows down or decreases the extent of
information search

Socio-economic characteristics of consumers such as education,

occupation, and income influences the degree of search

Unit 5: Consumer Decision-Making Process 28

 Middle-income individuals do more search than higher income and
lower income consumers

This is because of experience, increased learning and familiarity of

a product

Younger individuals, individuals at a new stage in the family life

cycle, seek more information

Highly involved consumers with a product category look for

information continuously

Perception of risk by consumers allows them to seek information

Consumers whose perception of risk is higher engage in increased

information search and show greater reliance on personal sources
of information and their own experiences.

Risk perception is a function of the individual, the product and the

situation.

It vanes among consumers from one product to another and also

from situation to situation.

For example, the individual may not perceive much risk when
buying a perfume for personal use but the same consumer may
experience substantial risk when buying it as a gift for his boss.
Alternative evaluation and selection
Is there a logical/rational way in which we decide

One of the most important criteria for selection is the role of emotions and
personality in decision making, which even outweighs logic and rationality
sometimes

Choice based on attitudes vs Attributes

Based on impressions, beliefs, intuition (attitude)

Attribute-based choice requires knowledge of a specific attribute at the time of

making a choice and comparison of each brand alternative on specific attributes.

Unit 5: Consumer Decision-Making Process 29

 Attitude-based choice involved the use of general attitudes, impressions, beliefs,
intuition, or
heuristics.

Consumers do not make attribute-by-attribute comparisons at the time of

purchase.

Instead they may base their decision on a combination of these.

A common approach would be to form overall preferences based on attitude-

based processing about brands (Exhibit 21.1).

The final choice is reached by undertaking a brand-by-brand comparison based

on price.

For example, when consumers objected to the withdrawing of original Coke,

their objections were not based on an analysis of specific attributes but on an
overall feeling about the brand.

Attribute-based choice requires the knowledge of specific attributes at the time

of making a choice and comparison of each brand alternative on specific
attributes.

this takes much effort and the process is time-consuming compared to attitude-
based but the result is likely to be an almost optimal choice

What choice process the individual consumer would use in a specific situation
would be determined by the interaction between her/his motivation, availability of
information and individual and situational factors.

Generally, the importance of making an optimal decision is related to the value

of the product under consideration and the consequences
associated with a non-optimal decision.

Thus, higher the value of the item, the greater the need for optimal decision-
making.

For example, a consumer is more likely to make the attribute-based choice for a
laptop computer or a laser printer than for an inexpensive watch or a gas_lighter.

Mita Sujan found that attribute-based choice is more likely when consumer
involvement
with the brand is high; also, Douglas M. Stayman, Dana L. Alden and Karen H.

Unit 5: Consumer Decision-Making Process 30

 Smith note that
attribute-based choice is likely when consumers are more knowledgeable about
product category.

Consumers are more likely to use attribute-based choice when they possess
more attribute-based
information in their memory and can easily access relevant information about all
brands under
consideration.

It is important to appreciate that even for important products, consumers make

many
decisions, which appear to be attitude-based choices without collecting much
information from
external sources.

However, many others do undertake extended information search in similar

purchase situations.

For most products and services including expensive and important ones,
marketers’ approach can be to provide attribute-based comparisons in their
advertising, packages
and displays etc. in an easy to process format and making their particular brand
the focal point of
comparison by listing the brand first, perhaps in coloured or bold type

Marketers’ messages must focus on providing information and experiences

(using spokesperson) that produce a strong attitude-based position.

Marketers must also provide performance levels and supporting information to

help develop preference among consumers who make attribute-based choices.

Eg: cars, housing, home appliances

Affective Choice
Affective choice (feeling based choice): Here purchase of some products is
based on effective choice/feelings

For example, a young girl goes to a ready-to-wear clothing store to buy a dress
she would wear for the annual college dinner.

Unit 5: Consumer Decision-Making Process 31

 She examines several dresses, tries a few and finally decides that in one
particular dress she looks pretty attractive.

She looks forward to making a great impression in the party and buys that dress

Such choices do not fit well with either attitude based or attribute-based criteria
and tend to be more holistic in nature.

The brands are not divided into distincs

components and each of them is evaluated separately from the whole.

The evaluation is simply based on how the product makes the consumer feel
while he/she is using the product or service.

Probably most of us can recall certain purchases we made based on our overall
feelings associated
with product usage.

M. T. Pham found that consumers imagine or picture themselves using the

product or service and evaluate the associated feelings that this use will
produce.

For example, the ac of Springwel mattress is aimed at stimulating consumers to

anticipate feelings that the consumpties experience will produce and base their
choice on these anticipated feelings

it does not necessarily fit with attitude or attribute, but based on how the
consumer feels using the product or service

Consumers are likely to make effective choices when the underlying motive is
consummatory.

Consummatory motives

These are intrinsically rewarding to the individual involved

Form the basis for behaviours that are intrinsically rewarding to the
involved individual.

Instrumental motives

Motives that cause behaviours aimed at achieving a second goal are

referred

Comes from the concept of learning

Unit 5: Consumer Decision-Making Process 32

 Behaviour that is instrumental in getting you something

There is a consequence to the behaviour and thus it is an instrumental

motive

Behaviours aimed at achieving a goal

To illustrate the difference, let us think of a college student who might read
Catch 22 or The Alchemist for the pleasure of reading a very good novel.

Another student might read the same novel to impress his friends.

The first situation represents consummatory motive activating the behaviour

while the second is an example of behaviour activation that satisfies
instrumental motives.

Marketers need to adopt different strategies for decisions that are largely
triggered by. consumptive motives by offering consumers products and services
that primarily provide positive consumption experiences.

The advertising, particularly for new brands, products or services, should help
consumers envision how they will feel during and after the consumption
experience.

For many brands that have been available for quite sometime, certain
consumers may have a basis for
imagining the feelings resulting from use experience but those who have not had
the opportunity to use may incorrectly predict the feelings resulting from use
experience.

For example, individuals imagining a rock-climbing trip may envision feelings of

fear rather than excitement.

Consumer Choices
Consumer choices, i.e., a consumer decision making can result or assume that
consumers make carefully calculated rational choices]

The process of determining what options are available and choosing the most
preferred one is bounded reality

All consumers have a limited capacity for information processing and often have
goals that do not focus on selecting the optimum choice and because of this,

Unit 5: Consumer Decision-Making Process 33

 they do not make strictly rational choices

A consumer constructs a selection process that is suitable for the situation at

hand

Decision Rules

Information processing strategies of consumers are called decision rules

these help a person in the decision making process by providing guidelines

for complex decisions

they can be used to evaluate various options and reduce the risk involved in
the decision

Decision rules can be classified in 2 categories:

Non-compensatory decision rules

They are a consumer decision rule by which positive evaluation of a

brand attribute does not compensate for a negative evaluation of the
same brand on some other attribute

People will not compensate just because there are varieties in a

segment

Conjunctive decision rules

The rule establishes minimum required performance for each

evaluative criterion

It is used by a consumer/customer for low involvement products (low

risk products) or to reduce choices on a high involvement product

Disjunctive decision rules

When consumers establish minimum acceptable performance

standards with each brand

The decision rules will then be to select the brand that exceeds the
other by the greatest amount on the criterion selected

READ: elimination-by-aspects decision rule

Lexicographic decision rules

Unit 5: Consumer Decision-Making Process 34

 Consumers decide/make decisions based on evaluation of
alternatives

The idea that if two products are equal on the most important
attribute, the consumer moves to the next important attribute

Thus the purchase decision is made when one of the brands

possesses more of an attribute which is looked at in the order of
importance than its rival

Compensatory decision rules

Consumers choose the brand that has maximum number of positive

features compared to negative

This approach represents a type of mental cost-benefit analysis: a

process that is used to measure the benefits of a decision or taking
action minus the cost associated with that action

Selection and purchase

Purchase is important to the marketer for his success in achieving in his
objectives and for formulating competitive strategies against the competitors

For purchasing, the consumer has to consider:

Selection of outlets, i.e., where to buy from

Vast majority of sales takes place in the store

It is important whether the store is a branded store as sales volumes

also matter

Unit 5: Consumer Decision-Making Process 35

 Outlet image refers to a store image: a consumer’s perception of all
attributes associated with the retail store, such as merchandise
availability and brand image

Retail brands, i.e., store brands are closely related to store image

Traditional retailers carry only manufacturers’ brands; now retailers also

develop and promote high quality brands with either the store’s name or
an independent name

Retail advertising: retailers use advertising to attract potential

consumers to their stores

Consumers usually buy advertised items and also end up buying other
products. This is known as the ‘spillover sales’

READ: price advertising decisions

Outlet Location and Size: Location and size play an important role in
store choice. Consumers generally select stores that are closest to the.
Consumers prefer to go to larger outlets rather than smaller ones.

READ: risk perception in store choice (financial and social risk)

Situational Factors:

1. Physical surroundings

2. Social surroundings

3. Task definition

How should they make the payment

Consumer shopping orientation

There are 7 types of shopping styles.

Consumer shopping orientation refers to shopping styles of consumers

based on psycho-graphics, based on personality traits, beliefs, values,
attitudes, interests and lifestyles.

Inactive shoppers

Would like things to be delivered to the house

Unit 5: Consumer Decision-Making Process 36

 Active shoppers

Concerned about price, quality

Quite tough regarding what they buy

Particular about where they go to shop for what

Service shoppers (in-house service)

Demanding in-store services

Would require the help of the store executives/assistants

Traditional shoppers

Lack the enthusiasm of shopping, just a routine & mundane thing

Just to satisfy requirements

Do not insist on help or service from the personnel

Dedicated fringe shoppers

Not specifically inclined towards brands

Go out & do their own thing

Price shoppers

Extremely price-conscious

Will take time to search for the right price-product

Eg: someone might not shop at Poppat Jamal and go to Sundar Stores
instead

Transitional shoppers

Consumers in the early stage of the family life cycle

they might try new products

READ: in-store influence on brand selection, POPs, discount and deals, retail
outlet atmosphere, out-of-stock situation

6 types of shopping orientation:

Chameleon

Unit 5: Consumer Decision-Making Process 37

 Change their purchase according to what the situation warrants

Buys based on occasions/situations

Eg: weddings, trips

Collectors & Gatherers

Large sums of a product like in hypermarkets/supermarkets

Not an essential product at that moment but buy because it is in bulk

Hibernates

Hate to shop

Predators

Shop with a purpose and carefully plan their purchase

Foragers

Only buy the desired products

Spend time searching for that specific product

Not brand loyal

Scavengers

Shop till they drop

Make it a point to buy essential & non-essential products just because

they are there

May even buy something they won’t use at all; whether price is low,
something they wanted to have a while back
Post-purchase action
Businesses have begun to focus on customer relationships and loyalty points

this is to increase customer satisfaction, commitment and retention of important

customers

Customers engage in the constant process of evaluation of the things they buy
as these products are integrated into their daily consumption activities

Unit 5: Consumer Decision-Making Process 38

 After purchase, most products are used by consumers even when they
experience dissonance

Some products may be non-used because the consumer returns or keeps the
product without using it.

Post-purchase dissonance

The theory of cognitive dissonance has two basic principles:

1. Dissonance is unpleasant & will motivate the person to reduce it

2. Individuals experience dissonance & will avoid situations that produce

dissonance

Factors that lead to dissonance:

Degree of irrevocability, i.e., decisions once made are not changeable

The importance of the decision to the consumer: if the consumer views

the decision as more important, then dissonance is likely to happen

Difficulty of choosing among alternatives: many alternatives, the number

of relevant attributes that are associated to the alternatives are very
similar or attributes are not available with other alternatives (cognitive
overlap)

Individual’s tendency to experience anxiety: the personality of some

individuals is such that they have a greater tendency to experience
anxiety. They are prone to experience post-purchase dissonance

Purchase Evaluation

Information Search →Product evaluation

Purchase evaluation is influenced by:

purchase process

post-purchase dissonance

product use

disposal of product and package

Satisfaction on one side & dissatisfaction on the other

Unit 5: Consumer Decision-Making Process 39

 Performance of the product, consumer’s expectation

Implication for marketers is creating reasonable expectations and ensuring

consistency in the product

Satisfaction, repeat purchase and customer loyalty

5.2 Types of Decision Making

5.3 Consumer Decision-Making Model- EKB

Model

decisional variables - psychographics

5.4 Consumer Insights

Unit 5: Consumer Decision-Making Process 40

 Indian perspective, national & regional

Fast food chains in India & how they change their strategies

Unit 5: Consumer Decision-Making Process 41