Lesson 2

Consumer Decision
Making Process

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Learning Outcomes
This lecture note covers the following
learning outcome:
LO2 - Outline and explain the steps in
a range of consumer decision making
processes.

Agenda

Consumer Decision Making Process

Alternative forms of decision making

Heuristics

Decision rules

Consumer Decision Making Process

Problem
Recognition
Information Search
Information
Evaluation
Purchase Decision

Post Purchase
Evaluation

 Zoe makes the purchase and enjoys

her new mobile phone

Post Purchase
Evaluation
Problem
Recognition

Zoe feels her mobile phone is

outdated to match her needs and
wants to buy a new one

Information
Research

Zoe talks to some of her friends

about buying a new phone and types
of phones

Information
Evaluation

Zoe goes online and compares

several models in terms of price,
features and user ratings

Decision

Zoe makes her choice based on

features that she was looking for

Example: Zoe is a junior executive in her twenties working in a

prominent sportswear company. She has decided to purchase a
new mobile phone. Lets look at a potential decision making
process for her.

Consumer Decision Making Process

Consumer Decision Making Process

Problem Recognition

This is the first step in the process. The buying process is initiated
when the consumer identifies a problem or need that has to be fulfilled.
Needs can be triggered from either internal or external stimuli.
Internal stimuli arises from an individuals average need e.g. hunger
and then becomes a drive. External stimuli comes from the
environment we live in, e.g. When a colleague buys a new car it can act
as a external stimuli.
By identifying the circumstances and stimuli that create needs in
consumers, marketers can generate a need with marketing strategies.
To understand what triggers a need, consumer behaviours has to be
studied. Specially for discretionary products or services(vacations,
luxury products, entertainment)
To get consumers to consider such items, marketing strategies need to
be carried out to enhance motivation.

Consumer Decision Making Process

Information Search

When a consumers interest is aroused by stimuli, they normally try to

look for information. Two levels of interest can be identified:
Heightened attention - It is a milder state of arousal where
consumers receptiveness is increased
Active information search - at this stage consumer engages in the
search for information more actively using various sources such as
friends, internet and reading materials.
From a marketers perspective these sources of information are very
important. There are four main categories of information sources:
Personal: Family, friends, neighbours, acquaintances
Commercial: Advertising, websites, sales persons, dealers,
packaging, displays
Public: Mass media, consumer rating organisations
Experimental: handling, examining, using the product

Decision
Final selection

The preferred set of brands

Brands that meet the initial buying

criteria

The number of brands the consumers

knows about

Total number of brands available in the

market

Choice
set

Consider
ation set

Awarene
ss set

Total set

Successive sets involved in consumer decision making

Information Search contd..

Consumer Decision Making Process

Consumer Decision Making Process

Evaluation of alternatives

During this stage consumers usually compare products

based on their various features and benefits using the
information from the previous stage.

Identifying alternatives

Evoked
Set

Retrieved
set

All Alternatives

Alternative sets (1)

Inert Set

Inept Set

Consumer Decision Making Process

Evaluation of alternatives contd..
Expectancy value model
This is a model that explains how attitudes and beliefs are formed.
We take the example of Zoes mobile phone. There are four brands
in the choice set. There are four attributes that she's looking for.
The table below shows her beliefs on how each brand scores on
the four attributes. As demonstrated in this example a single
brand does not dominate, e.g. If Zoe wants best price its brand A
and, if its touch screen its brand B.
Computer

A
B
C
D

Attribute

Touch
Screen
4
10
8
6

Camera Price
3
10
8
6
9
7
8
5

Memor
y
5
4
3
6

Consumer Decision Making Process

Evaluative Criteria
Evaluative Criteria are the dimensions a consumer will use to evaluate the
features of the alternative choices.
Some consumers would compare based on functional criteria. For others, style,
ease of operation, related services, or prestige may be important.The criteria
will depend on factors such as product under consideration and consumers
beliefs and attitudes. Another important factor isperceivedreliability .
Consumers usually assess goods and services by the features or benefits that
are important to them. Through their activities marketers try to influence the
type of criteria that consumers use in their product evaluations. Typically with
commercials thatcomparethe features of their brand with those oftheirrivals.
Determinant attributes are those used to differentiate between alternative
products.

Consumer Decision Making Process

Purchase Decisions

When making the purchase decision, a consumer makes up to five

sub-decisions: We will take the previous example of Zoe choosing a
new phone:
Brand : Nokia
Dealer : Local Nokia outlet
Quantity : one
Timing : weekend
Payment method : credit card
Characteristics of the consumer, the circumstances of the decision
and social context all play a part in the decision making process.
Everyday purchases do not require such a formal process, e.g.
Buying a regular FMCG good like flour.

Consumer Decision Making Process

Purchase Decisions contd..
Purchase
Decision

Intervening factors

Unanticipated
situational
factors

Attitudes of
others

Purchase
intention

Evaluation of
alternatives

Steps between Evaluation of Alternatives and a Purchase decision (2)

Consumer Decision Making Process

Purchase Decisions contd..
Perceived risk

This is a belief held by the consumer that he or she will have to face
negative consequences by purchasing a particular product.
There are several types of perceived risk:
1.Functional risk
2.Physical risk
3.Financial risk
4.Social risk
5.Psychological risk
6.Time risk
Consumers have strategies to deal with perceived risk such as decision
avoidance, preference for warranties and seeking advice from friends.

Consumer Decision Making Process

Post Purchase Behaviour
The involvement of marketing in the decision making process
continues even after the purchase. After buying a product
consumers may observe negative features or hear of a good
product review that justifies the purchase. The marketer has to
ensure that the consumer feels good about the brand in the post
purchase phase.
Post purchase satisfaction
Post purchase actions
Post purchase use and disposal.

Consumer Decision Making Process

Post Purchase Behaviour
Post purchase satisfaction
Consumer satisfaction can be defined as how well the products actual
performance met the perceived expectations. A satisfied consumer is likely to
become a regular and help in creating a positive word of mouth reputation for
the product. Three possible outcomes are possible with regard to satisfaction
Disappointed : when product fails to match the expectations
Satisfied : performance meets the expected level
Delighted : performance is beyond the expected level
The actual performance level has to be communicated accurately to avoid
misleading and ultimately dissatisfying consumers.

Consumer Decision Making Process

Post Purchase Behaviour
Post purchase actions

If the consumer is satisfied he or she will talk favourably about the brand with
friends, colleagues and family. A satisfied consumer may become a repeat
purchaser, e.g.75% of Toyota buyers were highly satisfied and they expressed
an interest in buying a Toyota again.

On the other hand, dissatisfied consumers can decide to stop buying, warn
friends, complain to regulatory and government bodies, bring lawsuit against
the company etc.

Keeping the communication with the consumer even after the purchase, helps
to minimise dissatisfaction. For example, marketers can encourage buyers to
make suggestions for improvement, provide how to use booklets etc.

Consumer Decision Making Process

Post Purchase Behaviour

Post purchase use and disposal

Products are disposed of in a number of ways, e.g. Sold, thrown

away, rented, converted to a another purpose. Marketers have to
understand consumer behaviour in this stage and communicate to
consumers. e.g. Batteries need to be disposed in a environmentally
acceptable manner.

From an organisational perspective, the importance of product

disposal is that it is linked with product consumption rate. i.e. the
faster the buyer consumes the product the faster they need to
repurchase another one. Marketing strategies can be designed to
attract consumers to repurchase their brand.

Alternative forms of decision making

The three main alternative forms of decision making methods of a
consumer are:
Habitual/routine decision making
Limited decision making
Extended decision making
Habitual
Decision
Making
Low involvement
In the purchase

Limited
Decision
Making

Extended
Decision
Making
High involvement
In the purchase

The factors that differentiates these methods are level information

search, degree of prior experience, amount of perceived risk, time
pressure and frequency of purchase.

Alternative forms of decision making

Habitual/routine decision making
Examples of routine purchases are the daily newspaper, weekly
groceries, regular coffee order:

Decision is make quickly

Level of involvement in the selection process is minimum

Product is evaluated after the purchase

Low cost goods

High frequency of buying

Consumer is likely to stay with one brand.

Alternative forms of decision making

Limited Decision making
Clothes, gifts, home furnishings, and vacations are examples of
items where consumers would typically use limited decision
making:
Involvement level is comparatively low
Prices of products range between low to moderate
Few brands are evaluated before the purchase decision is
made
Moderate amount of time is spent to make a decision

Alternative forms of decision making

Extended Decision Making

Purchasing a house, selecting a college, a first car, or a location

for a wedding are examples of extended decision making:
High degree of involvement
Product Prices are high
Many brands are evaluated before the purchase decision
Considerable amount of time is spent to make a decision

Heuristics

Day to day life is filled with decisions ,whether it is your breakfast

cereal or what radio station to listen to. In decision making
consumers seek the assistance of heuristics.

Researches have identified that in low involvement decision

making consumers rely on heuristics. i.e. rules of thumb or mental
short cuts.

For example, Bob has decided to buy a shirt at his usual store
named X .This decision is driven by his belief that this store thinks
it has the best range and its brand gives him confidence.
Therefore Bob is ignoring any information search about competitors
or substitute products. His assumption about X acted as a shortcut
that removed a few steps from the decision making process.

Heuristics
For a marketer, understanding heuristics is an advantage that
helps them forecast consumers behaviour when purchasing their
brand. In this lecture note three main heuristics are described:
The Representativeness Heuristic
The Availability Heuristic
The Anchoring and Adjustment Heuristic

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 into two
categories :
Compensatory Decision Rules
Noncompensatory Decision Rules

Decision rules
Noncompensatory Decision Rules
Conjunctive Decision Rule
Here consumers form a different, minimally acceptable cut off level for each
attribute. If a particular brand does not meet the cut off level of any attribute that
brand is removed from consideration.
Disjunctive Rule
It is the opposite of conjunctive rule. In this the consumer decides a separate
minimally acceptable performance level for each attribute. The brand is accepted
if any of the attributes meets or exceeds the cut off level.
Lexicographic Decision Rule
The attributes are ranked according to perceived relevance or importance to the
consumer. Then different alternatives are compared in terms of the single
attribute that is believed to be most important. If one brand out of the group
scores an acceptable score it will be selected, regardless of the score on any other
attribute.

References
1. Hawkins D.I., Best, R.J. and Coney K.AConsumer
Behavior: Building Marketing Strategy.;Tata McGraw-hill ;
2003.
2.Kotler, P. and Keller, K.L. Marketing Management.
Pearson Education 2006; Fig 6.6. Steps between Evaluation
of Alternatives and a Purchase decision,p197