PART 4- Decision Making

process
Example
Consumer Decision Making
Consumer Decision making process –
Bike purchase
Consumer Decision making Process

Understand • Problem/ Need

recognition
• Buying roles • Information search
• Buying behavior • Evaluation of
• Buying decision alternatives
making process • Purchase decision
• Post-purchase
behavior
 INTRODUCTION
• As a buyer or consumer we are all the time making decisions such as what
product to buy (a book or a shirt as a birthday present for your friend), which
brand (Lux, Liril, Dove, Palmolive) from where (Departmental store, corner shop,
chemist), etc.

• Consumer decision making- It is a process by which a consumer makes a

choice among various alternative options available in the market.

• Smart companies try to fully understand customers’ buying decision process—all

the experiences in learning, choosing, using, and even disposing of a product.
•
According to Philip Kotler (1997), the consumer typically passes through five
stages:Need or problem recognition, information search, evaluation of
alternatives, purchase decision, and postpurchase behavior.

• Clearly, the buying process starts long before the actual purchase and has
consequences long afterward
1. NEED /PROBLEM RECOGNITION
• The buying process starts when the buyer recognizes a problem or need triggered by internal
or external stimuli.

• With an internal stimulus, one of the person’s normal needs—hunger, thirst, sex— rises to a
threshold level and becomes a drive.

• A need can also be aroused by an external stimulus. E.g.-A person may admire a friend’s new
car or see a television ad for a Switzerland vacation, which inspires thoughts about the
possibility of making a purchase.

• Marketers need to identify the circumstances that trigger a particular need by gathering
information from a number of consumers.

• They can then develop marketing strategies that spark consumer interest.

• Particularly for discretionary purchases such as luxury goods, vacation packages, and
entertainment options, marketers may need to increase consumer motivation so a potential
purchase gets serious consideration
Need Recognition - Maslow's hierarchy of
needs
Types of Problem Recognition
Examples of External Stimulus
• Natural Depletion A consumer identifies a need to restock something they
purchase regularly. For example, a consumer is running out of favourite
shampoo.

• End of Life A product breaks or ages beyond its useful lifespan. For example,
software that is out of support.

• Routine Problems A consumer buys something new from a product category

from which they regularly purchase. For example, reader needs a few new
books.

• Lifestyle Changes A consumer makes a change to their situation. For example,

the birth of a child or moving to a new city. A lifestyle change may trigger a large
number of purchases.

• Social Information Learning about a new type of product from word of mouth.
For example, a mobile device user who hears about app that everyone is using.

• Marketing Messages A customer is influenced by a marketing message such as

a commercial. For example, a consumer sees a trail movie and decides they
must see it.
Types of Problem Recognition
• Fear of Missing Out A consumer decides that something is going on that
they are about to miss. This can be a big sale or trendy new products.

• Social Competition Social competition such as noticing that all the

neighbours have new solar panels on their roofs.

• Freshness A desire not to fall behind change. This includes enthusiasts of a

product category who are always purchasing updated thing. For example,
an sportsman feels their equipment is outdated.

• Examples of Internal Stimulus

• Goals A consumer is seeking to improve things. This includes diverse

needs such as home improvement, physical education, self-improvement,
peak experiences and self-fulfillment. For example, a consumer who
establishes a promotion at work may purchase books about leadership.

• Dissatisfaction A consumer is dissatisfied with a product or service and

seeks to replace it.
2. INFORMATION SEARCH
• The second stage involves the consumer in a search process.

• This search proceeds in two stages: Internal search and External search.

• Internal Search:

– this continues with consumers starting to search for the brand information within
his/her own mind set.

– Thus, marketers must build their communications to impact the long term memory and
create unique brand image in the minds of the consumers.

– Unique brand image can be created through correct integrated marketing

communications process.

– Correct segmentation, right target market and appropriate positioning strategy plays a
vital role here.
Information Search (cont.)
• External Search:

– this continues with consumers starting to search for the brand

information through external media such reading material, calling
friends on phone, going online, and visiting stores to learn about the
product.

– INFORMATION SOURCES- here the major information sources to

which consumers will turn fall into four groups:

• Personal sources. Family, friends, neighbors, acquaintances

• Commercial media. Advertising, Web sites, salespersons, dealers,

packaging, displays.
3. EVALUATION OF ALTERNATIVES

• How does the consumer process all the competitive brand

informations and make a final value judgment?

• There are several processes, and the most current models

see the consumer forming judgments largely on a conscious
and rational basis.

• In the evaluation stage, the consumer forms preferences

among the brands and forms three types of sets- Evoked set,
inert set and Inept set.

• This set will be formed on the basis of most sought-after

benefits.
3. EVALUATION OF ALTERNATIVES
• Evoked set- The set of products which would be considered as desirable.
The evoked set is consisted of products, that during the research, made a
positive impression on the consumer.

• Inert set- “The inert set” is the set of brands that a consumer has no opinion
about, neither good, nor bad. Products in the inert set can be easily moved
to the evoked set if the customer is persuaded in to the product’s direction.

• Inept set- Products in this set are usually ones that the consumer would
have had a previous bad experience with. If not, they might have seen some
bad reviews. Consumer here place the brands which they don’t desire.

• In this stage consumer may also form an intention to buy the most
preferred brand selected from the evoked set.
4.PURCHASE DECISION

• In executing a purchase intention, the consumer may move

through five steps:

– Which brand variant to buy? (suppose brand A).

– From where and which dealer should we purchase it (dealer 2).

– How much or how many units or quantity required (suppose one

computer).

– Timing- when should we buy it (suppose – weekend/ festival),

and

– How should be the payment method (credit / debit card or cash).

Purchase Decision (cont.)
• Even if consumer performs evaluations and chooses a brand,
three general factors can still intervene between the
purchase intention and the purchase decision.

• Because of the intervening factors a consumer may modify,

postpone, or avoid a purchase decision.

• INTERVENING FACTORS

– The first factor is the attitudes of others.

– The second factor is unanticipated situational factors that may

erupt to change the purchase intention.

– The third factor which influences change in decision is one or

more types of Perceived risk
Purchase Decision (cont.)
• Influence of Attitudes of others depends on two factors

– (1) the intensity of the other person’s negative attitude toward our
preferred brand and

– (2) our motivation to comply with the other person’s wishes

• Influence of unanticipated situational factors

– The second factor is unanticipated situational factors that may erupt to change the
purchase intention. Linda might lose her job, some other purchase might become
more urgent, or a store salesperson may turn her off.

• Preferences and even purchase intentions are not completely reliable

predictors of purchase behaviour
5. POSTPURCHASE BEHAVIOR

• Postpurchase behaviour can be four types

– POSTPURCHASE COGNITIVE DISSONANCE

– POSTPURCHASE SATISFACTION / DISATISFACTION

– POSTPURCHASE ACTIONS

– POSTPURCHASE USAGE AND DISPOSAL

5. POSTPURCHASE BEHAVIOR

• POSTPURCHASE DISSONANCE

• After the purchase, the consumer might experience dissonance from

noticing certain disquieting features or hearing favorable things about other
brands and will be alert to information that supports his or her decision.

• Marketing communications should supply beliefs and evaluations

that reinforce the consumer’s choice and help him or her feel good about
the brand.

• The marketer’s job therefore doesn’t end with the purchase. Marketers must
monitor postpurchase satisfaction, postpurchase actions, and postpurchase
product uses and disposal.

• Marketers must place ads showing satisfied/ happy brand owners in

this stage
Postpurchase Behavior (cont.)
• POSTPURCHASE SATISFACTION

• Satisfaction is a function of the closeness between expectations and the

product’s perceived performance.

• If performance falls short of expectations, the consumer is disappointed; if it

meets expectations, the consumer is satisfied; if it exceeds expectations,
the consumer is delighted.

• These feeling makes a difference in whether the customer buys the product
again and talks favorably or unfavorably about it to others.

• The larger the gap between expectations and performance, the greater the
dissatisfaction. Here the consumer’s coping style comes into play. Some
consumers magnify the gap when the product isn’t perfect and are highly
dissatisfied; others minimize it and are less dissatisfied.
Postpurchase Behavior (cont.)
• POSTPURCHASE ACTIONS

– Consumers may take public action by complaining to the

company, going to a lawyer, or complaining to other groups
(such as business, private, or government agencies).

– Private actions include deciding to stop buying the product (exit

option) or warning friends (voice option)

• Post- purchase communications to buyers have been shown

to result in fewer product returns and order cancellations.

– Marketers must communicate to solicit customer

suggestions for improvements and list the location of available
services in this stage.
– Markets must communicate after sales service.
Postpurchase Behavior (cont.)
• POSTPURCHASE USAGE

• Marketers should also monitor how buyers use and dispose of the
product.

• A key driver of sales frequency is product consumption rate—the

more quickly buyers consume a product, the sooner they may be
back in the market to repurchase it.

• Consumers may fail to replace some products soon enough

because they overestimate product life.

• One strategy to speed replacement is to tie the act of replacing the

product to a certain holiday, event, or time of year.