CONSUMER BEHAVIOUR

(401)
UNIT – III
UNIT – III: CONSUMER DECISION MAKING PROCESS: PROBLEM
RECOGNITION- METHODS OF PROBLEM SOLVING; PRE-PURCHASE
SEARCH INFLUENCES- INFORMATION SEARCH; ALTERNATIVE
EVALUATION AND SELECTION; OUTLET SELECTION AND PURCHASE
DECISION; POST PURCHASE BEHAVIOUR; SITUATIONAL INFLUENCES;
COGNITIVE DISSONANCE.

DIFFUSION OF INNOVATION: DEFINITION OF INNOVATION, PRODUCT MR. SAMARTH SINGH

CHARACTERISTICS INFLUENCING DIFFUSION, RESISTANCE TO
INNOVATION, ADOPTION PROCESS. ASSISTANT PROFESSOR
 CONSUMER DECISION MAKING
PROCESS
The consumer decision-making process can seem mysterious, but all consumers go through basic steps when making a purchase to determine what products
and services will best fit their needs.
Steps in consumer decision making process
1. Problem recognition
The first step of the consumer decision-making process is recognizing the need for a service or product. Need recognition, whether prompted internally or
externally, results in the same response: a want. Once consumers recognize a want, they need to gather information to understand how they can fulfil that
want
2. Information search
When researching their options, consumers again rely on internal and external factors, as well as past interactions with a product or brand, both positive and
negative. In the information stage, they may browse through options at a physical location or consult online resources, such as Google or customer reviews.
3. Alternatives evaluation
At this point in the consumer decision-making process, prospective buyers have developed criteria for what they want in a product. Now they weigh their
prospective choices against comparable alternatives. Alternatives may present themselves in the form of lower prices, additional product benefits, product
availability, or something as personal as colour or style options. Your marketing material should be geared towards convincing consumers that your product is
superior to other alternatives
4. Purchase decision
This is the moment the consumer has been waiting for: the actual purchase. Once they have gathered all the facts, including feedback from previous
customers, consumers should arrive at a logical conclusion on the product or service to purchase.
5. Post-purchase evaluation
The best marketers know that the process doesn’t end at the purchase step – in fact, that’s only the beginning of a customer’s value for your company. Once
acquisition is out of the way, your new goal is to create long-term relationships between consumer and company, ensuring that you get the most value out of
your customers, and they get the most value out of your products
Three levels of consumer decision-making:
Extensive problem-solving
• Consumers have not yet established a criteria for evaluating the product
• They haven’t narrowed the number of brands to be considered
Limited problem-solving
• Consumers have established a basic criteria for product evaluation
• They haven’t fully established brand preferences
Routinised-response behaviour
• Consumers have some experience with the product category
• They have a well-established set of criteria for product evaluation
• They may search for a small amount of information or may purchase out of habit
Four views of consumer decision-making:
i. an economic view: world of perfect competition, the consumer has often been characterized as making rational decisions.
ii. a passive view: depicts the consumer as basically submissive (“underdoing”) to the self- serving interests and promotional efforts of marketers.
iii. an emotional view: associate deep feelings or emotions, such as joy, fear, love, hope, sexuality, fantasy and even a little ‘magic’, with certain purchases or
possessions. These feelings or emotions are likely to be highly involving.
iv. a cognitive view: within this framework, consumers are frequently pictured as either receptive to or actively searching for products and services that
fulfil their needs and enrich their lives.
 Consumer Decision Making Process

Consumer behavior is the study of when, why, how, and where

people do or do not buy a product.
It blends elements from psychology, sociology, social
anthropology and economics.
It attempts to understand the buyer decision making process,
both individually and in groups.
It studies characteristics of individual consumers such as
demographics and behavioral variables in an attempt to understand
peoples want.
The consumer decision-making process involves five basic steps.
This is the process by which consumers evaluate making a
purchasing decision. The 5 steps are problem recognition,
information search, alternatives evaluation, purchase decision and
post-purchase evaluation.
 Consumer Decision Making Process

Definition: The Consumer Decision Making Process is the sequential interrelated steps
explaining the approach of the consumers in making buying decisions. Also, it involves an in-
depth analysis of the consumers’ purchase behavior. We can also refer to it as the Buyer
Decision-Making Process.
It is the traditional model depicting the process of Consumer Decision-Making. However, it is
still a widely used model to understand how the consumer makes the buying decision.
The process starts long before actually buying the product. And it continues until the consumer
finds a desirable product/service satisfying his need.
The framework of the Buyer Decision-Making Process contains five stages as follows:
• Identification and Recognition of the need.
• Gathering necessary information to find the available options.
• Evaluation of various alternatives.
• Making the final purchase Decision.
• The consumers’ post-purchase behaviour.
A deep understanding of the consumer’s decision-making process is crucial for marketers.
They must analyze all the aspects and sources that influence the decision-making process.
By this, marketers can ease the targeting process. They can make more focused and effective
marketing campaigns.
Content: Consumer Decision-Making Process
1. Steps in Consumer Decision-Making Process
• Need Recognition
• Information Search
• Evaluation of Alternatives
• Purchase Decision
• Post Purchase Behavior Example
Conclusion

Steps in Consumer Decision-Making Process

As discussed above, the entire consumer’s decision-making process is divided into

five stages. The consumer evaluates and makes the buying decision by passing
through these stages.

The steps in Consumer Decision Making process studied universally are as follows:
It is not necessary that every consumer compulsorily passes through all the stages. Because the consumers’
decision depends on the nature and type of the product that he wishes to buy.
They can skip some stages and directly make the purchase decision in some cases. In contrast, they can even reverse
back to the previous stages for a detailed evaluation. Besides, some stages may repeatedly occur throughout the
process.
It is not necessary that every consumer compulsorily passes through all the stages. Because the consumers’
decision depends on the nature and type of the product that he wishes to buy.
They can skip some stages and directly make the purchase decision in some cases. In contrast, they can even reverse
back to the previous stages for a detailed evaluation. Besides, some stages may repeatedly occur throughout the
process.
It is a crucial part of the process as no purchase process will ever initiate without the need. For Example, Mr Bob
realizes that he is tired and needs some water to drink.
Consumer problems can be simple or Complex. On the other hand, their needs can be Original or Derived. In
addition, it can be generated instantaneously or get influenced by external stimuli.
In individuals, Internal or External stimulus senses the need for any product or service.
1. Internal Stimuli: In this, the need generation occurs due to internal drives like Thrust, Hunger, etc.
2. External Stimuli: Need that generates in response to any Advertisement, Radio Jingle, Pamphlets, etc.
 Information Search

Information Search

After identifying the need, the consumers start collecting valuable information
about how they can meet their needs. For research, the consumer uses both
Internal and External sources.

Through research, he will be able to identify the desired product to solve his
problem. The information search broadly involves research about:
• The types of products available.
• The number of brands available for the same.
• The location from where it can be acquired.
Following are the sources from which a consumer Public Sources
can gather relevant information: • Mass media and News Paper
1. Personal Sources • Radio and Television
• Family • Consumer Rating Organizations

• Friends • Experiences Sources

• Demo
• Neighbour
• Test Drives, etc
• Acquittances
Internet
Commercial Sources
The information collected greatly influences the
• Advertisements decision of the consumer. Among these personal
sources are the most influential ones.
• Dealers
If the consumer acquires enough information, then he
• Retailers may make a purchase decision immediately. However,
if he fails to gather sufficient information, he may wait
• Salesperson
or suppress the need. Or repeat the procedure until he
• Window Displaying, etc finds the valuable information.
 Evaluation of Alternatives

Evaluation of Alternatives

The next step in the forgoing process is the evaluation of the alternatives. Here,
the consumer has to choose between the researched Brands, Products and
Services

Consumers compare several Attributes, Parameters and Criteria while evaluating

different alternatives. They assign weights to the factors or combination thereof to
filter the alternatives.

Mostly, they use heuristics and make rational judgment during product selection.

It is to be noted that the evaluation process varies across consumers. It also differs
in one consumer for different products.
 Purchase Decision
Purchase Decision

After a detailed evaluation of the alternatives, the consumer makes the purchase
decision. He will choose and buy the most suitable option that perfectly satisfies his
need.
Here, he actually purchases the product from the platforms where it is available. Say,
from Stores, E-commerce Platforms, Dealers, etc.

It is assumed that the consumer is convinced by the salesperson’s pitch and ready to
bear the risk associated with the product. But, two factors may influence the buyer’s
purchase decision that is:

• The unforeseen situational factors like – an economic breakdown, sudden price

rise, etc.
• Other’s attitudes about the purchase decision. It can be in the form of positive
or negative feedback.
 Post Purchase Behavior

Post Purchase Behavior

It is the last but most essential stage of the process. In this, the post-purchase
behaviour of the consumer is analyzed. It gives feedback to the marketer about
the Success and Failure of the product.
Briefly, after consumption, whether the consumer is Satisfied or Dissatisfied.
This stage broadly covers three major things:

1. Customers Feedback
2. Products Usage
3. Products Disposal
Marketers focus on this stage because it has the potential to evoke subsequent sales. They canalso get their products marketed by a

powerful tool, i.e., Word-of-Mouth.

 Example
Example
Lets us understand the complete process by taking a hypothetical example.
Step: 1 Need Recognition
Steve met with an accident while returning home from work and broke his Cell Phone. Consequently, he lost
connectivity with his family and social circle. Hence, he decided to buy a new one.
Step: 2 Information Search
He searched the E-commerce Apps, Websites and visited the nearby Retail Outlets. His friends also
recommended some brands and models.
Step: 3 Evaluation of Alternatives
After detailed research, Steve figured out that he wanted a 50mgpx Camera and 5g enabled phone. In
addition, he was looking out for the vendors providing mobile covers for free.
Steve filtered three brands offering the above features in his budget. Two of them were selling the phone
without any offer. In contrast, the third vendor offered two free mobile covers with the phone.
Step: 4 Purchase Decision
Steve purchased the phone from a third vendor satisfying all his needs.
Step: 5 Post Purchase Behaviour
He was satisfied with the phone and recommended the same to all his friends.
 Diffusion of Innovation

Diffusion
1. In consumer behavior terms, refers to research on the consumer acceptance of new products and services
2. Involves understanding two closely related processes:
3. Diffusion: a macro process concerned with the spread of a new product--an innovation--from its source to the
consuming public
4. Adoption: the micro process concerned with the stages the consumer goes through in deciding to accept or reject a
new product.

The diffusion process

Diffusion is the process by which
• the acceptance of an innovation--a new product, service, idea or practice
• is spread by communication--mass media, salespeople, or word-of-mouth
• to members of a social system--target market
• over a period of time
 Diffusion of Innovation

Four basic elements of the diffusion process:

1. The innovation
2. The channel of communication
3. The social system
4. Time
1. The innovation:
a) Innovation takes many forms
b) There is no universally accepted definition of the term’s product innovation or new product
c) Instead, approaches to define the term have taken place within certain contexts:
• Firm-oriented definitions
• Market-oriented definitions
• Consumer-oriented definitions
• Product-oriented definitions
 Product-oriented definitions
a) This approach focuses on the features inherent in the product itself and the effects these features are likely to have on consumers’ established usage patterns
b) Robertson identified three types of product innovations:
• Continuous innovation
• Dynamically continuous innovation
• Discontinuous innovation
Continuous innovation
• Introduction of a modified product rather than a totally new product
• Little or no change in technology
• Has the least disruptive influence on established usage patterns
• Symbolic innovations tend to be continuous
Dynamically continuous innovation
• May involve a new product or modification of an existing product
• Some technical advances
• Still does not disrupt or alter consumer buying and usage patterns
Discontinuous innovation
• Introduction of a pioneering product
• Involves a major technological advance
• Consumers must learn new behavior patterns
• May be difficult to market initially Is rare
 Product characteristics that influence diffusion

Product characteristics that influence diffusion

a) Not all new products meet with immediate success
b) No precise formula marketers can use to predict how consumers will react to their products
c) Researchers have identified five characteristics that appear to influence consumer acceptance
o Relative advantage
o Compatibility
o Complexity
o Trialability
o Observability
Relative advantage
• The degree to which potential consumers perceive a new product is superior to existing substitutes
Compatibility
• The degree to which potential consumers feel a new product is consistent with their present needs, values and practices
Complexity
• The degree to which a new product is difficult to understand or use
Trialability
• The degree to which a new product is capable of being tried on a limited basis
Observability
• The ease with which a product’s benefits or attributes can be observed, imagined or described to potential consumers
 2. Channel of communication:

2. Channel of communication:
a) Speed with which an innovation spreads through the market depends in great part on communications
b) Between the marketer and consumer
c) Between consumers (word-of-mouth)
d) In recent years a number of new channels of communication have been developed
 3. The social system:

3. The social system:

a) The physical, social, or cultural environment to which people belong and within which they function
b) Members of a social system have at least one characteristic in common that makes them potential buyers of a
particular product
c) The values and norms of a social system will influence the acceptance or rejection of new products
Three characteristics of a social system influence spread of new products
• The degree of compatibility between innovation and values of members
• Homogeneity of members
• Across cultures, depends on social similarity of the cultures
 4. Time:
4. Time:
Time relates to diffusion in three ways:
A. Amount of purchase time
B. Adopter categories
C. Rate of adoption
(A) Purchase time
• Refers to the amount of time that elapses between a consumer’s initial awareness of a new product or service and the point at which
he or she purchases or rejects it
• Important because is a predictor of the overall length of time it will take for the product to achieve widespread adoption
(B) Adopter categories
• Involve a classification scheme that indicates where a consumer stands relative to other consumers in terms of when they adopt a new
product (i.e., time)
• Five categories identified in research:
o Innovators
o Early adopters
o Early majority
o Late majority
o Laggards
 Time and the Adopter Categories

Opinion leaders
• Opinion leaders are most likely to be found among
the early adopter’s category
• Opinion leadership is the process by which one
person--the opinion leader--informally influences the actions or
attitudes of others
• The key characteristic is that it takes place between
two individuals, neither of whom represents a commercial
selling source and is thus considered more reliable
The S-Shaped Diffusion Curve

(C). Rate of adoption:

• How long it takes a new product or service to be adopted
by members of a social system
• Rate of adoption generally is becoming faster
• Diffusion of products worldwide is becoming more rapid
as well
• Marketers generally desire as fast a rate of adoption as
possible in order to dominate a market before competitors enter
“Skimming”
• Sometimes marketers don’t seek a rapid rate of adoption Resistance to adoption
• Making the product available at a very high price to consumers Researchers have identified five
who are willing to pay top dollar, then gradually lowering the price over factors that may result in consumers’
time for additional segments of the market
failure to adopt a new product
• Permits manufacturers to recover development costs more
quickly o Value barriers
The adoption process o Usage barriers
i. Series of stages the consumer moves through in arriving at a o Risk barriers
decision to purchase or reject a new product
o Tradition barriers
ii. Five stages include
o Image barriers
o Knowledge/awareness
o Persuasion/interest
o Decision/evaluation
o Implementation/trial
o Confirmation/adoption (rejection)
Table 15.11 The Stages in the Adoption Process