5.

CONSUMER DECISION MAKING PROCESS(MBAM

641)

By Dr.Genet Gebre
 CONSUMER DECISION PROCESS
The buying decision process
 Marketers have to go beyond the various influences
on buyers and develop an understanding of how
consumers actually make their buying decisions.
 Specifically marketers must identify who makes the
buying decisions, and the steps in the buying process
Buying roles
• Marketers must be careful in making their target
buying decisions because the buying roles change.
• When ICI, the giant British chemical company,
discovered that women made 60 percent of the
decisions on the brand of household paint, it is
decided to advertise its Delux brand to women
We can distinguish roles people play in buying decisions
 Initiator The person who first suggests the idea of buying the product/service
 Influencer The person who decides on any component of a buying decision:
Whether to buy, what to buy, or where to buy
 Buyer The person who makes the actual purchase
 User The person who consumes / uses the product/service
 Consumers make decisions on a daily basis – from
which mode of transportation to take to work to
which type of meal to consume for lunch or dinner.
 Why would this process be important to marketers?
 Marketersneed to know why consumers choose one
product over another. Why Nike instead of Adidas?
 Understanding consumers’ preferences and how they
make decisions enables marketers to influence the
choice process and determine how best to persuade
consumers to examine their brand and place in the
group of items being considered for purchase.
Essential assumptions
 The theory of decision making rests on some basic
assumptions. The most important is that there is
more than one alternative available.
 Ifthere is no competition, then the decision for the
consumer would not be which brand to purchase,
but whether or not to buy the product at all.
 In the case of some products with limited / no
alternatives, such as electricity provided by
government, then the decision to purchase is
already made for the consumer, lessening the need
for marketing.
 Cont…
 Additionally, we assume that the consumer must
choose from the multiple brands available to them.
 Finally, it is assumed that the consumer will choose
the best possible option that suits their needs.
Stages of the buying decision process
 Research shows that Buyers/customers go through a
five-stage decision-making process in any purchase,
whether it’s a product / a service.
 Because the decision-making process is a cognitive
one, it’s more psychological in nature
 So you won’t necessarily see the process. Instead, you infer that the decision
making process is in place by careful observation.
 The following diagram shows how consumers make decision
The decision-making process

Problem Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Post decision Process

Cont…
Problem Recognition
 The first step in the decision-making process is
recognizing that a need exists.
 When a consumer decides to make a purchase it is in
response to a problem – ‘I need a new computer’ or ‘I am
hungry and would like some food’.
 Problem recognition occurs whenever the consumer sees a
significant difference between their actual state of affairs
and some desired / ideal state.
 The ‘ideal state’ is the way the consumer would like to
be, ‘I would like a new 42-inch flat-screen television, and
the actual state is where they are now, ‘I am still viewing
television on a 14-inch television’.
 Problem recognition occurs when consumers notice the
discrepancy between the two states
There are two distinct types of problem recognition
 The first is need recognition, which occurs when
there is a decrease in the actual state. (For
example, I’m running out of a milk; I should go to
the grocery store to buy some’)
 The second type is opportunity recognition, which
occurs when there is an increase in the ideal state
(for example, I saw a flat-screen 42 inch TV at my
friend’s house)
 The image is much better than the television that
I have at home. I am going to buy one
Motivating problem recognition
 Many marketers attempt to motivate consumers
to initiate the decision-making process by
identifying potential problems through advertising
 They do this by either creating a new ideal state
or by creating dissatisfaction with the actual
state.
 By stimulating problem recognition, companies
encourage consumers to pursue a means of
solving their new ‘problem.’
Cont…

Using generic problem recognition

 Problem recognition further classified into
generic or selective problem recognition.
 Generic problem recognition is broadly defined,
‘I want orange juice’, whereas secondary
problem recognition is more narrowly defined, ‘I
want Tropicana orange juice.’
 Companies / groups that want to stimulate growth in
a specific product category make extensive use of
advertising that promotes generic problem
recognition and does not encourage purchase of a
specific brand.
Information search
 After a consumer recognises that they have a
problem, they then have to find information to help
them resolve it.
 The first step in this search process is internal
search searching in consumer’s own memory.
 This is followed by a search through external sources
(information collected through advertising and other
external media).
 In addition to where consumers search for
information, it is also important to consider when
they search.
 Most consumers search for pre-purchase information to help
ensure that they make an optimal purchase to
satisfy their needs.
External search for information
 Marketers often assume that consumers collect as much information as
possible in order to find the product / service that best satisfies their needs.
 However, this is not always the case. Consumers weigh the cost of getting
additional information (time and effort) against the benefit the information
could provide such as a cheaper or more suitable product.
 If their most pressing need is to have the product quickly then they may be
willing to forego any research into price and quality and simply purchase the
most easily available option.
 However, in recent times it has become easier to gather information about
products and so consumers are able to spend less time in collecting
information.
 For example, if a consumer is interested in buying a new car, in addition to
searching through memory, they can also search information via print,
television, and billboard advertising.
 Additionally, consumers visit company websites to collect additional
information such as technical specifications
Evaluation of alternatives
 The next stage in consumer’s decision-making process is their judgment about
the product to be purchased – ‘will this product do what I want it to do?’ And
finally making a choice or decision regarding the final purchase – ‘should I buy
it or not?’
 For high-risk purchases, consumers invest a lot of effort into making judgments
and decisions
 These high-effort situations usually occur when
there is some risk involved – such as health
(selecting a doctor, for example), financial
(buying a house),or social (selecting a partner).
Evaluation Criteria
 If attractive alternatives are available, a
consumer will work to determine which criteria
to evaluate and will judge each alternative’s
relative importance when it comes to making the
final decision.
 Criteriafor making that decision can include one
or more of the following:
 Cont…
 Colour, durability, options, Price, Quality, Safety Status,
Style & Warranty
• Consumers use the following three types of choice
processes when deciding between products and services
Affective choice
 This choice is based on an emotional “it feels right”
factor.
 A consumer will make a decision based not on the fact
that it feels right to make that purchase.
 This may mean that the consumer doesn’t go through the
research process or that she purchases a product or
service even though it doesn’t contain all the features
she’s looking for. The purchase just feels right or makes
the consumer feel good.
 Cont…

Attitude-based choice
 The consumer will go through the entire process from need
to research to evaluation, and she will make sure that the
product meets each and every need she has identified.
 For example, a consumer may decide to purchase a new
refrigerator to go with her newly remodelled kitchen. She
used to own an LG refrigerator.
 Notonly did the refrigerator work well, but she also liked
the appearance. Her parents had a Whirlpool model that
worked just as well, but she didn’t think it had the same
sleek appearance that the LG did.
 So,she goes to the appliance store and sees both LG and
Whirlpool models and discovers that they’re the same
price, so she purchased LG refrigerator
Cont…
Attribute choice
 This choice is strictly based on benefit and
feature by feature comparisons across specific
brands / products.
 You can imagine this consumer sitting down and
going through each feature or benefit one by
one and crossing a product off when one doesn’t
fit the bill.
 The choice process that a consumer uses
depends on whether she feels the purchase is
extremely relevant and personally important.
 Cont…
High-involvement purchases
 This type of purchase includes products / services that
involve a high expenditure or a great deal of personal
risk.
 Examples of high-involvement purchases are buying a
car, home, or making investments
 When a purchase is highly involving, a consumer goes
through a more in-depth evaluation process.
 She/he puts more time, attention, and energy into the
research phase of the buying process.
 She/he’s making a value decision by weighing several
equivalent products and trying to make the best
decision she can based on her individual criteria.
Cont…

Low-involvement purchases
This type of purchase includes products / services
that involve a lower expenditure and less
personal risk.
 Examples of low-involvement purchases are
buying a salt, or choosing a hair shampoo, or
deciding whether it’s beef or chicken for dinner.
 Low-involvement purchases are less about value
and more often about convenience, which is
why they require a simple evaluation process
 Cont…
Application of this knowledge to marketing
 If you know and understand the evaluation process your consumers go
through, you can take steps to influence the buyer’s decision.
 For instance, when it comes to high-involvement purchases, it’s important to
provide your consumer with information that reaffirms the positive
consequences of buying.
 As a marketer you want to stress the important features of your product and
the advantages compared to your competitors.
 This emphasis extremely important to the consumer in a high involvement
purchase, because it allows him to see value in the purchase.
 On the other hand, when it comes to low-involvement purchases, you can
generally provide less information.
 He spends less time and attention on research because he's making a decision
that’s more than likely based on impulse. This is why you often see low-
involvement purchase items in checkout lines of major retail chains
Cont…
 In situations where the consumer can’t find acceptable
alternatives, a decision to delay or not make a purchase is
often made.
 The best way to avoid this situation is by providing the
consumer with all the information he needs, including a
list of features that compare your product or service with
that of your competitors.
 This information can make the consumer feel more at
ease about the purchase decision, and it often helps him
to move forward in the purchase.
 Purchase stalls are most common when the consumer is
lacking the information that he needs to make a decision.
 Ifyou find that providing additional information doesn’t
help, you may try asking the consumer what information
he needs from you in order to make a decision today.
 Purchase decision
Assessing the value of the chosen product service

 After a consumer evaluates and selects the best

alternative, she/he’s ready to purchase.
 However, the consumer isn’t done flowing through
the process just yet.
 She/he must now determine whether she feels that
she/he’s buying a product/service that has value.
 Buying value is the perception of the worth the
customer is getting by purchasing your product.
 Buying value isn’t just about price; it’s also about
service, quality, and experience.
 The two factors that come into play when determining buying value is the
quality and the customer service the consumer receives.
 Two questions receive the most attention during this phase “Who will I
buy from?” and “When will I buy?” These questions help the consumer
determine what your actual buying value is.
Post-decision processes
 Marketers are aware that after consumers have made their decision and have
purchased a product, their job is not complete.
 Remember that the end of the sale isn’t always the end of the buying process.
 In fact, it could be the beginning of another sale
 Companies need to manage their post-decision interaction with buyers in order
to maintain a long-term profitable relationship with them.
 This entails making sure that the consumer is satisfied with their purchase and
any concerns or feelings of ‘buyer’s remorse’ are dealt with effectively by the
company.
 Cont….
Satisfaction and dissatisfaction
 Satisfied customers are often repeat purchasers and this leads to greater
profit ability.
 Additionally, repeat customers help to reduce costs.
 The cost of attracting a new customer is five times the cost of keeping an
existing one.
 Thus, a business that maintains its loyal customer base, in addition to
building its market with new customers, has the best chance for long-term
survival.
 Cont..
 Equally, dissatisfied customers can directly impact a company’s bottom line
through reduced sales.
 Dissatisfied customers stop purchasing; they can also complain and spread
negative word of mouth
Cognitive dissonance
 The final stage for a consumer is the post-purchase evaluation of the decision
they made.
 It is common for customers to experience concerns after making a purchase
decision. This arises from a concept known as ‘cognitive’ dissonance
 Cont….
 Cognitive dissonance is caused by feelings
of uncertainty as to whether or not one has made the right decision.
 This is most likely to occur when there are multiple attractive alternatives or
when there is potential for risk in the consumption of the item.
 So how do consumers and businesses respond to cognitive dissonance?
 Consider a young man purchasing an engagement ring for his fiancée. In
examining rings, he realises that there are thousands of different rings, with
different style, cut, and clarity.
Cont…

 The dissonance is made worse by the price of the ring. This can only be
relieved if his intended bride is pleased with his choice
 A consumer who is experiencing dissonance after his or her purchase may
try to return the product or may seek positive information about it to
justify the choice.
 If the buyer is unable to justify the purchase, they will be less likely to
purchase that brand again.
 Cont….
 Since dissonance can lead to returns or no repeat purchase, it is important
for marketers to minimise any potential for dissonance in the consumer.
 Indeed, some marketers spend the majority of their advertising budget on
advertising that reassures existing consumers that purchasing their product is
the right choice.
 This is especially true of durable goods. Additionally, automobile
manufacturers provide long-term warranties on their vehicles.
 Cont…
 This gives car buyers the reassurance that their vehicle would be covered in
case anything happened to the vehicle
 Some companies also provide free-phone services to give consumers advice
if they experience any problems with the product post-purchase.
 This type of support sends a comforting message to consumers – the
company cares about the customer and their purchase.