A Model of Consumer Decision Making

OUTPUT

INPUT

PROCESS

A Simple Model of Consumer Decision Making

Firm’s Marketing Efforts1. Product2. Promotion3. Price4. Channels of distribution

Sociocultural Environment1. Family2. Informal sources3. Other noncommercial sources4. Social class5. Subculture and culture

Need Recognition

Prepurchase Search

Evaluation of Alternatives

Psychological Field1. Motivation2. Perception3. Learning4. Personality5. Attitudes

Experience

Purchase1. Trial2. Repeat purchase

Postpurchase EvaluationOutput

Process

Input

External Influences

Consumer Decision Making

Postdecision Behavior

INPUT1.Marketing inputsProductPackagesSizeGuaranteesMass media advertisingDirect marketingPersonal selling

Socio cultural Inputs

•Usage by family member•The view of experience consumer•special interest discussion groups on internet•Noncommercial source of information•The comment of friend

PROCESS

• Need Recognition• Pre-purchase Search• Evaluation of Alternatives

Need or Problem Recognition

• The realization that there is a difference between actual and desired states– The higher the gap, the stronger the need (or

bigger the problem)• Two different types of problem

Actual

state types

Desired

state types

Types of Problems

• Active Versus Inactive problems– Active: those you are aware of– Inactive: those that you are not yet aware of (but

exist)• Those that require immediate solutions and

those that do not require immediate solutions

Pre-Purchase Search

• A stage in the consumer decision-making process in which the consumer appraises the benefits to be derived from each of the product alternatives being considered.

• Types of Information Sources• Types of Information Sought• Factors Affecting Extent of Information Search

Types of Information SourcesPERSONAL

FriendsNeighborsRelativesCo-workersComputer salespeopleCalling the electronics store

IMPERSONAL

Newspaper articlesMagazine articles•Consumer Reports•Direct-mail brochuresInformation from product advertisements

Internal web site

Factors that Increase the Level of Pre-purchase Search

• Product Factors: Higher search when– It is a long-lasting or infrequently used product– There are frequent changes in product styling– Large volume is purchased– The price is high– There are many alternative brands– There is much variation in features

Factors that Increase the Level of Pre-purchase Search

• Situational Factors: Higher search when:– Experience is lower– Previous experience was unsatisfactory

• Social Acceptability: Higher search when:– Purchase is a gift– Product is socially visible in use

Evaluation of Alternatives

• When evaluating potential alternatives, two types of information:

1. List of brands from which they plan to make their selection .

2. The criteria they will use to evaluate each brand.

The Evoked Set as a Subset of All Brands in a Product Class

All Brands

Known Brands

Unknown Brands

Overlooked Brands

Indifferent Brands

Unacceptable Brands

Acceptable Brands

Not Purchased Brands

Purchased Brands

Evoked Set Inept Set Inert Set(1)

(2) (3) (4)

(5)

Model that that do not end in purchase would appear to have perceptual problem

1. Brand may be unknown because of the consumer’s to selective exposure to advertising media and selective perception of advertising stimuli.

2. Brand may be unacceptable because of poor qualities.

3. Brand may be perceived that not having special benefits

4. Brand may be overlooked because they have not been clearly position or sharply targeted at consumer market segments.

5. Brand may not be selected because they are perceived by consumer as unable to satisfy perceived needs as fully as brand that is chosen.

Hypothetical Use of Popular Decision Rules in Making a Decision to Purchase an Ultra light

Laptop• DECISION RULE • MENTAL STATEMENT

• Compensatory rule • “I selected the computer that came out best when I balanced the good ratings against the bad ratings.”

• Conjunctive rule • “I selected the computer that had no bad features.”

• Disjunctive rule • “I picked the computer that excelled in at least one attribute.”

• Lexicographic rule • “I looked at the feature that was most important to me and chose the computer that ranked highest on that attribute.”

• Affect referral rule • “I bought the brand with the highest overall rating.”

Output

• Two outputs basically– Purchase behavior– Post purchase behavior

Purchase behavior

• Trial purchase(Evaluation) – First time, small quantity– Eg. Detergent – Durable goods not feasible(Refrigerators, Washing

machines)• Repeat purchase(Satisfaction) – Established

utility, large quantity • Long-term commitment purchase(Loyalty)

Post purchase behavior

• Trial purchase Evaluation• Evaluation outcomes:– Performance matches expectations(Neutral

feeling)– Performance exceeds expectations(Positive

feeling)– Performance fails to meet expectations(Negative

feeling)

Cognitive dissonance??

Concept of cognitive dissonance

• Discrepancies between final choice & decision making– Eg. Fox and grapes, Eco-friendly car

• Success mantra for companies “Post purchase satisfaction”– ‘’Why should I stay’’– Leads to loyalty– Eg. Shoppers Stop First

Citizen’s Club

What is the relevance of decision making for a Pharma company?

Gifting behavior

• Celebrate relationship Gifts, Self-gifts– Approx. 100 US$ billion

business in USA• In Pharmaceutical

business:– Company to doctor – Occasions : Appreciation,

Events, Festivals etc.

Gift selection decision

Should I give gifts?

What should I give as gift?

Do I want to give something that doctor desires?

Learning Doctor’s desires/

requirements

Surprise/No surprise

Beyond decision

• Consuming & processing

• Satisfaction

• Quality of life

• Future decision process

Products/ Services

Possessing

Collecting

Pleasure

Consuming

Relationship marketing

• Loyalty programs, loyalty schemes• Success rate high if the involvement is high in

terms of,– Financial risk– Social risk– Physical risk

• Resulted in ‘’Permission marketing’’– Eg. Asking customers if they would like to receive a targeted e-mail

ad, promotion, or message before it actually appears

Characteristics of Relationship marketing

•Product/Services •Individual attention•Continuous information•Exclusive price offers•After sale services•Extras & perks, etc.

•Repeat purchase•Increased royalty•Goodwill•Positive word of mouth•Lower cost to the firm

Trust &

Promises

The firm provides The customer provides

Reference

• Leon G. Schiffman, Consumer Behavious, 10th edition, Pg no 425-462

Many Thanks…