Consumer Decision Making
By Rachita Jayswal, Lecturer.
What is Decision????
A decision is a choice between two or more alternative actions or behaviors
For Example: A housewife goes to purchase a mid priced range of tea, than making a selection from the various brands of tea like Taj Mahal, Tata Tea, Red label, Yellow label, etc. than she is making decision.
Consumer Decisions
Consumer decisions are decisions consumers make in the marketplace involving: whether to purchase what to purchase when to purchase from whom to purchase how to pay for the purchase
Continuum of consumer buying decisions
Routine Limited Extensive
Involvement Low Low to moderate
High
Time Short Short to moderate
Long
Costs Low Low to moderate
High
Information search
Internal only Mostly internal Internal and external
Number of alternatives
One Few Many
Marketer’s Role in Different Types of Consumer Buying Decision
Routinized Response Behavior: Marketer must continue to provide satisfaction to
the existing customer Marketer must attract new customer by using
promotional schemes and introduced new features to the product.
Limited Problem Solving: Marketer should design the communication
programme that will help ▪ The buyer to gather more information, ▪ Increase his brand comprehension and ▪ Gain confidence in the brand.
Marketer’s Role in Different Types of Consumer Buying Decision
Extensive Problem Solving: Marketer must educate the prospective
buyers▪ About the attributes of the product, ▪ Their relative importance and ▪ High standing of the marketer’s brand on brand
attributes. So, the marketer should do marketing
communication which help the consumer to evaluate and feel good about his / her brand choice.
Input
Input Factors are: Marketing mix activities of organization
(Marketing Inputs) Socialcultural Influences (Socialcultural
Inputs)
Marketing Input
Marketing stimuli consist of 4 P’s Marketer are interested in knowing how
consumer will respond to various stimuli. These may be in the form of:
Product feature site Packages Suitable prices Mass media advertising Personal selling Direct marketing Selection of suitable distribution channel
Socialcultural Input
It non-marketing influences the consumer purchase decision.
Social Cultural factors includes the family, social class, culture and sub culture, informal sources and other non commercial sources.
For Example: the comment of a friend, an editorial in the newspaper, usage by a family member, an article in Consumer Reports or the view of an experienced customer.
Process
Process component of the model is concerned with how consumer make decisions.
The psychological field represent internal influences that affect consumer decision making processes. what they need or want Their awareness of various product choices Their information gathering activities Their evaluation of alternatives
Consumer Decision-Making Process consist of three stage
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Evaluation of Alternatives Evaluation of Alternatives
Information Search Information Search
Need Recognition Need Recognition
Need Recognition
Consumer recognized need when they face problem.
Among consumer there are varied types of need or problem recognition: Actual state type of
problem Desire state consumer
Types of Need or Problem
Actual State consumer: This occur when product is not performing satisfactorily.
Ex.: The housewife may realize that the mixer she was using doesn’t grind properly.
Desired state consumer: The consumer may experience the desire for something new.
Ex.: A newly married man desire to possess a motor – cycle.
Types of Need or Problem Simple problem recognition: Need that
occur frequently and can be dealt with automatically.
For Ex.: Feeling thirsty and not having “Pepsi”. Complex problem recognition: Need occur
over a period of time and the actual and desire state gradually move apart.
For Ex.: a man who was driving a scooter for many years consider selling it and going for new scooter so as to reduce the maintenance charges.
Need Recognition
Internal StimuliandExternal Stimuli
Present Status
Preferred State
Marketing helps consumers recognize an imbalance between present status and preferred state
Stimulus
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Any unit of input affecting one or more of the five senses:
sight
smell
taste
touch
hearing
Pre Purchase Search
Consumer gathers information related to their attainment of the desired state of affairs
Internal search – a passive approach to gathering information in which the consumer’s own memory is the main source of information about a product
External search – a proactive approach to gathering information in which the consumer collects new information from sources outside the consumer’s own experience
Marketing-controlledNon-marketing-controlled
Pre Purchase Search
Sources of InformationMarketer Controlled Advertising Salespersons Brochures Store displays Company Web sites
Nonmarketer Controlled
Friends and family Past experience Public information Experts Internet
Search Strategies
Systematic search involves a comprehensive search and evaluation of alternatives Extended problem solving Limited problem solving
Heuristic search involves the use of quick rules of thumb and shortcuts Routine problem solving
Search Efforts
The amount of search depends on: Perceived risk Involvement Familiarity and expertise Time pressure Nature of the product Amount of information overload
If perceived risk is high than complex information search and when the perceived risk is low than consumer likely to use very simple and evaluation techniques.
Information Search depends on Situational Factors
Experience Social Acceptability of the product
Value related consideration
Evaluation of Alternatives
For evaluation consumer tend to use two types of information: List of brands that they plan to
make their selection (The Evoked Set)
The criteria they will use to evaluate each brand
The Evoked Set
ALL Brands
UnknownKnown Brands
OverlookedBrands
Indifferent Brands
UnacceptableBrands
AcceptableBrands
Not purchasedBrands
PurchasedBrands
Perceptual Problems in the Four Terminal Problems
Unknown Brand: Consumer selective exposure in to advertising media and selective perception of advertising stimuli.
Unacceptable Brands: Poor qualities or inappropriate positioning in advertising or product characteristics.
Indifferent Brands: Perceived as not having special benefit.
Overlooked Brands: Not clearly positioned or sharply targeted at the consumer market segment
Marketer's role
Promotional technique should be deigned to impart favorable and relevant product image to the target consumers.
Change in product features or attributes.
Invite consumers in a particular target segment and try to put in their evoked ser
Criteria Used for Evaluating Brands Consumer Decision Rule referred as: Heuristic evaluation – choosing among
alternatives without formalized steps to arrive at a decision Such as the use of intuition Simply choosing by relying on a “gut-level
feeling”
Systematic evaluation – choosing among alternatives by using a set of formalized steps to arrive at a decision Multiattribute model: highest overall
judgment Linear compensatory: global score Lexicographic approach: rank order
attributes
Formal Choice Models
Consumer Decision rules are broadly classifiedinto two major category: Compensatory model
Noncompensatory models Conjunctive model Disjunctive model Lexicographic model
Compensatory Model
With the compensatory model the consumer arrives at a choice by considering all of the attributes and benefits of a product or service and mentally trading off the alternative’s perceived weakness on one or more attributes for its perceived strength on other attributes
Performance Levels on Evaluative Criteria for Six Notebook
ComputersEvaluativeCriteria
Alternatives
WinBook HP Compaq Dell IBM Toshiba
Price 5 3 3 4 2 1
Weight 3 4 5 4 3 4
Processor 5 5 5 2 5 5
Battery life 1 3 1 3 1 5
After-salesupport
3 3 4 3 5 3
Displayquality
3 3 3 5 3 3
Evaluation of Six Notebook Computers
Using a Compensatory Model EvaluativeCriteria
ImportanceScore
Alternatives
WinBook HP Compaq
Dell IBM Toshiba
Price 30 5 3 3 4 2 1
Weight 25 3 4 5 4 3 4
Processor 10 5 5 5 2 5 5
Battery life
05 1 3 1 3 1 5
After-saleSupport
10 3 3 4 3 5 3
DisplayQuality
20 3 3 3 5 3 3
Total 100 370 345
370 385 300 295
Noncompensatory ModelsWith Noncompensatory Models a
strength on one attribute cannot offset a weakness on another attribute
EvaluativeCriteria
MinimumStandard
s
Alternatives
WinBook HP Compaq
Dell IBM Toshiba
Price 3 5 3 3 4 2 1
Weight 4 3 4 5 4 3 4
Processor 3 5 5 5 2 5 5
Battery life
1 1 3 1 3 1 5
After-saleSupport
2 3 3 4 3 5 3
DisplayQuality
3 3 3 3 5 3 3
Evaluation of Notebook ComputersUsing the Conjunctive Model
Evaluation of Notebook ComputersUsing the Disjunctive Model
EvaluativeCriteria
MinimumStandards
Alternatives
WinBook HP Compaq Dell IBM Toshiba
Price 5 5 3 3 4 2 1
Weight 5 3 4 5 4 3 4
Processor Not critical 5 5 5 2 5 5
Battery life Not critical 1 3 1 3 1 5
After-saleSupport
Not critical 3 3 4 3 5 3
DisplayQuality
5 3 3 3 5 3 3
Evaluation of Notebook ComputersUsing the Lexicographic Model
EvaluativeCriteria
Rank Alternatives
WinBook HP Compaq Dell IBM Toshiba
Price 1 5 3 3 4 2 1
Weight 2 3 4 5 4 3 4
Processor 4 5 5 5 2 5 5
Battery life 6 1 3 1 3 1 5
After-saleSupport
5 3 3 4 3 5 3
DisplayQuality
3 3 3 3 5 3 3
Decision Outcomes
Choice Model Brand Choice
Compensatory Dell
Conjunctive HP, Compaq
Disjunctive Dell, Compaq, WinBook
EBA Dell
Lexicographic WinBook
Examples of Decision Rules
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 attributes.”
Lifestyle as consumer decision strategy
An individual’s family’s decisions to be committed to a particular lifestyle.
For Example: Devoted follower of a particular religion.
Incomplete Information and Noncom parable Alternative
Consumer decision process can also be influenced by Incomplete information and Non Comparable alternatives.
There are strategies to cope up with missing information: Consumer may delay decision Consumer may ignore missing information
and decide to continue with current decision Consumer may construct the missing
information
(Output) Purchase Decision
Three types of purchases: First time or trial purchase (Ex.:
Detregent) Repeat purchase Long term commitment purchases
In case of durable goods like refrigerators, Washing machines, Ovens, etc. consumer directly move to long term commitment
Purchase Decision When buying the product/service, the consumer may
make choices From whom to buy: determined by seller’s terms of
sales, past purchase experience, return policy, etc▪ store choice: deciding to purchase from a particular
outlet ▪ non-store choice: deciding to purchase from a
catalog, the Internet, or variety of mail-order possibilities
When to buy: determined by whether product is on sale, manufacturer offers a coupon/rebate, store’s atmosphere, salesperson persuasiveness, etc.
Purchase decision can also be influenced by Attitudes of others (e.g. friends, other customers) Unexpected situational factors (e.g. no cash or
credit card for payment)
Choiceidentification
Purchaseintent
Purchaseimplementation
Purchase decision
Future responseExitVoiceLoyalty
Decision confirmation
Experience evaluation
Satisfaction/dissatisfaction
Post-purchase evaluation
Outcomes of Post Purchase Evaluation
Neutral feeling: Actual performance matches expectation.
Positive Disconfirmation of Expectation: Performance of product exceeds expectation.
Negative Disconfirmation of Expectation: Performance of product falls below expectation.
Cognitive Dissonance
Consumer may adopt the one of the following strategy in order to reduce their cognitive dissonance:
Rationalize that decision is wise Look out for advertisement to support
their choice an avoid competitive brand. Persuade friends or neighbors to buy
same brand and confirm their own choice. Turn to other satisfied owners for their
reassurance.
Role of Expectations in Satisfaction/Dissatisfaction
ActualPerformance
Pre-purchaseExpectations
ActualPerformance
Pre-purchaseExpectations
Dissatisfaction Satisfaction
Post-purchase evaluation
Feedback of consumer
If the product performs as per consumer expectation than the consumer buy it again.
If product performance is disappointing of below expectation than consumers will look out for alternative products or brand in future.
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