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.