Consumers are seen as rational decision-makers. So, they take a decision when the need arises. There may be different kind of needs; these needs can be functional or psychological.
Functional needs are directly related to the functionality of a product and these functions are the features and benefits which differentiate one product from the other.
Consumer decision is an equally important area. It is also a difficult activity because a decision always means a surrender, giving up of something, either money or personal opportunity as a result of choice of one course of action. It also involves cost, thus making the process even more complex.
Consumers make many buying decisions everyday. Most large firm’s research consumer buying decisions in great detail to answer questions about what consumer’s buy, where they buy, how much they buy it for, when they buy and why they buy. Marketers can study consumer purchases to find answers to questions about what, where and how much.
There are different stages consumer pass through to reach a buying decision making. Consumer decision making process represents a problem-solving approach and involves the following five stages – need recognition, information search, evaluation of alternatives, purchase decision and post-purchase behaviour.
The consumer decision making process consists of the following stages:-
1. Identification of the Need for the Product or Service 2. Problem Recognition 3. Information Search 4. The Evoked Set 5. Evaluation of Alternatives 6. Beliefs and Attitudes 7. Purchase Decision 8. Post-Purchase Behaviour Evaluation.
Different Stages Involved in Consumer Decision Making Process
Consumer Decision Making Process – Need Recognition, Information Search, Evaluation of Alternatives, Purchase Decision and Post Purchase Behaviour
We create history by the choices we make. Consumer decision is an equally important area. It is also a difficult activity because a decision always means a surrender, giving up of something, either money or personal opportunity as a result of choice of one course of action. It also involves cost, thus making the process even more complex.
1. Need Recognition:
The first stage of the consumer decision making process where the consumer recognises a problem or need. The buyer senses a difference between his actual state and some desired state.
The need can be triggered by internal stimuli i.e. hunger, thirst etc. or it can be triggered by external stimuli.
The stage of the consumer decision making process where the consumer is aroused to search for more information. The consumer may simply have heightened attention or may go into active information search.
The amount of information search depends on the strength of the drive, the amount of information started with, the ease of obtaining more information, the value placed on additional information and the satisfaction obtained from such search.
Information can be obtained by:
a. Personal sources – Family, friends, neighbours etc.
b. Commercial sources – Advertisements, sales persons, dealers, displays etc.
c. Published sources – Mass media, consumer rating organisations etc.
d. Experiential sources – Handling, examining, using the product etc.
The stage of the consumer decision making where the consumer uses information to evaluate alternative brands in the choice set.
Concepts that help examine consumer evaluation processes:
a. Product attributes – Consumer sees each product as a bundle of product attributes. Every consumer will have different rating for different attributes and will attach different degree of importance to them.
b. Brand beliefs – The set of beliefs consumers hold about a particular brand based on the attributes.
c. Total product satisfaction – Consumer’s expectation of total product satisfaction will vary with levels of different attributes.
d. Evaluation procedure – The consumer arrives at attitudes towards the different brands through some evaluation procedure.
The stage of consumer decision making process in which the consumer actually buys the product. Generally the consumer’s purchase decision will be to buy the most preferred brand but two factors can come between the purchase intention and the purchase decision
First factor is the attitude of others towards that particular product and purchase decision.
Second factor is the unexpected situational factors
The stage of the consumer decision making process in which consumers take further action after purchase, based on their satisfaction or dissatisfaction.
Satisfaction depends on the consumer’s expectation and the product’s perceived performance.
Almost all major purchases result in cognitive dissonance or discomfort caused by post purchase conflict.
Consumer Decision Making Process – Stages that a Consumer Generally Goes Through while Making a Purchase Decision Making
Customer are those people in a market who are already buying the firms market offering. On contrary consumer are all people who directly or indirectly have interest in market offering but they may or may not have purchased it. Consumer is not necessarily a buyer of the product, he may simply be its evaluator, user or disposer or play any other role with respect to the product.
Following are the stages that a consumer generally goes through while making a purchase decision making:
Stage # 1. Problem Identification/Recognition:
Consumer purchase decision making processes are triggered by unsatisfied needs or wants. Individuals perceive differences between ideal and actual states based on some physical or socio-psychological dimension.
This motivates them to seek products or services which can bring their current state into more balance with the ideal. It is impossible for us to satisfy all our needs at once because we are limited by time and financial resources. The size of the gap between our desired and current state largely determines the strength of a particular need.
(a) Out of Stock – This is one of the most simplest and most common sources of problem recognition which occurs when consumer are looking for product and that produce is unavailable. This can be solved by choosing a familiar brand of different company.
(b) Dissatisfaction – This is also one of the sources of problem recognition, which is related by the consumer’s dissatisfaction with the product/services being issued.
(c) New Needs/Wants – Changes in consumers life often result in new needs which triggers problem recognition changes in consumer lives can be due to change in financial situation, change in employment status, changes in life style or change from graduate level of postgraduate level etc.
(d) Related Products Purchases – Purchase of a product can also stimulate problem recognition. Like when consumer purchase a new home then they look for purchase of related products like Furniture, Almirahs, Televisions or Refrigerators, which leads to problem recognition.
(e) Marketers Action – Action of marketer where it encourages consumers for not to be satisfied with their current state or situation cause problem recognition. Marketers also take advantage of consumer’s tendency towards novelty seeking behavior which leads them to try new or different Brands. Consumer often tries new products even though they are basically satisfied with their regular brand.
The second step in the consumer decision making process is information search. Once consumer has a problem or need he knows it can be satisfied by the purchase of a product/service then they begin to search for information needed to make a purchase decision. The searches can be – Internal Search and External Search.
Internal Search is related with initial search effort which often consists of an attempt to scan information stored in memory, this means to recall past experiences and knowledge regarding various purchase alternatives. If the internal search does not yield enough information then consumer will seek additional information by engaging in external search.
In external search consumer are moving away from their mind for acquiring information.
External sources of information can be:
(a) Personal Sources like information from friends, relatives or co-workers.
(b) Commercial / Marketer Controlled Sources like information from advertising, point of purchase displays and material or sales persons.
(c) Public sources like information from articles in newspapers or magazines, reports or televisions.
(d) Personal experience like information from actually handling, examining or testing the product, e.g. Test drive.
After acquiring information during the information search stage, the consumer moves to alternative evaluation. In this stage the consumer compares the various brands/products and services, which are identified as capable of solving the consumption problem and satisfying the needs or motives that initiate the purchase process.
There is formation of consumer’s arousal for purchase comprising of evoked set, which consists of the various brands identified as purchase option. The evoked set is a sub-set of all the brands of which the consumer is aware. The consumer reduces the numbers of brands to be viewed during this stage.
The exact size of evoked set varies from one consumer to another and depends on factors such as importance of purchase and amount of time and energy the consumer want to devote to comparing alternatives.
At this point, the consumer stops searching of information and evaluation of alternative but makes a purchase decision. Here consumer develops purchase intentions, which leads to buy a certain brand. Purchase intentions are generally brand matching purchase motives with attributes or characteristics as desired by buyer. This formation involves many of the personal sub-processes like motivation, perception and attitude formation.
A purchase decision is not always the same as actual purchase. Once a choice is made as to which brand to buy, the consumer waits for making the actual purchase. Here additional decisions are made such as when to buy, where to buy and how money to spend. So there is usually time delay.
Whether a particular consumer feels adequately rewarded following of purchase depends on two things – (i) the person’s aspiration or expectation level – how well the product was expected to perform and (ii) the consumer’s evaluation of how well the product actually performs.
Consumer’s expectations about a product’s performance are influenced by several factors. These include the strength and important of each person’s need and the information collected during the decisions- making process.
Consumer Decision Making Process – 5 Stages of Consumer Decision Making in Retail Market
Consumers are seen as rational decision-makers. So, they take a decision when the need arises. There may be different kind of needs; these needs can be functional or psychological. Functional needs are directly related to the functionality of a product and these functions are the features and benefits which differentiate one product from the other.
Therefore, on the basis of these functions customers make purchasing decisions. Psychological needs are cognitive needs and these needs speak in the form of experience of the consumer like word of mouth or personal opinion about a product and after evaluating both of these needs the customer makes a purchasing decision.
P&G used consumer information regarding various decision process stages to create and market the product Dryel.
Depending upon the product criteria a customer evaluates the most possible alternatives and then narrows down his or her choices to a few products. Then he or she may or may not visit some retail outlets for the exact purchase as he or she can opt for the e-retailing format too.
It has been observed that in retail this whole consumer decision making process goes through five stages which are as follows:
The stage starts with need identification. The buying process starts with a need when a consumer feels like he or she is having an unsatisfied need and therefore he or she starts looking for the surroundings to get desired level of satisfaction. A consumer through his or her previous experience knows how well he or she can satisfy these unmet needs like hunger, thirst and shortage of clothing.
Need recognition in most cases is straightforward when individuals find a shortage of something or goods required are of daily use. For example, there is no wheat/milk in the kitchen. A need may be aroused by an external stimulus. A stimulus such as a desire to visit a part of an outlet while purchasing other usual items.
Okay, so why do people want to buy things? It is because there is a problem, and they are looking for the solution to their problem. This is where the marketer can do several things to make his or her product or service more enticing to the consumer. If the problem persists, your job as a marketer is to present that problem with a solution. Want an example of great marketing? Just look at how Steve Jobs came along with the iPhone marketing. No one needed it, but he made sure that the iPhone was something that everyone needed to have.
Think of this simple equation here-
Problem = Desired State – Current State
This part of the consumers’ decision-making process is where they are looking for more information. They search for this either internally or externally. What is the difference between the two? Internal search is what someone already knows, such as pre-existing knowledge of the product or from the consumer’s memory. An external search is as simple as the consumer could use Google to look for a product review or perhaps even video demonstrations on YouTube.
The second stage is gathering information on how to solve the problem and how the consumer looks for the possible options to resolve the need in consideration. Information search is a process where the prospective buyers examine their environment for appropriate information to make a sound decision. This search may be internal (from memory), or external (through friends, family, published sources, salespersons, and the internet).
An individual usually drives or acquires information from the sources namely internal and external. A person’s past experience accompanied with shopping exposure might provide him or her with substantial guidelines to make the correct decision with the help of his or her internal memory. Consumers invest time in information search in preparation to the perceived risk associated with the particular purchase and the importance of purchase.
After an information search for the required product is completed, a consumer is expected to take a final decision on one of the choices available. The search also helps the consumer to acquire knowledge about the criterion to be used to evaluate the various alternatives involved at the information stage.
To justify this point in Gurgaon, some management students in order to find out the best option enlisted the following restaurants for consideration:
(d) Pizza hut
The alternatives are always considered by the consumer while taking a purchase decision. And this process constitutes an evoked set. The evoked set signifies all the outlets and product substitution which the consumer can memorise, remember, and corroborate with existing need.
What other opportunities does the consumer have with him or her? Some things that they will analyse include cost and effectiveness. When you are purchasing a new car, don’t you look into other options? The consumer can choose a product based on features or their attitudes. For example – “Oh wow, this new Ford has so many great features! Hmm… but if I get this BMW, it will make me look rich and important to all my friends.”
The retailers should make sure that their product should fall under the consideration set of the customer; otherwise, the product and the retail outlet will fail. For this purpose they need an effective marketing programme which can effectively position the product in such a way that for a particular need that product will automatically fall in the consideration set of the consumer.
The communication strategy for the same purpose should be very stronger followed by the promotional strategy. At the same time retailers need to cope up with the dynamics of the environment and should change the offerings according to the changing needs. From the customer point of view, he or she will evaluate all the possible alternatives available and can shortlist the best possible one (a restaurant of choice for taking his or her friends out for a treat).
The purchase decision can be considered as a final decision where an individual tries to focus on the product category or brand amongst a large pool of alternatives. As suggested in the consumer buying behaviour Howard Seth model, a consumer goes through a lot of stimulus display which may be significant, symbolic or social in nature and chooses a brand out of the various alternatives that are available.
In such a process, the final purchase decision is based on the five-step approach:
2. Brand comprehension
3. Attitude building
4. Intention to buy
5. Final purchase
While making decisions regarding a purchase, an exchange of cash or credit is involved. Today with the environment of large number of players, the revenue process has gone through a transformation. A consumer is able to pay for a product after the product reaches to him or her (cash on delivery). There are some other methods which have facilitated the process of payment organisation, such as Paytm, Oxigen wallet, that have improved the overall business for retailers.
Consumer purchasing behaviours have also been strongly affected with the arrival of online retail players which are using various methods for attracting the consumers. Various methods such as the Big Billion Day by Flipkart have changed the entire approach of the purchasing behaviour. A lot of impulsive nature has got into the purchase of the product during such events. India is moving slowly into a consumer-driven society.
With an increase in retail options, there are a lot of alternatives, The Indian consumers have become literally kings who have got the power to reject or accept the marketer. Post-purchase behaviour is vital from the marketing point of view because a happy consumer can easily positively affect the lifetime value of a product as he or she can create positive word of mouth across social media (Facebook, Twitter, and Linkedin) which can have a productive effect on other consumers. It helps the company in finding new customers without much spending. But the effect can also be negative if the consumer is dissatisfied and hence spreads a negative word of mouth. Therefore it has become a concern for the marketers to manage the post-purchase behaviour.
After making a purchase a consumer compares it against the products available in other retail formats especially with regard to the price. For example, a mobile phone available on Flipkart or Amazon is compared against each other and based on that the final purchase decision is made. In case the consumer has already made a purchase and he or she finds the products with similar features at a lesser price in the competitors’ basket then it creates a negative image in his or her mind.
The kind of evaluation a consumer normally does can be considered in the following ways:
1. The performance of a product matches with the expectation. This leads to satisfaction among the consumers.
2. The performance exceeds the level of expectations. It results in a delightful situation. It automatically leads to the repeat purchase and positive word of mouth publicity.
3. The performance falls below the expectation which then leads to dissatisfaction and negative word of mouth.
Performances can be measured not only in terms of product quality but also much more than that.
It can be measured in the following terms:
1. Time taken to deliver a product
2. The packaging and the condition of the product
3. The price of the product in the different retail formats
4. The brand image of the retailer
5. The offers it gives to the consumer
6. The handling of invoices and the other documents
7. The return policies of the company
8. The satisfaction with the logistics provider attached with the companies
9. The ambience of the retail format.
Consumer Decision Making Process
Consumers make many buying decisions every day. Most large firm’s research consumer buying decisions in great detail to answer questions about what consumer’s buy, where they buy, how much they buy it for, when they buy and why they buy. Marketers can study consumer purchases to find answers to questions about what, where and how much.
We shall now examine the stages consumer pass through to reach a buying decision making. Consumer decision making process represents a problem-solving approach and involves the following five stages – need recognition, information search, evaluation of alternatives, purchase decision and post-purchase behaviour.
The consumer decision making process starts long before actual purchase and continues long after. This encourages the marketer to focus on the entire buying process rather than just the purchase decision.
The consumer decision making process starts with need recognition. A buyer feels a certain need has arisen and has got to be satisfied. Needs may be triggered by internal stimuli or by some external stimuli. At this stage the marketer consumer need recognition. The market should research consumers to find out what kinds of needs arise, what brought them about and how they led the consumer to this particular product.
An attentive consumer may or may not search for more information. If the consumer’s drive is strong and a satisfying product is at hand, the consumer is likely to buy it then. If not, the consumer may under an information search for the product.
The customer can get information from the following sources:
(a) Personal sources — family, friends, neighbours
(b) Commercial sources — sales people, ad, dealers
(c) Public sources — mass media
(d) Experiential sources — using the product, examining.
The relative influence of these information sources varies with the product and the buyer. Once more information is obtained the consumer’s awareness and knowledge of the available brands increases. The marketer should carefully identify consumers’ sources of information and importance of each source. This information is critical in preparing effective communication to target markets.
The consumer uses information to evaluate the alternative brands. There are several elements in the process of evaluation.
First, we assume that each consumer is trying to satisfy some need and is looking for certain benefits which can be acquired by buying a product or service. Each consumer sees a product as a bundle of product attributes, for delivering these benefits and satisfying the need. Such as price, size, picture, etc. Consumers will vary as to which of these attributes they consider relevant and will pay the most attention to.
Second, the consumer is likely to develop a set of brand beliefs about where each brand stands on each attribute. The set of beliefs about a particular brand is known as the brand image. Brand images can help in the evaluation of alternatives.
Third, in order to reduce the number of alternatives, some consumers may consider only more critical attributes and mention the level of these attributes. In auto purchase, a consumer first specifies the price range to eliminate many alternatives and then further eliminate many alternatives like diesel car or petrol car, size, etc.
Fourth, the consumer may use an evaluation process involving trade among different alternatives. Marketers should study buyers to find out how consumers evaluate brand alternatives. If they know the evaluation process marketers can take steps to influence the buyer’s decisions.
In the evaluation stage, the consumer ranks brands and forms purchase intentions. Generally, the consumer’s purchase decisions will be to buy the most preferred brand but two factors — attitudes of others and unexpected situational factor—can influence the purchase decision. The first factor is the attitude of others.
For instance, a boy wants to buy a camera but his father wants him to buy the lowest priced camera, then the chances of the boy purchasing an expensive camera will be reduced. Purchase intention is also influenced by unexpected situational factors. The consumer may form a purchase intention based on expected income, expected price and expected benefits from the product.
When the consumer is about to act unexpected situations may arise due to loss of employment or some other purchase may become more urgent. Thus purchase intentions do not always result in actual purchase choice.
The marketer’s job does not end with the purchase of the product. After purchasing the product, the consumer will be satisfied or dissatisfied and will engage in post-purchase behaviour. The product use will provide feedback of information. If the product falls short of expectations, the consumer is disappointed, if it meets expectations, the consumer is satisfied; if it exceeds expectation the consumer is delighted.
Consumers base their expectations on information they received from sellers or other information sources. If the seller exaggerates the product’s performance, consumer expectations will not be met — this situation will lead to dissatisfaction. The larger the gap between expectations and performance, the greater is the consumer’s dissatisfaction. This fact suggests that seller should faithfully state the product’s performance.
Some sellers also understate performance levels to boost consumer satisfaction with the product. For example, Boeing sells expensive aircraft and consumer satisfaction is important for repeat purchases and the company’s reputation.
Almost all major purchases result in cognitive dissonance or discomfort caused by post-purchase conflict. Consumers are satisfied with the benefits of the purchased brand and glad to avoid the drawbacks of the brands not purchased. On the other hand, every purchase involves compromise.
Consumers feel uneasy about acquiring the drawback of the purchased brand and about losing the benefits of the brands not purchased. Thus consumers feel at least some post-purchase dissonance for every purchase.
It is important to satisfy the customer because a company’s sales come from two basic groups —new customers and repeat customers. It usually costs more to attract new customers than to retain current ones. The best way to retain current customers is to make them happy. A satisfied customer buys a product again, talks favourably to others about the product and buys other products of the company. Many marketers go beyond merely meeting the expectations of customers — they aim to delight the customers.
An unhappy consumer responds in a different way. Whereas a satisfied customer, on an average, tells 3 people about a good product experience, a dissatisfied customer tells 11 people. Clearly, bad word of the mouth travels further and faster than good word of the mouth and can quickly damage consumer attitudes about a company and its product.
Therefore, it is wise for a company to measure consumer satisfaction regularly. It cannot rely on dissatisfied customers to ventilate their grievances when they are dissatisfied. A company should set up a suggestion system to encourage customers to complain. In this way the company can learn the drawback of its product and how to improve it.
Moreover, marketers can take additional steps to reduce consumer post-purchase dissatisfaction and to help customers feel good about their purchases. For example, automobile companies can write to new car owners with congratulations on having selected a fine car. They can obtain customer suggestions for improvements and tell the location of available services. Post-purchase communication to buyers results in fewer returns and order cancellations.
Consumer Decision Making Process – 7 Stages Involved in the Consumer Decision Making Process
The person who recognises a need effectively becomes a potential customer. It is the recognition of a need that creates a want. A person may be thirsty so be in need of a drink, but this may be expressed as wanting a glass of champagne.
The creation of a want involves a decision process which can involve some or all of the following seven stages:
Most day-to-day purchases involve little or no risk in terms of being dissatisfied with the decision, so justify little time or effort. The choice is made on the basis of the immediately available information.
For very high-risk purchases buyers are likely to go through each stage of the decision-making process. This is termed ‘complex buying behaviour’ and is seldom adopted because of the time and trouble involved.
An example where this approach might be justified could be the purchase of a wedding present for someone overseas – in the US perhaps. Stage one comes with the engagement announcement.
Because it is so far away the need to take extra time and trouble could well be accepted with little thought, whereas stage three might involve finding out how long parcel post takes by sea and air and the relative costs, whether the electrical supply is compatible, and whether a gift list is being circulated around other friends and family members.
Possible alternatives might then be chosen on the basis of the amount of money available for the present. Stage five, the selection, could be made on the basis of ease of shipment and availability. Then, after the present has been purchased, stage seven might occur when it is being packed since if this is difficult the choice made may well seem less suitable than an alternative which could have been packed and shipped by the supplier.
The third stage of the process – information search – may involve starting from scratch, such as when the product is entirely new or is totally unfamiliar to the buyer. Obvious examples might be skis being purchased by the first-time skier or a hang glider by someone who has only tried the sport. This is, however, relatively uncommon.
Most products are by their nature in some way associated with other products. Thus someone considering buying a new television is likely to consider the brand of their existing television favourably if it has been reliable – unfavourably otherwise. Perhaps the brand of their radio, music centre, CD player or other similar product would then be at least initially considered.
Those brands which initially come to mind when considering a purchase are referred to as the ‘evoked set’. Clearly any brands which most people bring to mind in relation to certain types of product have a distinct advantage compared with other brands. It is the brands which are regularly within the evoked set of potential purchasers which set the standard that alternative products have to better if they are to be selected.
The concept of the evoked set was developed by Howard and Sheth as a result of their work on the development of a comprehensive buyer behaviour model.
Stage four (evaluation of alternatives) is another important part of the process since it will inevitably depend upon making a comparison of only a few specific potential differences between the products. These are known as the salient attributes. Other differences are known as the non-salient attributes.
Examples relevant to the choice of a motor vehicle might be the availability of fuel injection, a sun roof or electric windows. Other factors, such as more secure door-locking systems or low-level access to the boot, have until recently been considered non-salient attributes by most buyers. This is in spite of these features having significantly greater potential for saving inconvenience or injury than any of the attributes usually considered salient.
Studies have shown that there are many different evaluation procedures which are used when making buying decisions. This work has also shown that these tend to be complex since they involve comparing attributes within the context of brand beliefs and attitudes.
Other factors significant in the context of evaluating alternatives are the beliefs or attitudes held about the brands. Beliefs are perceptions of a brand which are based on explicit information. Attitudes are firmly held ideas which are often neither confirmed nor explicitly shown to be wrong by available information.
Returning to the personal computer example, users often take the view that IBM products are expensive. This view could be as a result of comparing the price of a range of similar machines. It could then be classed as a belief since it would be a descriptive thought based on the assessment of available data. Such beliefs may be modified by new information.
It could, however, just as easily be based on prejudice rather than a rational assessment of available data. It would then be classed as a brand attitude. These tend to be enduring evaluations which are resistant to new information. It is quite likely that brand selection will also be significantly influenced by the buyer’s understanding of the brand beliefs and attitudes of others, particularly close family.
Even when a decision to buy a particular product has been made, the purchase decision can be affected by unanticipated situational factors such as the cancellation of overtime working or because of the numerous other decisions often directly associated with the purchase – the vendor, the quantity, when and how to pay.
The quantity decision can often involve associated items such as batteries, film for cameras, tape for recording machines, etc., rather than the main item being purchased. Very often the supplier or the vendor removes the need to make these decisions by either including the essentials in the form of a prepackaged kit or by providing these as a discount on the price. The provision of the associated items as a kit can be considered a marketing strategy, whereas if they are provided as a form of discount this would be a selling strategy.
The timing decision is often linked to the payment decision, and the acceptance of credit cards has to a large extent reduced the importance of these decisions for many purchasers.
The final stage of the complex consumer decision making process is post-purchase behaviour. Since it is seldom possible to make a fully rational purchase decision, it is hardly surprising that purchasers often doubt the wisdom of their choice when, finally, the purchase has been made. This leads to minor faults being found with the product itself or its features.
Recognising this, manufacturers have found it beneficial to aim some of their advertising directly at new owners to reassure them that they have made a wise decision. This approach is often used by motor vehicle and copier manufacturers – they have appreciated how important an influence existing users can be on potential customers.
The provision of free telephone help-lines, call-out services and ‘no quibble’ return policies, such as those adopted by Marks & Spencer, are aimed specifically at overcoming this problem. It was also within this context that an increasing number of suppliers have recognised the importance of having good instruction manuals.
Consumer Decision Making Process – Separate Stages and Sub-Stages Involved in the Process
While purchasing any goods or services, customers actually go through a complex purchase process. Consumer decision making has three major stages known as the pre-experience evaluation, consumer experience and post-evaluation experience.
These separate stages are further divided into sub-stages as below:
1. Pre-Experience Evaluation- Consumer Choice:
Marketers are usually concerned over the thought how customers choose a certain product over others and what is their decision-making process which leads to the final purchase of the product. Customers go through various stages of this phase like need recognition, information search, evaluation of alternatives, and purchase.
Following is the explanation for each of the following stages:
(A) Need Recognition:
The buying process actually begins with recognising the needs of the customers. There are various ways of recognising a customer’s needs. However, Maslow’s hierarchy specifies in the best possible manner the five need categories which are arranged in a sequential order right from basic-lower level needs to the higher-level needs.
There are various services which can fulfil all the types of needs and these become increasingly important for higher-level, self-actualisation and ego needs.
i. Psychological Needs- They are known as the basic or the survival needs like food, clothing and shelter.
ii. Safety and Security Needs- This includes shelter, security and protection from any dangers.
iii. Social Needs- These needs are for friendship, affection and acceptance amongst others.
iv. Ego Needs- After fulfilling the basic needs, people look for more satisfaction by fulfilling their ego needs. They would like to get easily accepted in the society and hence purchase products which will add to their image and status.
v. Self-actualisation Needs- This involves enriching and self-fulfilment experiences wherein a customer believes in living their life to the fullest.
(B) Information Search:
Once the customer recognises his needs, he then tries to gain information of the same. They start looking for other people’s feedback and opinions which they can study and decide whether they can buy the product which they desire or can look for alternatives. Information may be quick and relatively automatic for small purchases and may extend to a formalised one in case of costly and big purchases.
People make use of both personal sources and non-personal sources for collecting information. Personal sources can be experts and immediate friends and non-personal sources can be websites, selective media and mass public. Seeking information actually invokes confidence in buyers and also reduces the risk of wrong purchases.
(C) Evaluation of Search Alternatives:
In today’s cut throat competition, there are a lot of options available in the market to choose from. Customers have a wide variety of alternatives and they have their own preferences of selecting one product over the above. Many a times, customers do not want to go through a daunting process of searching and evaluating the products hence they usually go in for the first option that is easily available to them.
If need be, they might look in for other alternatives which are available locally so that they do not have much trouble evaluating the alternative search. In order to purchase goods, customers visit retail stores where they keep various alternatives of the same type of products. In order to purchase services, customers visit establishments like banks or salons where they just render one type of service and do keep other options available. Customers are heavily depending on the internet for their wide evaluation of search alternatives.
(D) Service Purchase:
After following the above stages in a sequential manner, customers finally make the decision of purchasing the goods or services. The major difference between purchasing goods and purchasing services is that goods can be felt before buying. For example, people will try the product personally before buying a similar one for actual consumption.
This gives them a fair idea of what they will be buying. Whereas in services, due to its intangible characteristics people may not know their exact product till they actually pay for it and consume it; or make part payments to know better.
For example, eating a meal in a restaurant, a person has to consume the service to know it. In case like vacation planning, customer will have to make part payments to proceed with the plan and make full payment before finally leaving for the same.
2. Consumer Experience:
Due to the various choices available in the market and the credence qualities of goods, it is difficult to make out what decision-making process does a customer go through. It is actually a customer’s experience that influences his future purchasing needs and choices. Experience plays an important role in defining the decision-making process of the customers.
Experiences are of various types like funny, good, short, exciting, memorable and less exciting. Depending upon these experiences, people make their future purchase decisions. Thus organisations have realised the importance of customer behaviour and making all efforts to make their experiences happy and memorable.
(A) Services as Processes:
Services are actions also known as performances that are done for the customers. Service is a process which involves various steps, activities and actions. For example, in medical services, the first step is a patient interacts with the physician. The second step is to follow the doctor’s prescriptions and take the medications.
Other steps may involve third parties like going to a lab for blood testing etc. Thus, this is known as a series of steps for one work which actually form an experience to the patient. When a person interacts with multiple people for one task and when this whole process takes a long time then it becomes a memory for him related to that particular task. This memory can be a good one, bad one or simply remain as an experience!
(B) Service Provision as Drama:
Theatre works and dramas actually aim at giving a desirable experience through performances. A lot of hard work is put in this type by carefully managing the actors and physical setting of their behaviour at the backstage so that they can perform their best on the stage and leave a lasting impression on the viewer’s mind.
(C) Service Roles and Scripts:
Roles are actually a guiding list which orders a person to behave in a particular manner. Like stage plays and dramas have roles, even service delivery includes the same. For example, an air hostess or a waiter is expected to behave in a certain way which their job demands for.
It is the work of a hostess in a restaurant to greet the customers warmly, help and guide them in selecting the food items from the menu, reserve place for the bookings, see that everyone is comfortably accommodated and that they are enjoying their dining experience. Service employees need to behave according to the customer’s expectations otherwise they get frustrated and dissatisfied.
(D) The Compatibility of Service Customers:
It is a human tendency of a person to follow others. Thus the crowd present at a location influences a customer’s expectations immensely. The way others behave or react about a service affects other people’s mentality too. Customers can get incompatible due to many reasons like differences in age, values, beliefs, experiences, appearance, health and ability to pay.
Companies can concentrate on such incompatible customers and promote their individual decision-making process. However, they should also put in efforts to bring together the other lot by fulfilling their needs as desired.
(E) Customer Coproduction:
In many services, customer participation is equally important. Without this, there will be no meaning to the customer service being rendered. For example, in educational institutes, training and counselling, a customer has to dedicatedly concentrate on the sessions to bring out the best of the rendered services. Thus, customer coproduction is equally important to make customer service successful.
(F) Emotion and Mood:
Emotions and moods are the most important factors that play a major role in influencing the purchase decision of the customer. It is a person’s state of while purchasing and consumption that decide the future decisions.
3. Post-Experience Evaluation:
Once the customer purchases and consumes a product, they form a post experience evaluation whether they will come back to purchase the same again or no.
It is only after they have experienced, they evaluate the quality of the product. Generally a lot of attention is given to the pre-purchase evaluations and consumer choice. However, post purchase evaluations are equally important for organisations to understand and accept. They are typically important to judge the customer’s subsequent behaviour and repurchase of the product.
Post experience evaluation is basically captured in various measures of service quality, satisfaction, emotional engagement and loyalty.
Following are the specifics of service quality and customer satisfaction:
(A) Word-of-Mouth Communication:
This is the most preferred option for many customers. People go by the word-of-mouth reference for any products or service. Thus, it is important for organisations to create good experience so that customers can talk positively and give a good reference to others. However, if the service is bad then it is very difficult for the company to curb the negative talking that goes around amongst people.
(B) Attribution of Dissatisfaction:
When a customer is dissatisfied about a service, he may link the attributes to various sources. For example, if a customer goes to a salon for a specific haircut, but is not satisfied by the same then he/she may link it to many various factors like lack of skill of the hairstylist or inability to give clear instructions on her part as to what style she wants. Most of the time, they feel responsible for dissatisfactory services as they closely participate in almost all the stages of services.
(C) Positive or Negative Biases:
Research says that it is a human tendency to remember or weigh negative experiences more than the positive ones. Thus, if there is a good experience people may not remember for a long time. However if they have had a bad experience then they will never forget the same. Similarly, negative rumours are spread and affect more easily than the positive ones.
(D) Brand Loyalty:
It is the brand loyalty as well on the customer’s part which decides his future buying decisions. If a customer is completely satisfied with a particular brand then he will stick to it forever no matter its price or availability. Companies also make extra efforts to retain their loyal customers as they know the hard work involved in making one.
Consumer Decision Making Process – 5 Important Stages Involved in the Consumer Decision Making Process
The consumer decision making process or the stages involved in the decision-making process are:
1. Problem recognition,
2. Information search,
3. Evaluation of alternatives,
4. Purchase decision and
5. Post-purchase behaviour.
This is usually the first stage in the consumer’s decision making process. During this stage, the consumer recognises a problem and feels that he has to do something to reduce (or solve) the problem. This problem recognition can be due to either an actual state of a consumer or desired state of the consumer.
The actual state of problem may occur when the consumer feels the product or service is not giving the satisfactory performance. For instance, the consumer may feel that the music system he purchased is not giving the desired stereo effect. The desired state type of problem occurs when say a consumer who already owns a motor cycle, now desires to purchase a Maruti Alto, due to a rise in his purchasing power.
He also happens to read about the attractive offers for ‘Alto’ displayed outside the company showroom. This again stimulates in him a desire to purchase the car. The marketer needs to understand the circumstances or environmental cues which acts as a trigger to arouse the needs and desires of consumers and then develop attractive product displays and communication programmes.
An aroused consumer may or may not be involved in information search. If the consumer’s drive is strong and the required product is easily available (say Pepsi to quench one’s thirst), then he or she may not seek more information.
But if the consumer’s drive is strong, and yet he is in a dilemma and seeking answers to questions such as:
i. Which product category or particular brand will best satisfy his or her need?
ii. Where the product (or brand) will be easily available?
iii. What is the experience of the person(s) who has consumed the product?
Ultimately, how much information search the person is engaged in will depend upon:
a. The strength of his or her inner drive.
b. The amount of information originally available and the ability to obtain additional information.
c. The importance attached to the obtainment of additional information.
d. The satisfaction the consumer gets from gathering additional information.
Usually, the extent of search activity will increase as the consumer moves from a limited problem situation to one involving extensive problem solving. There are broadly four categories of consumer information sources – Personal sources, Commercial sources, Public sources and Experiential. The relative influence of these information sources will vary according to the product category and buyers characteristics. Each category of information source will influence the consumer differently.
Mass communication or information is received via commercial sources, while, the consumer may verify (or evaluate) this information through personal sources. So in this case, commercial sources carry out the informing function and personal sources the evaluating function.
After going through the information search stage, consumers will be able to increase his or her awareness of the available brands and their relevant features, in the particular product (or service) category. Hence, the marketers are required to do research and identify those information sources preferred by the target consumers and work at a suitable marketing mix programme.
Past experience is also considered to be an internal source of information. Most of the consumer decisions are taken on the basis of past experience (internal source) the degree of perceived risk and marketing and non-commercial information (external sources).
While making an evaluation of the alternatives, consumers tend to use two types of information:
(a) A ‘probable list’ of brands from which they plan to make the selection (the evoked set).
(b) Decide on the criteria to be used for evaluating each brand.
The probable list or evoked set refers to the specific brands, within a particular product category which a consumer considers while making the purchase decision. This set could include the small number of brands the consumer is familiar with, and finds acceptable. For instance, the evolved set for a DVD player by a consumer could include — Sony, Philips, Sansui, L.G., Videocon, Onida. It is to be remembered that the consumer will be considered only if the product is a part of his or her evoked set brand.
The marketers at this stage, need to work on designing promotional techniques which will communicate a favourable and relevant product image to the target consumer. While deciding on the criteria for evaluating brands, each consumer will have a set of important product attributes.
This will be used as the basis for evaluating brands. For instance, a consumer intending to purchase a personal computer may look out for the following attributes — CPU speed, price, type of display, Hard disk size, Amount of memory, CD/DVD, Read or Readwrite, laptop or; desktop.
Another consumer may be planning to purchase a DVD player. The product attributes he will be seeking in a DVD player will include — CD format support, PMPO (peak music power output), Megabass, Random play feature and FM tuning. Of course, the set of attributes and their relative importance to the consumer will vary from person to person.
Further, the consumer is also likely to have a predetermined notion and brand beliefs about where each attribute stands in their rank of importance to him or her. That is, the consumer will assign weightage to each brand attribute considered in terms of their order of importance to him or her. And in this way the consumer is most likely to identify the product brand of his or her choice.
Marketers need to understand as to how and why consumers evaluate brands. They must also try to influence buyer’s decision-making process by designing and promoting products matching the beliefs and choice of the target market. They should also constantly try to communicate the prominent features or attributes of the product or service to increase consumer awareness and interest in their brand.
Jet Airways has been able to capture customers attention by their constant communication (via the print media) of the benefits of e-ticketing and motivate people to experience the joy of flying with Jet Airways.
The success of ICICI Prudential, where the company was able to sell the concept of Planning for retirement by customers in the age group of 30-40 years, chief wage earner in the prime their working life with high disposable income can be attributed to the multidimensional communication strategy that went beyond traditional mass media.
ICICI was able to change the consumer’s perceptions towards retirement planning totally because of its aggressive advertising campaigns ranging from — Television, Print, Radio, Point of purchase displays, Out of Home, Public Relation to Consumer Services
The above mentioned ‘Evaluation of Alternatives’ stage will help the consumer to take a decision on his or her purchase intention. To a certain extent, the consumers purchase decision may be influenced by the attitude of others or the unanticipated situational factors. By the attitude of others we mean person(s) who are close to the consumer and their attitude or response towards the purchase decision.
We presume that in the purchase of the personal computer decision, the consumer may decide to purchase Dell’s Laptop Computer. However, the consumer’s wife may suggest the purchase of a desktop computer (HP’s) since she feels that a desktop computer when installed at home can be used by the children also. So in this case the consumer may either delay the purchase of the laptop Personal Computer or if convinced, decide to purchase HP’s desktop computer.
By unanticipated situational factors, we mean unforeseen circumstances such as additional expenses due to a family member falling sick or say one is required to go out of station for a long time on official duty. These situations may result in a delay in the purchase intention or decision.
Nevertheless, the consumer’s decision to change, postpone or avoid an immediate purchase decision will be greatly influenced by the perceived risk factor. This perceived risk concept can be associated with the transaction money involved and the consumer’s self- confidence to handle the risk factor. Of course, the consumer will work out ways to reduce the perceived risk. He will try to gather more information from reliable sources and seek those brands which offer long-term warranty period.
The marketer, should try to help the consumer in his decision-making process by providing all the necessary information, through various reliable sources and thus reduce the consumers perception of risk.
There is a general tendency among consumers to judge their experience against their expectations when being involved in a post purchase evaluation process. The level of satisfaction experienced by the consumer after his purchase will depend on the relationship between the consumer’s expectations and the products or services perceived performance. If the product or service matches expectations, the consumer is satisfied, otherwise, not.
For the marketer, it will be of interest to know the post purchase behaviour, undertaken by the consumer. For, the consumer’s post-behaviour actions will give the feedback on whether he or she is satisfied or dissatisfied with the product or service acquired.
There are three possible outcomes after the consumer purchases the product or service:
i. He is satisfied since the actual performance matches expectations.
ii. The performance of the product surpasses expectations leading to customer delight.
iii. The performance of the product or service falls below expectations, leading to dissatisfaction.
In the first two instances, the consumer is very much satisfied with the product or service performance and is likely to purchase the same brand of product in the future too. Further, a satisfied customer will also act as an informal opinion maker or provide a positive word-of- mouth to others.
In the last outcome, the dissatisfied customer will try to reduce the dissonance by:
i. Abandoning or returning the product or
ii. Seek information that will re-inforce its high value or
iii. Ignore information indicative of its low value.
In extreme cases, the consumer could also approach the Consumers Forum for a redressal. Thus, the marketer must ensure that consumers do not experience post-purchase dissatisfaction. And if at all they do, the complaints must be attended to at earliest, so that the customer dissatisfaction gets reduced considerably.