Consumer Decision Process

Consumer Decision Process
Consumer Decision Process

 

The consumer's choice results from the complex interplay of cultural, social, personal and psychological factors.

Although the marketer cannot influence many of these factors, they can be useful in identifying interested buyers and in shaping products and appeals to serve their needs better.

 Marketers have to be extremely careful in analyzing consumer behavior.

Consumers often turn down what appears to be a winning offer. Polaroid found this out when it lost millions on its Polarvision instant home movie system; Ford when it launched the Edsel; RCA on its Selecta-Vision and Philips on its Laser Vision video-disc player; Sony with DAT tapes; and Bristol with its trio of the Brabazon, Britannia and Concorde airliners. So far we have looked at the cultural, social, personal and psychological influences that affect buyers.

Now we look at how consumers make buying decisions: first, the types of decision that consumers face; then the main steps in the buyer decision process; and finally, the processes by which consumers learn about and buy new products.

 

 

Types of Buying Decision Behavior

Consumer decision making varies with the type of buying decision. Consumer buying behavior differs greatly for a tube of toothpaste, a tennis racket, an expensive camera and a new car.

More complex decisions usually involve more buying participants and more buyer deliberation.

Complex Buying Behavior

Consumers undertake complex buying behavior when they are highly involved in a purchase and perceive significant differences among brands, or when the product is expensive, risky, purchased infrequently and highly self-expressive.

Typically, the consumer has much to learn about the product category. For example, a personal computer buyer may not know what attributes to consider.

Many product features carry no real meaning; an 'Intel 200MIIz Pentium II Pro', 'SVGA display', '16Mb Sync DRAM, 256 Kb Cache' or even a '16X Max CD-ROM with 33.6 RPS fax/data (upgradeable to 56K)'.

This buyer will pass through a learning process, first developing beliefs about the product, then developing attitudes, and then making a thoughtful purchase choice.

Marketers of high-involvement products must understand the information fathering and evaluation behavior of high-involvement consumers.

They need to help buyers learn about product-class attributes and their relative importance and about what the company's brand offers on the important attributes.

Marketers need to differentiate their brand's features, perhaps by describing the brand's benefits using print media with long copy. They must motivate store salespeople and the buyer's acquaintances to influence the final brand choice.

Recognizing this problem, Dixons, the electrical retailers, is setting up the Link chain of stores dedicated to helping baffled buyers on to the information superhighway and multimedia.

What is the marketing ?

 

Dissonance-Reducing Buying Behavior

Dissonance-reducing buying behavior occurs when consumers are highly involved with an expensive, infrequent or risky purchase, but see little difference among brands. For example, consumers buying carpeting may face a high involvement decision because carpeting is expensive and self-expressive.

Yet buyers may consider most carpet brands in a given price range to be the same. In this case, because perceived brand differences are not large, buyers may shop around to learn what is available, but buy relatively quickly.

They may respond primarily to a good price or to purchase convenience. After the purchase, consumers might experience post-purchase dissonance (after-sales discomfort) when they notice certain disadvantages of the purchased carpet brand or hear favorable things about brands not purchased.

To counter such dissonance, the marketer's after-sale communications should provide evidence and support to help consumers feel good both before and after their brand choices.

Habitual Buying Behavior

Habitual buying behavior occurs under conditions of low consumer involvement and little significant brand difference. For example, take salt.

Consumers have little involvement in this product category - they simply go to the store and reach for a brand.

If they keep reaching for the same brand, it is out of habit rather than strong brand loyalty. Consumers appear to have low involvement with most low-cost, frequently purchased products.

Consumers do not search extensively for information about the brands, evaluate brand characteristics and make weighty decisions about which brands to buy.

Instead, they passively receive information as they watch television or read magazines.

Ad repetition creates brand familiarity rather than brand conviction. Consumers do not form strong attitudes towards a brand; they select the brand because it is familiar and may not evaluate the choice even after purchase.

Because buyers are not highly committed to any brands, marketers of low involvement products with few brand differences often use price and sales promotions to stimulate product trial.

Gaining distribution and attention at the point of sale is critical. In advertising for a low-involvement product, ad copy should stress only a few key points.

Visual symbols and imagery are important because they can be remembered easily and associated with the brand. Ad campaigns should include high repetition of short-duration messages.

Television is usually more effective than print media because it is a low-Involvement medium suitable for passive learning.

Advertising planning should be based on classical conditioning theory, in which buyers learn to identify a certain product, by a symbol repeatedly attached to it.

Products can be linked to some involving personal situation. Nestle did this in a recent series of ads for Gold Blend coffee, each consisting of a new soap-opera like episode featuring the evolving romantic relationship between neighbors, Sharon and Tony.

Nestie's success in doing this contrasts with the tea market in the United Kingdom where, although it is the national drink, sales promotions dominate sales.

Variety-Seeking Buying Behavior

Consumers undertake variety-seeking buying behavior in situations characterized by low consumer involvement, but significant perceived brand differences.

In such cases, consumers often do a lot of brand switching. For example, when purchasing biscuits, a consumer may hold some beliefs, choose a biscuit without much evaluation, then evaluate that brand during consumption.

But the next time, the consumer might pick another brand out of boredom or simply to try something different. Brand switching occurs for the sake of variety rather than because of dissatisfaction. In such product categories, the marketing strategy may differ for the market leader and minor brands.

The market leader will try to encourage habitual buying behavior by dominating shelf space, avoiding out-of-stock conditions and running frequent reminder advertising.

Challenger firms will encourage variety seeking by offering lower prices, deals, coupons, free samples and advertising that presents reasons for trying something new.

 

 

The Buyer Decision Process

Most large companies research consumer buying decisions in great detail to answer questions about what consumers buy, where they buy, how and how much they buy, when they buy and why they buy. Marketers can study consumer purchases to find answers to questions about what they buy, where and how much. But learning about the whys of consumer buying behavior and the buying decision process is not so easy - the answers are often locked within the consumer's head.

We will examine the stages that buyers pass through to reach a buying decision.

Clearly the buying 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.

This model implies that consumers pass through all five stages with every purchase. But in more routine purchases, consumers often skip or reverse some of these stages.

A woman buying her regular brand of toothpaste would recognize the need and go right to the purchase decision, skipping information search and evaluation. However, To illustrate this model, we return to Anna Flores and try to understand how she became interested in buying a camera and the stages she went through to make the final choice.

Need Recognition

The buying process starts with need recognition - the buyer recognizing a problem or need. The buyer senses a difference between his or her actual state and some desired state.

The need can be triggered by internal stimuli when one of the person's normal needs - hunger, thirst, sex - rises to a level high enough to become a drive.

From previous experience, the person has learned how to cope with this drive and is motivated towards objects that he or she knows will satisfy it.

A need can also be triggered by external stimuli. Anna passes a bakery and the smell of freshly baked bread stimulates her hunger; she admires a neighbors new car; or she watches a television commercial for a Caribbean vacation. At this stage, the marketer needs to determine the factors and situations that usually trigger consumer need recognition.

The marketer should research consumers to find out what kinds of need or problem arise, what brought them about and how they led the consumer to this particular product.

Anna might answer that she felt she needed a camera after friends showed her the photographs they took on holiday.

By gathering such information, the marketer can identify the stimuli that most often trigger interest in the product and can develop marketing programs that involve these stimuli.

Information Search

An aroused consumer may or may not search for more information.

If the consumer's drive is strong and a satisfying product is near at hand, the consumer is likely to buy it then. If not, the consumer may simply store the need in memory or undertake an information search related to the need.

At one level, the consumer may simply enter heightened attention. Here Anna becomes more receptive to information about cameras. She pays attention to camera ads, cameras used by friends and camera conversations. Or Anna may go into active information search, in which she looks for reading material, phones friends and gathers information in other ways.

The amount of searching she does will depend upon the strength of her drive, the amount of information she starts with, the ease of obtaining more information, the value she places on additional information and the satisfaction she gets from searching.

Normally the amount of consumer search activity increases as the consumer moves from decisions that involve limited problem solving to those that involve extensive problem solving. The consumer can obtain information from any of several sources:

• Personal sources: family, friends, neighbors, acquaintances.

• Commercial sources: advertising, salespeople, dealers, packaging, displays.

• Public sources: mass media, consumer-rating organizations.

• Experiential sources: handling, examining, using the product.

The relative influence of these information sources varies with the product and the buyer.

Generally, the consumer receives the most information about a product from commercial sources - those controlled by the marketer. The most effective sources, however, tend to be personal.

Personal sources appear to be even more important in influencing the purchase of services.

Commercial sources normally inform the buyer, but personal sources legitimize or evaluate products for the buyer.

For example, doctors normally learn of new drugs from commercial sources, but turn to other doctors for evaluative information.

As more information is obtained, the consumer's awareness and knowledge of the available brands and features increases.

In her information search, Anna learned about the many camera brands available.

The information also helped her drop certain brands from consideration.

A company must design its marketing mix to make prospects aware of and knowledgeable about its brand. If it fails to do this, the company has lost its opportunity to sell to the customer.

The company must also learn which other brands customers consider so that it knows its competition and can plan its own appeals.

The marketer should identify consumers' sources of information and the importance of each source.

Consumers should be asked how they first heard about the brand, what information they received and the importance they place on different information sources.

 

 

Evaluation of Alternatives

We have seen how the consumer uses information to arrive at a set of final brand choices.

How does the consumer choose among the alternative brands?

The marketer needs to know about alternative evaluation - that is, how the consumer processes information to arrive at brand choices. Unfortunately, consumers do not use a simple and single evaluation process in all buying situations.

Instead, several evaluation processes are at work. Certain basic concepts help explain consumer evaluation processes. First, we assume that each consumer is trying to satisfy some need and is looking for certain benefits that can be acquired by buying a product or service.

Further, each consumer sees a product as a bundle of product attributes with varying capacities for delivering these benefits and satisfying the need. For cameras, product attributes might include picture quality, ease of use, camera size, price and other features. Consumers will vary as to which of these attributes they consider relevant and will pay the most attention to those attributes connected with their needs. Second, the consumer will attach different degrees of importance to each attribute.

A distinction can be drawn between the importance of an attribute and its salience.

Salient attributes are those that come to a consumer's mind when he or she is asked to think of a product's characteristics.

But these are not necessarily the most important attributes to the consumer.

Some of them may be salient because the consumer has just seen an advertisement mentioning them or has had a problem with them, making these attributes 'top-of-the-mind'.

There may also be other attributes that the consumer forgot, but whose importance would he recognized if they were mentioned. Marketers should be more concerned with attribute importance than attribute salience.

Third, the consumer is likely to develop a set of brand beliefs about where each brand stands on each attribute.

The set of beliefs held about a particular brand is known as the brand image.

The consumer's beliefs may vary from true attributes based on his or her experience and the effect of selective perception, selective distortion and selective retention.

Fourth, the consumer is assumed to have a utility function for each attribute.

The utility function shows how the consumer expects total product satisfaction to vary with different levels of different attributes.

For example, Anna may expect her satisfaction from a camera to increase with better picture duality; to peak with a medium-weight camera as opposed to a very light or very heavy one; to be a compact 35 mm camera rather than a single lens reflex camera with interchangeable lenses.

If we combine the attribute levels at which her utilities are highest, they make up Anna's ideal camera.

The camera would also be her preferred camera if it were available and affordable.

Fifth, the consumer arrives at attitudes towards the different brands through some evaluation procedure.

Consumers have been found to use one or more of several evaluation procedures, depending on the consumer and the buying decision.

In Anna's camera-buying situation, suppose she has narrowed her choice set to four cameras: Nikon AF400. Olympus Superzoom 110, Pcntax Espio Jr. and Ricoh RW1. In addition, let us say she is interested primarily in four attributes - picture quality, ease of use, camera size and price.

Anna believes the Nikon will give her picture quality of 8 on a 10-point scale; is easy to use, 8; is of medium size, 9; and is very inexpensive, 10. Similarly, she has beliefs about how the other cameras rate on these attributes.

The marketer would like to be able to predict which camera Anna will buy.

Clearly, if one camera rated best on all the attributes, we could predict that Anna would choose it. But the brands vary in appeal. Some buyers will base their buying decision on only one attribute and their choices are easy to predict.

If Anna wants low price above everything, she should buy the Nikon, whereas if she wants the camera that is easiest to use, she could buy either the Olympus or the Pentax.

Most buyers consider several attributes, but assign different importance to each. If we knew the importance weights that Anna assigns to the four attributes, we could predict her camera choice more reliably. Suppose Anna assigns 40 per cent of the importance to the camera's picture quality, 30 per cent to ease of use, 20 per cent to its size and 10 per cent to its price.

To find Anna's perceived value for each camera, we can multiply her importance weights by her beliefs about each camera. This gives us the following perceived values:

We would predict that Anna will favor the Pentax.

This model is called the expectancy value model of consumer choice. This is one of several possible models describing how consumers go about evaluating alternatives. Consumers might evaluate a set of alternatives in other ways.

For example, Anna might decide that she should consider only cameras that satisfy a set of minimum attribute levels. She might decide a camera must have a super zoom lens.

In this case, we would predict that she would choose Olympus because it is the only one that satisfies that requirement.

This is called the conjunctive model of consumer choice. Or she might decide that she would settle for a camera that had a picture quality greater than 7 or ease of use greater than 9.

 In this case, the Nikon, Olympus or the Pentax would do, since they all meet at least one of the requirements.

This is called the disjunctive mode! of consumer choice. Row consumers go about evaluating purchase alternatives depends on the individual consumer and the specified buying situation.

In some cases, consumers use careful calculations and logical thinking. At other times, the same consumers do little or no evaluating; instead they buy on impulse and rely on intuition. Sometimes consumers make buying decisions on their own; sometimes they turn to friends, consumer guides or salespeople for buying advice.

Marketers should study buyers to find out how they actually evaluate brand alternatives.

If they know what evaluative processes go on, marketers can take steps to influence the buyer's decision.

Suppose Anna is now inclined to buy a Pentax camera because of its ease of use and lightness.

What strategies might another camera maker, say Olympus, use to influence people like Anna? There are several.

Olympus could modify its camera to produce a version that has fewer features, but is lighter and cheaper.

It could try to change buyers' beliefs about how its camera rates on key attributes, especially if consumers currently underestimate the camera's qualities.

It could try to change buyers' beliefs about Pentax and other competitors.

Finally, it could try to change the list of attributes that buyers consider or the importance attached to these attributes.

For example, it might advertise that all good cameras need a super zoom lens to get the picture quality that active people like Anna want.

Strategic Planning

 

Purchase Decision

In the evaluation stage, die consumer ranks brands and forms purchase intentions.

Generally, the consumer's purchase decision will be to buy the most preferred brand, but two factors, earn come between the purchase intention and the purchase decision.

The first factor is the attitudes of others. For example, if Anna Flores' husband feels strongly that Anna should buy the lowest-priced camera, then the chance of Anna buying a more expensive camera is reduced.

lie may like the specification of the Pen tax, but be offended by its name being Espio Jr (junior).

How much another person's attitudes will affect Anna's choices depends both on the strength of the other person's attitudes towards her buying decision and on Anna's motivation to comply with that person's wishes.

Purchase intention is also influenced by unexpected situational factors.

The consumer may form a purchase intention based on factors such as expected family income, expected price and expected benefits from the product.

When the consumer is about to act, unexpected situation;)! factors may arise to change the purchase intention. Anna may lose her job, some other purchase may become more urgent or a friend may report being disappointed in her preferred camera.

Thus preferences and even purchase intentions do not always result in actual purchase choice.

They may direct purchase behavior, but may not fully determine the outcome.

A consumer's decision to change, postpone or avoid a purchase decision is influenced heavily by perceived risk.

Many purchases involve some risk taking.35 Anxiety results when consumers cannot be certain about the purchase outcome.

The amount of perceived risk varies with the amount of money at stake, the amount of purchase uncertainty and die amount of consumer self-confidence.

A consumer takes certain actions to reduce risk, such as avoiding purchase decisions, gathering more information and looking for national brand names and products with warranties.

The marketer must understand the factors that provoke feelings of risk in consumers and must provide information arid support that will reduce the perceived risk.

 

 

Post purchase Behavior

The marketer's job does not end when the product is bought. After purchasing the product, the consumer will be satisfied or dissatisfied and will engage in post purchase behavior of interest to the marketer. What determines whether the buyer is satisfied or dissatisfied with a purchase?

The answer lies in the relationship between the consumer's expectations and the product's perceived performance.

If the product falls short of expectations, the consumer is disappointed; if it meets expectations, the consumer is satisfied; if it exceeds expectations, the consumer is delighted.

Consumers base their expectations on messages they receive from sellers, friends and other information sources.

If the seller exaggerates the product's performance, consumer expectations will not be met - a situation that leads to dissatisfaction. The larger the gap between expectations and performance, the greater the consumer's dissatisfaction.

This fact suggests that the seller should make product claims that represent faithfully the product's performance so that buyers are satisfied.

Motoring organizations regularly give pessimistic quotes about how long they will take to reach a customer whose car breaks down.

If they say they will be 30 minutes and get there in 20, the customer is impressed.

If, however, they get there in 20 minutes after promising 10, the customer is not so happy. Almost all large purchases result in cognitive dissonance or discomfort caused by post purchase conflict. Consumers are satisfied with the benefits of the chosen brand and glad to avoid the drawbacks of the brands not purchased.

On the other baud, every purchase involves compromise. Consumers feel uneasy about acquiring the drawbacks of the chosen brand and about losing the benefits of the brands not purchased.

Thus consumers feel at least some postpurchase dissonance for every purchase.-1 ' 1 Why is it so important to satisfy the customer?

Such satisfaction is important 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.

Keeping current customers is therefore often more critical than attracting new ones, and the best way to do this is to make current customers happy.

A satisfied customer buys a product again, talks favorably to others about the product, pays less attention to competing brands and advertising, and buys other products from the company.

Many marketers go beyond merely meeting the expectations of customers - they aim to delight the customer.

A delighted customer is even more likely to purchase again and to talk favorably about the product and company.

A dissatisfied consumer responds differently.

Whereas, on average, a satisfied customer tells three people about a good product experience, a dissatisfied customer gripes to 11 people. In fact, one study showed that 13 percent of the people who had a problem with an organization complained about that company to more than 20 people.^7 Clearly, bad word of mouth travels farther and faster than good word of mouth and can quickly damage consumer attitudes about a company and its products.

Therefore, a company would be wise to measure customer satisfaction regularly.

It cannot simply rely on dissatisfied customers to volunteer their complaints when they are dissatisfied.

In fact, 96 per cent of unhappy customers never tell the company about their problem.

Companies should set up suggestion systems to encourage customers to complain. In this way, the company can learn how well it is doing and how it can improve. The 3M Company claims that over two-thirds of its new-product ideas come from listening to customer complaints.

But listening is not enough - the company must also respond constructively to the complaints it receives.

Thus, in general, dissatisfied consumers may try to reduce their dissonance by taking any of several actions.

In the case of Anna - a Pen tax purchaser - she may return the camera, or look at Pentax ads that tell of the camera's benefits, or talk with friends who will tell her how much they like her new camera.

She may even avoid reading about cameras in case she finds a better deal than she got.

Beyond seeking out and responding to complaints, marketers can take additional steps to reduce consumer post purchase dissatisfaction and to help customers feel good about their purchases.

For example, Toyota writes or phones new car owners with congratulations on having selected a fine car. It places ads showing satisfied owners talking about their new cars ('I love what you do for me, Toyota!'). Toyota also obtains customer suggestions for improvements and lists the locations of available services. Understanding the consumer's needs and buying process is the foundation of successful marketing.

By understanding how buyers go through need recognition, information search, evaluation of alternatives, the purchase decision and post purchase behavior, the marketer can pick up many clues as to how to meet the buyer's needs.

By understanding the various participants in the buying process and the strongest influences on their buying behavior, the marketer can develop an effective programme to support an attractive offer to the target market.

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