MODULE-2

Consumer Decision Making

By
Dr. Rema Gopalan
 Learning Outcomes
• Consumer Decision Making: Consumer Buying Decision Process,
• Levels of Consumer Decision Making - Four views of consumer decision
making.
• Online Decision Making: Meaning and Process/Stages.
• Situational Influences- Nature of Situational Influence, Situation
Characteristics, and consumption behavior.
• Models of Consumer Behavior: Input-process-Output Model, Nicosia
Model, Howard Sheth Model, Engel-Kollat-Blackwell Models of Consumer
Behavior.
 What is a Consumer Behavior Model?
• A consumer behavior model is a theoretical framework for
explaining why and how customers make purchasing decisions.

• The goal of consumer behavior models is to outline a predictable

map of customer decisions up until conversion, thus helping you
steer every stage of the buyer’s journey.
 Consumer Behavior Models

TRADITIONAL CB MODELS CONTEMPORARY CB MODELS

• Learning Model • Nicosia Model
• Psychoanalytical Model • Howard Sheth Model
• Sociological Model • Engel-Kollat-Blackwell (EKB)
• Economic Model Model

• Input-Process and Output • Black Box Model

Model • Webster and Wind Model
 Input, Process and Output Model
• This is a simple model of consumer behavior, in which the input
for the customer is the firm’s marketing effort (the product, price,
promotion, and place) and the social environment.

• The social environment consists of the family, reference groups,

culture, social class, etc. which influences the decision- making
process. Both these factors together constitute the input in the
mind of the consumer.
Input, Process and Output Model
Nicosia Model of Consumer Behaviour
• The model developed in 1966, by Francesco Nicosia, tries to
explain buyer behavior by establishing a link between the
organization and its (prospective) consumer.
• This model focuses on the relationship between the firm and its
potential consumers.
Nicosia Model (1966)
 Four Fields of Nicosia Model

• Field 1: The firm’s attributes and the consumer’s attributes

Subfield 1- deals with the firm’s marketing environment and communication
efforts that affect consumer attitudes, the competitive environment, and
characteristics of target market.
Subfield 2- specifies the consumer characteristics e.g., experience, personality,
and how he perceives the promotional idea toward the product in this stage the
consumer forms his attitude toward the firm’s product based on his
interpretation of the message.
 Four Fields of Nicosia Model
• Field 2: Search and evaluation. The consumer will start to search for other firm’s
brand and evaluate the firm’s brand in comparison with alternate brands. In this
case the firm motivates the consumer to purchase its brands.
• Field 3: The act of the purchase. The result of motivation will arise by
convincing the consumer to purchase the firm products from a specific retailer.
• Field 4: Feed back of sales results. This model analyses the feedback of both the
firm and the consumer after purchasing the product. The firm will benefit from its
sales data as a feedback, and the consumer will use his experience with the product
affects the individuals attitude and predisposition’s concerning future messages from
the firm.
 Limitations of Nicosia Model
• The flow is not completed and does not mention the various factors internal
to the consumer.
• The assumption about the consumer being involved in the decision process
with no predisposition about the various brands is restricting.
• Overlapping between the firm’s attributes and consumer attributes.
 Howard-Sheth Model of Consumer Behaviour

• The Howard-Sheth Model of Consumer Behavior was put

forward by John Howard and Jagadish Sheth in the year 1969.
• The model is an integrated form of factors like social,
psychological, cultural influences on consumer choices into a
coherent sequence. It focuses on explaining consumer behavior in
terms of cognitive functioning and observed testable depiction of
such behavior and its outcomes.
 Four Sets of Howard-Sheth Model of Consumer
Behaviour

• Inputs: These input variables consist of three distinct types of stimuli (information
sources) in the consumer’s environment. The marketing messages from the
marketer in the form of product or brand information furnishes physical brand
characteristics (significative stimuli) and verbal or visual product characteristics
(symbolic stimuli). Social stimuli are created by the social environment. eg.
reference group, social classes.
• Perceptual and Learning Constructs: It includes the variables which are
perceptual in nature and are concerned with how the consumer receives and
understands the information from the input stimuli and other parts of the model.
Learning constructs category, consumers’ goals, information about brands, criteria
for evaluation alternatives, preferences, and buying intentions are all included.
 Four Sets of Howard-Sheth Model of
Consumer Behaviour

• Outputs: The outputs are the results of the perceptual and learning variables
and how the consumers will respond to these variables (attention, brand
comprehension, attitudes, and intention).
• Exogenous(External) variables: Exogenous variables are not directly part
of the decision-making process. However, some relevant exogenous variables
include the importance of the purchase, consumer personality traits, religion,
and time pressure.
 Limitations of Howard-Sheth Model
• Simplification of reality
• Linearity
• Assumes consumer rationality
• Limited to consumer behavior
• Limited to Micro-level perspective
• Limited to western culture
 Engel-Kollat-Blackwell model (1978)

• This model has a good description of the active information

seeking and evaluation processes of consumers. This model
shows components of decision making and the relationship and
interaction among them.
• This model of consumer behavior views consumer behavior as a
decision process and identify five activities occurring in this
decision process over a period of time.
 Four Stages of EKB Model
• Information Input Stage: consumer gets information from marketing and
non-marketing sources, which also influence the problem recognition stage
of the decision-making process. If the consumer still does not arrive to a
specific decision, the search for external information will be activated in
order to arrive to a choice or in some cases if the consumer experience
dissonance because the selected alternative is less satisfactory than expected.
• Information Processing Stage: This stage consists of the consumer’s
exposure, attention, perception, acceptance, and retention of incoming
information.
 Four Stages of EKB Model
• Decision Process Stage: The central focus of the model is on five basic
decision-process stages: Problem recognition, search for alternatives,
alternate evaluation (during which beliefs may lead to the formation of
attitudes, which in turn may result in a purchase intention) purchase, and
outcomes.
• Variables Influencing the Decision Process: This stage consists of
individual and environmental influences that affect all five stages of the
decision process.
 CONSUMER DECISION-MAKING
• The keys to influencing the purchase process are understanding
purchase intention and situational influences.
• Purchase intentions get converted into a purchase only when
situational factors act favorably.
• Situational factors include physical surroundings (location, size,
lighting, temperature, etc.), Social physical surroundings, timing
and antecedent conditions.
 Buying Role of Consumers
• Initiator
• Influencer
• Decider
• Gatekeeper
• Buyer
• User
 Need/Problem Recognition

• Problem recognition may be influenced by internal factors such as basic

impulses like hunger/thirst, new needs, interests, beliefs or external
factors like learning, dissatisfaction with current products or advertising.
• Marketers must focus their sales and marketing efforts on external factors
• Develop a comprehensive brand campaign to build brand awareness and
recognition
Example: Winter is coming. This particular customer has several light jackets, but she’ll
need a heavy-duty winter coat if she’s going to survive the snow and lower temperatures.
 Information Search
• When researching their options, consumers again rely on internal and external factors, as
well as past interactions with a product or brand, both positive and negative.
• Give the potential customer access to the information they want.
• Create a funnel and plan out the types of content that people will need. Present yourself
as a trustworthy source of knowledge and information.
• Include consumer-generated content, like customer reviews or video testimonials, on
your website.
Example: The customer searches “women’s winter coats” on Google to see what options are out there. When
she sees someone with a cute coat, she asks them where they bought it and what they think of that brand.
 Evaluation of Alternatives
• Alternatives may present themselves in the form of lower prices, additional
product benefits, product availability, or something as personal as color or
style options.
• The marketing material should be geared towards convincing consumers that
the product is superior to other alternatives. Be ready to overcome
objections—e.g., in sales calls, know your competitors so you can answer
questions and compare benefits.
• Example: The customer compares a few brands that she likes. She knows that she wants a
brightly colored coat that will complement the rest of her wardrobe, and though she would
rather spend less money, she also wants to find a coat made from sustainable materials.
 Purchase Decision

The consumer will recognize that your product is the best option and decide to
purchase it.
Some obstacles that may occur are:
• Payment issues
• Shipping or delivery challenges
• Purchase price
• Organizational hierarchy, etc.
Example: The customer finds a pink winter coat that’s on sale for 20% off. After confirming that the
brand uses sustainable materials and asking friends for their feedback, she orders the coat online.
 Post-Purchase Evaluation

As a marketer, you should try to gauge the following:

• Did the purchase meet the need the consumer identified?
• Is the customer happy with the purchase?
• How can you continue to engage with this customer?
• Marketer must ensure that customer continues to have a positive experience
with the product. Post-purchase engagement could include follow-up emails,
discount coupons, and newsletters to entice the customer to make an
additional purchase.
Levels of Consumer Decision Making/Types of
Buying Decision Behaviour
ONLINE CUSTOMER BEHAVIOR PROCESS
 Situational Influences- Nature of
Situational Influence
• Situational influences on consumer buying behavior are actually
impermanent conditions that impact how they behave.

• Situational influences arc temporary environmental conditions

that exist at a specific time and place and which influence
consumer behavior. A 'situation' is the set environmental factors,
or conditions, that a consumer responds to.
Nature of Situational Influences
 The Nature of Situational Influence

Four types of situations:

1. The Communications Situation

2. The Purchase Situation

3. The Usage Situation, and

4. The Disposition Situation

 Situational Characteristics and
Consumption Behavior

The five key dimensions or characteristics are

1.Physical surroundings
2.Social surroundings
3.Temporal perspectives
4.Task definition
5.Antecedent states
 Situational Characteristics and
Consumption Behavior

Physical Surroundings

Atmospherics is the sum of all the physical features of a retail environment.

➢Atmospherics influences consumer judgments of the quality of the store

and the store’s image.

➢Atmosphere is referred to as servicescape when describing a service

business such as a hospital, bank or restaurant.
 Comparison of Hotel Lobbies

The servicescape is part of the value proposition!

Distinctive Servicescapes Create Customer
Expectations
Distinctive Servicescapes Create Customer
Expectations
Situational Characteristics and
Consumption Behavior
Physical Surroundings
Typology of Service Environments

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Situational Characteristics and
Consumption Behavior
Components of physical surroundings:

1. Colors

2. Aromas

3. Music

4. Crowding

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Common Associations and Human Responses to Colors (Table 10-3)

Degree of Common Association and Human

Color Nature Symbol
Warmth Responses to Color
High energy and passion; can
Red Warm Earth
excite and stimulate

Orange Warmest Sunset Emotions, expressions, warmth

Optimism, clarity, intellect, mood-
Yellow Warm Sun
enhancing
Growth, grass, Nurturing, healing, unconditional
Green Cool
and trees love

Blue Coolest Sky and ocean Relaxation, serenity, loyalty

Indigo Cool Sunset Mediation and spirituality

Spirituality, reduces stress, can
Violet Cool Violet flower 42
create an inner feeling of calm
Situational Characteristics and
Consumption Behavior
Physical Surroundings

The Impact of Background Music on Restaurant Patrons

 Situational Characteristics and
Consumption Behavior
Temporal Perspectives
Temporal perspectives deal with the effect of time on consumer behavior.

Limited purchase time often limits search

Internet shopping is growing rapidly as a

result of the time pressures felt by
consumers.
 Situational Characteristics and
Consumption Behavior
Task Definition
Task definition is the reason the
consumption activity is occurring.
Consumers give gifts for many
reasons:
•social expectations
•ritualized situations
•to elicit return favors
Situational Characteristics and
Consumption Behavior
Types of antecedent states:
➢ Moods

• Transient feeling states that are generally not tied

to a specific event of object.
➢ Momentary Conditions

• Temporary states of being (tired, ill, having extra

money, being broke, etc.)

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Situational Influences and Marketing
Strategy
Identify the different situations that might involve the consumption of a
product

Determine which products or brands are most likely to be purchased or

consumed across those situations.

➢One method of dealing with this question is to jointly scale

situations and products.
Situational Influences and Marketing
Strategy
Five Steps for Developing Situation-Based Marketing Strategies

1. Use observational studies, focus group discussions, depth

interviews, and secondary data to discover the various usage
situations that influence the consumption of the product.
2. Survey a larger sample of consumers to better understand and
quantify how the product is used and the benefits sought in the
usage situation by the market segment.
3. Construct a person-situation segmentation matrix.
4. Evaluate each cell in terms of potential.
5. Develop and implement a marketing strategy for those cells
that offer sufficient profit potential given your capabilities.
Situational Influences and Marketing Strategy