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Decision Making Process Notes

The document outlines the consumer decision-making process, which includes need recognition, decision spectrum, pre-purchase information search, evaluation of alternatives, and post-purchase behavior. It also discusses the types of innovation and the adoption process, categorizing consumers into innovators, early adopters, early majority, late majority, and laggards based on their willingness to adopt new products. Each stage and category is illustrated with examples to clarify the concepts.

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aima nazir
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5 views

Decision Making Process Notes

The document outlines the consumer decision-making process, which includes need recognition, decision spectrum, pre-purchase information search, evaluation of alternatives, and post-purchase behavior. It also discusses the types of innovation and the adoption process, categorizing consumers into innovators, early adopters, early majority, late majority, and laggards based on their willingness to adopt new products. Each stage and category is illustrated with examples to clarify the concepts.

Uploaded by

aima nazir
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Consumer Decision-Making

Decision-Making Process

1.​ Need Recognition​


The first step in the decision-making process is identifying a need or problem. This
occurs when the consumer perceives a gap between their current situation and a
desired outcome.

It can be any type of need. It can be about hunger, clothes etc.

○​ Example:​
A person realizes their phone is outdated and lacks desired features,
prompting them to consider a replacement.
2.​ Decision Spectrum​
The complexity of decision-making varies based on the purchase's significance, risk,
and familiarity.​

○​ Routinized/Habitual Buying Behavior:


■​ Low involvement, everyday purchases (e.g., buying toothpaste).
■​ Habitual decisions requiring minimal thought.
■​ (If this buying behavior is seen, Step 3 and 4 are ignored in decision
making process)
○​ Limited Problem Solving:
■​ Moderate involvement for mid-level purchases (e.g., buying a new
jacket).
■​ Involves comparisons between products.
■​ High involvement: More comparison
■​ Low Involvement: Less comparison
○​ Extensive Problem-Solving/Complex buying behavior.
■​ High involvement of consumer significant or expensive purchases
(e.g., buying a car).
■​ The product is purchased less frequently by the consumer.
■​ Brands carry significant differences amongst each other.
○​ Example:​
A consumer may spend weeks researching and considering different laptops
before deciding.

3.​ Pre-Purchase Information Search​


Consumers actively gather information about products or services that meet their
needs.​
It can be done by recalling past experiences or knowledge (e.g., remembering a
reliable brand).
It can also be done by exploring reviews, expert opinions, advertisements,
recommendations or visiting shops.

○​ Example:​
A consumer planning to buy a new smartphone reads online reviews,
watches product comparisons, and consults friends.

4.​ Evaluation of Purchase Alternatives​


Consumers assess options identified during the information search to make a final
decision.​

○​ Examples of attributes​

■​Features: Functionality, design, or performance of the product.


■​Price and Value: Whether the product offers value for money.
■​Brand Reputation: Trust and recognition associated with the brand.
■​Social Influences: Recommendations from peers, influencers, or
experts.
○​ Categorization of Options:​

■​ Unacceptable Brands (Inept Set): Rejected options due to negative


perceptions.
■​ Acceptable Brands (Evoked Set): Actively considered acceptable
options.
■​ Indifferent Brands (Inert Set): Consumers are indifferent towards
this brand, have neutral behavior towards brands.
■​ Overlooked brands:
○​ Examples:​

■​ Evoked Set: A consumer narrows smartphone choices to Apple,


Samsung, and Google.
■​ Inept Set: A brand is excluded due to poor customer service reviews.
■​ Inert Set: A lesser-known brand is ignored due to insufficient
awareness.
5.​ Decision Rules​
Consumers apply decision rules to choose among alternatives, classified into
compensatory and non-compensatory rules.​

○​ Compensatory Decision Rule:


■​ All attributes are compared amongst each other between brands.
○​ Non-Compensatory Decision Rule:
■​ All attributes aren't compared/failure to compare all attributes
■​ Types:
■​ Conjunctive Rule: First instinct about the product/Minimum
cutoff point decides. They dont care much about the attributes.
E.g. if you see a shirt, you buy it cz you just liked it
■​ Lexicographic Rule: Prioritizes the most important attribute(s)
and buys the product based on that.
■​ Affect-Referral Rule: You aren’t able to evaluate the product,
so you rely on word of mouth about the product (review is
prioritized)

Output stage:
To purchase or to NOT purchase.

Post Purchase Behavior:

●​ Expectation > Experience = Negative Behavior


●​ Expectation = Experience = Positive Behavior
●​ Expectation < Experience = Delighted Behavior

Positive Behavior > Satisfaction > Rebuy > Positive word of mouth > Trust & Loyalty

Negative Behavior > Dissatisfaction > Cognitive Dissonance > Negative word of
mouth

Diffusion and Innovation

Innovation is something new brought to the market.

Types of Innovation

1.​ Continuous Innovation​

○​ Definition: Constantly evolving product.


○​ Examples: Telecommunication (telephones to smartphones etc)
2.​ Dynamic or Dynamically Continuous Innovation​

○​ Definition: Shifting forms of product.


○​ Examples: Smartwatches evolving from traditional watches
3.​ Discontinuous Innovation​

○​ Definition: Minor modifications of products.


○​ Examples: Smartphones or virtual reality devices.

Adoption Process of Innovation

1.​ Awareness: Consumer become aware of the product.


2.​ Interest: Consumer develops interest in the product.
3.​ Evaluation: Consumers evaluates the product, gets info about it, do people like
it?Should I try it or not.
4.​ Trial: Consumers try the product.
5.​ Adoption: If the consumer likes it, they will adopt the innovation and if they don’t like
it then it won’t be adopted.

Here's the reformatted and corrected version of the content with proper spacing, alignment,
and formatting:

Innovation Adoption Categories

Adoption is carried forward based on our individual differences (thinking, perception,


risk-taking ability etc).

1. Innovators

●​ Definition: The first group to adopt an innovation. They are adventurous,


risk-tolerant, and eager to explore new ideas.
●​ Percentage of Population: ~2.5%
●​ Example: A tech-savvy individual who pre-orders the latest smartphone before its
official release.

2. Early Adopters

●​ Definition: This group quickly adopts innovations after innovators. Some people are
trying it so they want to try it out as well.
●​ Percentage of Population: ~13.5%
●​ Example: A lifestyle blogger who integrates the latest tech gadget into their routine
and shares their experience with followers.

3. Early Majority

●​ Definition: These individuals adopt innovations after early adopters. (They rely on
reviews and proven success)
●​ Percentage of Population: ~34%
●​ Example: A professional who buys a new software system after hearing positive
feedback from colleagues and reading reviews.

4. Late Majority

●​ Definition: This group adopts innovations after the early majority.


●​ Percentage of Population: ~34%
●​ Example: A budget-conscious consumer who switches to electric vehicles only after
prices drop and charging stations become ubiquitous.

5. Laggards

●​ Definition: The last group to adopt innovations, often sticking to traditional products
or methods. (They usually are indifferent to innovations.)
●​ Characteristics:
○​ Highly resistant to change and innovation.
○​ Rely on established practices and avoid risks.
○​ May adopt only when there are no alternatives or due to external pressures.
●​ Percentage of Population: ~16%
●​ Example: An individual who continues to use a flip phone long after smartphones
dominate the market.

Just for explanation purpose:

●​ The adoption categories follow a bell curve distribution:


○​ Innovators and Early Adopters drive the initial diffusion of innovation.
○​ The Early Majority and Late Majority represent the mainstream market.
○​ Laggards signify the tail end of adoption.

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