CHAPTER TWO

CONSUMER DECISION MAKING PROCESS

Introduction

People make hundreds of decisions each day, from the ordinary to the extremely important. As
consumers, people constantly make decisions regarding the purchase of products and services.
Some of these decisions are trivial, and others are complex. Thus, consumer decision making is a
multifaceted process that ranges from automatic to highly structured problem solving. A
decision is the selection of an option from two or more alternative choices. This definition
implies that, for a person to make a decision, a choice of alternatives must be available. When
a person has a choice between making a purchase and not making a purchase, a choice between
brand X and brand Y, or a choice of spending time doing A or B, that person is in a position to
make decision. Consumer decision is a careful evaluation of the attributes of a set of products,
brands, or services and rationally selecting the one that solves a clearly recognized need for the
least cost. Customer decisions are choices that customers make in the marketplace as buyers,
and users. These decisions include whether to purchase, what to purchase, when to purchase,
from whom to purchase and how to pay for it.

2.1 Continuum of Information Searching For Decision Making

All consumer decision-making situations do not require the same degree of information search. One way
to characterize consumer decision making is on an effort continuum, ranging from very low to
very high in searching information.

 Habitual (Routine Choice): carried out automatically, with little conscious effort. As such, it
involves no information search or deliberation. Frequently purchased, low-cost products,
such as chewing gum and milk, generally involve habitual responses. These purchase
decisions are highly familiar and relatively trivial because they involve little risk.
Consumers have some experience with the product category. They have a well established
set of criteria with which to evaluate the brands they are considering. The problem is
recognized and internal search or long-term memory provides the single most solution. In
other words, consumers simply review what they already know. Evaluation occurs when
only the brand fails to perform as expected.
 Limited (Intermediate) Problem Solving: usually involves limited information search and
deliberation. Consumers are not motivated to rigorously evaluate each alternative, so they
engage simple decision rules or heuristics to aid their decision making. Products such as
snack foods and soft drinks, for which consumers typically have established preferences,
generally entail intermediate effort. An intermediate type of decision-making exists between
habitual and extensive decision-making. Consumers already have established the basic
criteria for evaluating the product category. They know the various brands in this category.
But unfamiliar with the exact brand, style, and price options that are currently available.

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 They have not fully established preferences concerning a select group of brands. They must
gather additional brand information to discriminate among the various brands.
 Extensive Problem Solving: requires a deliberate and systematic effort from consumers.
Here, consumers generally do not have well-established criteria to evaluate brands or may
be unfamiliar with the product category. Consumers generally engage in extensive problem
solving for infrequently purchased, expensive products such as automobiles, graduate
schools, and home security systems. Because these decisions involve high levels of risk,
consumers normally dedicate a great deal of time and effort in gathering information and
evaluating alternatives prior to actually making a purchase. Have no established criteria for
evaluating a product category or specific brands. Have not narrowed the number of brands
they will consider to a small and manageable size. It is needed in response to a very high
level of purchase involvement. It requires much effort, takes a long time in gathering a great
deal of information. Buying home, choice of a university, complex recreational items,
personal computers, and a car are best examples of extensive problem solving decision.

A more complete way to think about consumer decision making considers two separate factors:

 Processing Effort: represents a continuum from automatic to systematic processing. At one

extreme, consumers may process no information and simply respond intuitively. At the
other extreme, consumers gather and evaluate a great deal of product information prior to
choice. Processing effort closely parallels the routine—intermediate—extensive continuum
discussed above.
 Involvement: represents a continuum ranging from decisions that entail low levels of
consumer involvement or personal relevance to decisions that elicit much higher levels of
interest and concern. It may be helpful to think of processing effort as primarily cognitive or
thinking-oriented and involvement as more affective or feeling-oriented. Involvement is the
personal relevance or importance of an issue or situation. Accordingly, high involvement
decisions are characterized as important to consumers. High involvement is often associated
with emotional outcomes. Consumers seek not only functional benefits, such as the warmth
of a new jacket, but also the social rewards of compliments on their good taste or fitting in
with group norms. Finally, if a decision involves a high level of perceived risk, i.e., the
possibility of negative outcomes, then consumers are more likely to demonstrate higher
levels of involvement. Perceived risk comes in a variety of forms: financial, physical,
performance, psychological, and social.

There are four primary types of decisions that consumer must make.

 Budget Allocation  Store Patronage (where to buy)

 Product Purchase Or Not ( among  Brand And Style Decisions
competing products)

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2.2 Consumer Decision making process
1. Problem Recognition: The decision process begins when a customer recognizes problem to
be solved or a need to be satisfied and becomes highly motivated to solve those problems.
These problems could be: physiological in nature (hunger, recognized due to internal or
external stimulus (an advertisement) also occur when the consumer perceives a gap
between his or her current state and desired state.
2. Information Search: Consumers select brands by considering the following points: The
awareness set (Brands the customer is aware of), an evoke set (brands remembered at the
time of decision making), consideration set (brands exactly fit your need), sources of
information Marketing (advertising, salespersons, product or service literatures and
brochures, in store display, and internet or company web sites) and non marketing
(personal attitude, family, professionals, own experience)
Basic Types of Information Search

 Incidental learning: gaining information when we are not actually making a consumer
decision
 Directed search and evaluation: conscious search for information to make a particular
consumer purchase decision.
 Systematic search: comprehensive search and evaluation of alternatives consulting, taking
others for the decision.
 Heuristics: quick rule of thumb and shortcuts used to make decisions.
3. Alternative Evaluation: At this stage consumers select one of the several alternatives
(brands, dealers, and so on) available to them. The criteria consumers use varies from
tangible cost and performance features to intangible factors such as style, taste, prestige,
and brand image. The number of evaluative criteria used depends on the type of the
product, the consumer, and the situation.
4. Purchase Process: This step is broken down into three sub-steps: when the customer (a
user) identifies the most preferred alternative, purchase intent by reconciling the payers
most salient concerns with that of the user and implementing the purchase.
5. Post Purchase Process: The customer’s decision process does not end with the purchase.
The goal of the consumer’s decision lies in consumption and consumption occurs during
the post purchase phase. Purchases are only the means to an end with the end being the
attainment of benefits from consuming the product. Post purchase processes enables
consumers to take further actions by evaluating their expectations and the products
perceived performance. At this stage, the customer asks questions such as, “Did I make the
right decision?”, “Should I have done something, What else?” then after, making a
relatively permanent decision.

2.3 Public Policy and Consumer Protectionism

To some extent, competitive forces & government regulation act to insure consumer rights but
not fully. The socially responsible firm will recognize its responsibility to provide consumers

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with full and accurate information and safe products. Beyond such recognition, the socially
responsible firm will also realize that it has responsibility to address social issues such as
insuring a clean environment, discouraging drug use and teenage drinking, avoiding indirect
appeals to youth to smoke (for example, by the use of cartoon characters) and accounting for the
inability of young children to evaluation ads and promotional appeals.

2.3.1. The Consumer Movement

Broadly defined, the consumer movement represents activities by consumer groups,

government agencies, and at times business organizations that are designed to protect the
consumer. The term consumer movement is somewhat misleading since there is no actual
organization of consumers but, instead, a conglomeration of groups with separate concerns. As
a result, the activities of these groups in the consumer interest have also been referred to as
consumerism. The primary concern of the consumer movement is to ensure the consumer's
rights in the process of exchange. These rights include:

 The right to be informed and to be  The right to safety

told the truth  The right to be heard
 The right to choice
Three type of organization make up the consumer movement

 Consumer oriented groups concerned primarily with increasing consciousness and

providing consumer with information to improve their basis for choice.
 Government legislation & regulation.
 Business through competition & self – regulation.

2.3.2.1. Right to be informed

The consumer’s right to be informed is the right to be protected against fraudulent, deceitful or
grossly misleading information, advertising, labeling or other practices, and to be given the
facts he ( she ) needs to make an informed choice . This means that marketers are responsible for
providing complete and unambiguous information on which we can base purchase decisions.
Marketing communications that include misinformation, including exaggeration or distortion of
facts, are an infringement of the right to be informed.

Consumer’s right to be informed covers two components

 The right to be protected against misleading and deceptive information and

 The right to be given sufficient information to make an informed choice

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Deceptive Advertising

There are three types of deceptive advertising

1) Fraudulent Advertising: a straight forward lie

2) False Advertising: Involves a claim – fact discrepancy. That is the product’s claimed benefits
are fulfilled only unless certain conditions that may not be clear in the advertising, or the
product must be used in a certain manner or with certain precautions.
3) Misleading Advertising: It involves a claim-belief interaction. In this case an advertisement
interacts with certain consumer belief and results in a misleading claim.

The solution for the above problem includes:

a) Advertising Substantiation: Here, marketers are obliged to make proof of their claims
accessible to the public-such claims may include about a product's safety performance,
efficacy, qualify or comparative price. Hence, the company must provide tests, studies, or
other data to support their claim.
b) Corrective Advertising - In some cases companies not only asked to stop making
deceptive claims but also to correct these claims publicly. The rational for requiring such
corrective advertising is that deceptive claims have a residual effect and if uncorrected
could remain in consumer memory for a period of time.

Information Disclosure

Does the right to information include the right to adequate information to ensure a wise
purchase? There are two positions on this issue: The view of most businesses is that the buyer
should be guided by his or her judgment of the brand does qualify. Consumer activists believe
that business and impartial sources should provide full information and should reveal
performance characteristics. The Question of the efficacy of providing more information to
consumers does not resolute a basic question: Will consumers use the additional information
provided? Consumers do not always use the information markets provide to make purchase
decisions. If product involvement is low, information requirements may be minimal.
Information disclosure works best when guided by consumer research. By tailoring information
messages to consumers most likely to benefit from them, marketers can significantly increase
the likelihood that those consumers will make an informed decision on using or not using the
product.

3.2.2. The Right to Choose

Consumer satisfaction requires the ability to evaluation alternatives in the market place.
Consumer advocates argue that large corporations restrict choice by discouraging market entry.
The marketer of a leading brand may advertise heavily, preempt shelf space within the store

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and offer frequent price deals and coupons. Such actions tend to make competitive entry more
difficult and thus restrict choice. The potential for market dominance may create monopoly
powers that restrict consumer choice. It may force consumers to accept questionable quality
and/or high prices. Competition typically motivates marketers to offer improved quality and
fair pricing. In those industries in which competition is not workable government regulation is
substituted to assure satisfactory quality and service at fair price.

3.2.3. The Right to Be Heard

The consumer has the right to express dissatisfaction with a product and to have complaints
resolved (redressed). If not satisfied, consumers can react in three ways.

 The first and most common is simply not to buy again.

 A second reaction is to express dissatisfaction to others. Such negative word of mouth is
the most harmful effect of dissatisfaction because it goes beyond one consumer’s reaction
 A third reaction is to seek readdress. But few dissatisfied customers bring their complaints
to the marketer’s attention. They think that it is not worth the time and effort. However,
when financial risk and product involvement are higher, complaint behavior increases.

3.3. Problems Attributed to Consumers

Despite the best efforts of researchers, government regulations, and concerned industry people,
sometimes consumers’ worst enemies are themselves. Sometimes, consumers’ desires, choices,
and actions often result in negative consequences to the individual and/or society in which he
lives.

Some of these actions are the following.

 Addictive Consumption: It is a physiological and/or psychological dependency on products

or services.
 Compulsive Consumption: Some consumers shop because they are compelled to do so, as if
they were born to shop. It is not because shopping is a pleasurable or functional task.
Compulsive consumption refers to repetitive shopping, often excessive, as an antidote to
tension, depression, or boredom. “Shopaholics” turn to shopping much the way addicted
people turn to drugs or alcohol.
 Consumed Consumers: People who are used or exploited, willingly or not, for commercial
gain in the marketplace can be thought of as consumed consumers. The situation in which
consumers themselves become commodities includes selling body parts and babies.
 Consumer Theft: Shrinkage is the industry term for inventory and cash losses from
shoplifting and employee theft.

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 Anti-Consumption: Some types of destructive consumer behavior can be thought of as anti-
consumption, events in which products and services are deliberately defaced or mutilated.
This includes mild acts like spray-painting on buildings, release of computer viruses.

2.4 Diffusion of Innovation

2.4.1. The Diffusion Process

Consumers do not really buy products; they buy benefits. That is, we make purchases not for
the sake of the products themselves, but for the problems they solve, for the needs they satisfy,
or for the opportunities they offer. This is most evident with innovations, for the best new
products share the characteristics that they are developed around important consumer benefits
and within markets that are large enough to support them. New products are always possible
because the benefits consumers seek are constantly changing as values shift, lifestyles change,
and new technologies emerge. Diffusion of innovation is a process through which a new
product moves from initial introduction to regular purchase and use. In other words it is the
process of acceptance or adoption of a product by consumers. By understanding innovation
diffusion, marketers are able to offer the type of new product that best meets the needs of
targeted consumers and promote it in such ways that it is readily accepted by them.

2. 4.2. Types of Innovations

There are two ways of viewing innovations.
1. Innovation is any product that is measurably different from existing goods and services.
For instance, when home theater entertainment centers were introduced, they were
technically very different from older television sets.
2. Innovations are any product that is perceived as new by target consumers. Some new
products are more readily accepted and adopted by consumers than others. One reason for
this is that they require little effort on the part of consumers to incorporate them into their
lifestyles.

It is useful for marketers to classify each innovation according to the ease with which it can be accepted.
Doing so provides insight into the offers, its use, and the changes in consumption patterns it may require.
Using this perspective, there are three types of innovations:

 Continuous innovations: When products that are already accepted and used by consumers
are modified, and these changes require little or no effort on the part of consumers to
modify their behavior in order to use them. Example: adding fluoride to toothpaste, extra
vitamins in a packed food.
 Dynamically continuous: disrupt the consumer's use patterns but still do not radically alter
them. Example: Push-button telephones, electric toothbrush, automatic elevators.
 Discontinuous innovations: necessitate real change in consumption and behavior patterns.
Example: Cars, radios, airplanes and television sets. More recently, online grocery shopping

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 services, automatic teller machines, card payment systems all require radical changes in
behavior.

2.4.3. The Adoption process

Consumers go through five stages in the process of adopting a new product:
A. Awareness: The consumer becomes aware of the new product, but lacks information about it.
B. Interest: The consumer seeks information about the new product.
C. Evaluation: The consumer considers whether trying the new product makes sense.
D. Trail: The consumer tries the new product on a small scale to improve his or her estimate of
its value.
E. Adoption: The consumer decides to make full and regular use of the new product.

2. 4.4. A Profile of Consumer Innovator

We evaluate products in terms of nine key characteristics.
1. Relative Advantage: The relative advantage of an innovation is the extent to which
consumers in the target market perceive it to be superior in some important way to existing
products.
2. Compatibility: Compatibility is the degree to which an innovation fits with the needs,
values, and past experiences of the consumer.
3. Complexity: How difficult is it to understand and use an innovation? In general, the more
complex the product, the lower the likelihood of acceptance.
4. Tria-ability (Divisibility): It is the degree to which an innovation may be sampled or tried
out. Divisibility is the ability to separate the product into units small enough to try out. For
example, a new hairstyle that requires cutting or shaving is not trialable.
5. Observability (communicability): If an innovation is seen in the target market or if it can
easily be shown or described by the marketer, it is considered observable or communicable.
High Observability (communicability) increases the odds that an innovation will catch on.
6. Value: Does an innovation offer value for money? Is the benefits package it offers sufficient
to justify the price asked? Perception of value affects not only high priced products. No
matter what the price, the question is always whether the added features of an innovation
are worth the extra cost to the consumer.
7. Use: Do target consumers feel they will use a product sufficiently to justify its purchase? If
an innovation does not fit easily into the normal use patterns of consumers, it is unlikely to be
adopted. When personal computers were first introduced, powerful, high-speed machines
were not attractive in most households because people typically used the computer only for
word processing, or to play games.
8. Risk: If the level of economic, psychological, social, physical, or performance risk is
perceived to be too high, an innovation will not be readily accepted. In some cases, trial
offers lessen concerns about risk.
9. Price: Cream skimming discourages innovation.

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