Consumer decision-making

process
UNIT – III
The consumer decision-making process
involves five basic steps.
• 1. Problem recognition
• The first step of the consumer decision-making process is recognizing the need
for a service or product. Need recognition, whether prompted internally or
externally, results in the same response: a want. Once consumers recognize a
want, they need to gather information to understand how they can fulfill that
want.
• Develop a comprehensive brand campaign to build brand awareness and
recognition––you want consumers to know you and trust you. Most
importantly, you want them to feel like they have a problem only you can solve.
• 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.
• 2. 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. In the
information stage, they may browse through options at a physical location or consult
online resources, such as Google or customer reviews.
• Your job as a brand is to give the potential customer access to the information they
want, with the hopes that they decide to purchase your product or service. Create a
funnel and plan out the types of content that people will need. Present yourself as a
trustworthy source of knowledge and information.
• Another important strategy is word of mouth—since consumers trust each other more
than they do businesses, make sure to 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.
Methods of problem solving
• Here are some problem-solving methods specifically tailored to consumer
behavior:
• Consumer Research: Conduct comprehensive consumer research to gather
insights into the attitudes, preferences, motivations, and behaviors of your
target audience. Utilize both qualitative and quantitative research methods
such as surveys, interviews, focus groups, observations, and data analytics to
gain a deep understanding of consumer needs and desires.
• Psychological Analysis: Apply psychological theories and principles to analyze
consumer behavior. Study factors such as perception, learning, memory,
motivation, attitudes, and decision-making processes to uncover underlying
drivers of consumer behavior and develop strategies to influence consumer
actions.
• Segmentation and Targeting: Segment the market based on demographic, psychographic,
behavioral, or geographic factors, and then target specific segments with tailored marketing
messages and offerings. By understanding the unique needs and characteristics of different
consumer segments, marketers can address specific challenges and opportunities more
effectively.
• Consumer Journey Mapping: Map out the consumer journey from awareness to purchase
and beyond to identify key touchpoints, interactions, and pain points. By understanding the
consumer's path to purchase and the factors influencing each stage, marketers can develop
strategies to optimize the consumer experience and address barriers to conversion.
• Social and Cultural Analysis: Analyze social and cultural influences on consumer behavior,
including social norms, cultural values, reference groups, and social identity. Consider how
these factors shape consumer preferences, attitudes, and purchase decisions, and tailor
marketing strategies accordingly to resonate with target audiences.
• Behavioral Economics: Apply insights from behavioral economics to understand how
cognitive biases, heuristics, and decision-making shortcuts influence consumer behavior.
Identify opportunities to nudge consumers towards desired actions by framing choices,
leveraging social proof, scarcity, reciprocity, and other behavioral principles.
• Customer Feedback and Listening: Actively solicit and listen to customer feedback
through surveys, reviews, social media, and other channels. Pay attention to customer
complaints, suggestions, and preferences to identify areas for improvement and
address consumer concerns effectively.
• Personalization and Customization: Leverage data-driven personalization and
customization techniques to deliver relevant and targeted marketing messages, product
recommendations, and offers to individual consumers. By tailoring experiences based
on consumer preferences and behaviors, marketers can enhance engagement and
satisfaction.
• Experimental Approaches: Conduct controlled experiments or A/B tests to evaluate
different marketing strategies, messages, and interventions. Test hypotheses about
consumer behavior and preferences to identify what resonates best with your target
audience and refine marketing strategies accordingly.
• Continuous Monitoring and Adaptation: Monitor consumer behavior trends, market
dynamics, and competitive landscape on an ongoing basis. Be agile and adaptive in
responding to changes in consumer preferences, emerging trends, and external factors
to stay ahead of the curve and address evolving challenges effectively.
• 3. Alternatives evaluation
• At this point in the consumer decision-making process, prospective buyers
have developed criteria for what they want in a product. Now they weigh
their prospective choices against comparable alternatives.
• Alternatives may present themselves in the form of lower prices, additional
product benefits, product availability, outlet selection or something as
personal as color or style options. Your marketing material should be
geared towards convincing consumers that your 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.
Outlet selection
• Identifying Alternatives: Consumers first identify potential outlets where they can
purchase the desired product or service. These outlets could include brick-and-mortar
stores, online retailers, specialty shops, department stores, or direct sellers.
• Evaluation of Outlets: Consumers evaluate different outlets based on various factors
such as location, convenience, reputation, assortment of products, pricing,
promotions, atmosphere, service quality, and past experiences.
• Decision Criteria: Consumers consider their preferences, needs, and priorities when
selecting an outlet. Factors such as price sensitivity, brand loyalty, convenience,
product availability, and the overall shopping experience influence the decision-
making process.
• Information Sources: Consumers may seek information from various sources to aid
their outlet selection process, including personal experiences, recommendations from
friends or family, online reviews, advertising, and promotional materials.
• 4. Purchase decision
• This is the moment the consumer has been waiting for: the purchase.
Once they have gathered all the facts, including feedback from
previous customers, consumers should arrive at a logical conclusion
on the product or service to purchase.
• If you’ve done your job correctly, the consumer will recognize that
your product is the best option and decide to purchase it.
• 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.
Purchase Decision
• Evaluation of Alternatives: After selecting an outlet, consumers may further evaluate
alternative products or brands available within that outlet. They compare features, prices,
quality, and other attributes to make an informed purchase decision.
• b. Decision-Making Process: Consumers weigh the pros and cons of different options and
consider factors such as perceived value, brand image, product attributes, perceived risk,
and their own preferences and needs.
• c. Influences on Decision: Various internal and external factors can influence the purchase
decision, including personal preferences, past experiences, social influences, marketing
messages, promotions, and situational factors (e.g., urgency, budget constraints).
• d. Final Decision: Consumers make the final purchase decision based on their evaluation
of alternatives, balancing rational considerations with emotional or psychological factors.
This decision may involve choosing a specific product variant, quantity, and payment
method.
• 5. Post-purchase evaluation
• This part of the consumer decision-making process involves reflection from
both the consumer and the seller. As a seller, 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?
• Remember, it’s your job to ensure your customer continues to have a
positive experience with your product. Post-purchase engagement could
include follow-up emails, discount coupons, and newsletters to entice the
customer to make an additional purchase. You want to gain life-long
customers, and in an age where anyone can leave an online review, it’s
more important than ever to keep customers happy.
Post purchase behavior
• Post-purchase behavior refers to the specific decisions and actions of
a consumer after they have made a purchase. These can be important
indicators of consumer satisfaction or dissatisfaction. Additionally,
post-purchase behavior can also help marketers to understand what
factors may have influenced a customer's decision to make a
purchase.
Post purchase Dissonance
• Post-purchase dissonance is a phenomenon that occurs when a consumer feels
discomfort or uneasiness after making a purchase. Or cognitive dissonance
consists the feeling of doubt or anxiety whether we made the correct decision.
This feeling is caused by a discrepancy between the expected outcome of the
purchase and the actual outcome. For example, a consumer may experience
post-purchase dissonance if they buy a new car and it doesn't perform as well
as they thought it would.
• Post-purchase dissonance is also known as post-purchase regret, buyer's
remorse, or post-purchase cognitive dissonance. It is a common phenomenon
that most people have experienced at some point.
Cognitive Dissonance
• Cognitive dissonance is a term for the state of discomfort felt when
two or more modes of thought contradict each other. The clashing
cognitions may include ideas, beliefs, or the knowledge that one has
behaved in a certain way.
• The inconsistency between what people believe and how they behave
motivates them to engage in actions that will help minimize feelings
of discomfort. People attempt to relieve this tension in different ways,
such as by rejecting, explaining away, or avoiding new information.
• There are several factors that can contribute to post-purchase
dissonance.
1. Substantial risk: if the product is expensive, durable, reflect social
group values and technologically advance than perceptions of risk will
be higher and post purchase doubts will be more likely to occur. These
doubts or dissonance also effected by the kinds of or features of
consumers such as middle income or low income group, semi literate
human beings – the have more doubts about their purchase than
others.
2. Close substitutes – consumers are facing lots of problems in
selection of product or brand when close substitutes are available and
their problems further increases when product required is of technical
and scientific specifications.
3. Contrast features – dissonance is more likely to increase when the
chosen alternatives has alternative features. The product fits the
consumer’s need and has some very strong positive characteristics but
few attributes are not quite what the consumer wanted.
4. Nature of purchase decision: purchase decision is of reversible and
irreversible nature. In case of irreversible nature of purchase decision
the purchase product will not be exchanged or returned that is why
consumer feels high level of dissonance.
Signs of Cognitive Dissonance

• Everyone experiences cognitive dissonance to some degree but that doesn't

mean that it is always easy to recognize. Some signs that what you are feeling
might be related to dissonance include:
• Feeling uncomfortable before doing something or making a decision
• Trying to justify or rationalize a decision you've made or action you have
taken
• Feeling embarrassed or ashamed about something you've done and trying to
hide your actions from other people
• Experiencing guilt or regret about something you've done in the past
• Doing things because of social pressure or a fear of missing out (FOMO), even
if it wasn't something you wanted to do
Examples of Cognitive Dissonance

• You want to be healthy, but you don't exercise regularly or eat

a nutritious diet. You feel guilty as a result.
• You know that smoking (or drinking too much) is harmful to your health,
but you do it anyway. You rationalize this action by pointing to your high
stress levels.
• You'd like to build up your savings but tend to spend extra cash as soon
as you get it. You regret this decision later, such as when facing an
unexpected expense that you don't have the money to cover.
• You have a long to-do list but spend the day watching your favorite
shows instead. You don't want your spouse to know, so you try to make
it look like you've worked hard all day.
Causes of Cognitive Dissonance
• Forced Compliance : Sometimes you might find yourself engaging in behaviors that
are opposed to your own beliefs due to external expectations at work, school, or in a
social situation.2 This might involve going along with something due to peer
pressure or doing something at work to avoid getting fired.
• New Information: Sometimes learning new information can lead to feelings of
cognitive dissonance. For example, if you engage in a behavior that you later learn is
harmful, it can lead to feelings of discomfort. People sometimes deal with this by
finding ways to justify their behaviors or findings ways to discredit or ignore new
information.
• Decisions : People make decisions, both large and small, on a daily basis. When faced
with two similar choices, we are often left with feelings of dissonance because both
options are equally appealing.
Once a choice has been made, however, people need to find a way to reduce these
feelings of discomfort. We accomplish this by justifying why our choice was the best
option so we can believe that we made the right decision.
By removing consumers' dissonances, marketers are able to not only
acquire new or retain the existing consumers, but also create a positive
brand image for their organization. Therefore, all marketers must fully
comprehend how cognitive dissonance results in changes and how it
can be used for the benefit of the company.
How to avoid/reduce post purchase
dissonance
• Post-purchase dissonance can be a difficult feeling for customers to
deal with. As a result, it is important for marketers to be aware of the
different ways to avoid or mitigate post-purchase dissonance.
Common tactics for mitigating post-purchase dissonance revolve
around promotions that highlight the positive aspects of a product, as
well as direct communication with customers.
a) Focus on buyer’s need: marketers and its sales force must
understand that what important need has provided motivation to the
consumer and concentrate on it and later on convince the consumer
about the product and its attributes.
b) Speak their language: marketers need to use their language since few
things are more alienating than dealing with someone who speaks in jargon
and acronyms that we do not understand and with information provided in
their language- they feel confident to take decision related to purchase.
c) Use of sales enablement technology: modern sales enablement
technology is designed to empower sales people to create a specific,
personalized message for each customer. These messages are designed and
delivered according to the requirements of customers and enable
customers to be confident in taking their decisions.
d) Prioritize contents the buyer focus on: consumers have different
requirements for the product to be purchased and these requirements
should be given priority. This is most important for marketers to
understand these requirements priority and can minimize cognitive
dissonance.
Diffusion of Innovation
• Diffusion of Innovation (DOI) is a theory popularized by American
communication theorist and sociologist, Everett Rogers, in 1962 that
aims to explain how, why, and the rate at which a product, service, or
process spreads through a population or social system. In other
words, the diffusion of innovation explains the rate at which new
ideas and technology spread. The diffusion of innovation theory is
used extensively by marketers to understand the rate at which
consumers are likely to adopt a new product or service.
• DOI is designed in two process – 1)Diffusion
2) Adoption
Five characteristics which play an important
role in influencing the diffusion process:
• 1. Relative Advantage:
• The first characteristic is the new product’s relative advantage i.e., the degree
to which it appears to be better and superior than the existing products. If
the consumer perceives, the new product to be relatively superior as
compared to the existing products, more is the chance of the innovation
being adopted. For example, ‘E-mail’ and Fax were considered to be better
and superior to Telex.
• Similarly, cellular phones over took pagers, because they were accepted to
have better communicative features in comparison. This perception of
greater relative advantage in using ‘E-mail’ as well as cellular phones as
communication network, resulted in sooner acceptance of this concept or
new idea.
2. Compatibility:
• The degree to which potential consumers feel that the new product is
consistent with their existing needs, values and practices is a measure of its
compatibility. Greater the degree of compatibility, sooner will the innovation
be acceptable to the consumer. For example, ‘Laptop’ computers are highly
compatible with the needs and lifestyle of senior executives of companies.

3. Complexity: The third characteristic is the innovation’s complexity. This

means the extent or degree to which the new product is relatively difficult to
understand or use. Greater the degree of complexity, more time will be
required for the product to be accepted. For example, personal computers are
complex and therefore took a lot of time to penetrate Indian homes. This issue
of complexity is important when entering a market with hi-tech consumer
products.
4. Trialability: it is related with the trial of the innovative products/services.
Acceptability of innovative products is largely depends on the ease with
which the product can be tested and tried. Consumer market witnessed the
small packets of innovative products and with this small pack they are able to
assess the ability of products to fulfil their expectations. So the higher the
degree of trialability, greater would be the rate of diffusion.
5. Observability: The fifth characteristic is the innovation’s communicability.
The degree to which the results are observable or can be described to others
or the ease with which a new product’s salient features are observed.
A new product concept will work if the new technology or new product usage
can be described and demonstrated. For example, ‘Eureka Forbes’ has been
able to gain easy acceptance of its products such as the ‘Aquaguard’ and
‘Vacuum cleaner’ through adopting the method of observation through
demonstration.
Stages In Innovation
• Innovation Stage:
• This stage marks the introduction of the new idea, product, or technology into the social
system. Innovators, who are typically a small percentage of the population, are the first to
adopt the innovation. They are often risk-takers, enthusiasts, or experts in the field.
• Early Adopters Stage:
• Early adopters are the next group to adopt the innovation after the innovators. They are
opinion leaders and influencers within their social networks and are highly respected for
their judgment. Early adopters have a higher social status and are willing to take risks to
try new ideas or technologies.
• Early Majority Stage:
• The early majority represents the next phase of adoption, comprising a larger segment of
the population than the innovators and early adopters combined. Members of the early
majority are pragmatic and deliberate in their decision-making process. They observe the
experiences of early adopters before deciding to adopt the innovation themselves.
• Late Majority Stage:
• The late majority consists of individuals who adopt the innovation after the
early majority. They are typically more skeptical and conservative in their
attitudes towards change. Members of the late majority adopt the innovation
out of necessity or peer pressure rather than intrinsic motivation.
• Laggards Stage:
• Laggards are the final group to adopt the innovation, representing the
smallest percentage of the population. They are resistant to change and tend
to hold traditional values and beliefs. Laggards may adopt the innovation only
when it becomes unavoidable or when traditional alternatives are no longer
available.
Adoption Process
• Awareness:
• The adoption process begins with individuals becoming aware of the
existence of the new idea, product, or innovation. This awareness can be
triggered through various channels such as advertising, word-of-mouth,
personal observation, or media coverage.
• Interest:
• Once individuals are aware of the innovation, they develop an interest in
learning more about its features, benefits, and potential applications. They
seek out information, ask questions, and actively engage with sources that
provide more details about the innovation.
• Evaluation:
• During the evaluation stage, individuals assess the innovation's potential
value and relevance to their needs, preferences, and circumstances. They
compare it with existing alternatives, consider its advantages and
disadvantages, and weigh the potential risks and benefits of adoption.
• Trial:
• After positively evaluating the innovation, individuals may decide to
experiment with it on a trial basis. This could involve testing a sample, trying
out a free trial version, or using the innovation in a limited capacity to assess
its performance and suitability.
• Adoption:
• If the trial experience is positive and the benefits outweigh the costs and
risks, individuals make the decision to adopt the innovation fully. Adoption
involves integrating the innovation into regular use or practice, committing to
its long-term use, and potentially advocating for its adoption to others.
Resistance to Innovation
• Value Barrier:
• The value barrier can be said to be a product’s lack of relative advantage when
compared to its substitutes. When cellular phones were launched in India, being costly,
it was considered to be the product of exclusive customers.
• It was also accepted in business markets as a good mobile communication device and
hence worth the cost. Since landline phones were already available, most consumers
felt that the cost of mobile phone was too high in relation to the value they could get
from the landline phones.
• Subsequently, the mobile phone market saw phenomenal changes with many
manufacturers such as Bharti (Airtel), Hutch, Reliance etc., entering it and pushing down
the price of the handset and offering various schemes that help in reducing the monthly
charges. Simultaneously, the mobile phone companies are also using various media to
convey information on their product- service offering’s value to their target market.
• Usage Barrier:
• A usage barrier takes place when a product or service is not compatible with
the consumer’s existing habits. For instance, even though we are in the I.T
(Information Technology) age with a reasonable percentage of the consumers
being tech savvy, online shopping has not found wide acceptance.
• There is resistance from customers who prefer to visit shops, examine the
merchandise, and have their queries attended to by the store personal.
Moreover, they feel there is a fun element involved when shopping with
friends and relatives. The usage barrier in online shopping occurs because
they feel it is not compatible with their desire for visual treat and social
interaction involved in shopping when compared to e-shopping.
• To a certain extent, marketers are handling this barrier by having opinion
leaders (persons who have personal experience with the benefits of e-
shopping) communicate about the positive aspects of online shopping.
• Risk Barrier:
• A risk barrier refers to the consumer’s physical, economic,
performance or social risk in adopting an innovation. When cellular
phones were introduced, consumers were worried about risks due to
reports about physical risks of radiation from frequent and long usage
of the mobile phones.
• But technological improvements and media communication to
educate consumers, helped to reduce consumers perception of these
risks. Initially, consumers had fears about personal computers (PC)
price (economic) and performance (complicated software languages).
• This risk has been largely reduced by lowering the price of PCs as well
as new, easily understandable software packages being made
available in the market.