Consumer Decision

Making
Customer decisions are those decision that
customers make in the marketplace as users,
payers and buyers. Decision are often
guided payers and buyers. Decision are often
guided by mental budgeting. by mental
budgeting.
Consumer Decision making process:
Problem Recognition
Problem recognition is the point at which a potential customer realises they
need or want a product or service. It’s the first step in the buying process and
one of the most important. If your customer doesn’t need or want a product or
service, you’ll have a hard time making a sale.
Importance of Problem recognition
 Problem recognition is the most important part of the consumer decisioning process as this is the point where a person
becomes a potential customer and can start the process of buying a new product or a service. This is not only
important for customers but also for the organizations, manufacturers and marketers. The entire product lifecycle
revolves around the problem statement of the customers. If the problems ceases to exist so would be the need for the
product.

EG. - Features phone still function but not many people want them as now the problem recognition is just not about being
able to talk but also to have a multimedia device which can give many additional features like internet connectivity,
social media, apps. If a company does not recognize the changing customer behavior they would never be able to
define the problem statement and may become obsolete.

Examples of Problem Recognition

 The problem recognition might be due to:

 1. A product being out of stock like Oil, floor, raw materials can lead to a problem

2. Dissatisfaction with the current product or state

3. New needs/wants based on the lifestyle and hierarchy in life

4. Related products/purchases e.g. After buying an expensive phone, people look to buy a case immediately to protect

the phone

5. Marketer induced problem recognition which are inactive problems

6. New products and categories e.g. When an iPad was launched, people were working on phones and desktops. After

the launch, a new category got created in the market called Tablet PCs.
Methods of problem solving:
 Extensive Problem Solving

In extensive decision making, the consumers have no established or set criteria for evaluating a product in a particular
category. Here the consumers have not narrowed the number of brands from which they would like to consider and so their
decision making efforts can be classified as extensive problem solving. In this particular set of problem solving phase, the
consumer needs a lot of information to set a criteria on the basis of specific brands could be judged.

 Limited Problem Solving

In limited problem solving, the consumers have already set the basic criteria or standard for evaluating the products.
However, they have not fully set the established preferences and they search for additional information to discriminate
among other products or brands.

 Routinized Response Behavior

Here, in routinized response behavior, consumers have experience with the product and they have set the criteria for
which they tend to evaluate the brands they are considering. In some situations, they may want to collect a small amount of
additional information, while in others they may simply review what they are aware about. In extensive problem solving,
consumer seeks for more information to make a choice, in limited problem solving consumers have the basic idea or the
criteria set for evaluation, whereas in routinized response behavior consumers need only little additional information.
Pre purchase search influences:
 Pre-Purchase Behavior
When a consumer realizes the needs, he goes for an information search. He does the same, so
that he can make the right decision. He gathers the information about the following −

 Product Brands
 Products Variations
 Product Quality
 Product Alternatives.
 The consumer can gather information about a product depending on his age, gender, education
and product’s price, risk and acceptance.
  of
Types The information
Search Activities search activity can be classified into various types such as the following −

 Specific
Specific kind of activities are directly related to the problem. These kinds of requirements need immediate
assistance.

 Ongoing
Consumers go on with their research for a particular period of time if they decide or if they want to buy a
particular product. Ongoing activities basically show the work in progress.

 Incidental
Now, anything that we observe incidentally or just accidentally or naturally comes under incidental research.
Such information can be observed in our daily routine lives.

 Following are the information sources available −

 The information sources are of two types which are listed under:

 Internal Sources − Internal sources includes the consumer himself. Here he himself recalls the information
that is stored in his memory and uses his experiences.

 External Sources − External sources of information include all sorts of interpersonal communication with the
external environment such as friends, family, marketing people, through advertisements, etc.
Alternative evaluation and selection
 After information is secured and processed, alternative products, services, and outlets are identified
as viable options. The consumer evaluates these alternatives, and, if financially and psychologically
able, makes a choice. The criteria used in evaluation varies from consumer to consumer just as the
needs and information sources vary. One consumer may consider price most important while another
puts more weight (importance) upon quality or convenience.

 The search for alternatives and the methods used in the search are influenced by such factors as:

 (a) time and money costs

 (b) how much information the consumer already has
 (c) the amount of the perceived risk if a wrong selection is made
 (d) the consumer’s predisposition toward particular choices as influenced by the attitude of the
individual toward choice behaviour.
Selection
 The selection of an alternative, in many cases, will require additional evaluation. For example, a
consumer may select a favorite brand and go to a convenient outlet to make a purchase. Upon
arrival at the dealer, the consumer finds that the desired brand is out-of-stock. At this point,
additional evaluation is needed to decide whether to wait until the product comes in, accept a
substitute, or go to another outlet. The selection and evaluation phases of consumer problem
solving are closely related and often run sequentially, with outlet selection influencing product
evaluation, or product selection influencing outlet evaluation.
Outlet selection and purchase decision
 Outlet Image
It is the perception of the consumer about the store. It concerns all the attributes associated with the store.
 Advertising
Retailers use price advertising and attract people to stores. People usually come to buy the advertised items
and also end up buying other products. Sales of additional items is known as spillover sales.
 Outlet Location and Size
For the location of the store, convenience is the important factor. The consumers tend to buy from the
store that is closest to them. All other things being equal, larger stores are preferred to smaller stores.
People will go to smaller stores or nearby stores for minor items, but for purchasing items of high
value, or specialty items, people will take the trouble of going to distant places and choose the best.
 Consumer Characteristics
Consumer characteristics must be studied because it gives an idea of the consumer. Different
consumers have different reasons and different desires for shopping. Some buy for convenience others
for an image, some others for fulfilling obligations, etc.
 Inactive shoppers
They do not enjoy shopping and are not concerned much with price, product selection, etc. They have
a restricted lifestyle and restricted interest in shopping.
 Active shoppers
They enjoy shopping, and like to find out about various products. They are knowledgeable and
balance price with quality, fashion, attributes, etc.
 Service shoppers
They give importance to service by the shopkeepers. Both in-store and after-sales service is their main consideration.
 Traditional shoppers
They are active shoppers and engage in outdoor activities. They are knowledgeable and not price sensitive.
 Price shoppers
They are price conscious. They make a lot of search and find the lowest price available. They take the help of
the media for this purpose.
Post Purchase Behaviour
All the behaviour determinants and the steps of the buying process up to this point are operative before or during the
time a purchase is made. However, a consumer’s feelings and evaluations after the sale are also significant to a
marketer, because they can influence repeat sales and also influence what the customer tells others about the product
or brand.
 4 Steps to Improve Post-Purchase Behavior

1. Offer Proper Product Documentation

Boost a customer’s confidence that you have the right product for their want or need: Offer plenty of photos, detailed descriptions,
and reviews. Shopify estimates that more than half of online returns are due to sizing issues, while others find that 22% of items
are returned because they look different in person than online.
To lessen this risk, use virtual dressing rooms, detailed measurements, a variety of images and other ways customers can be sure
they’re choosing the best item.

2. Focus On Customer Service and Support

Companies like Amazon have set the bar for quick returns and refunds, while others like Athleta’s “Give-it-a-Workout” guarantee lessen the
chance of buyer remorse by letting customers try out a product without losing the opportunity to return it if needed.

3. Returns Management

If a return can’t be avoided, you can improve the customer experience by making the return process fast and frictionless.

4. Understanding Customer Feedback

It’s especially important to gather feedback from customers with post-purchase dissonance.
cognitive dissonance

 In marketing, cognitive dissonance relates to consumers' expectations, feelings about brands and internal logic when
deciding to buy something. Marketers try to be aware of potential conflicts or expectations that might affect buying
decisions. For a marketer, if cognitive dissonance involves purchasing their product, they typically want to resolve the conflict
in favor of what they're trying to sell.

 Here are five steps to using cognitive dissonance in marketing:

 1. Encourage consumer beliefs
 2. Use a consistent tone
 3. Include relevant facts
 4. Appeal to emotions
 5. Solve a pain point