Purchase Decision

Process
By
Dr Subhadip Sarkar
Assistant Professor
DMS NIT Durgapur
 • Supply and demand play key role Introduction
in the studies of Economics. Choose value

• Demand is the willingness to buy Market MARKET selection & Value positioning

backed by the purchasing power. Segmentation targeting

Provide value
It is the quantity of a good that
consumers are willing and able to Product
development
Service
development
pricing Sourcing
making
Distributin
g
purchase at various prices during Communicate value
Servicing

a given time.
Advertisement Sales force Sales promotion
• Market is place where sellers and
buyers interact. Marketing is the In economics, "competition" is the
rivalry among sellers trying to
process of identifying customers achieve goals such as increasing
and meeting the needs and wants profits, market share, and sales
volume by varying the elements of
of the customers by "creating, the marketing mix: price, product,
communicating, delivering, and promotion and place.
exchanging" goods and services
cbuying decision 11/17/2024 2
 • The science of consumer behaviour attempts
to explain how the purchase decision is made Introduction
by a consumer so that a marketing decision
can be made. In short, the steps that the
individuals or groups go through to select,
purchase, and use goods, services, ideas or Occupying more market
experiences to satisfy their needs and desires. share means the
addition of more
It searches for the answers regarding few WH
individual customers. So
questions: it is essential to know
1. Process phases: A buying decision is made that how do they decide
by a consumer owing to the reason for to buy?
solving his or her consumption problem
(When do we buy)?
2. Factors that influence it (why do they buy
what compels him/ her).
cbuying decision 11/17/2024 3
 Pre-purchase stage: 1) facing the consumption problem
Introduction and identifying the need to solve it, 2) searching and
collecting the information, 3) evaluating the alternatives,
Psychological 4) selection of the best alternative
influences: Sociocultural
•Motivation influences:
•Personality Consumer •Personal influence
•Perception purchase •Reference groups
•Learning Decision-
making •Family
•Values, beliefs, and process •Social class
attitudes •Culture
•Lifestyle •Sub-culture
Purchase stage: finalising the purchase
Marketing mix Post- Situational influences:
influences: purchase •Purchase task
•Product stage: 1) •Social surroundings
•Price consumption
•Physical surroundings
•Promotion •Temporal effects
•Place (distribution) and evaluation •Antecedent states
of the
cbuying decision 11/17/2024 6-4
purchased
brand during
 Concept of value
Maximum value is obtained when the essential function is
achieved at minimum cost. A manufacturing unit would like to
provide the required function or service at the desired time and
place and with the essential quality at a Lowest cost with
reliability.
According to Marketing principle it is dependent on quality,
service and price (Customer should look into it)
In an equation form of value
Benefits obtained / cost incurred) Costs incurred for the
from the
= (benefits
product product

• Functional value • Monetary cost

• Service value • Time cost
• Personnel value • Energy cost
• Image value • Psychic cost
cbuying decision 11/17/2024 5
 Problem Recognition Bill realizes that
he is fed up with
his puny b/w TV • Does this
process look
Information Search Bill talks to a familiar?
few of his friends
The about a new TV • How does it
Consumer differ for low
versus high risk
Decision- Evaluation of Alternatives Bill goes shopping
to compare TVs products?
Making of different brands
• Has anyone done
Process Bill chooses one
it differently?
Product Choice
model/brand for its • Which is the
features and price most critical
stage?
Post-purchase Evaluation Bill takes the TV
home and becomes
a couch potato 11/17/2024

cbuying decision 6-6

 • According to the Wentz-Eyrich
model emphasised that the
Phases of the Process
process starts much before the
actual buying and continues
after that. As per these authors • Engel-Blackwell-Miniard
the process passes through the proposed 5 steps which were
following set of steps: found beneficial for the
• Stimulus: marketing departments:
• Problem identification: 1. Problem identification
• Searching for the alternatives:
(need):
• Evaluation of the alternatives: 2. Searching for the
information:
• Making the purchase decision:
• Post purchase behaviour:
3. Evaluation of the
alternatives:

cbuying decision
4. Making the purchase
11/17/2024 7
 • Problem identification 1. Phases of the Process
(need): Abraham Maslow
defined need as a
physiological or
psychological deficiency (a
stimulus) that a person
feels the compulsion to
satisfy. This need can
influence a person’s work
attitudes and behaviours.
• Stimulus: it can appear in
various forms and emerging
from various sources, like,
friend, neighbour, family
(social), producer, retailer
etc.,
cbuying decision
(latent), from 11/17/2024 8
 Feeling the need and recognising product advantage
Physiological needs: Refers to the needs
that must be met in order for people to
survive. A person starts at the bottom of
the hierarchy (pyramid) and initially
seeks to satisfy basic needs (e.g. food,
shelter). Stimulus from basic need
Safety or Security needs: Refers to the
desires necessary to make people feel
safe and stable. Safety needs at work
could include physical safety (e.g.
protective clothing as well as protection
against unemployment, loss of income
through sickness etc.).
Social needs: Refers to the human need
to be accepted as part of a friendship
group or family. These would include the
need for love and belonging (e.g.
cbuying decision 11/17/2024 9
 Feeling the need and recognising product advantage
Esteem needs: Refer to the
desires for recognition and being
able to have self-respect. Esteem
needs are about being given
recognition for a job well done.
They reflect the fact that many
people seek the esteem and
respect of others. A promotion at
work might achieve this.
Self-Actualisation: Refers to the
force that drives a person to
become the best he/she can be.
Self-actualisation is about how
people think about themselves -
cbuying decision 11/17/2024 10
• The amount of effort a consumer Concepts of Interest
puts into a decision varies
depending on how involved the • Involvement is determined by
consumer is with the purchase. the consumer, not the
Involvement: the relative product, and the level will
importance of perceived influence:
consequences of the purchase
to a consumer. The level of
• the amount of time spent
making the decision
involvement determines the
extent of effort a person puts • the amount and quality of
into the purchase decision. information sought
• In low involvement purchases, • Involvement is also influenced
consumers view the purchase as by the perceived risk felt by
unimportant and the outcome of the consumer.
thecbuying
decision
decision
inconsequential •
11/17/2024
Buying a digital camera would
6-11

• High involvement purchases be an example of a high

 • Types of decisions: purchase
decisions will vary in the amount Concepts of
of effort consumers make in the Interest
process, according to their level
of interest and the nature of the
task.
• Habitual decision making: Habitual
familiar, low value, convenience
goods, decisions made by habit or Limited
brand loyalty.
• Limited problem solving: some Extended problem

effort required, rules of thumb are

Decision making effort
used to simplify decisions.
11/17/2024 6-12

• Extended problem solving: most

complex, higher risk and value.
cbuying decision
 2. Phases of the Process
• Searching for the information: after the identification of the need
the consumer will find the means to satisfy it. If a person is fully
aware of the product he needs and thus he also knows about the
alternatives. He rather will directly buy. In this scenario the marketer
would provide complete information. Here the sources could be:
1. Internal: past investigations, uses, experiences are used to fulfil the
need
2. Group resources: friend, neighbour, family (social groups) are useful
to take a buying decision
3. Marketing resources: communication made by the firm through ads,
promotions etc
4. Public resources: mass media (news paper, reports from consumer
organizations), technicians reports (refers to quality of the product).
5. Experimental resources: it contains the prior trial and examination
cbuying decision 11/17/2024 13
 Information for a Rational decision-making
• In economic theory, consumers are Limitations of consumers
portrayed as making rational
• Consumers are limited in
decisions
their skills
• Consumers attempt to maximize • Consumers are limited by
their utility continuously within the their existing values and
constraints of limited resources goals

• Consumers must • Consumers are limited in

the extent of their
• Be aware of all available product knowledge
alternatives • Doesn’t take into account
the impacts of advertising
• Be capable of correctly ranking and marketing
each in terms of benefits and
costs
cbuying decision 11/17/2024 14
 3.1 Phases of the Process
• Define the alternatives: having collected information from various
sources the customer would follow the three steps:
• Define information: after the identification of the need the consumer will
collect information about the product which could satisfy the need.
• Understand information: there will be a mental exercise which will lead to
the list of needs and the kind of benefits which can be obtained from the
products.
• Determine the alternative: depending on the research, memory, and past
experience he would list up the alternatives.
• The aim is to determine the alternatives (desirable and undesirable) which
can satisfy the needs and wants. Merits and demerits are recorded for
each alternative. If the available information can satisfactorily meet the
needs then the next step is followed.

cbuying decision 11/17/2024 15

 3.2 Phases of the Process
• Evaluating the alternative decision: the consumer has to assess
the goodness of each of alternative and then to select the best one.
In a simplest case one selects the best quality good at a lower price
than a medium quality item at a higher price. The multi-criteria
decision making process is normally applied here (list of criteria is
being prepared and each alternative is assessed as stated in the
example):
• The consumer is well informed about all the brands and trade marks
• He is also aware of the advantages obtained from all the brands
considered
• He will select that brand which will have greatest no of features
• He will make a decision to buy a brand
cbuying decision 11/17/2024 16
 Identification of a problem Decision
Identification of Decision
Criteria
Making Process
Allocating of weight-age to • Decision:
criteria
• A Choice from two
Development of Alternative or more alternatives
is called.
Analysis of Alternative
• Decision Making
Process:
Selection of an Alternatives
• A set of eight steps
Implementation of the alternative including
identifying a
cbuying decision
Evaluation of Decision Effectiveness problem, Selecting
11/17/2024 17

an alternative, and
evaluating the
 DEFINITION OF MULTI-CRITERIA DECISION
MAKING
• MCDM is a process which enables to MULTI- objective DECISION
choose a satisficing alternative among MAKING
a set of alternatives decision after
analyzing them through a set of criteria
Solution space
• There are two types of problems:
MULTI- objective DECISION MAKING
& MULTI attribute DECISION MAKING
• The diagram shows a Pareto frontier f2(x)
when the two functions are minimized
simultaneously Pareto Frontier
• Any point on the frontier is dominating
a point which is located inside the f1(x)
solution space 11/17/2024 18
 Satisfying solution
• It is a non-dominated solution which ensure the following condition:
• A non-dominated solution (for MADM) will always persuade an
inequality of for any value of k (provided that each criterion is
meant for making benefit). In a condition with two objectives () each
required to be maximised, an alternative is called a Pareto optimal
(a non-dominated point) if there exists no alternative point such
that is held for any pair of weights . here

where each alternative , an element of a set ,

is scanned through each criterion a (an
element of a set ):

11/17/2024 19
 Step 1: Identifying a
problem

• Inconsistency between an existing and a desired state of

affairs.
“My sales representatives Need new Computer”

cbuying decision 11/17/2024 20

 Step 2: Identifying decision criteria

• Criteria that define what’s relevant in a decision. Each criterion (objective) is the
reflection of the desire of a decision maker which ultimately delineates the way
to thrive. (THEY MAY BE CONFLICTING IN NATURE)

• Price

• Weight

• Warranties

• Screen Type

• Reliability

• Screen Sizes
cbuying decision 11/17/2024 21
 Step 3: Allocating Weights to the Criteria

• Weight the items in order to give them the correct

priority in the decision
Criteria Weight
Reliability…………..…10
Screen Size……………8
Warranties………..……5
Weight………….………5
Price………………..…..4
Screen Type……..……3
cbuying decision 11/17/2024 22
 Step 4: Developing
Alternatives
• To list the viable alternatives that could resolve the problem.

Compaq Acer HP

cbuying decision 11/17/2024 23

 Step 5: Analyzing
alternatives
• After alternatives identification critically analyze each one is
analyzing alternatives.

Model Reliability Screen Warranty Weight Price Screen

Size Type
Acer 8 3 5 10 3 5
TravelMat
737Tl
Compaq 8 5 10 6 6 5
Presario
1800XL

HP omnibook 8 5 5 10 3 10
900
 Step 6: Selecting an
Alternative
• An act of choosing the best alternative from among those
condition.

Model Reliabi Screen Warra Weight Price Screen Type Total

lity Size nty
Acer 8*10= 3*8=24 5*5=2 10*5=5 3*4=1 5*3=15 206
TravelMat 80 5 0 2
737Tl
Compaq 8*10= 40 50 30 24 15 239
Presario 80
1800XL
HP omnibook 80 40 25 50 12 30 237
900
 Step 7: Implementing the Alternative

• Conveying a decision to those affected and getting their commitment to

it.

cbuying decision 11/17/2024 26

 • Evaluating the alternative
decision: But between two
Phases of the Process
steps of selecting the best and
buying it few factors are
inevitable:
1. the need urgency and the
quality that can be expected from
the product
2. Personality, experience and the
level of information available to
him
3. The price of the product (as
higher price will lead to more
thinking from him about the kind
of benefits which would be
gained)
cbuying decision 11/17/2024 27
 3.3 Phases of the Process

• Making the purchase decision: it is the way of choosing one

alternative among the many after a comprehensive evaluation
through a cost and benefit.
• It is an outcome of a sub-decision taken to buy a specific good, of
a specific nature, from a specific outlet (location, price, behaviour
of the sales person), at a specific price, using a specific payment
method (purchase condition, payment method, how much to pay,
additional benefits).
• Lastly, he has to ensure the lowering of risk owing to the
consequence of availing non-effective item (in that case the buyer
might decide to modify, postpone or cancel the process).
cbuying decision 11/17/2024 28
• RISK IS THE EFFECT OF AN ACTION
WHICH MAY LEAD (WITH A CERTAIN Concepts of Interest
PROBABILITY OR A LIKELIHOOD) TO
BAD CONSEQUENCES (SAY HIGH COST, • The consequences of making
MORE TIME OR BAD REPUTATION). Like a bad choice may vary from
minimal (chocolate bar) to
a Perceived risk is the belief that the use severe (university program
of a product has potentially negative or choice of mate!).
consequences, either financial, physical,
• Risk is perceptual, therefore
or social. it can be influenced. How do
• Risk comprises with 1. the probability of marketers reduce the risk
something going wrong, and 2. the perceived by consumers?
negative consequences from it. • What do consumers do to
reduce their perceived risk?
• Risk Analysis is a process that helps you
identify and manage potential problems • Mostly, they look for
information.
that could undermine key business
initiatives
cbuying decision
or projects. To carry out a Risk 11/17/2024

Analysis, one must first identify the

6-29
 4. Phases of the Process
• Making the actual purchase: this phase gets finalised
with the final purchase. During this phase the buyer would
apply their choice strategies and seek price discounts
based on the knowledge about the rival brands
(bargaining). The finalisation process can be influenced
by the way the store is adorned with the relevant
information, presence of other family members, kind of
gathering in the store etc.,.

cbuying decision 11/17/2024 30

 5. Phases of the Process
• Taking the post purchase decision: the buyer now
evaluates the deal. He wants to verify the performance of the
product with the expectation that he made before. This will
lead to the content (when the performance of the product
outweighs the expectation) or discontent (when the reverse
happens). This outcome will be carried forward when the next
purchase of similar kind is witnessed. In this regard, the
marketers would pacify the buyer that his decision was
perfect (as such practice may protect them to lose a
customer). A well balanced post-purchase action would lead to
a less number of return of goods, lesser number of dissatisfied
customers, product complains, order cancellations etc.,.
cbuying decision 11/17/2024 31
 Thank you

cbuying decision 11/17/2024 32