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CONSUMER’S DECISION MAKING

PROCESS
 MEANING OF DECISION MAKING:
• The process by which a person is required to make a choice from
various alternative options is referred to as decision making.

• For example say a housewife goes to purchase a mid price range of


tea, her decision making merely involves making a selection from
the various brands of tea like Taj Mahal, Tata tea, Red Label etc.
• The market environment has been evolving become competitive and
more of a buyers market with each marketer trying to adopt unique
strategies which can result in positive decision making from the
customer’s side.

• While the customer gains from having to decide and select from a
wide array of choices, the marketer will benefit from a substantial
increase in sales when the consumer decides to purchase their
brands.
 PROBLEM RECOGNITION STAGE:
This is the first stage in consumer’s decision making process. During
this stage the consumer recognises the problem and feels that he has
to do something to reduce or solve the problem.

This problem recognition can be due to either an actual state of a


consumer or desired state of the consumer.

Actual state of the problem may occur when the consumer feels the
product or service is not giving the satisfactory performance.

Desired state type of problem occurs when say a consumer who


already owns a motorcycle now desires to purchase a Maruti Alto due
to the rise in his purchasing power.
The marketer needs to understand the circumstances or
environmental cues which acts as a trigger to arouse the needs and
desires of consumers and then develop attractive product displays and
communication programmes.
 INFORMATION SEARCH:
An aroused consumer may or may not be involved in information
system. If the consumers drive is strong and the required product is
easily available (say Pepsi to quench one’s thirst), then he or she may
not seek more information.

But if the consumer’s drive is strong ,and yet he is in a dilemma and


seeking answers to questions such as:

Which product category or particular brand will best satisfy his or her
need?

Where the product(or brand)will be easily available?

What is the experience of the person(s)who has consumed the


product?
Ultimately ,how much information search the person is engaged in
will depend upon:

The strength of his or her inner drive.

The amount of information originally available and the ability to


obtain additional information.

The importance attached to the obtainment of additional information.

The satisfaction the consumer gets from gathering additional


information.
 CATEGORIES OF CONSUMER
INFORMATION SOURCES:
INFORMATION SOURCES SOURCES

Personal Friend’s, family, neighbours,


business associates and
acquaintances, e-mail.

Commercial Advertising, sales person, publicity,


sales promotion.

Public Mass media, consumer rating


organisation, websites.

Experiental Demonstration, handling small


sample pack.
 After going through the information search stage, consumers will be
able to increase his or her awareness of the available brands and their
relevant features in the particular product or service category.

Hence the marketers are required to do research and identify those


information sources preferred by the target consumers and work out a
suitable marketing mix programme.
 EVALUATION OF ALTERNATIVES:
While making an evaluation of the alternatives consumers tend to use
two types of information:

A probable list of brands from which they plan to make the selection.

Decide on the criteria to evaluate each brand.


The probable list or the evoked set refers to the specific brands within
a particular product category which a consumer considers while
making the purchase decision.

This set could include the small number of brands the consumer is
familiar with and finds acceptable too.

Ex: The evolved set for a DVD player by a consumer could include
Sony, Philips, LG, Videocon etc.
 The marketers at this stage need to work on designing promotional
techniques which will communicate a favourable and relevant product
image to the target consumer.

While deciding on the criteria for evaluating brands each customer


will have a set of important product attributes which will be used as a
basis for evaluating brands.

Ex: A consumer intending to purchase a personal computer may look


out for the following attributes i.e. CPU speed, price , type of display
hard disk drive etc.
Marketers need to understand as to how and why consumers evaluate
brands. They must also try to influence buyer’s decision making
process by designing and promoting products matching the beliefs and
choice of the target market.

They should also constantly try to communicate the prominent


features or attributes of the product or service to increase consumer
awareness and interest in the brand.

Ex: Indigo Airlines(Constant communication (via print media) of the


benefits of e-ticketing.
 PURCHASE DECISION:
 The above mentioned Evaluation of Alternatives stage will help the
consumer to take a decision on his or her purchase intention.

To certain extent the consumer’s purchase decision may be influenced


by the attitude of others or the unanticipated situational factors.

 By unanticipated situational factors we mean unforeseen


circumstances such as additional expenses due to family member
falling sick or say one is required to go out of station for a long time on
official duty.

These situations may result in a delay in the purchase intention or


decision.
Nevertheless the consumer’s decision to change, postpone or avoid an
immediate purchase decision will be greatly influence by the
perceived risk factor.

The perceived risk factor can be associated with the transaction


money involved and the consumer’s self confidence to handle the risk
factor.

The marketer should try to help the consumer in his decision making
process by providing all the necessary information through various
reliable sources and thus reduce the consumer’s perception of risk
 POST PURCHASE BEHAVIOUR:
There is a general tendency among consumers to compare their
experience with their expectations when being involved in a post
purchase evaluation process.

 The level of satisfaction experienced by the consumer after his


purchase will depend on the relationship between the consumer’s
expectation and the product’s or service’s perceived performance.

 If the product or service matches expectations the customer is


satisfied otherwise not.
For the consumer’s post purchase behaviour actions will give the
feedback on whether he or she is satisfied or dissatisfied with the
product or service acquired.

Three possible outcomes after the consumer purchases the products


or services:

He is satisfied since the actual performance matches expectations.

The performance of the product surpasses expectations leading to


customer delight.

The performance of the product or service falls below expectations


leading to dissatisfaction.
In the first two instances the consumer is very much satisfied with the
product or service performance and is likely to purchase the same
brand of the product in future too.

In the last outcome the dissatisfied consumer will try to reduce the
dissatisfaction by:

Abandoning or returning the product.

Seeking information that will reinforce its high value.

Ignore information indicative of its low value.


 MODELS OF CONSUMER BEHAVIOUR:

MODELS OF CONSUMER
BEHAVIOUR

CONTEMPORARY
TRADITIONAL MODELS
MODELS

HORWARD SCHIFFMAN
ENGEL AND KANUK’S
LEARNING PSYCHOANALYTIC SHETH MODEL BLACKWELL
ECONOMIC OF BUYING MODEL OF
MODEL MODEL MODEL AND MINIARD
BEHAVIOUR CONSUMER
(EBM) MODEL DECISION
MAKING
HOWARD SHETH MODEL
 Definition: The Howard Sheth Model is an approach for analysing the
combined impact of the social, psychological and marketing factors on
the buying behaviour or preference of the consumers and the industrial
buyers into a logical order of information processing.

 John Howard and Jagadish Sheth introduced the Howard Sheth Model in
the year 1969. The concept was published in their book ‘The Theory of
Buyer Behaviour’.
Presents a comprehensive picture of consumer decision making. This
model represents the rational brand choice behaviour by buyers
when faced with situations involving incomplete information and
limited abilities.

Has three levels of decision making:

Extensive problem solving.

Limited problem solving.

 Routinised response behaviour.


 EXTENSIVE PROBLEM SOLVING:
The initial stages of decision making when the buyer has little
information about brands and has not yet developed a well defined
and structured criteria to make selection from various products (
choice criteria).
 LIMITED PROBLEM SOLVING :
 In a slightly more advanced stage choice criteria which is well
defined but the buyer is not clear and undecided on the set of brands
which will best serve him. In this situation the consumer is uncertain
on the best brand which will suit him or her.
 ROUTINISED REPONSE BEHAVIOUR:
 The stage when buyers have well defined choice criteria along with
predispositions towards one brand.

 In such a situation there is hardly any confusion in any consumer’s mind


and is ready to purchase a particular brand with little evaluation of
alternatives.
 FOUR COMPONENTS :
 The four components involved in the model are:

 Input Variables.

 Output Variables.

 Hypothetic Constructs.

 Exogenous Variables.
 INPUT VARIABLES:
 The stimulus inputs refer to the idea or information clue about the brand and
its product in terms of product quality, distinctiveness, price, service offered
and availability. These can be further classified as follows:

 Significant Stimuli: The significant stimuli are the physical traits of the
product and the brand. It includes the product’s price, quality, availability,
distinctive characteristics and service.

 Symbolic Stimuli: The marketing strategies like advertisement and publicity


creates a psychological impact on the buyer’s perception of a product’s
rhetorical and visible features.

 Social Stimuli: The social stimuli comprises of the various environmental


factors which are considered as a source of information for the buyers. It
includes family, social class and reference groups.
 OUTPUT VARIABLES:

Purchase
Behaviour
Intention All of the
elements result
Attitude The brand in actual
which the purchase of a
Buyer’s buyer intends product by the
Comprehension evaluation of to buy. buyer.
the particular
Attention Store of brand potential
information the to satisfy his or
Based on the buyer has about
information the her motives.
the brand.
buyer has
about the
brand.
 EXOGENOUS VARIABLES:
 There are certain other external factors which influence the buying behaviour of an
individual or a firm by hampering the product purchase of a preferred brand.

 These influence all or some of the constructs explained above and through them, the
output.

 Some exogenous variables are importance of the purchase, time at the disposal of the
buyer, personality traits, financial status etc.
 HYPOTHETICAL CONSTRUCTS:
BUYERS LEARNING CPONSTRUCTS:

PERCEPTUAL CONSTRUCTS • Motives are general or specific goals


impelling action.
These deal with information • Brand potential of the evoked set –
processing. The perceptual refer to the buyers perception on the
constructs include: ability of brands in his/her evoked
• Sensitivity to information – set(those brands which are being
refers to the degree to which actively considered) to satisfy his/her
the buyers regulate the goals.
stimulus information flow. • Decision mediators- Buyer will have
• Perpetual bias means altering certain mental rules for matching and
information. ranking the purchase alternatives.
• Search for information • Predisposition- Preference towards
involves actively seeking brands in evoked set which expresses
information on the brands or an attitude towards them.
their characteristics. • Inhibitors-Environmental forces like
price, time pressure which may
inhibit or restrain on the purchase of
the preferred brand.
 LIMITATIONS OF HOWARD SHETH
MODEL:
• Absence of sharp distinctions between exogenous and other variables.

• Some of the variables are not well defined and are difficult to measure
too.

• This model is quite complex and not very easy to comprehend.


 ENGEL, BLACKWELL AND MINIARD (EBM)
MODEL:
 This model is a development of the original Engel, Kollat and Blackwell
model first introduced in 1968.

 Both have similar scope and have the same level of complexity.

 Primarily the core of the EBM model is a decision process, which is


augmented with inputs from information processing and other
influencing factors also.
• The Engel Kollat Blackwell Model of Consumer Behaviour was created
to describe the increasing, fast-growing body of knowledge concerning
consumer behaviour.

• This model, like in other models, has gone through many revisions to
improve its descriptive ability of the basic relationships between
components and sub-components.

• The Engel Kollat Blackwell Model of Consumer Behaviour or consists of


four distinct stages:
 Information Input stage.
 Information Processing Stage.
 Decision Process Stage.
 Variables influencing the decision process.
 INFORMATION INPUT STAGE:
• At this stage the consumer gets information from marketing and non-
marketing sources , which also influence the problem recognition stage
of the decision-making process.

• If the consumer still does not arrive to a specific decision, the search
for external information will be activated in order to arrive to a choice
or in some cases if the consumer experience dissonance because the
selected alternative is less satisfactory than expected.
 INFORMATION PROCESSING STAGE:
• This stage consists of the consumer’s exposure, attention, perception,
acceptance, and retention of incoming information.

• The consumer must first be exposed to the message, allocate space


for this information, interpret the stimuli, and retain the message by
transferring the input to long-term memory.
 DECISION PROCESS:
• This process consists of five basic stages:
 Need Recognition: This acknowledges the fact that there exists a
problem and the individual is aware that there is a need to be satisfied.
 Search: When enough information is available in memory to take a
decision then only internal search will be required.
 Alternative evaluation: The various alternatives found during the search
will be evaluated. This takes into account our attitudes and beliefs also.
 Purchase: A purchase is made based on the chosen alternative.
 Outcomes: Outcome can be either positive or negative depending on
whether the purchase satisfies the original perceived need.
Dissatisfaction can lead to post purchase dissonance.
 VARIABLES INFLUENCING DECISION PROCESS:

• Includes the Individual, social and situational


factors which will influence the decision
process.
ADVANTAGES DISADVANTAGES
This model is very flexible and more Vague definition on the role of
coherent than Howard Sheth Model of influencing variables.
Consumer Behaviour.

It also human processes like memory, Separation of information search and


information processing and considers alternative evaluation is somewhat
both the positive and negative purchase critical.
outcomes.
 SCHIFFMAN AND KANUK’S MODEL :
• This model speaks of the interactions between the marketer and
consumer. This process can be seen in the form of three distinct though
interacting or interlocking stages.

• Three stages :
 Input Stage.
 Process Stage.
 Output Stage.
 INPUT STAGE:
• The input stage in the consumer decision making model consists of
external environmental influences, or two major sources of information.

• These sources are the firm’s marketing mix elements( including the
product or service, its price, its promotion and location of availability) as
well as the external sociological influences on the consumer (family,
peer and friends, neighbours, other informal and non-commercial
sources, social class, group influence, religion and cultural etc.)
 PROCESS STAGE:
• The process stage of the model focuses on how consumers make
decisions.

• The psychological factors inherent in each individual (motivation,


perception, learning, personality and attitudes) affect how the
external inputs from the input stage influence the consumer’s
recognition of a need, pre-purchase search for information, and
evaluation of alternatives.

• External factors can influence buying and include the marketing mix
offered by a business as well as dynamic uncontrollable factors such as
social, cultural and economic change.
 OUTPUT STAGE:
• The Output Stage of the consumer decision making model consists of
two closely linked post decision activities namely purchase behaviour
and post purchase evaluation.
• Post purchase decision activities is also dependent upon the type of
decision involved.
• Ex: The purchase behaviour for a low cost non-durable product say a
new toothpaste may be influenced by the free coupon offer or may in
fact be a trial purchase.
• In case the consumer is satisfied with the product after use he or she
may repeat the purchase. A repeat purchase will indicate product
adoption by the consumer.
 ADOPTER CATEGORIES:
Early adopters Early majority
Innovators
Early adopters are prestige They are the leading
Innovators are risk takers oriented opinion leaders. segment of the market,
and they seek changes. about one third of the
They have higher social
They are the first one to status, financial liquidity, target market.
buy a new product. education. Early Majority have above
They try the product in its They use the product average social status and
initial introduction phase. during its late introduction are not opinion leaders.
phase of its life cycle. They come into picture
during the growth phase of
the product.

Laggards
Late majority
Conservative, price
Followers of the early majority,
typically sceptical about an
conscious segment,
innovation, have below average aversion to change-agents.
social status and little financial They are oldest and most
liquidity. traditional.
They are about 36 percent of
the target market. They show their willingness
to use the product in its
They try the product in its late late maturity phase and
growth and maturity phase.
diminishing phase.
 CHARACTERISTICS OF OPINION
LEADERS:
• Opinion leaders are perceived to be highly credible sources of product
related information.

• They are gregarious and are people with experience.

• They usually provide unbiased information. They provide both favourable


and unfavourable information to their opinion seekers.

• Opinion leaders are both sources of information and advice.

• They tend to be consumer innovators.

• They have got greater exposure to the Media, especially in there area of
leadership.

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