Why study Consumer Decision Making What is consumer mind (Black Box) Concepts - consumer decision, purchase involvement and product involvemt Types of consumer decisions Roles of Consumer in C.D.M Consumer Decision Making process Need Recognition process Information search process Evaluation process Purchase Post-purchase Factors influencing C.D.M
Opening Case on Aarey Milk Diary. So firms that choose not to understand their consumers purchasing behaviour often lose out of the market. An excellent engineered product may fail just because the customer does not identify himself or herself with it. (share examples) The firm must understand the buyers purchasing behaviour. Specially how the buyer decides, what motivates him and who influences him. The marketer needs to focus on “how and “why” of the total experience consumers have with products and service. (share examples)
Buyers continues to be an Enigma- sometimes responding the why the marketer wants and on other hand occasions just refusing to buy the product from the same marketer.- Black Box The marketers provide stimuli but he is uncertain of the buyers response. This stimuli is a combination of product price etc. Stimulus Company controlled Buy Product Price Advertising Sales Promotion Response Display Distribution Consumer mind(Black Box) No Buy Social Word of mouth Reference Group
A decision is a set of an options from two or more alternatives choices. So consumer decision produces an image of an individual carefully evaluating the alternatives of a set of products, brand or services and rationally selecting the one that solves a clearly recognized need for the least cost. Purchase involvement is the level of concern for, or interest in the purchase process triggered by the need to consider a particular purchase. Product involvement is the level of concern for a particular brand or a product category. Examples: Juice (purchase involvement ) Slice, Mirinda, Thums up etc. (product involvement)
Nominal decision Limited decision Extended making making decision making Problem recognition Problem recognition Problem recognition Information search Information search Internal Internal Limited external External Alternative evaluation Alternative evaluation Information search Few attributes Many attributes Limited internal Simple decision making Complex decision making Few alternatives Many alternatives Purchase
Consumer decision processes are the decision making processes undertaken by consumers in regard to a potential market transaction before, during, and after the purchase of a product or service. The focus of this process, forms an integral part of consumer behaviour on how consumers spend their available resources (such as time and money) on personal and household products and services so as to satisfy their needs. The decision-making processes that consumers use when making purchases vary, particularly with regard to the time and effort that they take to reach a decision.
Problem recognition is the first stage in C.D.M process. Problem recognition is the result of a discrepancy between a desired state and a actual state that is sufficient to arouse and activate the decision process. Eg: Feeling Bored- actual state. Listening music/Call friend – desired state.Types of Consumer Problem Consumer problem may be either active problem or inactive problem. Active problems only require the marketers to convince consumers that its brand is the superior solution. Inactive problems require the marketer to convince consumers that they have the problem and the marketers brand is a superior solution to the problem which is more difficult task.
Marketing Strategy used problem recognition Discover Consumers problem Activity analysis Product analysis Problem analysis Responding to Consumer problem Helping Consumer recognize problem Suppressing problem recognition
Once problem is recognized relevant information from long-term memory is used to determine if a satisfactory solution is known, what are the characteristics of potential solution are, what are appropriate ways to compare solutions and so forth- This is called Internal search. If a resolution is not reached through internal search, then external search is focused. It is important to note that even in extended decision making with extensive external search, the initial internal search generally produces a set of guides or decision constraints that limit and guide external search. Examples of External search: web, books, articles newspaper, friends etc.
Types of InformationEvaluative Criteria: The desired characteristics are theconsumers evaluative criteria. Ex: Laptop or ComputerAppropriate Alternative: Here the consumer seeks fordifferent companies or brand Ex: Dell, HP Asus, Toshiba, ,Apple, Fuji. Evoked Set Inert Set Inept Set Asus Dell Fuji Toshiba HP Apple These are the Which are Which are not brands which known but not known are know very the well performance
Alternative Characteristics: Here the consumer comparesthe different features of the selected evoked setEx: price, memory, processor etc.
When potential consumers have all the necessary internal and external information on alternatives, they have to evaluate the alternatives in order to make a purchase. Information will lead to an evoked set(familiar brands) of alternative products from which a choice will then have to be made. Theory of Evoked Set- By Howard and Sheth’s Total Set Awareness Consideration Decision Set(all brands) Set Set (brands (brands (brands decided) aware off) considered) Purchase Set
Consumers use several attributes when they are evaluating alternative products and they are more interested in a specific attribute that brings the sought benefits. Example: Price, Quality, availability, service, performance etc The number of criteria used in decision making are relatively limited, usually less than six. Also, not all criteria are equally important. The criteria used to make a decision change depends on the consumer, the product, and the situation.
Consumers generally make three types of purchase: trial purchase, repeat purchase and long term commitment purchase. Trial purchase would be in smaller in quantity and it would be also termed as Exploratory phase. Repeat purchase is very closely related to brand loyalty, which firms try to encourage because it contributes to greater stability in the market share.
The purchasing process does not end when a consumer buys a product . After the purchase consumers tend to evaluate their experience to decide if they are satisfied or dissatisfied. The information will be used in future decision-making. The performance of the product or service will be compared with consumers expectations. There are three possible outcomes of these evaluations: Perceived performance meeting expectations Perceived performance exceeding expectations Perceived performance being lower than expectations When a consumer thinks of the unique, positive qualities of the brand not selected, it is known as cognitive dissonance. When cognitive dissonance occurs Marketing can minimize through: after a purchase, it is called Effective Communication Follow-up post purchase dissonance. Guarantees Warranties
External Influence Socio cultural Environment Firms Marketing Efforts 1. Family I1. Product 2. Informal sources N2. Promotion 3. Other non commercial P3. Price sources U4. Channel of distribution 4. Social class T 5. Sub culture and culture Consumer Decision Making Need Psychological Field P Recognition 1.Motivation R Information 2.Perception O Search 3.Learning C Evaluation of 4. Personality E Alternatives 5. Attitude S Purchase S Post-purchase Experience Purchase 1. Trial 2. Repeat purchase OUT PUT