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The decision making process - ONLINE


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A short presentation on the decision making process and how it is affected by the internet.

Published in: Business

The decision making process - ONLINE

  1. 1. The Decision Making Process and Purchasing Online David Martin Maxine Ellison
  2. 2. Presentation Aims: Consumers are increasingly using the internet as a method of purchasing goods and services. We will the typical objectives of marketers at each stage of the decision making process and show how they attempt to influence each stage in the context of internet shopping, making reference to both high and low involvement products and services.
  3. 3. The Decision Making Process <ul><ul><li>Problem recognition </li></ul></ul><ul><ul><li>Information search </li></ul></ul><ul><ul><li>Evaluation of alternatives </li></ul></ul><ul><ul><li>Product choice </li></ul></ul><ul><ul><li>Post purchase </li></ul></ul>
  4. 4. Forces Influencing The Online Consumer’s Behaviour Other stimuli: Personal and Environmental Uncontrollable Factors Demographic, personal, cultural, sociological, economic, legal, environmental etc.. Marketing stimuli (Traditional Marketing Mix) Buyer’s Decision Process Problem identification, Search, Trust building, Evaluation of alternatives, Choice, Post-purchase behaviour Buyer’s Decision Product choice, Brand choice, Dealer choice, Purchase timing Web Experience: Online Controllable Marketing Factors Source: Based on P. Kotler’s framework (2003)
  5. 5. Stimulating Need Recognition <ul><li>“ Problem recognition occurs whenever we see a significant difference between our current state of affairs and our ideal state.” </li></ul><ul><li>Product replacement </li></ul><ul><li>Opportunity recognition </li></ul><ul><li>Altered perception </li></ul><ul><li>Previously unsatisfied need </li></ul><ul><li>Trickle down – the purchase of one product offsets another </li></ul>
  6. 8. Information Search <ul><li>Types of information search: </li></ul><ul><ul><li>Existence / availability of the product or service </li></ul></ul><ul><ul><li>Information about the characteristics of the product or service </li></ul></ul><ul><ul><li>Information regarding alternatives </li></ul></ul>INTERNAL vs. EXTERNAL
  7. 9. Information Search - Internal All products / brands Ones you know Ones you don’t <ul><li>Those you would consider buying </li></ul><ul><li>Those you feel indifferent towards </li></ul><ul><li>Those you wouldn’t consider </li></ul>Memory
  8. 10. Information Search - External
  9. 11. Information Search - External Centralisation of information -
  10. 12. <ul><li>Consumers will typically search for more information when making a high involvement purchase. </li></ul><ul><li>Consumers are likely to be brand loyal. </li></ul><ul><li>Consumers are likely to make assumptions. </li></ul><ul><li>The consumers prior expertise </li></ul><ul><li>More market knowledge = less time spent on search. </li></ul><ul><li>If there is too much or it is too complex the consumer is unlikely to make a decision. </li></ul>Factors Which Effect Information Search
  11. 13. Evaluating Alternatives High-involvement Compensatory decision rule Low- involvement Non-compensatory rule All Alternatives Evoked set Inert set Inept set Retrieval set Prominent products in environment
  12. 14. Journal 1 <ul><li>Buying cars online: The adoption of the Web for high-involvement, high- cost purchases </li></ul><ul><li>Date: 12 th November 2001 </li></ul><ul><li>Authors: Mike Molesworth </li></ul><ul><li>Jukka-Petteri Suortti </li></ul><ul><li>(Bournemouth University, Fern barrow, Talbot Campus, Poole, Dorset, UK) </li></ul><ul><li>Methodology: </li></ul><ul><li>8 respondents were recruited from a convenience sample from the South England to participate in an in-depth interview. </li></ul><ul><li>Result: </li></ul><ul><ul><li>There is an advantage online in the information search stage. </li></ul></ul><ul><ul><li>In the evaluation stage, lack of product experience is a barrier. </li></ul></ul><ul><ul><li>At the negotiation the lack of human interactivity is another barrier. </li></ul></ul><ul><ul><li>After sales service was a perceived risk, and a key barrier that consumers faced and make them reject the online purchasing. </li></ul></ul>
  13. 15. Traditional Perceived Risks <ul><li>Functional </li></ul><ul><ul><li>The product won’t perform well. </li></ul></ul><ul><li>Physical </li></ul><ul><ul><li>There is a risk to personal health & safety. </li></ul></ul><ul><li>Social </li></ul><ul><ul><li>Chosen product will cause social embarrassment. </li></ul></ul><ul><li>Financial </li></ul><ul><ul><li>Product will not be worth the amount paid for it. </li></ul></ul><ul><li>Time </li></ul><ul><ul><li>Time spent on product search is wasted if product doesn’t perform as expected. </li></ul></ul><ul><li>Psychological </li></ul><ul><ul><li>Poor product choice may affect status or ego. </li></ul></ul>
  14. 16. Journal 2 <ul><li>Understanding online purchase intentions: contributions from technology and trust perspectives. </li></ul><ul><li>Date: 15th October 2002 </li></ul><ul><li>Authors: Hans van der Heijden </li></ul><ul><li>Tibert Verhagen </li></ul><ul><li>Marcel Creemers </li></ul><ul><li>(Department of Information Systems, Marketing and Logistics, Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam, Amsterdam, The Netherlands) </li></ul><ul><li>Methodology: </li></ul><ul><li>228 undergraduate students studying information systems at a Dutch university were required to study two CD websites, one internet only and another that was part of a well known Dutch retail chain with stores. The students then filled in a survey. </li></ul><ul><li>Result: </li></ul><ul><ul><li>Trust, ease of use and usefulness are the threshold variables. </li></ul></ul><ul><ul><li>There was no preference between the web only store and the one with physical shops. </li></ul></ul>
  15. 17. Journal 3 <ul><li>Consumer perspectives of risk and uncertainty and the implications for behaviour towards innovative retail services: The case of Internet Banking </li></ul><ul><li>Date: February 2006 </li></ul><ul><li>Authors: Dale Littler </li></ul><ul><li>Demetris Melanthiou </li></ul><ul><li>(Manchester Business School, The University of Manchester, Booth Street West, Manchester, UK) </li></ul><ul><li>Methodology: </li></ul><ul><li>5 In-depth interviews, 150 survey respondents. A mix of IB users and non-users. </li></ul><ul><li>Result: </li></ul><ul><ul><li>Respondents favoured well known brands which also had a physical presence (buildings, face to face staff) over web only banks. </li></ul></ul><ul><ul><li>The main risks the respondents were concerned about were financial and security risks. </li></ul></ul><ul><ul><li>Users felt that they were able to find relevant & sufficient information online. </li></ul></ul>
  16. 18. Product Choice <ul><li>Heuristics </li></ul><ul><li>Determinant attributes </li></ul><ul><li>Market beliefs </li></ul><ul><li>Product signal </li></ul><ul><li>Brand recognition </li></ul><ul><li>Country of origin </li></ul>
  17. 19. Online Specific:
  18. 20. Post Purchase Evaluation <ul><li>It is important for the consumer to feel satisfied with their purchase in terms of; </li></ul><ul><li>Price </li></ul><ul><li>Function </li></ul><ul><li>Style </li></ul><ul><li>Acceptance from peers </li></ul><ul><li>If customers are happy with the purchase they are more likely to make repeat purchases in the future. </li></ul>
  19. 21. Conclusion <ul><ul><li>With online purchases the consumer is independent from the Company. </li></ul></ul><ul><ul><li>Highly involved decisions require more information and time. </li></ul></ul><ul><ul><li>Benefits of online are that it is a greater source of information, including independent recommendations and opinions. </li></ul></ul><ul><ul><li>A hindrance is its lack of inter-personal capabilities. </li></ul></ul>
  20. 22. Thank you for your time. Any questions?