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Consumer
Decision Making Process
BY-UNNATI SHAH
Consumer Behavior
• Processes a consumer uses to make
purchase decisions, as well as to use
and dispose of purchased goods or
services; also includes factors that
influence purchase decisions and
the product use.
REVIEW LEARNING OUTCOME
Understanding Consumer Behavior
Consumer behavior
consumers make purchase
decisions
consumers use and
dispose of product
= HOW
Five Factors Influencing Decisions
1. Level of consumer involvement
2. Length of time to make decision
3. Cost of good or service
4. Degree of information search
5. Number of alternatives considered
LEVELS OF CONSUMER DECISION
MAKING
• Not all consumer decisions receive or require the
same amount of effort in the information search.
• Researchers have identified three specific levels of
consumer decision making: extensive problem
solving, limited problem solving, and routinized
response behavior.
Types of Consumer Buying Decisions
More
Involvement
Less
Involvement
Routine
Response
Behavior
Limited
Decision
Making
Extensive
Decision
Making
Extensive Problem Solving
• When consumers have no established criteria for
evaluating a product, or have not narrowed their
choices, then they are in extensive problem solving.
• At this level, the consumer needs a great deal of
information to establish a set of criteria on which to
judge specific brands and a correspondingly large
amount of information concerning each of the
brands to be considered.
• Example- Used while buying expensive, important
or technically complicated product or services.
Limited Problem Solving
• At this level consumers have already established
the basic criteria for evaluating the product
category but haven’t established preferred
categories.
• Their search for additional information is more
like “fine-tuning;” they must gather additional
brand information to discriminate among the
various brands.
• Example- Usually used when purchasing a new,
updated version of something. Relplacing
something old with something new.
Routinized Response Behavior
• At this level, consumers have some experience
with the product category and a well-
established set of criteria with which to
evaluate the brands they are considering.
– They may search for a small amount of additional
information.
• Routinized response behavior implies little
need for additional information.
• Example- Day to day decisions.
Models of Consumers: Four Views
of Consumer Decision Making
Depicting how
and why
individuals
behave as they
behave in decision
making.
• An Economic View
– Rationale in the economic sense, aware of all available product
alternatives, able to identify best alternatives
• A Passive View
– Irrational, impulsive, depending on promotions
• A Cognitive View
– Information Processor; either receptive or active,
– Heuristics (shortcut); information overload (exposure)
• An Emotional View
– Joy, fear, love, hope, sexuality, magic with certain purchase
An Economic View
• The consumer has often been characterized as making rational decisions.
– This model, called the economic man theory, has been criticized by
consumer researchers for a number of reasons.
– To behave rationally in the economic sense, a consumer would have
to:
• Be aware of all available product alternatives.
• Be capable of correctly ranking each alternative in terms of its
benefits and its disadvantages.
• Be able to identify the one best alternative.
– This perspective is unrealistic because:
• People are limited by their existing skills, habits, and reflexes.
• People are limited by their existing values and goals.
• People are limited by the extent of their knowledge.
• Consumers operate in an imperfect world, therefore the economic view is
often rejected as too idealistic and simplistic.
A Passive View
• Consumer basically are submissive to the self-serving
interests and promotional efforts of marketers (i.e., the
passive view).
• Consumers are perceived as impulsive and irrational
purchasers, ready to yield to the arms and aims of
marketers.
• The principal limitation of this model is that it fails to
recognize that the consumer plays an equal, if not
dominant, role in many buying situations by seeking
information about product alternatives and selecting the
product that appears to offer the greatest satisfaction.
• This view is largely unrealistic.
A Cognitive View
• Consumer are thinking problem solver.
• Model focuses on the processes by which consumers seek and
evaluate information about selected brands and retail outlets.
• In contrast to the economic view, this view recognizes that the
consumer is unlikely to seek all possible information, but will only
seek information until he/she has what is perceived as sufficient
information to make a satisfactory decision.
• Consumers are presumed to use heuristics—short-cut decision
rules to facilitate decision making.
– They also use decision rules when exposed to too much information—
information overload.
• This model depicts a consumer who does not have complete
knowledge, and therefore cannot make perfect decisions, but who
actively seeks information and attempts to make satisfactory
decisions.
An Emotional View
• In reality, when is comes to certain purchases or possessions, deep feelings
or emotions are likely to be highly involved.
• When a consumer makes what is basically an emotional purchase
decision, less emphasis tends to be placed on searching for prepurchase
information and more on the current mood or feelings.
• Unlike an emotion, which is a response to a particular environment, a
mood is more typically an unfocused, pre-existing state—already present
at the time a consumer “experiences” an advertisement, a retail
environment, a brand, or a product.
• Mood is important to consumer decision making in that it impacts when
consumers shop, where they shop, and whether they shop alone or with
others.
– Some retailers attempt to create a mood for shoppers.
• Individuals in a positive mood recall more information about a product
than those in a negative mood
A Model of Consumer Decision
Making
INPUT
PROCESS
OUTPUT
A MODEL OF CONSUMER DECISION
MAKING
Consumer Decision-Making Process
Postpurchase
Behavior
Purchase
Evaluation
of Alternatives
Information Search
Need Recognition
Cultural, Social,
Individual and
Psychological
Factors
affect
all steps
Need Recognition
Internal Stimuli
and
External Stimuli
Present Status
Preferred State
Result of imbalance
between the present
state and preferred
state.
Need Recognition
• Recognition of a need occurs when a
consumer is faced with a problem.
• Among consumers there seem to be two
different problem recognition styles.
– Actual state types —consumers who perceive that
they have a problem when a product fails to
perform satisfactorily.
– Desired state types —the desire for something
new may trigger the decision process.
Stimulus
Any unit of input affecting one or
more of the five senses:
sight
smell
taste
touch
hearing
Want
Recognition of an unfulfilled need and a product
(or attribute or feature) that will satisfy it.
Recognition of Unfulfilled Wants
• When a current product isn’t performing
properly
• When the consumer is running
out of an product
• When another product seems superior to
the one currently used
Prepurchase Information Search
Internal Information Search
 Recall information in memory
External Information search
 Seek information in outside environment
 Non-marketing controlled
 Marketing controlled
-Advertising
-Salespeople
- Infomercials
- Websites
- Point-of-sales materials
Sources of Information
Marketer Dominated
-Friends
-Family
- Opinion leaders
- Media
Non-Marketer Dominated Stimuli
Factors that are likely to increase
prepurchase search
1. Product factors
2. Situational factors
• Experience
• Social acceptability
• Value-related considerations
3. Consumer factors
• Demographic characteristics
• Personality
Evaluating Alternatives
Determine criteria to be used for
evaluation of products
Assess the relative importance of the
each criteria
Evaluate each alternative based on the
identified criteria
Evoked Set
Purchase!
Evaluation of Products
Analyze product attributes
Use cutoff criteria
Rank attributes by importance
Evaluation of Alternatives
Evaluation of Alternatives
• When evaluating potential alternatives, consumers tend to
use two types of information:
– A “list” of brands (the evoked set).
– The criteria they will use to evaluate each brand.
The evoked set refers to the specific brands the consumer
considers in making a purchase in a particular product
category.
The inept set consists of brands the consumer excludes from
purchase consideration as unacceptable.
The inert set is those brands to which the consumer is
indifferent because they are perceived as having no
advantage.
Consumer Decision Making Process
Consumer decision rules
• They are referred to as heuristics, decision strategies, and information-
processing strategies, and are procedures used by consumers to facilitate
brand choices.
– These rules reduce the burden of decision making.
1. Compensatory decision rules— a consumer evaluates brand options
in terms of each relevant attribute and computes a weighted or
summated score for each brand.
• The computed score reflects the brand’s relative merit as a
potential purchase choice.
• The assumption is that the consumer will choose the brand with
the highest score.
• A unique feature of a compensatory decision rule is that it allows a
positive evaluation of a brand on one attribute to balance out a
negative evaluation on some other attribute.
2. Noncompensatory decision rules do not allow
consumers to balance positive evaluations of a
brand on one attribute against a negative evaluation
on some other attribute. Forms include:
• Conjunctive decision rule—the consumer establishes a
minimally acceptable level that is established as a
cutoff point for each attribute.
– If any particular brand falls below the cutoff point on any one
attribute, the brand is eliminated from consideration.
• Disjunctive rule—this rule mirrors the conjunctive
rule.
– The consumer establishes a minimally acceptable level as a
cutoff point for each attribute.
– In this case if a brand alternative meets or exceeds the cutoff
established for any one attribute, however, it is accepted.
3. Lexicographic decision rule—the consumer
first ranks the attributes in terms of perceived
relevance or importance.
– The consumer then compares the various brand
alternatives in terms of the single attribute that is
considered most important.
– If one brand scores sufficiently high on this top-
ranked attribute, it is selected, and the process ends.
– The highest-ranked attribute may reveal something
about the individual’s consumer orientation.
• Nine out of ten shoppers who go to the store for
frequently purchased items have a specific
shopping strategy for saving money.
– Practical loyalists—look for ways to save on those
brands and products that they would buy anyway.
– Bottom-Line Price Shoppers—buy the lowest-priced
item, with little or no regard for brand.
– Opportunistic Switchers—use coupons or sales to
decide among brands and products that fall within
their evoked set.
– Deal Hunters—look for the best “bargain” and are not
brand-loyal.
OUTPUT
• The output portion of the consumer decision-
making model concerns two closely associated
kinds of postdecision activity: purchase
behavior and postpurchase evaluation.
• The objective of both activities is to increase
the consumer’s satisfaction with his or her
purchase.
Purchase
Determines which attributes
are most important
in influencing a
consumer’s choice
To buy
or not to buy...
Types of Purchases
Consumers make three types of purchases:
Trial
Purchases
Repeat
Purchases
Long-Term
Commitment
Purchases
Explains the consumer’s
post-purchase evaluation
process
Postpurchase Behavior
Postpurchase Behavior
Can minimize through:
Effective Communication
Follow-up
Guarantees
Warranties
Cognitive Dissonance
?Did I make a good decision?
Did I buy the right product?
Did I get a good value?
• As consumers use a product, they evaluate its
performance in light of their own
expectations.
• There are three possible outcomes of such
evaluation.
– Actual performance matches the standard,
leading to a neutral feeling.
– Positive disconfirmation when the performance
exceeds the standard.
– Negative disconfirmation when the performance
is below the standard.
.
cognitive dissonance is inner tension
that a consumer experiences after
recognizing an inconsistency between
behavior and values or opinions
An important aspect of the purchase
process is reducing postpurchase
cognitive dissonance, when consumers
try to reassure themselves that their
choice was a wise one.
Outcomes of Postpurchase Evaluation
• Actual Performance Matches Expectations
• Actual Performance Exceeds Expectations
– Positive Disconfirmation of Expectations
• Performance is Below Expectations
– Negative Disconfirmation of Expectations
Factors Determining
the Level of Consumer Involvement
Situation
Social Visibility
Interest
Perceived Risk of Negative
Consequences
Previous Experience
Factors Influencing Buying Decisions
Social
Factors
Individual
Factors
Psycho-
logical
Factors
Cultural
Factors
CONSUMER
DECISION-
MAKING
PROCESS
BUY /
DON’T BUY
Cultural Influences on Buying
Decisions
Values
Language
Myths
Customs
Rituals
Laws
Material Artifacts
Social Influences
Reference Groups
Opinion Leaders
Family Members
Social Influences on
Buying Decisions
Individual Influences
Gender
Age
Family Life Cycle
Personality
Self-Concept
Lifestyle
Individual Influences
Psychological Influences
Perception
Motivation
Learning
Beliefs & Attitudes
THANK YOU
UNNATI SHAH

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Consumer Decision Making Process

  • 2. Consumer Behavior • Processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and the product use.
  • 3. REVIEW LEARNING OUTCOME Understanding Consumer Behavior Consumer behavior consumers make purchase decisions consumers use and dispose of product = HOW
  • 4. Five Factors Influencing Decisions 1. Level of consumer involvement 2. Length of time to make decision 3. Cost of good or service 4. Degree of information search 5. Number of alternatives considered
  • 5. LEVELS OF CONSUMER DECISION MAKING • Not all consumer decisions receive or require the same amount of effort in the information search. • Researchers have identified three specific levels of consumer decision making: extensive problem solving, limited problem solving, and routinized response behavior.
  • 6. Types of Consumer Buying Decisions More Involvement Less Involvement Routine Response Behavior Limited Decision Making Extensive Decision Making
  • 7. Extensive Problem Solving • When consumers have no established criteria for evaluating a product, or have not narrowed their choices, then they are in extensive problem solving. • At this level, the consumer needs a great deal of information to establish a set of criteria on which to judge specific brands and a correspondingly large amount of information concerning each of the brands to be considered. • Example- Used while buying expensive, important or technically complicated product or services.
  • 8. Limited Problem Solving • At this level consumers have already established the basic criteria for evaluating the product category but haven’t established preferred categories. • Their search for additional information is more like “fine-tuning;” they must gather additional brand information to discriminate among the various brands. • Example- Usually used when purchasing a new, updated version of something. Relplacing something old with something new.
  • 9. Routinized Response Behavior • At this level, consumers have some experience with the product category and a well- established set of criteria with which to evaluate the brands they are considering. – They may search for a small amount of additional information. • Routinized response behavior implies little need for additional information. • Example- Day to day decisions.
  • 10. Models of Consumers: Four Views of Consumer Decision Making Depicting how and why individuals behave as they behave in decision making.
  • 11. • An Economic View – Rationale in the economic sense, aware of all available product alternatives, able to identify best alternatives • A Passive View – Irrational, impulsive, depending on promotions • A Cognitive View – Information Processor; either receptive or active, – Heuristics (shortcut); information overload (exposure) • An Emotional View – Joy, fear, love, hope, sexuality, magic with certain purchase
  • 12. An Economic View • The consumer has often been characterized as making rational decisions. – This model, called the economic man theory, has been criticized by consumer researchers for a number of reasons. – To behave rationally in the economic sense, a consumer would have to: • Be aware of all available product alternatives. • Be capable of correctly ranking each alternative in terms of its benefits and its disadvantages. • Be able to identify the one best alternative. – This perspective is unrealistic because: • People are limited by their existing skills, habits, and reflexes. • People are limited by their existing values and goals. • People are limited by the extent of their knowledge. • Consumers operate in an imperfect world, therefore the economic view is often rejected as too idealistic and simplistic.
  • 13. A Passive View • Consumer basically are submissive to the self-serving interests and promotional efforts of marketers (i.e., the passive view). • Consumers are perceived as impulsive and irrational purchasers, ready to yield to the arms and aims of marketers. • The principal limitation of this model is that it fails to recognize that the consumer plays an equal, if not dominant, role in many buying situations by seeking information about product alternatives and selecting the product that appears to offer the greatest satisfaction. • This view is largely unrealistic.
  • 14. A Cognitive View • Consumer are thinking problem solver. • Model focuses on the processes by which consumers seek and evaluate information about selected brands and retail outlets. • In contrast to the economic view, this view recognizes that the consumer is unlikely to seek all possible information, but will only seek information until he/she has what is perceived as sufficient information to make a satisfactory decision. • Consumers are presumed to use heuristics—short-cut decision rules to facilitate decision making. – They also use decision rules when exposed to too much information— information overload. • This model depicts a consumer who does not have complete knowledge, and therefore cannot make perfect decisions, but who actively seeks information and attempts to make satisfactory decisions.
  • 15. An Emotional View • In reality, when is comes to certain purchases or possessions, deep feelings or emotions are likely to be highly involved. • When a consumer makes what is basically an emotional purchase decision, less emphasis tends to be placed on searching for prepurchase information and more on the current mood or feelings. • Unlike an emotion, which is a response to a particular environment, a mood is more typically an unfocused, pre-existing state—already present at the time a consumer “experiences” an advertisement, a retail environment, a brand, or a product. • Mood is important to consumer decision making in that it impacts when consumers shop, where they shop, and whether they shop alone or with others. – Some retailers attempt to create a mood for shoppers. • Individuals in a positive mood recall more information about a product than those in a negative mood
  • 16. A Model of Consumer Decision Making INPUT PROCESS OUTPUT
  • 17. A MODEL OF CONSUMER DECISION MAKING
  • 18. Consumer Decision-Making Process Postpurchase Behavior Purchase Evaluation of Alternatives Information Search Need Recognition Cultural, Social, Individual and Psychological Factors affect all steps
  • 19. Need Recognition Internal Stimuli and External Stimuli Present Status Preferred State Result of imbalance between the present state and preferred state.
  • 20. Need Recognition • Recognition of a need occurs when a consumer is faced with a problem. • Among consumers there seem to be two different problem recognition styles. – Actual state types —consumers who perceive that they have a problem when a product fails to perform satisfactorily. – Desired state types —the desire for something new may trigger the decision process.
  • 21. Stimulus Any unit of input affecting one or more of the five senses: sight smell taste touch hearing
  • 22. Want Recognition of an unfulfilled need and a product (or attribute or feature) that will satisfy it.
  • 23. Recognition of Unfulfilled Wants • When a current product isn’t performing properly • When the consumer is running out of an product • When another product seems superior to the one currently used
  • 24. Prepurchase Information Search Internal Information Search  Recall information in memory External Information search  Seek information in outside environment  Non-marketing controlled  Marketing controlled
  • 25. -Advertising -Salespeople - Infomercials - Websites - Point-of-sales materials Sources of Information Marketer Dominated -Friends -Family - Opinion leaders - Media Non-Marketer Dominated Stimuli
  • 26. Factors that are likely to increase prepurchase search 1. Product factors 2. Situational factors • Experience • Social acceptability • Value-related considerations 3. Consumer factors • Demographic characteristics • Personality
  • 27. Evaluating Alternatives Determine criteria to be used for evaluation of products Assess the relative importance of the each criteria Evaluate each alternative based on the identified criteria
  • 28. Evoked Set Purchase! Evaluation of Products Analyze product attributes Use cutoff criteria Rank attributes by importance Evaluation of Alternatives
  • 29. Evaluation of Alternatives • When evaluating potential alternatives, consumers tend to use two types of information: – A “list” of brands (the evoked set). – The criteria they will use to evaluate each brand. The evoked set refers to the specific brands the consumer considers in making a purchase in a particular product category. The inept set consists of brands the consumer excludes from purchase consideration as unacceptable. The inert set is those brands to which the consumer is indifferent because they are perceived as having no advantage.
  • 31. Consumer decision rules • They are referred to as heuristics, decision strategies, and information- processing strategies, and are procedures used by consumers to facilitate brand choices. – These rules reduce the burden of decision making. 1. Compensatory decision rules— a consumer evaluates brand options in terms of each relevant attribute and computes a weighted or summated score for each brand. • The computed score reflects the brand’s relative merit as a potential purchase choice. • The assumption is that the consumer will choose the brand with the highest score. • A unique feature of a compensatory decision rule is that it allows a positive evaluation of a brand on one attribute to balance out a negative evaluation on some other attribute.
  • 32. 2. Noncompensatory decision rules do not allow consumers to balance positive evaluations of a brand on one attribute against a negative evaluation on some other attribute. Forms include: • Conjunctive decision rule—the consumer establishes a minimally acceptable level that is established as a cutoff point for each attribute. – If any particular brand falls below the cutoff point on any one attribute, the brand is eliminated from consideration. • Disjunctive rule—this rule mirrors the conjunctive rule. – The consumer establishes a minimally acceptable level as a cutoff point for each attribute. – In this case if a brand alternative meets or exceeds the cutoff established for any one attribute, however, it is accepted.
  • 33. 3. Lexicographic decision rule—the consumer first ranks the attributes in terms of perceived relevance or importance. – The consumer then compares the various brand alternatives in terms of the single attribute that is considered most important. – If one brand scores sufficiently high on this top- ranked attribute, it is selected, and the process ends. – The highest-ranked attribute may reveal something about the individual’s consumer orientation.
  • 34. • Nine out of ten shoppers who go to the store for frequently purchased items have a specific shopping strategy for saving money. – Practical loyalists—look for ways to save on those brands and products that they would buy anyway. – Bottom-Line Price Shoppers—buy the lowest-priced item, with little or no regard for brand. – Opportunistic Switchers—use coupons or sales to decide among brands and products that fall within their evoked set. – Deal Hunters—look for the best “bargain” and are not brand-loyal.
  • 35. OUTPUT • The output portion of the consumer decision- making model concerns two closely associated kinds of postdecision activity: purchase behavior and postpurchase evaluation. • The objective of both activities is to increase the consumer’s satisfaction with his or her purchase.
  • 36. Purchase Determines which attributes are most important in influencing a consumer’s choice To buy or not to buy...
  • 37. Types of Purchases Consumers make three types of purchases: Trial Purchases Repeat Purchases Long-Term Commitment Purchases
  • 38. Explains the consumer’s post-purchase evaluation process Postpurchase Behavior
  • 39. Postpurchase Behavior Can minimize through: Effective Communication Follow-up Guarantees Warranties Cognitive Dissonance ?Did I make a good decision? Did I buy the right product? Did I get a good value?
  • 40. • As consumers use a product, they evaluate its performance in light of their own expectations. • There are three possible outcomes of such evaluation. – Actual performance matches the standard, leading to a neutral feeling. – Positive disconfirmation when the performance exceeds the standard. – Negative disconfirmation when the performance is below the standard.
  • 41. . cognitive dissonance is inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions An important aspect of the purchase process is reducing postpurchase cognitive dissonance, when consumers try to reassure themselves that their choice was a wise one.
  • 42. Outcomes of Postpurchase Evaluation • Actual Performance Matches Expectations • Actual Performance Exceeds Expectations – Positive Disconfirmation of Expectations • Performance is Below Expectations – Negative Disconfirmation of Expectations
  • 43. Factors Determining the Level of Consumer Involvement Situation Social Visibility Interest Perceived Risk of Negative Consequences Previous Experience
  • 44. Factors Influencing Buying Decisions Social Factors Individual Factors Psycho- logical Factors Cultural Factors CONSUMER DECISION- MAKING PROCESS BUY / DON’T BUY
  • 45. Cultural Influences on Buying Decisions Values Language Myths Customs Rituals Laws Material Artifacts
  • 46. Social Influences Reference Groups Opinion Leaders Family Members Social Influences on Buying Decisions
  • 47. Individual Influences Gender Age Family Life Cycle Personality Self-Concept Lifestyle Individual Influences

Editor's Notes

  1. Chapter 5 Consumer Decision Making
  2. Chapter 5 Consumer Decision Making
  3. Chapter 5 Version 6e
  4. Chapter 5 Consumer Decision Making
  5. Chapter 5 Consumer Decision Making
  6. Chapter 5 Consumer Decision Making