Consumer

Decision Making
Process
MODULE 3
Application of CB in
Marketing Strategy
Product/Services Development Strategy
◦ Understanding consumers tastes and preferences
◦ Ideas for new products
◦ Brand Naming
◦ Logo Designing
◦ Packaging

IMC Decisions
◦ What are the elements of a promotion mix
◦ Communication theme/platform
◦ Words and visuals of ads
◦ Where and when should ads be placed
◦ Effectiveness and Recall of ads
Application of CB In
Marketing Strategy
Price
◦ What should the price be
◦ How sensitive are consumers to price and price changes
◦ What should be the pricing tactics

Distribution
◦ Where does the target market shop
◦ What should be the choice of marketing channels
◦ How should stores be designed
Consumer Behaviour Course
Module 3 Understanding how consumers make
decisions
Module 5 Psychological factors that affect decision
making like personality motivation  Understand the
attitudes etc factors
Module 6 Sociological factors that affect decision  More
making – reference groups, culture, family, importantly
what would
Module 4 How do u influence consumer behaviour at marketers do
various touch points

Module 7 Difference between B2B and B2C

Write down 4 things you remember buying in the last 6 months
And think about how did you take the decision to buy the product
Perceived Risk
How consumers handle risk
 Information search
 Brand Loyalty
 Well known brand
 Endorsed Brand
 Extrinsic clues – expensive
 Seeking assurances through warranties and guarantees
 Consumer decision making
process
Inpu
t Process Output

Need
External Recognition
stimuli
Purchase

Internal
Pre-Purchase
stimuli search
Stages in Evaluation of Post Purchase
consumer brands
decision making
Inputs to Consumer decision
making
Types of Stimuli
 External Stimuli
 Marketing Mix – the 4 P’s
 Social dimension, Culture, Reference groups and family (Module 6)
 Communication consumption – Social media conversations, WOM etcMoti

 Internal Stimuli (Module 5)

 Perceptions and Attitudes
 Types of motivation/Needs
 Personality
 Biases and preferences
 Past experiences
 Consumer decision making
process Black Box

Input Process Output

Stimuli to the
consumer Need
Recognition Purchase

Internal
Pre-Purchase
influences like search
motivation,
perception, Evaluation of Post Purchase
personality and brands
attitude wil be
covered in
Module 4
Step 1:
Need/Problem
recognition
 Step 1:
Need/Problem Recognition
Problem Recognition
Can be due to internal/external stimuli
Motivation to resolve depends on 2
factors
◦ Magnitude of discrepancy between ideal
and your desired/actual state (DS vs AS)
◦ Importance of problem
Actual state – when consumers
perceive they have a problem when a
product fails to perform satisfactorily
Desired state – desire for something
new may trigger decision process
Implication to marketer
Putting “prospective customers” into
a state of problem recognition – this
may lead to acquisition,
consumption/disposition of product
Techniques to stimulate problem
recognition
◦ Attempt to create a new ideal state
◦ Create dissatisfaction with current
state
Without problem recognition –
marketing efforts are futile
Step 2: Pre-
purchase search
INCLUDES 3 “THEORIES” TO UNDERSTAND
CONSUMER BEHAVIOUR ESPECIALLY
SEARCH BEHAVIOUR
Step 2:
Pre-purchase Search
 Sometimes customer’s recall past purchases and this provides them with
adequate information to make the present choice. Past experience is an
internal source of data
 However when a customer has no previous experience he/she “may” engage
in an extensive search for useful information on the basis of which to make a
choice.
 Consumers usually search memory (Psychological field) before seeking
external sourcs of information. However consumer decisions are a combination
of past data and marketing/other communication
Greater the relevance of the past data less the search.
The act of shopping is an important form of external information. Internet has
changed the way pre-purchase search is done. Retailers can help with pre-
purchase and eliminate “research regret”
 Consumer decision making
process Black Box

Input Process Output

Stimuli to the
consumer Need
Recognition Purchase

Internal
Pre-Purchase
influences like search
motivation,
perception, Evaluation of Post Purchase
personality and brands
attitude wil be
covered in
Module 4
Factors that influence pre-
purchase
Product Factors Situational Factors Consumer Factors
Long periods between First time purchase Demographics
purchases
Frequent changes in the Unsatisfactory past Personality traits
product purchase
Frequent price changes Value related
considerations like
occasion, situation etc
Volume Purchasing
High Price
Many alternate brands
Much variation in
features
Contextual factors
 Task complexity
 Information organization
 Time constraint
Levels of
consumer
decision making
MODEL TO HELP UNDERSTAND HOW
CONSUMERS VIEW PRODUCTS AND THE
IMPLICATIONS FOR MARKETERS
Types of products consumers
buy
High Involvement products – high price, complex features, large
difference between alternatives, high perceived risks, reflect self
concept of buyer

Low Involvement products – does not reflect on the buyer, alternatives

within the same product are similar, frequent brand switching, low price
Different levels of Consumer
Decision making
Routinized Problem Solving

 Customers think they know all they need to know about a product and they
don’t search for info.
 Choice is governed by learned decision plan
 Tend to be low involvement products
Characteristics:
frequently purchased, low cost items, here the customer is aware of his choices,
doesn’t establish attributes consumer spends little or less time in choosing an
alternative, perceives low risk in buying product/brand

What should a marketer do?

Implications for a marketer
 Important for marketers to ensure that they don’t stockout and force
loyal customers to try alternatives
 Maintain pricing structure and make sure you try new concepts when
interest drop
 Create brand memorability
 New brands or brands will low market share need to develop strategies
of producing prominent external stimuli such as give aways, store
displays, attractive offers
 New brands – may create features or attempt to make the product a
more high involvement products
Extensive Problem Solving
 Buyer has no information, experience about the product/services
 Lack of information also spreads to the brands for the product and also
the criterion that they set for segregating the brands to be small or
manageable subsets that help in the purchasing decision later.
Characteristics
 Expensive, infrequent purchases, more customer participation,
unfamiliar product category
Implications for marketers
 Can not totally relay on word for mouth for acquiring new customers
 Marketers need to understand the importance of brand recognition in
the minds of consumer and clear communication from the brand is
critical
 Clearly differentiate themselves from other brands
 Post purchase assurance
 Limited Problem Solving
Purchasing products that we are familiar with but still need some more
information, might not research online but will rely on memory and
make decisions based on logical inferences
Can be attributed to not being brand loyal but it can be attributed to
anything from being novelty of a new product, boredom from an
existing one.
 Could be due to a change in existing situation
Characteristics : buying product occasionally, moderate time used for
exploring,
Implications for the marketer
Marketers need to understand which factor matters to the customer
and focus promotion on those benefits and try to find a “differentiator”
 Buying situations
It is not only that products differ.
Even the buying situation differs.
Each time the buyer is to take a purchase decision, it may or may not be the
same as the previous one.
Absence of any one of the following factors (or all) might change the decision
◦ Awareness about competing brands
◦ Customer has a decision criteria
◦ Customer is able to evaluate and decided on his choice
Henry Assel
TYPES OF CONSUMER BEHAVIOUR AND
IMPLICATIONS FOR MARKETERS
Henry Assael – 4 types of buying
behaviour
Consumers are becoming smarter by the day
Buying a face wash and buying a luxurious car is very different,
therefore the perception involved and the information gathered by the
consumer in purchasing a car is much more than buying a face wash.
Henry Assael distinguished four types of consumer buying
behavior based on the degree of buyer involvement and the degree of
differences among brands.
Types of buying behaviour Trying a new
restaurant
Buying a
house

Buying tiles Salt

for a house
Complex Buying Behaviour
Consumers engage in complex buying
behavior when they are highly involved in a
purchase and aware of significant differences
among brands.
This is usually the case when a product is
expensive, bought infrequently, risky, and highly
self –expressive like buying a house, choosing a
college for education
Buying develops beliefs -> develops attitude ->
purchases
What should the marketer do
Since the customer needs to learn – primary job of the marketer is to provide
lots of information and create a truly differentiated product

Develop strategies that assist the buyer in learning about

the product attributes and their relative importance
Marketers must call attention to the high standing of
their company’s brand and their most important
attribute
Marketer needs to differentiate the brands features and
use media to describe the brand benefts and train store
sales personnel
Dissonance Reducing
behaviour
Highly involved but consumer cant see difference between brands
In this case the buyer will shop around to learn what is available but will
buy fairly quickly perhaps responding primarily to a good price or a
purchase convenience
After the purchase, the consumer might experience dissonance that
stems from noticing certain disquieting features of the carpet or hearing
favorable things about other brands.
The consumer will be alert to information that supports his or her
decision.
Acts -> Acquires new beliefs -> attitudes
What does the marketer do?
Focus on quality differences, brand, price or convenience
Marketing communication should aim at supplying beliefs and
evaluations that help the consumer feel good about his or her brand
choice.
Design a communication programme, which will help the buyer to
gather more information, increase his brand comprehension and
gain confidence in the brand.
Habitual Buying Behaviour
◦ Simplest type of consumer behaviour
◦ Occurs when consumer already has some experience of buying and using the
product
◦ Adopted for the purchase of low cost, frequently used items
◦ If buyers keep reaching out for the same brand – it is out of habit and not loyalty
◦ Buyers do not give it much thought and do not take a lot of time to make the
purchase. With these products – consumer behaviour doesn’t pass through the
same sequenct of belief, attitude and behaviour.
◦ Consumers do not search extensively for information, evaluation – they are
passive receipts of information.
◦ After purchase, they may not even evaluate the choice because they are not
highly involved with the product
◦ For low inlvement products, the buying process begins with se brands belies
formed by passive learning and is followed by purchase behaviour.
What should Marketers do
Marketers of such products find it effective to use price and sales
promotions to stimulate product trial
Television advertising is more effect than print because it is a low
involvement medium and includes passive learning
Techniques to convert a low involvement product into one of higher
involvement
◦ Link the product to solving some issue or personal issue– for example Close
up is linked to whitening teeth
◦ Use it to trigger strong emotions related to personal values or ego defence
◦ Add an important feature
Variety seeking
Some buying situations are characterised by low involvement but
significant brand differences
Here consumers do a lot of brand switching.
For example restaurants – consumers may reach out for another brand
for another taste
Brand switching occurs for the sake of variety rather than dissatisfaction
Variety Seeking
The market leader and the minor brands will have different marketing
strategies
Market leaders may try to encourage habitual buying behaviour by
dominating shelf space, avoiding out of snack conditions and
sponsoring frequent reminder advertising
The challenger firms will encourage variety seeking by offering lower
prices, deals, coupons, and adverstising that presents reasons for trying
something new.
Elaboration
Likelihood Model
HOW THE DECISION PROCESSES CHANGES
BASIS THE TYPE OF PRODUCT
https://www.youtube.com/watch?v=QCzV9UN7yGw
https://youtu.be/eD9ajBA8nyw
Attitude
A learned Predisposition to behave in a consistently
favourable/unfavourable manner with respect to a given object

Attitudes have CONSISTENCY

Attitudes have a learned predisposition

Attitude has 3 components
Cognition – An opinion or belief of an attitude .I believe spiders are
dangerous.

Affective –feelings/emotions connected with the opinion: I am scared

of spiders

Behavioural – the way we act. If I see a spider, I will leave the room
ELM
Attitudes can be changed in 2 different ways of persuasion –
 Central route
 The thought is that consumers carefully evaluate the merits/demerits of a
product which is relevant/high involvement
 Hence the central route to persuasion requires onsidered thought and
cognitive proccessing

 Peropheral route
 For low involvement products – which require little thought or processing –
customer is less motivated to exert cognitive effort and learning occurs
though repetition, passive processing of visual cues and holistic perception
 Hence great ads, themes, jingles, slice of life, taglines etc are used
The Elaboration Likelihood Model

SO what does an
Marketer do:

https://youtu.be/Nd6jveo
sFCE
Step 3:
Evaluation of
brands
ALSO INCLUDE CONSUMER DECISION
MAKING “RULES”
Evaluation of alternatives

Brand Awareness
matters
 Result of search and Evaluation : Brand-sets

Awareness (brands known to consumer)

Consideration set ( brands consumer
willing to consider)
Evoked set (comes to mind in a particular
situation)
Inept set (unacceptable)
Inert set ( indifferent or overlooked )
Implications for marketers
 Marketing used to be driven by companies – “pushed” on consumers through
traditional advertising. At each point in the funnel, as consumers whittled
down their brand options, marketers would attempt to sway their decisions.
 Today consumers seize decision making in their own hands
75% of information during “active evaluation” comes consumer driven
activities as well as store interactions
 Hence marketers should try to “influence” consumer driven touch points such
as word of mouth and internet search
Companies like GM – strong sales incentive, in dealer programs, - however
asian companies like tayota, Honda dominate with brand strength and product
quality- positive experiences with these brands have made purchasers loyal to
them and this generates positive WOM and works better than incentives
What are your criteria for choosing a B school
Alumni what are they doing - Faculty
Placement report - Hostels
Specialization – Courses, Course outline
Location
fees vs salary – ROI
Rankings – Economic times,
Accreditation
Scholarship
Fees
Former Students
Campus – how it looks like,
Extra curriculars
Citizenship, PR
Evaluation techniques used by
consumers
Information processing strategies by consumers are called decision
rules.
They can be used to evaluate various options and reduce risk involved in
the decision

Two categories of decision rules:

Compensatory Model/Decision Making Rules

Non Compensatory Model/Decision Making Rules

 Compensatory Model/Non
Compensatory Model
Compensatory Model
Brands are evaluated in terms of each
relevant criteria and the best brand
(or the highest score) is chosen
Alternative good attributes and/or
acceptable bad attributes can be
traded off or compensated with or by
during decision making
Models
◦ Expectancy Value Model
◦ Affect Referral
Non Compensatory Model
Certain preference attributes are not
compensatory in nature and cant be
traded off/compensated by other
attributes
Positive Evaluations do not trade of for
negative evaluations
Models
◦ Conjunctive Models
◦ Disjunctive Models
◦ Lexicographic Models
 Compensatory models
EXPECTANCY VALUE MODEL –
 1) Ask consumers what are the relevant attributes,
2)what weights he wishes to give to each attribute
(out of 100 ),
 3) ask Consumer to rate each brand ( on scale of 1-
10) on each attribute
 4) Consumer arrives at summated score for each
brand by multiplying 2and 3

AFFECT REFFERAL RULE

Consumers will not analyze any brand attributes but
will go by overall ratings given by others to choose a
brand with best ratings
Non Compensatory Decision
Models
Conjunctive Decision Rule (and rule )
• Consumer sets a minimum standard for each attribute and a brand has to pass on all the
attributes ,else will be dropped
• Reduces a large consideration set to a manageable size.
• Often used in conjunction with another decision rule.

Disjunctive Decision Rule (or rule )

• Sets a minimum acceptable standard ( higher than in conjunctive ) as the cutoff point for
every attribute--a brand that exceeds the cutoff point on any attribute , is accepted.
 Reduces large consideration set to a more manageable number of alternatives.

Lexicographic Decision rule

• The consumer decides to select that brand which has the highest rating on most imp
attribute
• If there is a tie, then he compares brands on next most important attribute and so on and
so forth
Strategies to tackle Evaluation
Modify the brand – real positioning
Alter beliefs about the brand
Alter beliefs about competitors brands
Alter importance weights
Call attention to neglected attributes
Shift Buyers ideals
Step 4: Purchase
OUTPUT PART OF THE PROCESS
Types of Purchase
 when a consumer purchases a product but buys a smaller quantity
than usual, the purchase is called a trial. This is the exploratory phase in
which consumers evaluate a product through direct use.
 Consumers can be encouraged into such purchases through promotional
activities like a coupon, sale prices, free samples
 Not feasible for all products like durables etc

 When a product is in an established category is found by trial to be

more satisfactory or better than other brands, consumrs are likely to
repeat the purchase – this represents brand loyalty.
Step 5: Post
purchase
OUTPUT PART OF THE PROCESS
Post Purchase
 Post purchase evaluation occurs after consumers have used the
product and evauate it in context of their expectations.
 Positive disconfirmation of purchase occurs when product’s
performance > expectations and Negative disconfirmation occurs when
performance < expectations.
 Cognitive dissonance occurs when consumers try to reassure
themselves that they made wise choices. In doing so they rationalize
their decisions being wise – seeks ads to support their choice, avoid
competitive brands, attempt to persuade others or turn to others
satisfied purchasers for reassurance.
 degree of post purchase analysis depends on the importance of the
product decision and the experience acquired in using the product.
Diffusion &
adoption of
technology
 Diffusion of technology
 Macro process by which the acceptance of an innovation (new product, service, idea or
practice) takes place amongst membrs of a social system (market segment) over time.
4 elements influence the same
 Innovation
 Communication Channels
 time
 Social Systems

Designed into 2 steps

 Diffusion – process by which innovations are spread among members of a social system
 Adoption – persuasion of individuals within a social system
Innovation lifecyle
 Customer segments
 Innovators – 2.5% - first people to adopt. They are willing to take risks, are usually
younger, have the highest social class, financial stability, some level of knowledge
about the product and risk tolerance.
 Early adopters – 13.5% - highest degree of opinion leadership, younger in age, high
social statys, education and more discrete about adoption choices
 Early Majority - 34% - have above average social status, connect with early
adopters, seldom hold opionion leadership in a system
 Late Majority – 34% - after the average member of the society, they are skeptical
of innovation and will try only after the majority have adopted the same. Low
average social status, financial instability and in contact with others in early and
late majority
Laggards – individuals in this category are the last to adapt,aversion to change,
likely to hold on to traditions, low social status and financial stability , older than
other adopters and in contact with only famuky and close friends.
Factors that affect adoption
 Product factors
 Consumer Factors
Product Factors
 Relative advantage – degree to which a new product is perceived as
superior to the old one
 Compatibility – degree to which potential consumers feel a new product
is consistent with their present needs, values and practices.
 Complexity – the degree to which a new product is difficult to understand
affects product acceptance.
 Trialability – degree to which new product can be tried on a limited basis.
 Observability (Communicability) – ease in which products
benefits/attributes can be observed, imagined or described to potential
consumers.
https://youtu.be/j8KpV-4_mRg
Consumer factors
Consumer Factors