Consumer Decision Making

Process
Module 3
 • Consumer Decision Making Model

THE MARKETING SOCIO-CULTURAL Need recognition

MIX: INFLUENCES: Type of decision
• Product • Reference Groups Pre-purchase Purchase
• Promotion • Family No Purchase
Information Search
• Price • Social Class Evaluation of
• Distribution • Culture Purchase Alternatives
Post purchase
LEARNING:
evaluation
Knowledge
COMMUNICATION COMMUNICATION Experience
PSYCHOLOGICAL
SOURCES: SOURCES: Re-purchase
INFLUENCES: No Repurchase
• Advertising • Word of Mouth Motivation
• Marketer’s digital • Recommendation Personality traits
marketing s Perception Trust and loyalty
messages • Social Media Attitudes

INPUT PROCESS OUTPUT

• The Input into deciding what to buy comprises the marketer’s offering-i.e. product,
price, place and promotion.
• The input also comprises of the influence of reference groups-family, social class,
culture; marketer’s communications in the form of advertising, viral marketing and
digital marketing; as well as word of mouth and recommendations.
• A customer’s psychological factors- motivation, personality, perception and
attitude help process the input. The purchase decision during the processing stage
sees the customer go through the stages of need recognition,; the type of decision
determines the amount of pre-purchase information search, which leads to
evaluation of purchase alternative.
• The outcomes are functions of learning and forming attitudes and includes what to
buy and whether to buy it again or not.
• INPUT:
• The input components of the customer’s decision process includes three types of
external influences:
i. The Marketing Mix consists of strategies designed to reach, inform and persuade
customers to buy marketers products. These include the product, advertising
and other promotional efforts, pricing policy, and the distribution channel
ii. Socio-cultural influences: include the customer’s family, peers, social class,
reference groups and culture.
iii. Communications in the form of Marketing communications, word of mouth,
social media communications also act as inputs in the customer decision
making.
• PROCESS:
• The process component of the model is concerned with how
customers make their purchase decisions.
• The purchase process is influenced by psychological factors such as
motivation, personality, perception and attitudes.
• The process includes stages the customers go through before the
actual purchase which is comprised of need recognition, information
search (determined by type of purchase decision) and evaluation of
alternatives.
 Process
1. Need Recognition:
• Need recognition occurs when a customers is faced with a ‘problem’.
• For instance a customer , Raj, joins a job just after college.
• For Raj, a young executive who has just joined a job after his graduation, on seeing his colleagues
(influence of social factors in the ‘Input’ stage working seamlessly on their laptops) as well as an
advertisement that shows how laptops help you in your work life (input variable); the need is
triggered. The problem is the reduced ability to work effectively at new job which, with the influence
of social factors and marketing communication , leads customer to realise he needs a laptop.
• There are two types of needs.:
Actual states: here, the need is triggered when the customer perceives that they have a problem with
their currently used product. For e.g. a customer who perceives his phone as one that hangs often.
Desired state: customers may desire something new
• Need recognition is the beginning of the consumer decision making process.
Type of Decision
• Not all buying decisions require the same amount of information and cognitive
processing.
• Buying decisions are of the following types:
Extensive problem solving: products the consumer buys infrequently and may not have
much experience in buying the product. E.g.: cars, diamonds. Here, the customer
engages in extensive problem solving behaviour such that he tries to collect a lot of
information before decision to buy as the customer does not have much knowledge of
the product as product is bought for the first time or rarely.
Routinised response behaviour: Consumers have experience with the product to be
purchased . Here customers already have an established basic criteria for evaluating a
product but still need information to understand the differences among brands. In such
case, the customer engages in limited problem solving. This type of decision occurs when
customers have bought the product before
• Customer Involvement:
• Customer involvement is the degree of personal relevance that the product or purchase holds for the customer.
• High Involvement purchases are very important to the customer, have a high degree of perceived risk and
results in extensive problem solving behaviour such that customer engages in extensive information search.
• Low involvement purchases are not very important, hold little relevance, have little perceived risk and are
routinized response behaviour
Type of buying decisions- extensive problem solving corresponding to high involvement purchases and
routinized problem solving corresponding to low involvement purchases determine the level of information
search the customer would engage in.
What type of purchase decision do you think a laptop is for Raj ?
In the laptop example, it can be assumed that since laptop is being purchased for the first time by Raj, it involves
an extensive problem solving behaviour. Also the laptop being an experience purchase, would entail higher
perceived risks and since it is important to Raj for his work and to fit into his new job, purchase of laptop for Raj
would be a high involvement purchase.
This would mean Raj shall engage in extensive problem solving behaviour
Henry Assael (1987) model of consumer behaviour based on level of
involvement and differences between brands
Complex Buying Behaviour:
• Consumers are highly involved and consumers are aware of significant differences
among brands
• This is usually the case when the product is expensive, bought infrequently, riskly and
highly self expressive.
• Here , the customer does not know much about the product category
• E.g.: In the purchase of a personal computer, the consumer may not know which
attributes to look for
• Complex buying behaviour involves a 3 step process: beliefsattitudes behaviour
First the buyer develops beliefs about the product
Second, he develops attitude towards the product
Third, he makes a thoughtful purchase choice
• Marketing implications for complex buying behaviour:
Recognise high involvement consumer’s information gathering and
evaluation behaviour
Develop strategies that assist the buyer in learning about the product’s
attributes and their relative importance
Call attention to the high standing of the company’s brand on the more
important attributes.
Differentiate the brand’s features , use print media to describe brand’s
benefits and motivate store sales personnel and reference groups to
influence final brand choice.
The HP ad assists the buyer
in learning about the
product’s attributes and
their relative importance
 Habitual Buying Behaviour
• There is an absence of significant differences between brands
• Consumers have little involvement in the product category. Involves purchase of low-cost , frequently purchased
products.
• With low involvement products, consumer does not pass through the normal belief/attitude/behaviour sequence.
• Customers do not search extensively for information about the brands not evaluate them on the basis of their
characteristics
• Consumers are passive recipients of information as they watch or see advertisements of the brands in the product
category.
• Advertising Repetition creates brand familiarity rather than brand conviction.
• Consumers do not form strong attitude towards a brand: rather, they select a brand because it is familiar.
• Consumers may not evaluate their choice, even after purchase as they are not highly involved with the product
category.
• Marketing Implications:
Marketers of low involvement products with few differences find it effective to use price and sales promotion to
stimulate trial since the consumers are not highly committed to any brand.
The Ad copy should stress only a few key points and use visual symbols and imagery which is easy to remember and
associate with the brand.
Ad campaigns should aim for high repetition with short duration messages
Television is more effective than print media because it is a low involvement media suited for passive learning.
• Marketing implications cont.
Marketers can convert low involvement products into high involvement ones.
• This can be done in 4 ways:
i. Link the product to some involving issue. For example, Colgate links itself with
avoid cavities
ii. Link the product to some involving personal situation: For e.g.: Sensodyne links
itself with sensitive gums for people facing this personal problem or
iii. Design Ad to trigger strong emotions related to personal values or ego defence.
For e.g.: Close-Up is linked with fresh breath and confidence to get closer.
iv. Add an important product attribute –for e.g.; Dove has moisturising properties
 This Colgate ad triggers strong emotions related to personal values or
Reminder Ad that ego defense.
maintains familiarity
Dissonance reducing buying behaviour
• Sometimes the consumer of a highly involved purchase may see little difference in the brands
• The purchase is expensive, infrequent, and risky.
• Buyer will shop around to learn what is available but will buy fairly quickly , responding primarily to a good
price or for convenience.
• E.g: purchase of furniture: expensive and highly self expressive. Buyers may consider most furniture brands
in a given price range to be the same.
• After the purchase, the consumer might experience dissonance which stems (“ did I purchase the right
furniture?”) from noticing some disquieting features or hearing favourable things about other furniture.
• The consumer will be alert to information that justifies his decision
• The customer acts first, then acquires beliefs, and the ends with a set of attitudes. Behaviour beliefs
attitudes
• Marketing implications:
• Communication should aim at supplying beliefs and evaluations that help consumer feel good about his or
her brand choice.
Honda Amaze communication aims at
supplying beliefs and evaluations that help
consumer feel good about his or her brand
choice.
Variety seeking behaviour
• Low customer involvement but significant brand differences exist.
• Consumers look around and try a number of brands
• Consumers often do a lot of brand switching
• E.g: Biscuits or juice
• The consumer may have certain beliefs about the biscuits, chooses a brand of biscuits without much
evaluation and evaluates the biscuits during consumption.
• But next time, the consumer may reach for another brand –more out of boredom and to seek taste of a
different brand
• Marketing implications:
• Market leaders and smaller marketers will have different strategies here
• Market leader will encourage habitual buying behaviour by dominating the shelf space, avoiding out of stock
situations and sponsoring frequent reminder advertisements
• Challenger firms will encourage variety seeking by offering lower prices, sales promotions, advertising that
presents reasons to try something new.
The top brand fostering its
leadership position and maintaining The challenger-Nutrichoice encouraging
familiarity to that Parle-G becomes a customers to try its many available options
habitual purchase such that
consumers don’t think twice before
buying it.
Need or Problem Recognition

Lipton Green Tea triggers a desire for low calorie tea. It

makes a consumer wonder if her tea is as healthy and
low in calories like Lipton green tea which triggers a
problem to replace her current brand of tea with a low
calorie one such as Lipton Green Tea if that’s what the
consumer would like.
• Problem recognition is the first stage in the consumer decision process
• Problem recognition is the result of a discrepancy between a desired state and an actual state that is
sufficient to arouse and activate the decision process.
• Desired stage: having tea with low calorie; Actual state: current tea being consumed is not low in calories
• The actual state is the way an individual perceives his or her feelings and situation to be at the present
time
• The desired state is the way an individual wants to feel or be at the present time.
• Raj: Actual state: new job, colleagues working on their own personal computers; he, himself has no
personal computer. Desired state: to have a computer like his peers so he can work efficiently
• E.g.: Actual state: hungry; Desired state: satiated/full
• The kind of action taken by consumers in response to the recognised problem related directly to the
problem’s importance to the consumer, the situation and the dissatisfaction or inconvenience created by
the problem.
• Without recognition of a problem , there is no need for a decision.
• The Desire to resolve recognised problems:
• Depends on:
The magnitude of the discrepancy between desired state and actual state
The relative importance of the problem- importance is determined by how
critical the problem is to maintaining the consumer’s desired lifestyle
• A consumer may have a Maruti Alto but desires a Jeep Compass. Here, the
difference between the actual state and desired state is very large.
• However, consumers have limited budget. The importance of fulfilling the desire
for a Jeep Compass may be much lower than desire for other consumption
problems such as those related to housing, utilities-such as an AC, food.
Approaches to Activating Problem
Recognition
• Problem recognition is the function of (1) magnitude of the
discrepancy between desired and actual states (2) importance of the
problem
• A firm can attempt to influence the size of the discrepancy by altering
the desired state or perceptions
• The firm can attempt to influence the perceptions of the importance
of an existing discrepancy.
The Ad triggers need by emphasising the magnitude of the
discrepancy between actual state-(left) – and desired state (right),
showing the two states side by side on the same face. It also
triggers the need by increasing the importance of resolving the
problem.
Snickers triggers need for its brand of chocolate by highlighting the
problems when one is feeling hungry. The Ad also presents Snickers as
the answer to the problem of hunger.
 Pre-purchase search:

• Consumers engage in both internal and external information search.

• Sometimes recalling past purchases provides the consumer with adequate information to
make the present choice. For e.g.: a person who is buying a new phone may recall his prior
phone-use experiences.
• Internal search involves the consumer identifying alternatives from his or her memory. For
certain low involvement products, it is very important that marketing programs achieve
“top of mind” awareness.
• For instance, consumer may remember the pen brand he used last which he found
satisfactory and his memory allows him to decision on purchasing the same brand of pen.
Low involvement purchases such as toothpaste, inexpensive chocolate is considered based
on prior memories and perceptions of the customer
• For high involvement products, consumers are more likely to use an external search.
Before buying a car, for example, the consumer may ask friends’ opinions, read reviews in
Consumer Reports, consult several web sites, and visit several dealerships.
• However, when a customer has had no past experience, he or she may have to engage in
more extensive information search. Raj would indulge in an extensive information search
• Many customer’s information comes from past experiences and external information.
Sources of information
• The shopping experience-looking around in various retail outlets and collecting information about the product and
brands
• Opinions of friends, colleagues.
• External sources of information is highest for consumers who have the least amount of product category knowledge.
• The less customers know about a product category and the more significant the purchase is to them, the more
extensive their pre-purchase information search is likely to be.
• Conversely, customers high in subjective knowledge ( a self-assessment of how much they feel that they know of a
product category), will rely more on their own evaluations rather than external sources of information.
• The Internet has had a great impact on pre-purchase search. This implies, marketers must ensure effective search
engine optimization for their brands and ensure effective, relevant content availability for their brands on the digital
media. Consumer reviews have also become a dominant source of information in the current digital age.
Marketing Implication:
firms that make products that are selected predominantly through external search must invest in having information
available to the consumer in need—e.g., through brochures, web sites, or news coverage.
HP provides detailed
descriptions of its
laptops such as type
of processor, size of
RAM, prices,
warranty available.
Customers can
search for laptops
based on various
categories such as
type of processor,
size of screen,
colour, usage
 Factors that increase Pre purchase information search
Product Factors
Long periods of time between successive purchase
Frequent changes in product styling
Frequent price changes
High volume purchasing
Many alternative brands
Much variation in features
Situational Factors
Experience: First time purchase: no past experience because product is new; unsatisfactory past experience
within the product category
Social Acceptability: The purchase is a gift; the product is socially visible
Value related considerations: The purchase is discretionary rather than necessary; all alternatives have both
desirable and undesirable consequences; family members disagree on product requirements or evaluation of
alternatives; product usage deviates from important reference groups; many sources of conflicting information
Consumer Factors
Demographics: Education, income, occupation, age, wealth, marital status
Personality traits: how practical one is; willingness to accept risk; product involvement; novelty seeking
Evaluation of Purchase Alternatives
• Brands available will fall into the following categories:
Evoked set (consideration set): specific brands or models a consumer considers in making a purchase within a
product category
Inept set: brands or models that consumers exclude from the purchase consideration as they are unacceptable or
seen as inferior.
Inert set: brands or models the consumer is indifferent because they are perceived as not having any particular
advantages. These are brands consumer has overlooked. For e.g.: Raj may be indifferent towards small, imported
laptops sold in the unorganised market.
• Excluded products include:
Unknown brands or models because of the consumer’s selective exposure to advertising media and selective
perception of advertising stimuli.
Unacceptable brands of poor quality and inappropriate positioning or not having specific features or attributes
Brands that are perceived as not having any special benefits
Brands that are not clearly positioned
Brands that do not satisfy perceived needs.
• Marketers must ensure their products become part of the consumer’s
evoked set.
• To do this, marketers must plan and execute promotional techniques
that impact a more favourable and relevant product image to the
target consumer
• This may also require change in product features or attributes that are
preferred by the target consumer
• An alternative strategy is to get consumers to consider a specific
offering such as easy instalment payments in the case of a car
purchase.
• Criteria consumers use to evaluate the alternatives within their
evoked set are in the form of important product attributes. In addition
to price, attributes that consumers use while evaluating following
products are:
E Book Readers: Size, weight, touch screen, battery, memory size
Orange juice: amount of pulp, degree of sweetness, strength of
flavour, colour, packaging
Wrist watches: size of the dial, precision, water resistance, alarm
features
 Bulova watch is being
advertised as the most
accurate watch

Torgden watches
advertised as
stylish, sports
watch, which is
waterproof and is
a quartz analog
watch for men
How customers evaluate alternatives: Decision
Rules
• Decision rules are procedures consumers use to facilitate brand and
other consumption related choices
• Compensatory Models
Expectancy Value Model
Affect Referral
• Non Compensatory Models:
 Conjunctive Model
Disjunctive Model
Lexicographic Model
 Compensatory decision rules: The Expectancy Value Model
 here, the consumer evaluates brands or model options in terms of each relevant attribute and
computes a weighted or summated brand for each brand
 The Computed score reflects the brands’ relative merit as a potential purchase choice
 The consumer will select the brand that scores the highest among alternative evaluated.
Brand (ratings on Performance Value for money Design Summated score:
a scale of 1 to 5) (weight: 5) (weight: 3) (weight: 2)
Dell 3 4 3
Dell: weighted 3 * 5= 15 4*3= 12 2*3= 6 Dell: 33
score
HP 4 3 4
According to this
HP : weighted 5* 4= 20 3*3 = 9 2*4= 8 HP : 37 decision rule, Raj
score would evaluate HP
Lenovo 2 5 3 as the brand that
Lenovo: weighted 5*2= 10 3*5= 15 2*3= 6 Lenovo: 31 meets his choice.
score
Affect Referral Model
• This model assumes that for many purchases, consumers maintain a long
term memory of overall evaluations of the brands in their evokes set.
• Under affect referral, consumers tend to make choices based on recalled
affect towards brands in memory, bypassing reevaluation of the brands
and comparison processes.
• In this model, the customer does not make any assessment by individual
attributes.
• Under this model, consumer selects the brand with highest perceived
overall rating derived from memory.
• E.g: A customer decides to purchase a new
Affect Referral Model
• consumer choice based on affect referral.
• The traditional concept of affect referral is an effort-minimizing choice heuristic,
thus limiting to a rare phenomenon wherein recalled affect solely guides choice
behavior.
• On the contrary, this model emphasizes that affect referral is the rule rather
than the exception.
• Affect referral reflects human rational mechanism that governs the processes of
internal information utilization for choice situations involving brands in memory
• For e.g.: A customer wants to buy ice-cream. He would remember which brand
of ice-cream he liked/enjoyed in the past and would choose the brand he
liked/enjoyed in the past.
Non Compensatory Rules:
• Conjunctive decision rule: consumer establishes a separate ,
minimally acceptable level as a cut off for each attribute.
• If a particular brand or model falls below this cut off point on any of
the attribute, that option is eliminated from further consideration
• Because conjunctive rule can result in several acceptable alternatives,
the customer applies an additional decision rule to arrive at a final
selection (for example, accepting the first satisfactory brand)
• Lexicographic decision rule:
the consumer first ranks the attributes in terms of perceived
relevance or importance.
Consumer then compares the various alternatives in terms of the
single attribute that is considered most important.
If one option scores sufficiently high on the top ranked attribute this
brand is selected.
When there are two or more surviving alternatives, the process is
repeated with the second highest ranked attribute and so on.
Brand (ratings on a Performance (weight: Value for money Design Summated score:
scale of 1 to 5) 5) [RANK: 1] (weight: 3) [RANK -2] (weight: 2) [RANK :3]
Dell 3 4 3
Dell: weighted score 3 * 5= 15 4*3= 12 2*3= 6 Dell: 33
HP 4 3 4
HP : weighted score 5* 4= 20 3*3 = 9 2*4= 8 HP : 37
Lenovo 2 5 3
Lenovo: weighted 5*2= 10 3*5= 15 2*3= 6 Lenovo: 31
score

The highest ranked attribute is Performance. Raj would select HP as HP has highest rating on
this first ranked attribute.
Assuming Dell and HP had the same rating on this attribute, Raj will consider the second
highest ranked attribute, which is Value for Money
Based on Value for Money, Dell will be selected with a rating of 4 as compared to HP’s rating of
3 on this criterion.
• With the lexicographic rule, the higest ranked attribute may reveal
something about the individual’s basic consumer or shopping
orientation as follows:
Quality oriented: where the consumer follows ‘buy the best’ rule
Status oriented: where the consumer slects on the basis of ‘buy the
most prestigious brand’ rule
Economy minded: where consumer follows the ‘buy the least
expensive’ rule.
Reliance Digital tries to attract the
‘Economy minded’ consumers
Other decision rules:
• Recognition Heuristic: consumers choose brands that seem familiar
to them
• Majority vote heuristic: consumer chooses the option that most
other people have chosen. If most people have a Samsung phone, a
consumer may select the same.
Decision Rules and Marketing Strategy
• An understanding of which decision rules consumers apply in
selecting a particular product or service is useful to marketers for
developing their promotional strategy
• Marketers can develop promotional strategy according to which
decision rule the customer uses.
• In the case of compensatory rule-expectancy model or the
Lexicographic decision rule, Marketers can demonstrate how their
brand rates superior in the important product features/criteria.
• In the case of affective referral model, Marketers can show Ads that
evoke positive memories attached to the brand
Persuading the customer
• Marketing stimuli such as advertising messages are primarily designed to persuade customers to buy the advertised brand
• Different customers are persuading differently
• Due to differing motivations and abilities, customers differ in terms of how much they pay attention to and process advertised
messages
• Customers differ in their motivation and ability to process marketing stimuli:
• Customers with high motivation and ability to process marketing stimuli:
• Customers with high levels of motivation and ability to process advertisements shall engage with the advertisement more and process
the information in the message in greater detail.
• These customers will pay more attention to the information content of the advertised message, evaluate the content of the message
and may get motivated with what is being communicated.
• The strength of the factual argument will convince such customers to buy the advertised brand.
• Customers with low levels of motivation and ability to process marketing stimuli:
• Customers with lower levels of motivation and ability to evaluate messages, will pay more attention to peripheral or external cues
such as visuals , attractiveness of the model, music , rather than the detailed content of marketing messages .
• Accordingly, customers may be persuaded in two ways:
• Central route
• Peripheral route
Persuading customers to take decisions:
Central and Peripheral Routes.
• Central route: Petty and Cacioppo (1986) state that there are two “routes” to
persuasion: central and peripheral.
• The central route to persuasion consists of thoughtful consideration of the
arguments (ideas, content) of the message. When a receiver is doing central
processing, he or she is being an active participant in the process of persuasion.
• The peripheral route to persuasion occurs when the listener decides whether to
agree with the message based on other cues besides the strength of the
arguments or ideas in the message. For example, customer may decide to agree
with a message because the source appears to be an expert, or is attractive.
• The peripheral route also occurs when a listener is persuaded because he or she
notices that a message has many arguments -- but lacks the ability or motivation
to think about them individually.
CENTRAL ROUTE
PERIPHERAL ROUTE
• Case Analysis:
• Which MP 3 player should Ruby buy?
• How does she go through the decision making process.
• What would be her final decision and why ?