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Consumer Decision Making Process

The need recognition stage is the first and crucial step in the consumer decision-making process. It occurs when a consumer perceives a discrepancy between their actual state and their desired state, leading to a realization that they need to solve a problem. This stage is fundamental for marketers to understand, as it forms the basis of why consumers begin their journey toward purchasing a product or service.

Key Factors in Need Recognition

1. Discrepancy Between Actual and Desired State

  • Definition:
    A consumer identifies a gap between their current situation (actual state) and where they want to be (desired state).
  • Examples:
    • Actual State: Your TV is malfunctioning, and you want to watch a cricket match.
      Desired State: A functional TV to enjoy the match.
    • Actual State: Your washroom is outdated and unattractive.
      Desired State: A luxurious, five-star hotel-style washroom.

2. Importance of the Problem

  • Definition:
    The perceived importance of solving the identified discrepancy. Consumers prioritize problems based on their significance.
  • Examples:
    • Education for securing a future job (safety and career needs).
    • Buying a car for daily commuting due to transportation issues.
    • Financial security or purchasing a house to fulfill long-term safety needs.

Types of Need Recognition

1. Actual State Need Recognition

  • Focuses on the current dissatisfaction or problems faced by the consumer.
  • Examples:
    • Mosquitoes causing health issues like dengue or malaria → Solution: Mosquito repellent.
    • Outdated fashion leading to lack of recognition at parties → Solution: Purchase fashionable clothing.

2. Desired State Need Recognition

  • Focuses on aspirations or improvements in the consumer's current situation.
  • Examples:
    • Painting a house to make it look new and impressive despite being old → Solution: High-quality paints or interior design services.
    • Dreaming of a palace-like home → Solution: Luxury home decor and renovations.

Situations Leading to Need Recognition

  1. Depleted Stock or Malfunctioning Products:
    • E.g., Running out of salt, a broken appliance, or an inactive internet connection.
  2. Discontentment:
    • Current product is functional but not satisfactory.
      • E.g., A washroom that is functional but lacks aesthetic appeal.
  3. Changing Environment:
    • Needs arising due to external factors like seasons or societal trends.
      • E.g., Mosquito repellent during the rainy season.
  4. Changing Financial Circumstances:
    • A new job or raise may enable the purchase of previously unaffordable products.
  5. Marketing Activities:
    • Advertisements showcasing dream scenarios or aspirational lifestyles.

Marketing Implications of Need Recognition

Understanding whether a consumer is driven by their actual state or desired state helps marketers position their products effectively.

  • Actual State-Oriented Products:
    Focus on solving immediate problems.
    • Example: Mosquito repellents address health concerns.
  • Desired State-Oriented Products:
    Emphasize aspirational benefits or improvements.
    • Example: Home paints and luxury products highlight aesthetics and social recognition.

Segmentation Based on Purchase Intentions

Consumers can be segmented based on their purchase intention categories, which helps marketers prioritize resources effectively:

  1. Firm and Immediate:
    • Consumers ready to purchase immediately.
    • Example: Customers with urgent needs like replacing a broken smartphone.
    • Strategy: Minimal effort required; ensure availability.
  2. Firm but Not Immediate:
    • Consumers who plan to purchase in the near future (e.g., 2–6 months).
    • Strategy: Encourage quicker decisions through limited-time offers or promotions.
  3. Positive but Not Firm:
    • Consumers with a favorable attitude but undecided on the brand or timeline.
    • Strategy: Build brand preference and urgency to convert them to firm buyers.
  4. Neutral:
    • Consumers with no strong opinion about any brand.
    • Strategy: Increase brand awareness and create a positive perception.
  5. Not Inclined to Buy:
    • Consumers uninterested in the category or brand.
    • Strategy: Use persuasive marketing to spark interest and create a need.
  6. Strongly Opposed:
    • Consumers with negative opinions about the brand or product.
    • Strategy: Often not worth pursuing unless a significant opportunity exists to change perceptions.

Strategic Importance of Need Recognition

  • Helps segment the market based on consumer needs, behaviors, and purchase intentions.
  • Guides product positioning and marketing communication strategies:
    • Highlight actual state needs for problem-solving products.
    • Emphasize aspirational benefits for desired state products.
  • Enables resource allocation by focusing on high-potential consumer segments.

4.3.2 Pre-purchase Information Search

Introduction

Pre-purchase information search is a crucial step in the consumer decision-making process. It involves gathering information about a product or service to make an informed purchasing decision. Consumers can engage in different types of information searches based on their needs, preferences, and the complexity of the purchase.

Types of Information Search

1. External vs Internal

  • External Search:
    • Consumers seek information outside their knowledge base.
    • Example: Researching online, reading reviews, asking for recommendations.
    • Often required for complex or high-risk purchases.
  • Internal Search:
    • Consumers rely on their past experiences, memories, and knowledge.
    • Example: Choosing a favorite brand of toothpaste based on habit or preference.
    • Common for routine or low-risk purchases.

2. Active vs Passive

  • Active Search:
    • Consumers deliberately seek information.
    • Example: Browsing websites, visiting stores, or consulting experts.
    • Linked with external searches, particularly for high-involvement purchases.
  • Passive Search:
    • Consumers gather information without actively looking for it.
    • Example: Noticing ads or receiving recommendations in conversations.
    • Often linked with internal searches or long-term purchase considerations.

Implications for Marketers

  1. Internal Search: Minimal marketing intervention is required. Focus on brand recall and loyalty.
  2. External Search: Provide detailed information across relevant platforms where consumers are likely to search.
  3. Active Search: Ensure visibility in high-traffic channels such as online reviews, comparison websites, or social media.
  4. Passive Search: Use content marketing, ambient advertising, or word-of-mouth strategies to gradually influence consumers.

Types of Problem-Solving Based on Information Search

1. Extended Problem Solving

  • Characteristics:
    • High risk and uncertainty.
    • Limited prior knowledge.
    • Involves significant research and time.
    • Examples: Buying a car, a home, or a luxury gadget.
  • Marketing Implications:
    • Provide comprehensive information.
    • Assist customers at every stage of the decision-making process.
    • Use testimonials, detailed guides, and in-depth comparisons.

2. Limited Problem Solving

  • Characteristics:
    • Moderate risk and uncertainty.
    • Some prior experience, but not specific to the current purchase.
    • Example: Switching brands for a known product category like buying a new TV.
  • Marketing Implications:
    • Offer targeted information to fill knowledge gaps.
    • Highlight unique selling points of the brand or product.
    • Focus on point-of-sale strategies and promotions.

3. Routine Problem Solving

  • Characteristics:
    • Low risk and uncertainty.
    • Consumers are familiar with the product and brand.
    • Example: Buying everyday items like groceries or toothpaste.
  • Marketing Implications:
    • Minimal investment in detailed information.
    • Emphasize availability and brand recall through consistent advertising.

Factors Influencing Information Search

1. Product Characteristics

  • Complexity: The more complex a product, the more information consumers seek.
  • Cost: High-cost products drive extensive information searches due to increased perceived risk.

2. Market Characteristics

  • Availability of Alternatives: More options increase the need for comparative research.
  • Competitive Landscape: Intense competition drives consumers to seek differentiation.

3. Consumer Characteristics

  • Past Experience: Experienced consumers need less information.
  • Time Pressure: Limited time reduces the depth of information search.
  • Involvement Level: High involvement (e.g., significant personal stakes) prompts extensive research.
  • Importance of Purchase Decision: Important decisions (e.g., buying a gift for a boss) lead to a more thorough search.

4. Perceived Risk

  • Definition: Uncertainty about the consequences of a purchase decision.
  • Types of Risk:
    • Financial: Will it be worth the money?
    • Performance: Will it work as expected?
    • Social: Will it be well-received by others?
    • Psychological: Will it align with personal values?

Managing Perceived Risk

Strategies for Consumers

  1. Gather Information: Reduce uncertainty by researching.
  2. Brand Loyalty: Stick to trusted brands.
  3. Brand Image: Choose brands with strong reputations.
  4. Store Image: Rely on trustworthy retailers.
  5. Price as Quality Indicator: Assume higher price equals better quality.
  6. Reassurance: Look for guarantees, warranties, and return policies.

Strategies for Marketers

  • For Reassurance: Offer return policies, extended warranties, and satisfaction guarantees.
  • For Information: Provide clear and accessible details, testimonials, and reviews.
  • For Brand Image: Invest in branding and visibility in trusted retail outlets.
  • For Risk Reduction: Ensure a consistent quality standard and communicate reliability.

4.3.3 Evaluation of Alternatives

In the consumer decision-making process, the evaluation of alternatives is the third critical stage. It follows need recognition and pre-purchase information search. In this stage, consumers compare different brands or products based on specific criteria to decide which best fits their needs. Here, we delve into the details of this stage and its implications for marketers.

Key Components in the Evaluation of Alternatives

1. List of Brands (Total Set)

  • Definition: The total set includes all brands available in a particular category. For example, in the TV market, the total set may consist of 50 different brands.
  • Process: From this large set, consumers narrow down options through awareness and selection criteria.

2. Evaluation Criteria

  • Consumers use various criteria to evaluate brands, such as:
    • Price: Affordability or budget constraints.
    • Features: Size, picture quality, sound quality, etc.
    • Brand Name: Trust and recognition.
    • Warranty: Guarantee terms and service support.
    • Service Accessibility: Proximity and ease of accessing support.
  • Note: The criteria vary by individual based on their preferences and needs.

3. Decision Rules

  • After establishing evaluation criteria, consumers use decision rules to weigh their options:
    • Compensatory Rules: Consumers consider multiple criteria, allowing strengths in one area to compensate for weaknesses in another.
    • Non-Compensatory Rules: Consumers focus on one decisive criterion, which is non-negotiable.

The Evaluation Process: Stages and Sets

  1. Awareness and Unawareness Sets

    • Awareness Set: Brands the consumer knows.
    • Unawareness Set: Brands unknown to the consumer, effectively eliminated from consideration.

    Marketing Insight: To stay in the consumer's consideration, brands must ensure awareness through targeted marketing. Identify where your target consumers consume information (e.g., social media, TV, magazines) and ensure visibility.

  2. Evoked, Inept, and Inert Sets

    • Inept Set: Brands consumers actively reject (e.g., too expensive, poor service).
    • Inert Set: Brands consumers are indifferent to (e.g., lack of information or interest).
    • Evoked Set: Brands consumers consider seriously.

    Marketing Insight: The goal is to move from the awareness set into the evoked set, also known as the consideration set. This requires addressing reasons for rejection and indifference, such as affordability, availability, and effective promotion.

Decision Rules in Detail

1. Compensatory Decision Making

  • Definition: Consumers assess all criteria and make an overall judgment based on a weighted average of strengths and weaknesses.
  • Example: A TV with excellent picture quality and size but a high price might still be chosen if its overall value is strong.
  • Usage: More common with high-involvement purchases where multiple attributes matter.
  • Marketing Application: Highlight multiple strengths of the product across all key attributes.

2. Non-Compensatory Decision Making

  • Definition: Consumers focus on a single, non-negotiable criterion and choose the best option for that criterion.
  • Example: A gamer may prioritize refresh rate and image clarity above all else.
  • Usage: Common with specific needs or when consumers have strong preferences.
  • Marketing Application: Identify the critical criterion for your target audience and emphasize it in marketing campaigns.

Practical Implications for Marketers

1. Understanding the Consumer Journey

  • The decision-making process starts long before the purchase. Marketers must intervene effectively at each stage:
    • Need Recognition: Highlight pain points and needs your product can solve.
    • Pre-Purchase Information Search: Provide accessible, trustworthy information.
    • Evaluation of Alternatives: Showcase why your product is the best choice.

2. Strategies to Enter the Evoked Set

  • Use surveys or social media listening tools to understand reasons for consumer rejection or indifference.
  • Address barriers (e.g., price, awareness, service availability) through tailored strategies.
  • Promote your product effectively in channels relevant to your target audience.

3. Positioning Based on Decision Rules

  • If consumers use compensatory rules, focus on multiple strong attributes.
  • If consumers use non-compensatory rules, highlight and excel in one decisive attribute.

4.3.4 The Purchase Decision

The shopping phase in the purchase decision process is crucial as it transitions a consumer from intent to action. This stage involves both physical and digital shopping environments, each with unique attributes. Below is an in-depth explanation of the shopping activity and factors influencing consumer behavior.

Shopping Process in a Physical Store

Step-by-Step Activities

  1. Entering the Store:
    • Observe the displays.
    • Refer to any pre-prepared shopping list.
    • Grab a shopping cart or basket.
  2. Browsing and Navigation:
    • Move to the appropriate sections or browse around the store.
    • Engage with salespeople if assistance is needed or avoid them for independent shopping.
  3. Product Examination:
    • Inspect the desired items for quality, price, and other factors.
    • Select and place items in the cart.
  4. Decision Reassessment:
    • Reevaluate items in the cart; remove items that no longer appeal.
  5. Checkout Process:
    • Proceed to the billing counter.
    • Stand in the queue for billing, complete payment, and exit.

Shopping Process in a Digital Store

Step-by-Step Activities

  1. Opening the App or Website:
    • Search for desired items using keywords.
  2. Filtering and Sorting:
    • Apply filters (e.g., price, brand, customer feedback, ratings).
    • Refine the search results to shortlist options.
  3. Exploring Products:
    • Review product details, images, and videos.
    • Sometimes refer to external platforms like YouTube or Instagram for additional reviews.
  4. Selection and Carting:
    • Add desired items to the cart.
    • Repeat the search and selection process for other categories.
  5. Reassessing the Cart:
    • Remove or add items based on preference and budget.
  6. Checkout:
    • Choose the payment method (credit card, UPI, etc.).
    • Confirm the order and exit the platform.

Reasons Why People Shop

Shopping is not always about fulfilling a need for a product or service. Consumers shop for various emotional, social, and psychological reasons. Understanding these reasons can help retailers enhance their strategies.

Primary Reasons for Shopping

  • Expected Role Fulfillment:
    • As part of familial or societal roles, e.g., a parent buying groceries for the family.
  • Diversion (Retail Therapy):
    • To alleviate boredom or for recreational purposes.
  • Self-Gratification:
    • The emotional high from purchasing or bargaining for products.
  • Information Gathering:
    • Researching products, especially for influencers or enthusiasts.
  • Physical Activity:
    • Engaging in shopping as a means to move around and explore.
  • Sensory Stimulation:
    • Enjoying the tactile feel of products or the sensory appeal (e.g., the smell of coffee, texture of fabrics).
  • Social Interaction:
    • Using shopping as an opportunity to socialize or meet people with shared interests.
  • Authority and Expertise:
    • Gaining a sense of expertise or helping others in the store.

Factors Influencing Purchase Decisions

Key Purchase Factors

  1. Store Selection:
    • Consumers may choose between local stores, distant shops, or even travel to another city/state for a better deal or unique products.
  2. Digital Store Preferences:
    • Factors like bundling, discounts, faster delivery, warranty, and app usability influence preferences.
  3. In-Store Experience:
    • Ambiance, layout, customer service, and promotional schemes can significantly influence a consumer's decision.

Examples of Consumer Behavior

  • For Bargain Hunters:
    • Offering multiple discount schemes or “buy one get one” deals excites this group. The joy lies in the act of bargaining itself, not just the final price.
  • For Status Seekers:
    • Highlight loyalty programs, exclusive member benefits, or premium shopping experiences to appeal to their sense of status.

Importance of Purchase Experience

The purchase experience encompasses every interaction a consumer has with the store or platform. A positive experience can influence not just the current purchase but also future shopping behavior.

Physical Store Experience

  • Differences between a traditional hypermarket, premium hypermarket, and luxury store lie in their interiors, ambiance, and customer service.

Digital Store Experience

  • Factors such as website/app design, user interface (UI), loading time, and clarity of product information play a critical role.

4.3.5 Post Purchase Behaviour

Importance of Post-Purchase Behavior

The Airbnb Example

Airbnb’s business model is a prime example of the importance of post-purchase behavior:

  1. Customer Feedback: After a stay, customers provide feedback on the property. This feedback directly influences future customers’ decisions.
  2. Host Feedback: Hosts also review guests, creating a two-way accountability system that emphasizes post-purchase evaluation.
  3. Impact on Business: Positive reviews build trust and attract more users, while negative feedback serves as a warning, ensuring transparency for all parties.

This highlights how post-purchase behavior can shape a business's success by influencing future purchase decisions.

Theoretical Framework of Post-Purchase Behavior

Post-purchase satisfaction or dissatisfaction arises when a product or service's performance meets, exceeds, or falls short of customer expectations. This is summarized in three scenarios:

  1. Satisfaction: When performance matches expectations.
  2. Dissatisfaction: When performance is below expectations, leading to cognitive dissonance.
  3. Delight: When performance exceeds expectations.

Managing Expectations for Delight

To achieve customer delight, expectations must be carefully managed. However, this requires a balance:

  • Under-promising: Leads to low expectations, making it easier to exceed them. However, it may fail to attract customers in the first place.
  • Over-promising: Attracts customers with high expectations but risks dissatisfaction if promises are not met.

The ideal approach lies in setting realistic expectations while delivering exceptional performance.

Example: Restaurants

  • Five-Star Restaurants: Customers accept long waiting times (e.g., 45 minutes to an hour) because the ambience and premium service set the expectation of a relaxed, high-quality dining experience.
  • Fast Food Outlets: A delay of even five minutes can lead to frustration because the expectation is quick service.

These scenarios highlight the importance of setting appropriate expectations to avoid dissatisfaction.

Strategies for Effective Post-Purchase Management

1. Customer Engagement

  • Utilize social media, personalized emails, or phone calls to stay connected with customers.
  • Demonstrate care and concern for their experience.

2. Expectation Management

  • Clearly communicate what the product or service offers during the pre-purchase stage.
  • Ensure alignment between promotional messages and actual delivery.

3. Testimonials and Social Proof

  • Showcase positive feedback from satisfied customers to reassure potential buyers.
  • Highlight examples of how others have successfully used and benefited from the product.

4. Handling High-Involvement Purchases

  • Products like cars, TVs, or washing machines demand more attention to post-purchase behavior due to their high cost and long-term usage.
  • Offer comprehensive after-sales support and warranty services.
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