Consumer Decision

Making Process

Consumer Behavior
Lecture 7
MBA 2K13

Decision-Making Perspectives

Are consumers
rational when they
make purchase
decisions?

What is purchase
momentum?
What cognitive
processing styles
affect consumer
decision making?

Sometimes consumers are rational and

sometimes they are not. They buy things at
times with no advance planning, on an
impulse, or do something different from what
they intended

Consumers react to purchase momentum

which is when an initial impulse purchase
increases the likelihood that we will buy even
more

Some have a rational system that processes

information analytically and sequentially using
logic while others rely on an experiential
system of cognition

 Levels of consumer decision making

Stages of the consumer decision
making process
Need Recognition
Pre-purchase Search
Evaluation of Alternatives

Levels of Consumer
Decision Making
Extensive
Problem
Solving
Limited
Problem
Solving
Routine
Response
Behavior
Levels of Consumer
Decision Making-I

Continuum of Buying
Decision Behavior

Levels of Consumer
Decision Making-I

Factors That Affect the Type

of Decision Making Process
Used
Importance of the decision
Extent of previous experience
Existence of well-established decision
criteria
Amount of information at hand about each
alternative
Initial purchases: Tend to require more
extensive problem solving
Repeat purchases: Tend to require limited
problem solving, sometimes habitual
decisions
Levels of Consumer Decision
Making-I

Stages in Consumer Decision

Making Process

Stages in the Decision Making

Process-II

Overview of the
Consumer
Decision Making
Process

Stages in the Decision

Making Process-II

Consumer Decision Making

The Process
Need Recognition
Pre-purchase Search
Evaluation of Alternatives

Stages in the Decision Making

Process-II

Stage-I: Need or Problem

Recognition
The realization that
there is a
difference between
actual and desired
states
The higher the gap,
the stronger the
need (or bigger the
problem)
Need Recognition, Stage-I

10

Need or Problem Recognition

Occurs when consumer sees

difference between current state and
ideal state
Need recognition: actual state declines
Opportunity recognition: ideal state
moves upward

Need Recognition, Stage-I

11

Types of Problems
Active Versus Inactive problems
Active: those you are aware of
Inactive: those that you are not yet
aware of (but exist)

Those that require immediate

solutions and those that do not
require immediate solutions

Need Recognition, Stage-I

12

Need Recognition, Stage-I

13

Problem Recognition and

Marketing Strategy
Identify existing consumer problems and
find solutions for these
Lower the actual state( Akhar mera bacha
aisa kyun hai)

Increase the desired state

Increase the importance of the gap
between actual and desired states
Convert inactive problems to active
problems
Convert problems into ones requiring an
immediate solution
Need Recognition, Stage-I

14

Stage-II: Information Search

The process by which we survey the
environment for appropriate data to make a
reasonable decision
Deliberate attempt to gain knowledge about
a purchase decision; goal is to reduce
uncertainty.

Information Search,
Stage-II

15

Concepts on Information Search

Pre purchase vs. Ongoing search
Deliberate versus Accidental Search
Types of Information Sources
Types of Information Sought
Factors Affecting Extent of Information
Search
How much search ?????????????

Information Search,
Stage-II

16

 Pre-Purchase vs. Ongoing

Search
Pre-purchase versus Ongoing Search
Pre-purchase Search

Ongoing Search

Determinants

Involvement with
purchase

Involvement with product

Motives

Making better purchase

decisions

Building a bank of
information for future use

Outcomes

Better purchase
decisions

Increased impulse buying

Information Search,
Stage-II

17

 Deliberate versus
Accidental Search
Directed/Deliberate Learning:
Existing or new product knowledge obtained
from information search or experience of
alternatives
Incidental Learning:
mere exposure over time to conditioned
stimuli and observations of others

Information Search,
Stage-II

18

 Types of Information
Sources
Internal search
Retrieve information from long term
memory
External search
Gather information from external sources,
e.g., ads, media, friends, stores

Internal searches are based on our own

memory banks while external sources come
from other sources
Information Search,
Stage-II

19

 ContTypes of Information
Sources
PERSONAL

IMPERSONAL

Friends
Neighbors
Relatives
Co-workers
Computer
salespeople
Calling the
electronics store

Newspaper articles
Magazine articles
Consumer Reports
Direct-mail brochures
Information from
product
advertisements
Web site

Information Search,
Stage-II

20

 Types of Information Sought

Brands or alternatives available
Evaluative criteria to be used
General, Specific product features

Ratings of brands on evaluative

criteria
Information Search,
Stage-II

21

Evoked Set as a Subset of all

Brands in a Product Category

Information Search,
Stage-II

22

 Factors that Increase the

Level of Pre-purchase
Search

Product Factors: Higher search

when
It is a long-lasting or infrequently used
product
There are frequent changes in product
styling
Large volume is purchased
The price is high
There are many alternative brands
There is much
variation
Information
Search, in features
continued

Stage-II

23

ContFactors that Increase

the Level of Pre-purchase
Search
Situational Factors: Higher search
when
Experience is lower
Previous experience was unsatisfactory

Social Acceptability: Higher

search when
Purchase is a gift
Product is socially visible in use
Information Search,
continued
Stage-II

24

Factors that Increase the

Level of Pre-purchase Search
Value-Related Factors: Higher
search when
All alternatives have both positive and
negative qualities
Conflicting information is available
Other considerations exist
continued

Information Search,
Stage-II

25

Factors that Increase the Level of

Pre-purchase Search

Consumer Factors: Higher

search when
Consumers are well-educated, have
higher income levels and are younger
Level of involvement is high
Shopping is seen as an enjoyable
activity
continued

Information Search,
Stage-II

26

 How much search????

Amount of
Information
Search and
Product
Knowledge

As a general rule,
purchase decisions
that are perceived
as risky will involve
more extensive
searches.

Risk is felt
whenever there is a
belief that there
may be a negative
consequence
associated with the
Information Search,
27
Stage-II
decision

Information Search and

Marketing Strategy
Get products into consumers evoked
set
Limit information search if your
brand is the preferred brand
Increase information search if your
alternative is the preferred brand
Use point-of-purchase advertising
effectively
Information Search,
Stage-II

28

Stage-III: Evaluation of Alternatives

Types of Consumer Choice Processes

Affective choices
More holistic; an overall evaluation
based on how one feels about a
purchase

Attribute-based choices
Have pre-determined evaluative criteria
May require both external and internal
search
Evaluation of Alternatives,
29
Stage III rules may be used
Complicated decision

Evaluative Criteria
Evaluative criteria: dimensions used
to judge merits of competing options
Determinant Attributes: Features
we use to differentiate among our
choices
Criteria on which products differ carry
more weight
Marketers educate consumers about (or
even invent) determinant attributes
Pepsis freshness
date stamps on cans
Evaluation of Alternatives,
Stage III

30

Product Choice: Levels of

Categorization

Evaluation of Alternatives,
Stage III

31

Strategic Implications
of Product Categorization

Position a product
Identify competitors
Create an exemplar product
Locate products in a store

Evaluation of Alternatives,
Stage III

32

Consumer Decision
Rules/Evaluative Criteria
Once we assemble and evaluate
relevant options from a category, we
must choose among them
Procedures used by consumers to
facilitate brand or other consumptionrelated choices

Evaluation of Alternatives,
Stage III

33

Product Choice: How Do We Decide?

Decision rules for product choice can be
very simple or very complicated
Prior experience with (similar) product
Present information at time of purchase
Beliefs about brands (from advertising)

Evaluation of Alternatives,
Stage III

34

Nature of Evaluative Criteria

Can be tangible or intangible
Include surrogate indicators
Attributes that are used as indicators of
another attribute

Are often ranked in order of

importance

Evaluation of Alternatives,
Stage III

35

Heuristics: Mental Shortcuts

Heuristics: mental rules-of-thumb for
efficient decisions
Product Signals
Market Beliefs
Country of Origin
Evaluation of Alternatives,
Stage III

36

Heuristics: Choosing Familiar Brands

Zipfs Law: Our tendency to prefer a

number one brand to the competition

Consumer Inertia: The tendency

to buy a brand out of habit merely
because it requires less effort

Brand Loyalty: Repeat purchasing

behavior that reflects a conscious
decision to continue buying the same
brand
Evaluation of Alternatives,
Stage III

37

Processing
by Brand

Processing
by Attribute

Types of Decision Models

Compensatory

Weighted Additive/
Multi-attribute

Simple Additive Rule

Non compensatory

Conjunctive
Disjunctive

Lexicographic
Elimination by aspects

Consumer Decision Rules

1. Non-compensatory
Positive evaluations do not compensate for
negative evaluations OR
Non compensatory decision rules suggest
that a product that is low on one attribute
cannot compensate for that weakness with
a strength on another attribute
Conjunctive Rule
Disjunctive Rule
Lexicographic Rule
Elimination by Aspect
Evaluation of Alternatives,
Stage III

39

Non-Compensatory Consumer
Decision Rules
Conjunctive Decision Rule
(Processing by brand)

Product attributes are identified

A minimally acceptable cutoff point
is established for each attribute
Brands that fall below the cutoff
point on any one attribute are
eliminated from further
consideration.
continued
Evaluation of Alternatives,
Stage III

40

Non-Compensatory Consumer
Decision Rules
Disjunctive Decision Rule
brand)

(Processing by

Consumers identify product attributes

Establish a minimally acceptable cutoff point
for each attribute(which may be higher than the
one normally established for conjunctive rule)

In this case, if the option meets or exceeds

the cut off for any one attribute, it is
accepted.
continued
Evaluation of Alternatives,
Stage III

41

Non-Compensatory Consumer
Decision Rules
Lexicographic Decision Rule

(Processing by attribute)
Product attributes are identified
Product attributes are ranked in terms of
importance
brands are compared in terms of the
attribute considered most important
Brand that scores highest on the first
attribute is chosen
If there is a tie, the scores on the next
attribute are considered
Evaluation of Alternatives,
Stage III

42

Non-Compensatory Consumer
Decision Rules
Elimination-by-Aspects Rule
(Processing by attribute)
The buyer also evaluates brands on the
most important attribute but specific cut
offs are imposed

2. Compensatory Decision
Rules
Compensatory models suggest that a strength on
an important product attribute can compensate
for a weakness on an attribute of lesser
importance

Simple Additive Rule: (Processing by brand)

The consumer merely chooses the alternative that
has the largest number of positive attributes

Weighted Additive Rule/Multi Attribute:

(Processing by attribute) The consumer also
takes into account the relative importance of
positively rated attributes, essentially multiplying
brand ratings by importance weights

Evaluation of Alternatives,
Stage III

45

Alternative Evaluation and

Marketing Strategy
Identify decision rule used by target
market and use suitable promotional
messages
Influence the choice of evaluative criteria
Influence the rating of your product on
evaluative criteria used
Use surrogate indicators effectively
Use consumption vision
Evaluation of Alternatives,
Stage III

46