Consumer Decision Making Process

CONSUMER DECISION MAKING PROCESS

Here, The Consumer Decision process is explained with an example of consumer’s purchase decision regarding

Consumer Decision making process consists of five major steps which can be presented in the below diagram.

Stage: 1 Need recognition / Problem recognition

The need recognition is the first and most important step in the buying process. If there is no need, there is no purchase. This recognition happens when there is a lag between the consumer’s actual situation and the ideal and desired one.

However, not all the needs end up as a buying behavior. It requires that the lag between the two situations is quite important. But the “way” (product price, ease of acquisition, etc.) to obtain this ideal situation has to be perceived as “acceptable” by the consumer based on the level of importance he attributes to the need.

In addition to that, a need resulting from a new element, the gap between the actual situation and the ideal situation may be due to three cases. The current situation has not changed, but the ideal situation has (a neighbor told you about the possibility – that you did not know – to clean the pool by a specialized company). Or, the ideal situation is still the same but it’s the actual situation has changed (you’re tired of cleaning your pool by yourself). Or finally, the two situations have changed.

The recognition of a need by a consumer can be caused in different ways. Different classifications are used:

Internal stimuli

A customer may be needed the SUV car due to his internal or psychological stimuli that he is in trouble for travelling at a distant area.

External stimuli

To purchase a SUV car, external stimuli may influence the need of customer like his colleagues have SUV cars so that he also wants to buy the same one.

Classification by type of needs

1.     Functional need:

The need is related to a feature or specific functions of the product or happens to be the answer to a functional problem. Like a computer with a more powerful video card to be able to play the latest video games or a washing machine that responds to the need to have clean clothes while avoiding having to do it by hand or go to the Laundromat.

2.     Social need

The need comes from a desire for integration and belongingness in the social environment or for social recognition. Like buying a new fashionable bag to look good at school or choose a luxury car to “show” that you are successful in life.

3.     Need for change

The need has its origin in a desire from the consumer to change. This may result in the purchase of a new coat or new furniture to change the decoration of your apartment.

Stage: 2 Information search

Once the need is identified, it’s time for the consumer to seek information about possible solutions to the problem. He will search more or less information depending on the complexity of the choices to be made but also his level of involvement. (Buying pasta requires little information and involves fewer consumers than buying a car.)

Then the consumer will seek to make his opinion to guide his choice and his decision-making process with:

a.     Internal information

This information is already present in the consumer’s memory. It comes from previous experiences he had with a product or brand and the opinion he may have of the brand. Internal information is sufficient for the purchasing of everyday products that the consumer knows – including Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG). But when it comes to a major purchase with a level of uncertainty or stronger involvement and the consumer does not have enough information, he must turns to another source.

b.    External information

This is information on a product or brand received from and obtained by friends or family, by reviews from other consumers or from the press.

The consumer will pay more attention to his internal information and the information from friends, family or other consumers. It will be judged more “objective” than these from advertising, a seller’s speech or a commercial brochure of the product.

Stage: 3 Evaluation of Alternatives

After having the information of the product, the consumer may look for the evaluation of different alternative sources or providers.

Some basic concepts will help us understand consumer evaluation process:

The consumer is trying to satisfy a need.

The consumer is looking for certain benefits from the product solution.

The consumer sees each product as a bundle of attributes with varying abilities for delivering the benefits sought to satisfy the need.

While purchasing SUV car, a consumer may seek for mileage, price, power, additional technological features, etc.

The consumer will pay th3e most attention to attributes that deliver the sought-after benefits.

The market for a product can often be segmented according to attributes that are important to various consumer groups.

Expectancy Value Model:-

Car	Attributes
	Mileage	Power	Add. features	Price
Nissan juke	10	8	6	4
BMW X1	8	9	8	3
Audi  Q2	6	8	10	5
Hundai Fesport	4	3	7	8

Suppose, the consumer gives 40% importance to mileage, 30% to power, 20% to additional technological features and 10% to price.

To find out consumer’s perceived value, we multiply his weights by believes about each car’s attributes. This computation leads to the following perceived  values:

Nissan Juke: (0.4) (10) + (0.3) (8) + (0.2) (6) + (0.10) (4) = 8

BMW X1: (0.4) (8) + (0.3) (9) + (0.2) (8) + (0.10) (3) = 7.8

Audi Q2: (0.4) (6) + (0.3) (8) + (0.2) (10) + (0.10) (5) = 7.3

Hundai Fesport: (0.4) (4) + (0.3) (3) + (0.2) (7) + (0.10) (8) = 4.7

An expectancy value model formulation may predict that the consumer will favor Nissan Juke, which has the highest perceived value.

Suppose, most car buyers form their preferences in the same way knowing this, a car manufacturer can do a number of things to influence buyer’s decision.

Stage: 4 Purchase decision

Now that the consumer has evaluated the different solutions and products available for respond to his need, he will be able to choose the product or brand that seems most appropriate to his needs. Then proceed to the actual purchase itself.

His decision will depend on the information and the selection made in the previous step based on the perceived value, product’s features and capabilities that are important to him.

But his Consumer Buying Decision Process and his decision process may also depend or be affected by such things as the quality of his shopping experience or of the store (or online shopping website), the availability of a promotion, a return policy or good terms and conditions for the sale.

For example, in executing a purchase of SUV car, the consumer may make up to five sub decisions:

Quantity- One car

Dealer- From which dealer he has to buy car

Payment- On installments, then how many installments or on cash payment.

Color- Metallic or Non-Metallic

Timing- Weekend  

Stage: 5 Post-purchase behavior

Once the product is purchased and used, the consumer will evaluate the adequacy with his original needs those who caused the buying behavior and whether he has made the right choice in buying this product or not. He will feel either a sense of satisfaction for the product and the choice or, on the contrary, a disappointment if the product has fallen far short of expectations.

An opinion that will influence his future decisions and buying behavior. If the product has brought satisfaction to the consumer, he will then minimize stages of information search and alternative evaluation for his next purchases in order to buy the same brand.

On the other hand, if the experience with the product was average or disappointing, the consumer is going to repeat the 5 stages of the Consumer Buying Decision Process during his next purchase but by excluding the brand from his “evoked set”.

The post-purchase evaluation may have important consequences for a brand. A satisfied customer is very likely to become a loyal and regular customer. Especially for everyday purchases with low level of involvement – such as Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG). A loyalty which is a major source of revenue for the brand when you combine all purchases made by customer throughout his entire life (called “lifetime customer value”). The “Holy Grail” that all brands in the industry are trying to achieve.

Positive or negative, consumers will also be able to share their opinion on the brand. Whether in their family or by word-of-mouth. Or on a much broader scale now with social networks or on consumer product review websites. A tendency not to be overlooked because now with the Internet, an unhappy customer can have a strong power to harm for a brand.

That’s why that’s important for companies to have awareness of that matter. In addition to optimizing the customer experience, a guarantee (for example, for a washing machine), an efficient customer service and a specific call center are some of the assets that can be developed to improve post-purchase behavior if there is any trouble with the product.