Unit 4 Condumer Decision Making Process.pptx

it was good consumer behaviour educational things

1. Consumer Decision Making Process Unit 3

2. Stages in Consumer Decision-Making

3. Case of Daniel Daniel’s case is the perceived need for a new TV His situation is similar to that encountered by consumers virtually every day of their lives. He realizes that he wants to make a purchase, and he goes through a series of steps in order to make it. These steps can be described as: problem recognition (2) information search, (3) evaluation of alternatives, and (4) product choice.

4. Types of consumer decisions

5. Types of Consumer Decisions 1. Nominal Decision Making/Habitual Decision Making Nominal decisions occur when there is very low involvement with the purchase Information search is low (limited internal) Risk is low These are products which are brought with greater frequency like a toothpaste, shaving cream, blades, cosmetics etc There is no dissonance and very limited evaluation

6. Limited Decision Making This is for the products which have a higher time, risk and money involvement In this information search (internal and limited external) takes place and the buyer wants to find out a number of features, attributes and aspects of the product before finally making a decision to purchase The purchase is for products like – TV, computer, machine, motor cycle etc In this there can be limited dissonance if the product does not perform upto expectations

7. Extended Problem Solving In this category the risk involved is high, the money involvement is much more The goods are not purchased frequently These involve a lot of information search and greater physical activity for finding out about the attributes of the products These items include a house, a motor car, jewellery or something which is valued most

8. Extended problem solving is carried out in the following cases: High priced products Medical products associated with risk Automobiles associated with functions Complex products (computers) Products associated with one’s ego or emotions (clothing, cosmetics etc) Product is of great interest to the consumer

9. Consumer Decision Making Process There are five stages in consumer decision making process: 1.Problem Recognition: the consumer recognizes a problem that needs to be solved /consumer recognises a need to buy a product 2. Information Search: Attempt is made to gain knowledge about the product 3. Evaluation and Alternatives: The products which can fulfil the needs are evaluated in terms of plus and minus points 4. Purchase Action: The actual purchase is made from a store after consideration of a number of factors 5. Post-purchase behaviour: This is how a consumer feels after using the product that is satisfaction or dissatisfaction

10. Problem Recognition A need or problem recognition could result when: a) The Actual State changes (AS type): The product is failing, or the consumer is running short of it; There is a problem that exists. Consumers who react in such situations are called AS Types. Example: A product stops functioning and the customer needs a replacement; e.g. A refrigerator; Samsung One door: Standard;

11. b) The Desired State changing (DS type): there is an imbalance between the actual state and the desired state another product seems better and superior to the one that is being currently used; Consumers who react in such situations are called DS Types. Example: The product is functioning properly; but the consumer wants to buy an upgraded model; e.g., the refrigerator is functioning properly; however, the customer wants to buy another one which has more features and is more modern; Samsung Two doors: Deluxe: Frost free;

12. Problem Recognition Importance of Problem Recognition Problem recognition explains: Why a buyer buys Gives definite direction to subsequent purchase behaviour Help the marketer exert his influence, so that the need be recognised

13. The consumer decision process generally begins when the consumer identifies a consumption problem that needs to be solved For example- I need a new camera or I would like some new clothes. Problem recognition is the perceived difference between an ideal (desired) and an actual state. Without recognition of a problem, there is no need for a decision When there is a discrepancy between a consumer desire and the perceived actual state, recognition of a problem occurs This is a critical stage in the decision process because it motivates the consumer to action.

14. The ideal/desired state is the way that consumers would like a situation to be (having an excellent camera or wearing attractive clothing). The actual state is the real situation as consumers perceive it now. Problem recognition occurs if consumers become aware of a discrepancy between the actual state and the ideal state (“My camera is too old” or “My clothing is out of date”)

15. The level of one’s desire to resolve a particular problem depends on two factors: the magnitude of the discrepancy between the desired and actual states, and the relative importance of the problem

16. Types of Consumer Decision 1. Nominal Decision Making/Habitual Decision Making In this type of decision making – the consumer already has some experience of buying and using the product. Usually, this kind of behaviour is adopted for the purchase of low cost, frequently used items. In such cases the buyers do not give much thought, or search and also do not take a lot of time to make the purchase. Most of the time the buyer is familiar with the various brands available and the attributes of each and has a well-established criteria for selecting their own brand

17. The buyers are well aware of the product class, know the brands and also have a clear preference among the brands The degree of involvement in buying such products is low. These are products which are brought with greater frequency like a toothpaste, shaving cream, blades, cosmetics etc In such a case, the marketer has to ensure two tasks: (a) The marketer must continue to provide satisfaction to the existing customers by maintaining quality, service and value. (b) He must try to attract new customers by making use of sales promotion techniques like points of purchase displays, off-price offers, etc., and also introduce new features to the products.

18. 2.Limited Decision Making In this case – The consumer is familiar with the product and various brands available, but has no established brand preference. Here the buyer is more complex as compared to routine buying behavior because the consumer is confronted with an unfamiliar brand in a familiar product class. The consumer would like to gather additional information about the brands to arrive at his brand decision.

19. For instance, A housewife buys refined vegetable oils for her cooking and she may be familiar with the concept of vegetable oil, vanaspati and ghee. She may also know that Dhara , Dalda and Sundrop are some of the leading brands available. But to establish her choice of brand, she would like to check with her friends and regular store about the attributes of each. This buying behavior as described limited problem solving because the buyers are in a situation where they are fully aware of the product class but not familiar with all the brands and their features

20. Limited problem solving also takes place when a consumer encounters an unfamiliar or new brand in a known product category. The housewife, who buys refined vegetable oil, on her next visit to the market, sees a new brand of oil, Saffola . Apart from buying a new brand, this brand of oil also claims the unique attribute of being low in cholesterol To arrive at a decision, whether or not to buy this brand, the housewife needs to gather information about the new brand, which will allow her to compare it with the known brands

21. Here the marketer’s job is to design a communication programme , which will help the buyer to gather more information, increase his brand comprehension and gain confidence in the brand

22. 3.Extended Problem Solving This buying is referred to as a complex buying behavior because the consumer is in an unfamiliar product class and is not clear about what criteria to consider for buying. Extensive problem solving occurs when the consumer is encountering a new product category. He needs information on both the product category as well as the various brands available in it. This kind of decision is the most complex type. For instance, you may become interested in purchasing a Color Television set to replace the existing black and white one. You may have heard of the various brand names like BPL, Akai, etc. but lack clear brand concepts. You do not know what product attributes or features to consider while choosing a good television set. So yours is an extensive problem solving

23. The marketing strategy for such buying behavior must be such that it facilitates the consumer’s information gathering and learning process about the product category and his own brand. The marketer must be able to provide his consumer with a very specific and unique set of positive attributes regarding his own brand, so that the purchase decision is made in his favor. The marketing communications should be aimed at supplying information and help the consumer to evaluate and feel good about his/her brand choice

24. Types of Problem Recognition 1. Immediacy of problem solution In this type it is relevant factor in determining the decision time horizon That is how soon a problem solution is needed, will affect the length of decision process and intensity of decision effort 2. Expectancy of the problem It can affect such facets as the sources of information used in the decision process

25. 3. Routine Problems It is those in which the difference between actual and desired state is expected to occur and an immediate solution is required Typically, convenience goods are associated with this type of problem-recognition, such as most grocery purchases are made by consumers 4. Emergency Problems It is those that are unexpected in which immediate solutions are necessary For example-a consumer who is involved in an automobile accident and totals his car may need a quick solution to his transportation problem

26. 5. Planning problems It occurs when the problem occurrence is expected but an immediate solution is not necessary For example- a consumer who expects that his car will only last one additional year may begin in window shopping for autos, have discussed with friends about various brands and pay closer attention to automotive ads 6.Unexpected problem It is those when the problem is unexpected but no immediate solution is required The fashion-adoption occurs over a lengthy period of time for many consumers

27. Utilizing Problem Recognition Information Utilizing problem recognition information helps the marketers as follows: 1) Marketing strategy and problem recognition Marketers are concerned with the following: What problems consumers facing What market mix to develop to solve the problem Want the consumers to recognize the problem Sometimes managers suppress problem recognition

28. 2) Improvement of Product Managers get to know the problem by intention and determine what improvements can be made The problem identified by managers may be of low importance to the consumer The problem is found by survey, focus group interviews, product analysis, problem analysis, activity analysis, human factor research, emotion research

29. Activity Analysis It focuses on a particular activity, for example-maintain a lawn, preparing dinner, lighting the fire place It deals with the use of product, for example lawn mower, microwave oven Problem Analysis It states the problems and asks respondents to associate a product brand or activity with it Packages are hard to open, does not pour well, packages do not fit in the Frigidaire, packages of particular product, waste too many resources

30. Human factor Research It attempts to determine human capabilities in area of vision, strength, response time, fatigue Emotions Research Marketers find the role of emotions in decision making, that is emotions with certain products or brands 3) Developing Marketing Mix

31. Search and Evaluation After a need is recognized, the consumer goes for an information search, so as to be able to make the right purchase decision. He gathers information about the: ( i ) Product category and the variations (ii) Various alternatives (iii) Various brands. The amount of information a consumer will gather depends on the following:

32. i ) The consumer: demographics (age, gender, education), psychographics (learning, attitudes, involvement, personality type) ii) Product category: differentiation and alternative brands available, risk, price, social visibility and acceptance of the product. iii) Situation: time available at hand, first time purchase, quantity of information required, availability of information

33. Types of Search Activity The information search activity may be of various types, viz , specific, ongoing and incidental. ( i ) Specific This type of search activity is specific to the problem and/ immediate purchase; It is spurred as the need arises, and the consumer actively seeks information. Example: student enters college and needs to buy a laptop so that he can work on his assignments

34. (ii) Ongoing Here the search activity is a gradual process that could span over time. Example: the same student has been thinking of purchasing the laptop since the past five years, and over these past 5-6 years, he has been gathering information specific to the laptop as a product category and also about the various brands available

35. (iii) Incidental This is a by-product of another search activity or experiences. Consumers absorb information from their day to day routine activities and experiences. Example: the student goes to a mall; he has gone there to help his mother buy a microwave oven; there in the store, he attends a demonstration of a new laptop that is being launched

36. Sources of Information Search I) Internal Sources Memory of past searches, personal experiences, and low-involvement learning II) External Sources Personal sources -such as friends, family, and others. Independent sources -such as magazines, consumer groups, and government agencies. Marketing sources -such as sales personnel, Web sites, and advertising. Experiential sources, -such as inspection or product trial.

37. Sources of Information Search The information sources are of two types: i ) Internal sources This includes the consumer and his self. He recalls information that is stored in his memory (comprising information gathered and stored, as well as his experiences, direct and indirect). Internal sources seem sufficient when: It is a routine purchase The product is of low involvement

38. ii) External sources Here the consumer seeks information from the external environment. External sources are resorted to in cases where: Past knowledge and experience is insufficient. The product is of high involvement and the risk of making a wrong decision is high External sources of information include: Interpersonal communication (family, friends, work peers, opinion leaders etc.) Marketing communication or commercial information (advertisements, salespeople, company websites, magazines etc.) Other public sources (editorials, trade magazines and reports, consumer awareness programmes on TV, Internet etc.)

39. Situational Influence on Purchasing Decisions Situational influence is defined as all those factors particular to a time and place that do not follow from a knowledge of the stable attributes of the consumer and the stimulus and that have an effect on current behavior The five key dimensions or characteristics are physical surroundings, social surroundings, temporal perspectives, task definition, and antecedent states

40. Physical surroundings When a consumer enters a shop with the intention of purchase, the most important things that he observes is the door, style, cleanliness etc of the shop These are known as physical surroundings It include: Location of the store The sound (music and other noises present in the store) Aromas (smell of place) Lighting – how well lit are the products, how well lit is the store and the show windows The décor (decoration is done with great fineness and displays are eye catching) The colour (the colour of the store and of the walls and the railings or any other show cases etc) The merchandise itself (a merchandise of high value, quality, high in demand etc)

41. Social Surroundings Social surroundings are the other individuals present in the particular situation . People’s actions are frequently influenced by those around them For example- Friends, relatives or salespeople Conditions during the shopping environment (e.g., an overcrowded store may cause the buyer to terminate the buying decision process Consumers accompanied by children buy about 40% more items than consumers shopping by themselves

42. Temporal perspectives Temporal perspectives are situational characteristics that deal with the effect of time on consumer behavior . Time as a situational factor can manifest itself in a number of ways The amount of time available for the purchase has a substantial impact on the consumer decision process. In general, the less time there is available (i.e., increased time pressure), the shorter will be the information search, the less available information will be used, and the more suboptimal purchases will be made

43. Task Definition By task definition is meant, the buying intention or motive Why is the purchase being made-is it for self consumption, or is it for a gift or is it for a special occasion like a marriage gift and so on The task or the purpose and intentions must be known to the marketer to make his job easys

44. Antecedent States Features of the individual person that are not lasting characteristics, such as momentary moods or conditions, are called antecedent states. For example, most people experience states of depression or excitement from time to time that are not normally part of their individual makeup.

45. Purchasing Process Why do people shop? Personal and social motives influence consumer shopping activities 1.Personal Motives a)Role Playing Shopping activities are learned behaviour and are accepted as part of one’s position or role, such as mother or housewife

46. b) Diversion Shopping can offer a diversification from the routine of daily life and is a form of recreation c) Self-gratification Shopping may be motivated by the utility of the buying process Emotional states or moods may explain why and when someone goes shopping d)Learning about new trends Shopping provides consumers with information about trends and movements and product symbols reflecting attitudes and lifestyles

47. e) Physical activity Shopping can provide a considerable amount of exercise f) Sensory stimulation Shopping can provide sensory benefits such as looking at the handling merchandise, listening to the sounds (noise, silence and soft background music) and smelling the cents

48. 2. Social Motives a) Social experience outside the home Shopping can provide opportunities for seeking new acquaintances, encounters with friends or just people watching b) Communication with others having a similar interest Shopping can provide an opportunity to interact with customers or salespeople having similar interests

49. c) Peer group attraction Certain stores provide a meeting place where members of a peer group may gather d) Status and authority Shopping may provide an opportunity to attain a feeling of status and power by being waited on e) Pleasures of bargaining Shopping may offer the enjoyment of gaining a lower price through bargaining or visiting special sales

50. Store-Purchasing Process 1.Choosing a store The consumer has certain evaluative store criteria established in his/her mind and compares these with his/her perception of a store’s characteristics As a result of this process stores are categorized as either acceptable or unacceptable If the resulting shopping experience is favourable then store choice will become largely routinised over a period of time

51. 2. Factors determining store choice There are several important factors that influence consumer store choice behaviour They are as follows: a) Store location Closer the consumers are to a store, the greater their likelihood to purchase from that store The further away are consumers are from a store, lower the likelihood to patronize that store Intercity, intra-city and intra-store may be the choices for the store location

52. b) Store design and physical facilities The design characteristics of a store visibility reflect its image and can dramatically influence patronage Many consumers appear to size up a store based on its outward appearance of architecture and signs c) Merchandise Consumer prefer stores that offer either a wide variety of product lines, brands and prices or substantial depth to their assortment such as sizes, colors and styles

53. d) Advertising and sales Promotion Advertising can be highly influential in cultivating a store image in consumers mind It fulfills the three goals such as: To inform consumers such as for a new store opening To persuade consumers that they should patronize a certain store or buy a particular brand To remind customers of the store that they are appreciated

54. e) Personnel Employees of a retailer influence the store’s image Consumers generally desire to shop where store personnel are perceived as helpful, friendly and courteous f) Customer service Retail stores may offer number of services in order to attract customers: Credit Delivery, parking Gift wrapping, product returns Telephone ordering Complaint offices etc

55. g) Clientele Consumer will tend to patronize those stores where persons similar to them are perceived to be shopping Store choices depends on social-class membership There is matching process occurs between the consumer’s self-image and the store image

56. 3. In store purchasing behaviour Once the consumer have selected the stores, a number of factors influence consumer’s behaviour within the store environment Merchandising techniques a) Store layout and Traffic Patterns A store’s interior is organized in such a manner as to accomplish the firms merchandising strategy Traffic patterns are popular to determine where good or bad sales areas are within the store

57. b) Point-of-Purchase Media An effective combination of good store layout and attractive displays can change a retail environment into exciting and also more sales c) Product shelving Height of shelves at which products are displayed and the number of rows presented in the shelves can influence sales of products d) Pricing strategy Price awareness, promotional prices and couponing are important e) Packaging It include-graphics, product information contained on the package, and the physical package

58. Non-Store Purchasing Process In non-store buying, a shopper does not want to go to a store Shopper avoids the difficulty of finding parking space Shopper wants to avoid long queues for payment or does not have time to drive down to a store several miles away Non-store buying or direct marketing is one in which products and services are offered to a prospective customer by telephone, mail or other accesses

59. It includes door to door selling, direct mail etc There are number of ways to non-store buying and the buyer can buy in a number of ways Known buyer is one who places the order from the home by telephone, catalogue, brochure or mail The consumer can avoid an extra trip to the market A consumer gives the order over the telephone to his supplier, who notes down the order and supplies it by reaching the goods to the desired destinations

60. Significance of Non-store Purchasing 1. Self Identity of Consumer An increased emphasis on consumers self identify with individually expressed through goods and services which leads to a desire to consider more items than a store can display 2. Save in time for working women’s A higher proportion of working women who have less time to shop Increased leisure time pursuits of self development and creative expression, which allow less time to shop from store to store

61. 3. Rapid Acceptance of new technology There is a rapid acceptance of new technology such as home computers, automated bank teller machines More consumers are becoming technologically competent for new merchandising approaches 4. Mode of paying easy Increased popularity of non store innovations as pay by phone, mail order catalogs and Tv direct marketing resulting in consumers who are becoming psychologically prepared for new shopping forms 5. Demand for specialty product Greater demand for specialty products and services that are difficult to get in most shopping centers

62. Purchasing Pattern Consumers make following types of purchases: Trial purchase Repeat purchase Impulse purchase

63. Trial Purchase A purchase would be considered as a trial-when a consumer purchases a product for the first time and buys a smaller quantity than usual Trial is the exploratory phase of purchase behaviour in which consumers attempt to evaluate the product through direct use Consumers may also be encouraged to try new product through tactics such as free coupons, samples

64. 2.Repeat Purchase When a new brand in an established product category (toothpaste, detergent powder, cold drinks) is found by trial and found to be better than other brands then consumers are likely to repeat the purchase Repeat purchase is closely associated with the concept of brand loyalty

65. 3. Impulse purchasing It is also called as unplanned purchasing Impulse purchasing occurs when consumers suddenly decide to purchase something they had not planned on buying Pure impulse break normal buying pattern Suggestive impulse having no previous knowledge of a product Reminder impulse may be recall advertising Planned impulse where a shopper enters the store with the intention of making some purchases on the basis of price, coupons

66. Post Purchase Evaluation and Behaviour After making a purchase, the consumer uses the product and then evaluates the experience to determine whether it was satisfactory or unsatisfactory After purchasing a product, a customer is satisfied or dissatisfied Customer’s satisfaction or dissatisfaction depends on his expectation and difference between the performance Expectation gives the degree of customer’s satisfaction/dissatisfaction with the product

67. Post-purchase Behaviour Purchase Usage Evaluation Satisfaction Committed customers Repeat purchases Increased use Brand switching Discontinued use

68. Customers experience with prior product Dissatisfaction Expectancy Confirmation Satisfaction Performance is performance almost performance is below expectation as expected-not is better than different expected Expectation of the performance of the product/brand Actual performance of the product as evaluated by the consumer Discrepancy between the expected and actual performance

69. Consumer satisfacti on If the performance of the product/brand is better than expectations of the customer then the customer is satisfied Satisfaction is the feeling that results when consumers make a positive evaluation or feel happy with their decision.

70. Post Purchase Dissonance This is a feeling of tension and anxiety that a consumer experiences after the purchase of a product. The consumer begins to have a feeling of uncertainty with respect the performance of the product and begins to doubt his purchase decision “whether the decision was the right one? He begins to ask himself the following questions: a) Have I made the right choice? b) Have I purchased the right brand? c) Have I got value for money?

71. Post purchase dissonance generally occurs in cases where: ( i ) The decision making and purchase relates to a high involvement product; (ii) The purchase activity is irrevocable; (iii) The consumer cannot return the product; (iv) The various alternatives have desirable features and are all comparable; (v) The alternatives are also unique in some way or the other.

72. Consumers try to reduce this dissonance by: ( i ) Gaining more product information; (ii) Discussing with other satisfied customers who have bought the same product/brand; (iii) Going back to the dealer and asking for reassurances. Other methods that consumers employ to reduce cognitive dissonance are by: Rationalizing that the choice that they have made is the right one. Refer to data (printed/audio visual) that supports and recommends the chosen product/brand. Make others buy the same product/brand to reassure their choice.

73. Marketers also employ strategies to reduce this dissonance by providing guarantees and warranties, membership to company consumer forums and communication and follow up with the customers