Notes on Consumer Decision Process

Stage 1: Need Recognition

  • The consumer decision process outlines steps buyers take for a purchase.

  • Need recognition is the first step: realizing an unmet need.

  • It starts when consumers identify a gap between their current and desired states.

  • The amount of information search depends on the perceived risk of the purchase.

Stage 2: Information Search

  • External Search: When buyers look for info beyond their own knowledge (e.g., internet, friends, reviews).

    • Examples (new car): Asking a brother, buying Consumer Reports, checking manufacturer websites.

  • Factors Affecting Search:

    • Perceived benefits vs. perceived costs of searching.

    • Actual or perceived risk.

    • Locus of control (internal vs. external).

  • Key Points:

    • Higher perceived benefits lead to more search effort.

    • "Life tends to unfold the way it should" indicates an external locus of control.

    • Physiological risk example: A helmet designed to prevent brain damage.

  • Sets:

    • Retrieval Set: All brands a consumer can easily recall (e.g., all laundry detergents Miguel remembers).

    • Evoked Set: A shortlist of brands a consumer would actually consider buying; more likely to be chosen quickly.

Stage 3: Evoked and Retrieval Sets; Evaluative Criteria

  • Evoked Set Importance:

    • Increases purchase likelihood.

    • Reduces consumer search time.

  • Evaluative Criteria: Factors consumers use to compare alternatives (e.g., Jerome using price, condition, location for textbooks).

  • Decision Shortcuts:

    • Determinant attributes.

    • Consumer decision rules (compensatory or noncompensatory).

Stage 4: Postpurchase and Market Design Implications

  • Postpurchase Outcomes: Satisfaction, loyalty, and cognitive dissonance.

  • Choice Architecture: Influences purchase decisions through environmental design (e.g., default options).

  • Conversion Rate: Tracks how many visitors complete a purchase after viewing.

    • Formula: CR=PurchasesVisitsCR = \frac{\text{Purchases}}{\text{Visits}}

  • Improving Customer Satisfaction:

    • Demonstrate correct product use.

    • Set realistic expectations.

    • Offer warranties and money-back guarantees.

Stage 5: Multidimensional Influences; Maslow's Hierarchy

  • Influences on Decision Making: Marketing mix, social, psychological, and sociological factors.

    • Psychological: Internal mental processes (perception, behavior).

    • Sociological: External social influences.

  • Maslow's Hierarchy:

    • Physiological needs: Basic biological necessities (e.g., Food).

Stage 6: Attitudes and Attitude Components

  • Attitude: A learned, long-lasting personal evaluation or feeling about an idea/object.

  • Affective Component Example: Yessica's dislike for a new product line shows her feelings (affective component).

Key Formulas and Concepts

  • Conversion Rate: CR=PurchasesVisitsCR = \frac{\text{Purchases}}{\text{Visits}}

  • Benefit-Cost Ratio (search): Benefit-Cost Ratio=Perceived BenefitsPerceived Costs\text{Benefit-Cost Ratio} = \frac{\text{Perceived Benefits}}{\text{Perceived Costs}}

  • Locus of Control: Internal vs. external orientation affects consumer response to outcomes and information.

Connections to Real-World Marketing

  • Brand Strategies: Marketers aim for brands to be in consumers' evoked sets through advertising and consistent branding.

  • Choice Architecture: Techniques like default options influence consumer decisions.

  • E-commerce Goals: Reduce abandoned carts and improve conversion rates by simplifying checkout and offering guarantees.

Ethical and Practical Implications

  • Ethical Marketing: Avoid misleading claims for trust and to reduce cognitive dissonance.

  • Transparency: Clearly state terms for warranties and guarantees.

  • Informed Decisions: Truthful information helps consumers make better choices.