Understanding Consumer Decision Making

CHAPTER 3: UNDERSTANDING CONSUMER DECISION MAKING

MODULE OUTCOMES

  • Consumer Decision Making Process: Understanding the stages a consumer goes through when making purchasing decisions.
  • Consumer Buying Decisions & Consumer Involvement: Explore types of buying decisions and the levels of involvement consumers have.
  • Individual Factors Influencing Consumer Buying Decisions: Factors related to personal characteristics that affect consumer behavior.
  • Social Factors: Influence of societal norms and groups on consumer decisions.
  • Variables Affecting Purchase Situations: Examination of different factors impacting the purchasing environment.
  • Buying "New to the World" Products: Understanding the process consumers go through when trying completely new products.

CONSUMER DECISION MAKING PROCESS

1. Problem Recognition
  • Definition: Recognizing the existence of an unfulfilled need.
  • Example: Actual state (e.g., "I need a car") vs. desired state (e.g., "I want my own car").
  • Stimuli:
    • Internal: Natural feelings such as hunger and thirst.
    • External: Influences from outside, such as advertisements (e.g., TV commercials).
2. Information Search
  • Internal Search: Recalling information from the consumer's memory based on previous purchases.
  • External Search: Gathering information from outside sources influenced by:
    • Perceived risk: Concern over potential negative outcomes.
    • Knowledge: Consumer's prior experience.
    • Alternatives: Types of brands available (e.g., different car brands).
3. Evaluation of Alternatives
  • After gathering information, consumers evaluate their options before making a final decision.
  • Decision-making is influenced by:
    • Memory recall: Previous experiences.
    • External resources: Comparison of outside information.
4. Purchase
  • Definition: The actual act of buying occurs at this stage.
5. Post-Purchase Behavior
  • Consumers have expectations regarding the outcomes or benefits of their purchase.
  • If expectations are met, this determines the level of satisfaction.
  • Post Purchase Dissonance: Consumers may experience inconsistency between their purchase decision and their values or opinions, leading to feelings of tension known as cognitive dissonance.

CONSUMER BUYING DECISIONS

Types of Buying Decisions
  1. Level of Consumer Involvement: The degree to which a consumer is engaged in the decision-making process.
  2. Length of Decision-Making Time: The duration a buyer takes to arrive at a decision.
  3. Cost: The price of the product or service significantly influences buying behavior.
  4. Degree of Information Search: The effort made by the buyer to gather information before making a decision.
  5. Number of Alternatives: The quantity of different options that a buyer considers before making a final decision.

CONSUMER INVOLVEMENT

Factors Determining the Level of Consumer Involvement
  • Previous Experience: Past interactions with similar products or services.
  • Interest: The personal relevance of the product to the consumer.
  • Perceived Risk: The consumer's assessment of the potential for negative consequences from their purchase.
  • Situation: The context in which the consumer is making the purchase decision.
  • Social Visibility: The extent to which the purchase may be seen by others, affecting the consumer's decision-making process.

INDIVIDUAL FACTORS

Key Individual Influencers on Buying Decisions
  1. Perception: How the consumer views and interprets information about products.
  2. Motivation: Influenced by theories like Maslow’s hierarchy of needs, which categorize human motivations.
  3. Learning: The process through which consumers acquire knowledge and experience, affecting future purchasing behavior.
  4. Values, Beliefs, and Attitudes: Fundamental convictions that influence consumer actions.
  5. Personality, Self-Concept, and Lifestyle: The unique characteristics of consumers that shape their buying habits.

SOCIAL FACTORS

Influences on Consumer Decision Making
  1. Culture: Shared values and practices that shape consumer behavior.
  2. Subculture: Distinct cultural groups that exist within a larger culture, affecting buying decisions.
  3. Reference Groups: Groups that provide social influence and comparison standards for consumers.
  4. Opinion Leaders: Individuals who influence the attitudes and behaviors of others through their ideas and experiences.
  5. Family: Family members' influence on buying decisions, including values that guide purchases.
  6. Social Class: Consumer behavior varies across different social class levels.

VARIABLES AFFECTING PURCHASE SITUATIONS

  1. Purchase Reason: The underlying motive behind a buying decision influences the choice of product. Example: A consumer may buy a different watch for personal use (long-distance running) compared to a gift for a family member (a birthday).
  2. Time: Timing of the purchase can alter consumer behavior. Example: A romantic dinner on Valentine's Day compared to a spontaneous purchase during a casual soccer match.
  3. Physical Surroundings: The environment where the purchase is made affects buying behavior. Example: Consumers in a queue may not want others to see their purchases, and privacy is essential when applying for loans at banks.

BUYING “NEW TO THE WORLD” PRODUCTS

Stages in Adopting New Products
  1. Awareness: The consumer becomes aware of the new product but lacks detailed information.
  2. Interest: If the consumer finds the product intriguing, they will begin to gather informal information.
  3. Evaluation: A mental assessment occurs to determine if the product meets their needs.
  4. Trial: Experiencing the product first-hand, such as a test drive for vehicles.
  5. Decision: The consumer makes a choice to either adopt or reject the product based on their evaluation.
  6. Confirmation: After adoption, the consumer may reflect on whether they made the right decision regarding the product.