The Consumer Decision
Process
Customer Decisions

Decisions customers make in the
marketplace as buyers, payers, and users,
include:
–
–
–
–
–
Whether to purchase
What to purchase
When to purchase
From whom to purchase
How to pay for it
Consumer Decision Process Model
Problem Recognition
Search for Information
Pre-purchase Evaluation of Alternatives
Purchase
Consumption
Post-consumption Evaluation
Divestment
Consumer Decision Process
Continuum
Extended
Problem
Solving
Midrange
Problem
Solving
High
Degree of Complexity
Limited
Problem
Solving
Habitual
Problem
Solving
Low
Consumer Decision Process Model
Problem Recognition
Step 1. Problem Recognition
Similarities with motivation…not always a problem
Marketers Impact
Consumer Decision Process Model
Need Recognition
Search for Information
Search For Information
Internal search: retrieving knowledge from memory
External search: collecting information from peers, family, and the
marketplace
Search may be passive as
consumers become more receptive
to information around them, or
consumers can engage in active
search behavior
Internal Search: Searching for
Information from Memory

What Kind of Information Is Retrieved from Internal
Search?
– Recall of Brands

Consideration or Evoked Set
– Recall of Attributes
– Recall of Evaluations
– Recall of Experiences
Awareness, Evoked, and
Consideration Sets
Awareness Set
(All the brands in the
Awareness)
Evoked Set
(Brands recalled)
Brands NOT
recalled
Consideration Set
(Brands considered)
Brands NOT
considered
External Search: Searching for
Information from
the Environment

External Search
– Prepurchase Search
– Ongoing Search
Sources of Information for
Customers
MARKETER SOURCES
• Advertising
• Salespersons
• Product/service brochures
• Store displays
• Company web sites
NONMARKETER SOURCES
PERSONAL
• Friends and other acquaintances
• Past experience
INDEPENDENT SOURCES
• Public information (e.g., Consumer
Reports, Better Business Bureau, news
reports in media, government
publications, such as The Census of
Manufacturers)
• Product or service experts: (e.g., auto
critic, home appraiser, pharmacist, and
so on)
• Internet (bulletin boards)
Determinants of the Amount of
Search

Perceived risk
 Involvement
 Familiarity
 Expertise
 Time pressure
How do we classify information?
Number of
Brand Price
CDs
3
Panasonic 375 $
Remote
Y
Audio Weight
tape
(kilos)
SIMPLE
5,0
Venturer 250 $
1
N
SIMPLE
3,0
RCA 300 $
1
Y
DOUBLE
5,0
Sharp 325 $
1
Y
DOUBLE
6,0
JVC 350 $
3
N
SIMPLE
6,0
Sony 400 $
1
Y
DOUBLE
4,0
Type of Information
• More infos than presented.
• Not as organized.
• subjective (ex.: design) and/or objective
criteria
• accessibility
• biases
• missing infos
Type of biases

Biases due to the source (salesperson versus
family)
 Own Biases (mental accounting: challenge
to rational evaluation)
– Snowstorm and football…
– Framing issues

Information Overload (Customers are exposed to so
much information that they are unable to process it to make a decision)
Consumer Decision Process Model
Need Recognition
Search for Information
Pre-purchase Evaluation of Alternatives
Pre-purchase Evaluation of
Alternatives
The process of evaluating alternatives identified from search,
which leads to product or brand
most likely to satisfy the consumer
Can use new or preexisting evaluations stored in memory
Evaluative criteria: standards and
specifications used to compare
different products and brands
Identification of Alternatives
How to Categorize?
Levels of categorization
Strategic Implications for marketers
 Positioning
 Identification of competitors
What do you think about this ad?
Choices: How to make the decision?
Heuristics
“Simple rules of thumb used to aid judgments or decisions.”
Heuristics: What types of mental shortcuts?
 Product signal
 Market beliefs
 Country of origin
 Brand Loyalty
Alternatives Evaluation

Other Heuristics
– Compensatory
– Noncompensatory
Multi-Attribute Model
The rule :
k
ST   I i Pi
i 1
where
ST = total score;
Ii = importance of attribute i;
Pi = performance of brand i on attribute i;
k = number of attribute.
Multi-Attribute Model Application
Number
Brand Price of CD’s
2
5
Panasonic
Weight
Remote
5
Audio
Tape
1
2
Venturer
5
1
1
1
4
RCA
4
1
5
5
2
Sharp
3
1
5
5
1
JVC
3
5
1
1
1
Sony
Importance
1
5
1
2
5
4
5
1
3
3
From 1 very bad to 5 very good
47
44
53
45
33
41
Use of the multi-attribute rule by
a Customer
Brand RATINGS
ATTRIBUTE
Quality
Fit with desired
performance
standards
Customer
support
Price
Total
WEIGHT
Brand 1
Brand 2
Brand 3
4
Average (2)
Excellent (4)
Poor (1)
3
Good (3)
Poor (1)
Good (3)
1
Poor (1)
Good (3)
Excellent (4)
Good (3)
Average (2)
Poor (1)
2
4(2) + 3(3) + 1(1) + 2(3) 4(4) + 3(1) + 1(3) + 2(2) 4(1) + 3(3) + 1(4) + 2(1)
= 24
= 26
= 19
Compensatory Attribute
Processing Models

Additive Difference Model
– Brands Compared by Attribute, Two at a Time
– Differences Added Up as Decision Maker Proceeds by
Attribute; e.g.:
Epson
Canon
Diff
Price
5
3
2
Weight
3
4
-1
Processor
5
5
0
Battery Life
1
3
-2
After Sale Support 3
3
0
Display Quality
3
3
0
----------------------------TOTAL
-1 (Canon is marginally
better)
Noncompensatory Brand
Processing Models

Conjunctive Models
– Minimum Cutoffs Set for Each Attribute (Reject if Below Cutoff)
– Need Additional Rule to Rule Out Remaining Alternatives (If More
Than One)

Disjunctive Model
– Acceptable Levels for Attributes Decided (Reject if Below Cutoff)
– Decision Based on Several, but Not All, Important Attributes
Conjonctive Rule
Attribute
Threshold
Price : No more than 325 $
Number of CD’s : One is enough
Remote : Yes, mandatory
Audio tape : double
weight : no more than 5 kilos
Number of
Brand Price
Cd’s
3
Panasonic 375 $
Remote
Y
Audio Weight
Tape
(kilos)
SIMPLE
5,0
Venturer 250 $
1
N
SIMPLE
3,0
RCA 300 $
1
Y
DOUBLE
5,0
Sharp 325 $
1
N
DOUBLE
6,0
JVC 350 $
3
N
SIMPLE
6,0
Sony 400 $
1
Y
DOUBLE
4,0
Disjonctive Rule
Attribute
Threshold
Price : No more than 300 $
Number of CD’s : At least
Remote : Yes, mandatory
Audio tape : double
weight : no more than 4 kilos
Number of
Brand Price
Cd’s
3
Panasonic 375 $
Remote
Y
Audio Weight
Tape
(kilos)
SIMPLE
5,0
Venturer 250 $
1
N
SIMPLE
3,0
RCA 300 $
1
Y
DOUBLE
5,0
Sharp 325 $
1
Y
DOUBLE
6,0
JVC 350 $
3
N
SIMPLE
6,0
Sony 400 $
1
Y
DOUBLE
4,0
Noncompensatory Attribute
Processing Models

Lexicographic Model
– Attributes ordered by importance
– If one alternative dominates on that attribute, it is
chosen; otherwise, proceed to next most
important attribute
– I want to get the brand that does best on the
attribute(s) most important to me.

Elimination by Aspects
– Attributes ordered by importance; alternatives
acceptable on first attribute proceed to evaluation
on further attributes
– I will eliminate any brands that have a value of 3
or below, beginning with the most important
attribute.
Elimination by Aspects
Attribute
Price :
Importance order
1
Threshold
No more than 375 $
Number of CD’s :
5
One is enough
Remote :
2
Yes, mandatory
Audio tape :
4
double
weight :
3
no more than 5 kilos
Number of
Brand Price
Cd’s
3
Panasonic 375 $
Remote
Y
Audio Weight
Tape
(kilos)
SIMPLE
5,0
Venturer 250 $
1
N
SIMPLE
3,0
RCA 300 $
1
Y
DOUBLE
5,0
Sharp 325 $
1
Y
DOUBLE
6,0
JVC 350 $
3
N
SIMPLE
6,0
Sony 400 $
1
Y
DOUBLE
4,0
Lexicographic Rule
Attribute
Price :
Importance Order
3
Number of CD’s :
5
Remote :
1
Audio tape :
4
weight :
2
Number of
Brand Price
Cd’s
3
Panasonic 375 $
Remote
Y
Audio Weight
Tape
(kilos)
SIMPLE
5,0
Venturer 250 $
1
N
SIMPLE
3,0
RCA 300 $
1
Y
DOUBLE
5,0
Sharp 325 $
1
Y
DOUBLE
6,0
JVC 350 $
3
N
SIMPLE
6,0
Sony 400 $
1
Y
DOUBLE
4,0
What did you learn ?
CASE ANALYSIS
Reality of Consumer Decision
Making


Consumers may use multiple decision-making
strategies
Emotions and imagery often accompany
rational, cognitive analysis
ALL
ALTERNATIVES
NONCOMPENSATORY
EVALUATION
SURVIVING
ALTERNATIVES
COMPENSATORY
EVALUATION
Consumer Decision Process Model
Need Recognition
Search for Information
Pre-purchase Evaluation of Alternatives
Purchase
Purchase
Purchase decisions involve
choosing a form of retailing, a
specific retailer, and a particular
product and brand
Purchase intention can change
during the purchase stage--it can be
influenced by factors such as instore promotions, discounts, or
stock-outs
Deviation From the Identified
Choice

The preferred brand may be out of stock
 New in-store information may reopen the
evaluation process
 Financing terms may render a purchase
infeasible
Consumer Decision Process Model
Need Recognition
Search for Information
Prepurchase Evaluation of Alternatives
Purchase
Consumption
Consumer Decision Process Model
Need Recognition
Search for Information
Pre-purchase Evaluation of Alternatives
Purchase
Consumption
Post-consumption Evaluation
Post-consumption Evaluation
Satisfaction: when expectations are
met or exceeded by perceived
performance
Dissatisfaction: when performance
falls short of expectations
Consumption is an important
determinant of satisfaction
Cognitive dissonance: questioning
decision (post-purchase regret)
Emotion affects evaluation
Importance of Customer
Satisfaction

Satisfied customers come back
 Leads to profitability
– Example: Consumer in supermarket spends
over $50,000 in a life time
– Satisfied customer can provide $150,000 of
business for a car dealer over a life time
Exhibit 12.8: The Disconfirmation Paradigm
Measuring Satisfaction in Terms
of Expectations
How did we do? How was our:
Room appearance
Room cleanliness
Registration speed
Friendliness of staff
Room service promptness
Fell Below
Expectations
Met
Expectations
Exceeded
Expectations
Customer Dissatisfaction

Dissatisfied customers stop purchasing,
complain, and spread negative WOM.
 The average business does not hear from
96% of its unhappy customers.
 The average person with problems tells 9 or
10 people.
 95% of complainers will do business with
you if complaint is resolved quickly.
Responses to Dissatisfaction

Complaints
– Consumer Complaints
– When Complaints Are Likely to Occur
– Complainer Types
Satisfaction Is Not Enough

65% to 85% of customers who defect to
competitors say they were “satisfied” or
“very satisfied.”
 Customer retention is key--develop longterm relationships.
Customer Retention Tactics






Care about your customers. (2/3 of customers defect
because they feel the company doesn’t care about them.)
Remember customers between sales. (Contact on
birthdays, etc.)
Build trusting relationships (expertise, reliability, concern).
Monitor the service delivery process.
Be there when you are needed (service and repair).
Provide extra effort (beyond the call of duty).
Cognitive Dissonance
Irrevocability
of the decision
Choice
Difficulty
of choice
Doubts
Anxiety
of the consumer
Importance
of the decision
Reduce
perceived value
of rejected options
Cognitive
Dissonance
Stress
Strategies
Increase
Perceived value
Of chosen
option
Reduce
Importance
of the decision
Consumer Decision Process Model
Need Recognition
Search for Information
Pre-purchase Evaluation of Alternatives
Purchase
Consumption
Post-consumption Evaluation
Divestment
Divestment
How consumers dispose of the
packaging or product after use
Options include:
Disposal
Remarketing or reselling
Recycling
Consumers’ environmental
concerns about divestment may
affect product choice
Variables Shaping the Decision
Process
Environmental Differences:
Culture: values, ideas, artifacts, and
symbols that help individuals interpret,
communicate, and evaluate as
members of society
Social Class
Family
Personal Influence
Situation
Happy Halloween!!!
Commercial Time
This is a car advertisement from Germany.
When they finished filming the ad the people who
made it noticed something moving along the side
of the car, like a ghostly white mist.
The ad was never put on TV because the
unexplained ghostly phenomenon frightened the
production team out of their wits. Watch it
carefully and about halfway look and you will see
the white mist crossing in front of the car then
following it along the road......Spooky!
Case Study
1.
Watching the purchase decision of some of the people in
the video, would you say this pattern is typical of a
product in a low-involving category? Describe the
purchase process of one of these persons or your own
purchase decision?
2.
What are the key attributes of the product? How does the
company position itself relatively to these attributes?
3.
How important are other people in the decision making
process regarding the purchase of this product? How
does the company use this aspect? What do you think of
that?