FOUR VIEWS OF CONSUMER DECISION MAKING

Economic Man : Under economics, it is assumed that man is a rational being, who will evaluate all the alternatives in terms of cost and value received and select that product/service which gives him/her maximum satisfaction (utility). Consumers are assumed to follow the principle of maximum utility based on the law of diminishing marginal utility. It is assumed that with limited purchasing power, and a set of tastes and needs, a consumer will allocate his/her expenditure over different products at given price so as to maximise total utility. The law of equimarginal utility enables him to secure maximum utility from limited purchasing power. Economic model of consumer behavior is one dimensional. This means that buying decisions of a person are governed by the concept of utility. Being a rational man one will make his purchase decision with the intention of maximising the utility/benefits. Economic model is based on certain predictions of buying behavior.

Price effect Substitution effect Income effect

The assumptions about the rational behavior of human being have been challenged by the behavioural scientists. They are of the opinion that while the predictions are useful, the model only explains how a consumer ought to behave. It does not throw light on how does the consumer actually behave. Behavioural scientists argue that the economic model is incomplete. Economics is assuming the market to be homogeneous, and that buyers will think and act alike. Buyers will only concentrate on one aspect of the product i.e., price. This model ignores all other aspects such as perception, motivation, learning, attitude, personality and socio cultural factors. It has always been agreed upon that man is a complex entity, a puzzle, a riddle. Hence it is very important to have a multi disciplinary approach to understand consumer behavior. Further, in today’s environment, apart from the various psychological, socio cultural determinants of the consumer, it has been observed that the consumer also gets influenced by other marketing variables, namely- product, effective distribution network and marketing communications.

Passive Man: Quite opposite to the rational economic view of consumers is the passive view that depicts the consumer as basically submissive to the self serving interests and promotional efforts of marketers. In the passive view, consumers are perceived as impulsive and irrational purchasers, ready to yield to the aims and into the arms of marketers. At least to some degree, the passive model of the consumers was subscribed to by the hard-driving super sales people of old, who were trained to regard the consumer as an object of manipulated. The principal limitations of the passive model is that it fails to recognise that the consumer plays an equal, if not dominant, role in many buying situations – sometimes by seeking information about product alternatives and selecting the product that appears to offer the greatest satisfaction and at other times by impulsively selecting products that satisfy the mood or emotion of the moment. The influence of motivation, selective perception, learning, attitude, communication and opinion leadership serves to support the proposition that consumers are rarely objects of manipulation. Therefore, this simple and single minded view should also be rejected as unrealistic.

The Cognitive Model/View : Cognitive model portrays the consumer as a thinking problem solver.

Within this framework, consumers frequently are pictured as either receptive to or actively searching for products and services that fulfill their needs and enrich their lives. The cognitive model focuses on the processes by which consumers seek and evaluate information about selected brands and retail outlets.

Within the context of the cognitive model, consumers are viewed as information processor. Information processing leads to the formation of preferences and , ultimately, to purchase intentions. The cognitive view also recognises that the consumer is unlikely to even attempt to obtain all available information about every choices. Instead, consumers are likely to cease their information-seeking efforts when they perceive that they have sufficient information about some of the alternatives to make a satisfactory decision. As this information-processing viewpoint suggests, consumers often develop shortcut decision rules (called heuristics) to facilitate the decision making process. They also use decision rules to cope with exposures to too much information ( information overload). The cognitive, or problem-solving, view describes a consumer who falls some where between the extremes of the economic and passive views, who does not ( can not) have total knowledge about available product alternatives and, therefore, can not make perfect decisions, but who nonetheless actively seeks information and attempts to make satisfactory decisions. Consistent with the problem solving view is the notion that a great deal of consumer behavior is goal oriented.

An Emotional Man : Each of us is likely to associate with deep feelings or emotions, such as joy, fear, love, hope, sexuality, fantasy, and even a little magic, with certain purchases or possessions. These feelings or emotions are likely to be highly involving. For instances, a lady who misplaces a favorite ear ring might go to great length to look for it, despite the fact he or she has six other at hand. If we were to reflect on the nature of our recent purchases, we might be surprised to realise just how impulsive some of them were. Rather than carefully searching, deliberating , and evaluating alternatives before buying, we are just as likely to have made many of these purchases on impulse, on a whim, or because we were emotionally driven. When a consumer makes what is basically an emotional decision, less emphasis is placed on the search for prepurchase information. Instead, more emphasis is placed on current mood and feelings. This is not to say that emotional decisions are not rational decisions.

APPLICATION OF CB IN STRATEGIC MARKETING

Analysing Market Opportunities: This is done by examining trends in income, consumers life style and emerging influences (working housewives, mosquito repellent, International school)

Selecting the target market: The study of consumer trends would reveal distinct groups of consumers with very distinct needs and wants. (shampoo sachets).

Determining the product mix: Having identified the unfulfilled need slot and having modified the product to suit differing consumer tastes, the marketer now has to get down the brass tacks of marketing. He has to determine the right mix of products, price, promotion and advertising. Again consumer behavior is extremely useful as it helps find answer to many perplexing questions.

Product :The marketer has the product that will satisfy hitherto unfulfilled consumer need, but he must decide the size, shape and attribute of the product. ( product line decision, package, warranty and after service) ( Maggi noodles, Pan parag, Sintex indoor water storage)

Price: Many buying situation that the marketer faces in fixing the price of it’s product. It is only continuous study of consumer behavior in actual buying situation that the marketer can hope to find answer to these questions.

Distribution: Having determined the product size, shape, package and price, the next decision the marketer has to make is regarding the distribution channel. Many questions come to the mind. Answer to all the questions can only be found when the marketer has a good understanding of the consumer’s needs which are being fulfilled by his product and the manner in which consumer arrive at the decision to buy ( Eureka Forbes).

Promotion: The marketer here is concerned with finding the most effective methods of promotion which will make the product stand out amongst the clutter of so many other brands and products, which will help increase the sales objectives and yet be within the budget. This is possible only when the marketer knows who his target consumer are, where are they located, what media do they have access to, what is their preferred media and what role does advertising play in influencing the purchase decision. (BJP strategy in 2014 election).

Use in Non-profit and Social Marketing:The knowledge of consumer behavior is also useful in the marketing of non-profit or social or governmental services and institutions such as hospitals, voluntary agencies, law enforcement and tax collection agencies.

THE PERCEPTION PROCESS

The concept of perception

In order to appreciate the formation of perception, it is necessary to understand sensation. Sensation is the immediate response to our sensory receptors ( e.g., eyes, ears, nose, mouth, fingers ) to such basic stimuli as light, colour, and sound. Perception, on the other hand, is the process by which stimuli are selected, organised and interpreted. However, the study of perception focuses on what we add to or take away from these sensation as we assign meaning to them. Perception is subjective.

Stages in the perceptual process

No consumer forms perception in a single step. Rather, perception is a outcome of a process consisting of the following parts:

Primitive Categorisation: Here, the basic characteristics of a stimulus are isolated by the person to form his perception. Thus any thing shining, may be seen with an amount of suspicion by the consumers. This is what is known as primitive categorization. A slight error of judgement on the part of the marketer in not appreciating this, may lead to a marketing pitfall. (Sunlight dish washing liquid vs. Minute Maid- a popular brand of frozen lemon juice).

Cue Checks: Here cue characteristics are analysed by the person in preparation for the selection of a schema. In the context of the sunlight liquid example quoted above, the cue check stage in the perceptual process was the pairing the yellow bottle with a prominent picture of a lemon.

Confirmation Check: Here, once the schema is selected, a confirmation check is run by the person to see the validity of the schema chosen. In the context of the continuing example of the Sunlight liquid detergent, a juice schema was selected instead of a dishwashing liquid schema. The confirmatory check was the picture of the lemon juice found on the leading brand of a real lemon juice.

Confirmation Completion: The last and final stage is confirmation completion where a perception is formed by the consumer or any person for that matter and decision is made. The act of drinking the detergent illustrate it. Unfortunately, the consumer found out their the way.:

SENSORY SYSTEM

External stimuli or sensory inputs, can be received on a number of channels. We may see a billboard, hear a gingle, feel the softness of a Kashmir sweater, taste a new flavour of ice cream, or smell a leather jacket. The inputs picked up by our five senses constitute the raw data that generate many type of response. For example, sensory data emanating from the external environment can generate internal sensory experience. When the song on the radio triggers a young man’s memory of his childhood dance and brings to mind the soft feelings of the mother’s touch. Sensory inputs evoke historic imagery, in which events that actually occurred are recalled. The data that we receive from our sensory systems determines how we respond to products.

Sensory Thresholds: There are some stimuli that people simply are not capable of perceiving. The science that focus on how the physical environment is integrated into our personal, subjective world is known as ‘psychophysics’. By understanding some of the physical laws that govern what we are capable of responding to, this knowledge can be translated into marketing strategies. Thresholds work at the following levels.

The absolute threshold: The absolute threshold refers to the minimum amount of stimulation that can be detected on a sensory channel. The point at which an individual senses a difference between “something” and “nothing” is referred as the ‘absolute threshold’. The absolute threshold is an important consideration in designing marketing stimuli. A billboard might have the most entertaining copy ever written, but this genius is wasted if the print is too small for passing motorists to see it from the highway.

The differential threshold: The differential threshold refers to the ability of a sensory system to detect changes or differences between two stimuli. The minimal difference that can be noticed between two similar stimuli is known as the differential threshold.

The JND and Weber’s Law

The minimum change in a stimuli that can be detected is also known as the JND, which stands for Just Noticeable Differences. In the nineteeth century, a psychophysicist named Ernest Weber found that the amount of change that is necessary to be noticed is systematically related to the original intensity of the stimuli. The greater the initial stimulus, the greater the change must be for it to be noticed. This relationship is known as Weber’s Law. Many companies chose to update their package periodically, making small changes that will not necessarily be noticed at the time. When a product icon is updated, the manufacturer does not want people to lose their identification with a familiar symbol. On the other hand whenever product improvements are made marketers would like them to be above the level of JND so that they are noticed and responded.

SUBLIMINAL PERCEPTION

Subliminal(relating to mental processes of which the individual is not aware) perception is a topic that has captivated the public for over 30 years, despite the fact that there is virtually no proof that this process has any effect on consumer behavior. Subliminal perception refers to the perception of a stimulus below their absolute threshold.

Subliminal Techniques: Subliminal perception can be formed through several routes. The following are some techniques.

Embeds: Embeds are tiny figures that are inserted into magazine advertising by use of high speed photography or airbrushing. These hidden figures, usually of a sexual nature, supposedly exert strong but unconscious influences on the innocent readers.

Auditory Messages: In addition to subliminal visual message, many consumers and marketers seem to be fascinated by the possible effects on messages hidden on sound recordings. An attempt to capitalise on subliminal auditory perception techniques is found in the growing market for self help cassettes. These tapes, which typically features the sound of wave crashing or some other natural setting, supposedly contain subliminal messages to help the listener to stop smoking, lose weight, gain confidence and so on. Despite of rapid growth of this market, there is little evidence that subliminal stimuli transmitted on the auditory channel can bring about desired changes in behaviour.

Consumer Folklore: Along with the interest in hidden self-help messages on recordings, some consumers have become concerned about marketing rumors, also called as the consumer folklore. The popular press has devoted much attention to such stories and state legislatures have considered bills requiring, warning labels about these messages.

Low Level Auditory Stimulation: One technique, known as ‘psycho-acoustic persuasion’ does appear to work. Subtle acoustical messages such as “ I am honest. I wont steal. Stealing is dishonest”.

THE CONSUMER BUYING DECISION PROCESS

I. 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.

II. 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. Then the consumer will seek to make his

opinion to guide his choice and his decision-making process with:

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

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. Not to mention, of course,

official business sources such as an advertising or a seller’s speech.

III. Alternative evaluation

Once the information collected, the consumer will be able to evaluate the different alternatives that offer

to him, evaluate the most suitable to his needs and choose the one he think it’s best for him. In order to do

so, he will evaluate their attributes on two aspects. The objective characteristics (such as the features and

functionality of the product) but also subjective (perception and perceived value of the brand by the

consumer or its reputation). Each consumer does not attribute the same importance to each attribute for

his decision and his Consumer Buying Decision Process. 

IV. 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.

V. Post-purchase behaviour : 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. Which will produce customer loyalty.