Consumer Decision Making Process 4.pdf

7/27/2019 Consumer Decision Making Process 4.pdf

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Consumer Decision Making

Process

Module 4

Dr. Mohan P Philip


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Syllabus

Stages in Consumer Decision process- Types

of Decision Making- Post Purchase

Behaviour- Personal Influence and Opinion

leadership- Diffusion of innovations-

Adoption Process


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Stages in Consumer Decision process

Problem recognition

Information search

Evaluation of alternatives & selection Outlet selection & purchase

Post purchase action


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Buying decisions and consumption of products

and services always in the context of some

specific situation.

It is extremely important for marketers to

understand how situations and internal and

external influences affect the purchasing

decision process.


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Situational influence refers to all those factors

outside and removed from the consumer and

also from the attribute of product or service.

These factors are particular to a time and

place and have a demonstrable and

systematic effect on consumer behaviour.

Situational factors are temporary conditions

or settings present in the environment at a

specific time and place.


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There are three types of situational variables:

Communication situation Purchase situation

Usage or consumption situation


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Communication situation:

Refers to the setting in which consumers areexposed to information from interpersonal or

commercial sources that have an effect on

consumers behaviour.


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Determining factors to which consumer will

notice, understand and retain information:

Consumer is alone or in a group,

In a good or foul mood,

In a hurry or relaxed.


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Types of communication situations that may

influence consumer response:

i. The exposure situation:

E.g., Consumer reads the magazine as a pass-

on issue.

Consumer views TV commercial alone, with

family members or friends.


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ii. The context of communication:

E.g., happy programs lead consumers to have

positive thoughts and sad programs negative

thougts.

iii. The consumers mood while exposure to

communication occurs.


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Purchase situation:

May affect consumer decision on product

selection and include several stimuli present

in the store, if the product is given as:

a gift or

it is an emergency or

anticipated purchase


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Usage or consumption situation:

Refers to the occasion of use, such as:

Arrival of guests,

Or the product usage is related to attending

parties so on.

E.g., Entertaining close friends at home

Going to a hotel or bar on Saturday night


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Social surroundings:

Refer to the presence of other individuals

during the purchase or consumption process.

Social influence is a significant force thataffects our behaviour.

E.g., sales people know that they can use theshoppers companion as an effective sales aid

by asking her/his opinion and advise.


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Antecedent states:

Are momentary conditions such as shoppingwhen in a bad mood, tired or anxious, or

buying on impulse.

Marketers often advertise their products orservices by communicating mood

enhancement as one of the benefits.

Ads such as you need a break or giveyourselves a treat in an attempt to induce

positive mood.


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Consumer Decision Making Process

Consumer Decision Making is influenced by:

Level of consumer involvement,

Time pressure, Mood.


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Constructive processing:

It means that consumers adjust their degree

of cognitive effort to the task at hand.

Consumer evaluates the level of effort

required to make a certain choice, then selects

a strategy best suited for the occasion.


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Product involvement:

Refers to consumers level of interest in a

product. Marketers communicate many sale

involvement to increase consumerinvolvement in a product.

Advertising involvement:

Refers to consumers interest in processing the

ad messages

E.g., TV- medium of low involvement

Print - medium of high involvement


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Purchase situation involvement:

May occur when buying the same item in

different contexts.


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Types of Decision Making

Consumer Decision Making Process generally

falls under one of the three major decision

approaches:

Nominal decision making

Limited decision making

extended decision making


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i. Nominal decision making:

Occurs when products are low costs,

frequently purchased,

Familiar brands/products,

Of low involvement category,

And little search time is given to purchase

Very low involvement in purchase because of

brand loyalty, time pressure and other

reasons.


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ii. Limited decision making:

Is usually straight forward and simple,

It involves input from long term memory and

limited search,

Few alternatives and attributes considered,

and,

There is little or no post purchase evaluation.


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iii. Extended decision making:

Occurs when products are:

Expensive, Risky,

Ego-intensive,

Are purchased infrequently,

Consumer involvement is very high,

Consumer considers much information frominternal and external sources,

Post purchase decision is more likely to becomplex and dissonance-causing.


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Nominal decision making and Extended

decision making are two ends of a

continuum. In between there might be various shades of

consumer involvement depending on:

Product category,

Nature of purchase situation, and

Personal factors


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Nominal Decision Making Limited Decision Making Extended Decision Making

Low cost products More expensive product

Frequent purchases Infrequent purchases

Low involvement High-involvement

Familiar product /brand Unfamiliar product

Little thought, search or

time to given purpose

Extended thought, search

and time given to

purchase


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Post Purchase Behaviour

Consumers engage in a constant process of

evaluating the things they buy.

Incase of some purchases they experience

post purchase dissonance as a result of doubts

they develop about the wisdom of a purchase. [dissonance = anxiety after purchase]


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Cognitive dissonance occurs as a result of

some discrepancy between a consumers

prior evaluation and the purchase decision.


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Dissonance Theory

Derived from two Basic Principles: i. Dissonance is unpleasant and will motivate

the person to reduce it.

ii. Individuals experiencing dissonance will

avoid situations that produce more

dissonance.


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Post purchase dissonance occur when more

than one alternative was attractive and a

relatively permanent and difficult decisionhad to be made.


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Factors that cause dissonance:

i. The degree of irrevocability of the decision:

Easier to change decision less likely

to experience dissonance

ii. The importance of decision to the

consumer:

If decision is more important greater

the possibility to cause dissonance


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iii. Difficulty of choosing among the

alternatives:

Greater the possibility of choosing betweenthe alternatives greater the Post

Purchase dissonance.

iv. The individuals tendency to experienceanxiety:

If consumer more prone to anxiety

the more likely to experience the PostPurchase dissonance.


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Incase ofnominal decisions and limited

decisions consumers are unlikely to

experience post purchase anxiety becausethey do not find attractive attributes in brands

not selected.


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Product purchases characterized as high-

involvement are more likely to produce

dissonance.

Once a minimum threshold level is passed, it

becomes increasingly unpleasant andconsumers generally take some action to

avoid or reduce it.


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Purchase Evaluation and

Satisfaction/Dissatisfaction

Consumers expect a level of performance

from their selected product or the retail

outlet.


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Expectations and perceived performance are

not independent and consumers tend toevaluate their performance in line with their

expectations.


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This performance perception could be:

noticeably more than expected level,

noticeably below expectations, or

match the expected level of performance.


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Positive post-purchase evaluation results in

Satisfaction and

Negative evaluation causes dissatisfaction.


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When performance level far exceeds the

desired performance level, the customer is

likely to be delighted.

This reducesconsumers decision making

efforts on future purchase occasions and

The rewarding experience encourages the

consumer to repeat the same behaviour in

future.


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A delighted consumer is likely to be

committed and usually unlikely to be

influencedby competitors actions.

A delighted customer is also likely to spread

favourable word-of mouth.


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Dissatisfaction Responses

In case ofdissatisfaction, first of all the

consumer decides whether to take some

action or not.


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Ifno action is taken then the consumer lives

with dissatisfaction and develops a negative

attitude towards the product or the outlet.

This is damaging to the company or the outlet

due to loss of future sales and unfavourable

word-of-mouth.


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Implications for Marketers

To meet consumer expectations, marketers

need to focus on creating reasonable

expectations among consumers through:

Appropriate promotional efforts,

Ensure consistency in product quality, so that

expectations created through marketing

communications are fulfilled.


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Consumers, whose complaints resolved to

their satisfaction are comparatively more

satisfied than consumers who had no

complaints and were actually satisfied with

the product.


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The firm should develop:

an efficient system of receiving complaints

and

Encourage consumers to record their

complaints as soon as they occur, and

Effectively resolve the cause of their

complaints.

A better strategy is to anticipate

dissatisfaction and act promptly to remove

the cause of complaint before it occurs.

f h


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Satisfaction, Repeat Purchase and

Customer Loyalty

Relationship marketing focus on:

Developing an ongoing and

Profitable relationship with a companys

customers.


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The core of this concept (Relationship

marketing) is based on:

Understanding customers and

Their needs at individual customer level and

The marketers objectives are to encourage

more usage of the product/brand, repeat

purchases, and brand loyalty.


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Creating committed customers necessarily

requires:

Consistently meeting or exceeding customer

expectations and

Inculcating a belief among them that the

company treats them fairly and concerned

about their well being.


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Product Disposal

Disposal of product containers is increasingly

becoming important for governments and

marketers because of environmental

concerns.


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Many socially responsible manufacturers are

making efforts to develop products andpackages that can be disposed off safely and

are less likely to be harmful to the society.

P l I fl d O i i


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Personal Influence and Opinion

leadership

Personal influence is frequently considered as

same as word of mouth communication or

advertising.

A favourable word of mouth communication

actually have more influence than other forms

of promotional activities.


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The main reasons for it are:

Consumers view word of mouth as reliable

and trust worthy information which can help

people to make better buying decisions.

Personal contacts can provide social support

and give a stamp of approval to purchase.

NATURE AND SIGNIFICANCE OF


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NATURE AND SIGNIFICANCE OF

PERSONAL INFLUENCE

Personal influence is described as the effect or

change in a persons attitudes or behaviour as

a result of communication with others.


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The communication done is always

multidimensional because:

i. Communication leading to influence may be

source oriented( by the influencer) or

recipient oriented( by the influencee)

ii. Communication may result in one way or

two way influence (i.e.. individual may

influence while being influenced).

iii. Communication resulting in influence may

be virtual or visual


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OPINION LEADERSHIP

Opinion leaders are those people who are

able to exert personal influence in a given

situation. They are the ones to whom others

look for advice and information.

Personal influence of opinion leaders are

significant for the marketer.

The marketer must first identify and segmentthem.


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Then they must be reached with effective

promotional message which will make the

opinion leaders to communicate and influencetheir fellow group members.

CHARACTERISTICS OF OPINION


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CHARACTERISTICS OF OPINION

LEADERS

They have greater exposure to mass media relevant totheir area of interest.

They have greater interest and knowledge of the areaof influence

They are generally more social and companionable.

They are more innovative

They are loyal to group standards and values

They exhibit the personality trait of public

individualization ( the state in which they feeldifferentiated to some degree from others and chooseto act differently from them)

WHY OPINION LEADERS ATTEMPT TO


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WHY OPINION LEADERS ATTEMPT TO

INFLUENCE OTHERS

Mainly there are four reasons

Product involvement

Self involvement

Other involvement

Message involvement


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INNOVATION

It is an idea, practice or product perceived to be

new by an individual or a group.

It is the adoption of a new idea, product or

process which is prospectively useful.

It is the design and development of something

new which is unknown and not in existence.


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Innovation has a process has four basic

elements:

Improvement and development of existing

forms

Improvement and development of existing

processes

Introduction of novel production processes

Introduction of new products and services.


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TYPES OF INNOVATIONS

Innovations vary in how much behavioural change

is required on the part of consumer. It is mainly

divided into three

1) Continuous Innovations:It is the innovation which has a limited influence

on the consumption behaviour of consumers.

That means only slight changes are made in theproduct or service offered. E.g. product

alteration


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2) Dynamically continuous innovation:

It is the one that effects consumer

consumption behaviour in a deeper or

pronounced way.

E.g. internet shopping

3) Discontinuous innovation:

It represents a product which is entirely new

to the consumer where the consumer hardly

knows about it.


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Adoption Process

The acceptance and continued use of a product or

brand by an individual is referred to as adoption.

There are mainly 6 stages in the adoption process

1) Awareness:

At this stage the potential adopter finds out

about the existence of a product but has very

little information and no well formed attitudesabout it.


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2. Comprehension:

This stage represents the consumers having

knowledge and understanding of what theproduct is and can do


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3) Attitude :

The consumers develops favourable or

unfavourable behavioural predispositionstowards the product . I

f the attitudes are not favourable then it

leads to the termination of the adoptionprocess.

4) Legitimation:

The consumer becomes convinced that theproduct should be adopted


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5) Trial:

In this stage, if possible the consumer tests or

tries the product to determine its utility

6) Adoption:

At this stage the consumer determineswhether or not to use the product in a full

scale way .

Thus the purchase of the product completes

the adoption process.

SIGNIFICANCE OF ADOPTION


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SIGNIFICANCE OF ADOPTION

PROCESS

The significance of adoption process to themarketer is two fold:

They can understand the speed at which the

consumer moves through the stages of adoptionprocess

The marketers communication forms vary intheir effectiveness over the different stages in

the adoption process.These points assist the marketer to develop an

effective promotional program.


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DIFFUSION OF INNOVATION

Diffusion of Innovations is a theory that seeks to

explain how, why, and at what rate new ideas

and technology spread through cultures.


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Everett Rogers, a professor of rural sociology,

popularized the theory in his 1962 book

Diffusion of Innovations.

He said diffusion is the process by which an

innovation is communicated through certain

channels over time among the members of a

social system.


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The book proposed 4 main elements thatinfluence the spread of a new idea:

the innovation,

communication channels,

time, and

a social system.

Diffusion is the process by which aninnovation is communicated through certain

channels over time among the members of asocial system


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The key elements in diffusion research are:

Innovation

Rogers defines an innovation as an idea,

practice, or object that is perceived as new by

an individual or other unit of adoption

Communication channels

A communication channel is the means by

which messages get from one individual to

another.


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Time

The innovation-decision period is the length of

time required to pass through the innovation-

decision process.

Rate of adoption is the relative speed with which

an innovation is adopted by members of a socialsystem

Social system

A social system is defined as a set of interrelatedunits that are engaged in joint problem solving

to accomplish a common goal


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CLASSIFICATION OF ADOPTERS

Rogers defines an adopter category as a classification ofindividuals within a social system on the basis ofinnovativeness.

Innovators

Innovators are the first individuals to adopt aninnovation.

Innovators are willing to take risks, youngest in age,have the highest social class, have great financiallucidity, very social and have closest contact to

scientific sources and interaction with otherinnovators.

innovators.
http://en.wikipedia.org/wiki/Social_classhttp://en.wikipedia.org/wiki/Social_classhttp://en.wikipedia.org/wiki/Social_class


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Early Adopters

This is the second fastest category of

individuals who adopt an innovation. These individuals have the highest degree of

opinion leadership among the other adopter

categories. Early adopters are typically younger in age,

have a higher social status, have morefinancial lucidity, advanced education, and

are more socially forward than late adopters.More discrete in adoption choices than
http://en.wikipedia.org/wiki/Opinion_leadershiphttp://en.wikipedia.org/wiki/Early_adoptershttp://en.wikipedia.org/wiki/Early_adoptershttp://en.wikipedia.org/wiki/Opinion_leadership


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Early Majority

Individuals in this category adopt an innovation

after a varying degree of time.This time of adoption is significantly longer thanthe innovators and early adopters.

Late Majority

Individuals in this category will adopt aninnovation after the average member of thesociety.

These individuals approach an innovation with a

high degree of skepticism and after the majorityof society has adopted the innovation.

L d


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Laggards

Individuals in this category are the last to

adopt an innovation.

These individuals typically have an aversion

to change-agents and tend to be advanced in

age.Laggards typically tend to be focused on

"traditions", likely to have lowest social

status etc


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HARD CORE LOYALS Committed buyer spokes person for the brand

SOFT CORE LOYALS

Satisfied buyer with divided loyalty

SHIFTING LOYALS

Satisfied buyer with switching

costs

SWITCHER

Buyer with no feeling of loyalty

Documents

Consumer Decision Making Process 4.pdf