A Model of Consumer Decision Making

INPUT

PROCESS

OUTPUT

A Simple Model of Consumer Decision Making

External Influences
Input Firms Marketing Efforts 1. Product 2. Promotion 3. Price 4. Channels of distribution Consumer Decision Making Need Recognition Process Prepurchase Search Evaluation of Alternatives Psychological Field 1. Motivation 2. Perception 3. Learning 4. Personality 5. Attitudes Experience Sociocultural Environment 1. Family 2. Informal sources 3. Other noncommercial sources 4. Social class 5. Subculture and culture

Postdecision Behavior
Output Purchase 1. Trial 2. Repeat purchase

Postpurchase Evaluation

INPUT
1.Marketing inputs Product Packages Size Guarantees Mass media advertising Direct marketing Personal selling

Socio cultural Inputs

Usage by family member The view of experience consumer special interest discussion groups on internet Noncommercial source of information The comment of friend

PROCESS
Need Recognition Pre-purchase Search Evaluation of Alternatives

Need or Problem Recognition

The realization that there is a difference between actual and desired states
The higher the gap, the stronger the need (or bigger the problem)

Two different types of problem

Actual state types Desired state types

Types of Problems
Active Versus Inactive problems
Active: those you are aware of Inactive: those that you are not yet aware of (but exist)

Those that require immediate solutions and those that do not require immediate solutions

Pre-Purchase Search
A stage in the consumer decision-making process in which the consumer appraises the benefits to be derived from each of the product alternatives being considered. Types of Information Sources Types of Information Sought Factors Affecting Extent of Information Search

Types of Information Sources

PERSONAL Friends Neighbors Relatives Co-workers Computer salespeople Calling the electronics store IMPERSONAL Newspaper articles Magazine articles Consumer Reports Direct-mail brochures Information from product advertisements Internal web site

Factors that Increase the Level of Prepurchase Search

Product Factors: Higher search when
It is a long-lasting or infrequently used product There are frequent changes in product styling Large volume is purchased The price is high There are many alternative brands There is much variation in features

Factors that Increase the Level of Prepurchase Search

Situational Factors: Higher search when:
Experience is lower Previous experience was unsatisfactory

Social Acceptability: Higher search when:

Purchase is a gift Product is socially visible in use

Evaluation of Alternatives
When evaluating potential alternatives, two types of information: 1. List of brands from which they plan to make their selection . 2. The criteria they will use to evaluate each brand.

The Evoked Set as a Subset of All Brands in a Product Class

All Brands Known Brands
Evoked Set Inept Set

Unknown Brands
(1)
Inert Set

Acceptable Brands

Unacceptable Brands
(2)

Indifferent Brands
(3)

Overlooked Brands
(4)

Purchased Brands

Not Purchased Brands

(5)

Model that that do not end in purchase would appear to have perceptual problem
1. Brand may be unknown because of the consumers to selective exposure to advertising media and selective perception of advertising stimuli. 2. Brand may be unacceptable because of poor qualities. 3. Brand may be perceived that not having special benefits 4. Brand may be overlooked because they have not been clearly position or sharply targeted at consumer market segments. 5. Brand may not be selected because they are perceived by consumer as unable to satisfy perceived needs as fully as brand that is chosen.

Hypothetical Use of Popular Decision Rules in Making a Decision to Purchase an Ultra light Laptop
DECISION RULE Compensatory rule MENTAL STATEMENT I selected the computer that came out best when I balanced the good ratings against the bad ratings. I selected the computer that had no bad features.

Conjunctive rule

Disjunctive rule
Lexicographic rule

I picked the computer that excelled in at least one attribute.

I looked at the feature that was most important to me and chose the computer that ranked highest on that attribute.

Affect referral rule

I bought the brand with the highest overall rating.

Output
Two outputs basically
Purchase behavior Post purchase behavior

Purchase behavior
Trial purchase(Evaluation) First time, small quantity
Eg. Detergent Durable goods not feasible(Refrigerators, Washing machines)

Repeat purchase(Satisfaction) Established utility, large quantity Long-term commitment purchase(Loyalty)

Post purchase behavior

Trial purchase Evaluation Evaluation outcomes:
Performance matches expectations(Neutral feeling) Performance exceeds expectations(Positive feeling) Performance fails to meet expectations(Negative feeling)

Cognitive dissonance??

Concept of cognitive dissonance

Discrepancies between final choice & decision making
Eg. Fox and grapes, Eco-friendly car

Success mantra for companies Post purchase satisfaction

Why should I stay Leads to loyalty Eg. Shoppers Stop First Citizens Club

What is the relevance of decision making for a Pharma company?

Gifting behavior
Celebrate relationship Gifts, Self-gifts
Approx. 100 US$ billion business in USA

In Pharmaceutical business:
Company to doctor Occasions : Appreciation, Events, Festivals etc.

Gift selection decision

Do I want to give something that doctor desires?

Should I give gifts?

What should I give as gift?

Learning Doctors desires/ requirements

Surprise/No surprise

Beyond decision
Consuming & processing Satisfaction Quality of life
Consuming Possessing

Products/ Services

Collecting

Future decision process

Pleasure

Relationship marketing
Loyalty programs, loyalty schemes Success rate high if the involvement is high in terms of,
Financial risk Social risk Physical risk

Resulted in Permission marketing

Eg. Asking customers if they would like to receive a targeted e-mail
ad, promotion, or message before it actually appears

Characteristics of Relationship marketing

The firm provides Product/Services Individual attention Continuous information Exclusive price offers After sale services Extras & perks, etc.

The customer provides Repeat purchase Increased royalty Goodwill Positive word of mouth Lower cost to the firm

Trust & Promises

Reference
Leon G. Schiffman, Consumer Behavious, 10th edition, Pg no 425-462