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V SEM BBA
LECTURE NOTES

CONSUMER BEHAVIOUR
Prepared by,
Abdul Faraz
Assistant Professor in commerce and
management
Sapient college of commerce and management
Mob: 8050663693

Topic
UNIT - 4
CONSUMER DECISION MAKING PROCESS
CONSUMER BEHAVIOUR Lecture Notes

UNIT 4 : CONSUMER DECISION

MAKING PROCESS
The Consumer decision-making process involves identifying their needs, gathering information, evaluating
alternatives, and then making their buying decision. Consumer behaviour may be determined by economic
and psychological factors and is influenced by environmental factors like social and cultural values.

Consumer decision-making behaviour is a complex procedure and involves everything starting from problem
recognition to post-purchase activities. Every consumer has different needs in their daily lives and these are
those needs that make them make different decisions.

Decisions can be complex, comparing, evaluating, selecting, and purchasing from a variety of products de-
pending upon a consumer's opinion over a particular product. This renders understanding and realizing the
basic problem of the consumer decision-making process for marketers to make their products and services
different from others in the marketplace.

Steps in the consumer decision-making process

1. Problem recognition : The first step of the consumer decision-making process is recognizing the need
for a service or product. Need recognition, whether prompted internally or externally, results in the
same response: a want. Once consumers recognize a want, they need to gather information to under-
stand how they can fulfil that want.
2. Information search : When researching their options, consumers again rely on internal and external
factors, as well as past interactions with a product or brand, both positive and negative. In the infor-
mation stage, they may browse through options at a physical location or consult online resources, such
as Google or customer reviews.
3. Alternatives evaluation : At this point in the consumer decision-making process, prospective buyers
have developed criteria for what they want in a product. Now they weigh their prospective choices
against comparable alternatives. Alternatives may present themselves in the form of lower prices,
additional product benefits, product availability, or something as personal as colour or style options.
Your marketing material should be geared towards convincing consumers that your product is superior
to other alternatives
4. Purchase decision : This is the moment the consumer has been waiting for: the actual purchase. Once
they have gathered all the facts, including feedback from previous customers, consumers should arrive
at a logical conclusion on the product or service to purchase.
5. Post-purchase evaluation : The best marketers know that the process doesn’t end at the purchase step
– in fact, that’s only the beginning of a customer’s value for your company. Once acquisition is out of
the way, your new goal is to create long-term relationships between consumer and company, ensuring
that you get the most value out of your customers, and they get the most value out of your products.

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Opinion leaders: Like reference groups, ‘opinion leaders’ or ‘influentials’ play a key role in influencing
the buying behaviour of their followers. Very often we come across situations where a person refers to an
individual rather than a group in formulating his or her behaviour pattern. The individual to whom such
reference is made by a person or persons is the opinion leader. The beliefs, preferences, attitudes,
actions and behaviour of the leader set a trend and a pattern for others to follow in a given situation.

In a very intimate reference group, there is a reference person, an informal group leader. The group of
followers respects him and looks up to him. He is the innovator in the group of followers who respect him
and look up to him. He is the innovator in the group who first tries new ideas and products and then
propagates them to his followers. Marketers very often try to catch hold of the opinion leaders through
ads and other means of communication. If they succeed in selling their ideas and products to the opinion
leaders, then they have sold it to the entire group of followers behind them.

Definition of Opinion Leadership : Opinion leadership is defined as the process in which one person
influences the attitudes or actions of another person informally, who may be identified as an opinion
leader. They offer informal advice about the product or service. Opinion leaders are part of the social
groups They have a social communication network. The communication is informal and interpersonal
in nature which happens between those who are not associated with the commercial selling source
directly.
Examples of Opinion Leadership : The role of opinion leadership can be seen in the following examples.
1. During casual talk, a friend talks about the car he recently bought. He recommends buying it.
2. A person shows a friend a photograph of his recent tour abroad. He suggests that by using a particular
make of camera, better pictures could be shot.

Characteristics of Opinion Leaders : Opinion leadership is a dynamic process. It is the most powerful con-
sumer force. As an informal communication sources, it effectively influences consumers in their product-
related decisions. The dynamics of the opinion leadership may be discussed under the following headings:

A credible source of information, Provision of both positive and negative product information, Source of
information and advice, Two-way street,Specific characteristics.

1. Credible Source : Opinion leaders are knowledgeable. Their advice about a product or service is con-
sidered reliable. As opinion leaders are informal sources of information, it is perceived that they give
advice in the best interest of opinion seekers. The first-hand information received from opinion leaders
helps in reducing perceived risks. It properly tackles the anxiety in buying new products as the opinion
is based on first-hand experience.
2. Provision of Both Positive and Negative Product Information : Marketers provide information which
is invariably favourable to the products they are marketing. However, opinion leaders are not directly
associated with marketers. They provide both favourable and unfavourable information about the
product. So, opinion seekers have faith in opinion leaders. They are confident that they are receiving

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both positive and negative information in an accurate way.

3. Sources of Information and Advice : Opinion leaders are the source of both information and advice.
They simply share their experience about a product or service. Their talk is related to what they know
about a product. In their more aggressive talks, they advise others to buy or avoid a specific product.
They base their advice on proper reasons.
4. Two-way Street : Opinion leaders in one product-related situation become opinion receivers in another
situation even for the same product. For example, a new homeowner thinking of buying a lawn mover
seeks information and advice from other people about which brand to select. After purchasing the lawn
mover, he may be satisfied with the product (in the post-purchase experience). Now he has a compel-
ling need to talk favourably about the purchase to other people to confirm the correctness of his choice.
In the first instance, he is an opinion receiver and in the second he is an opinion leader.
Sometimes, an opinion leader is influenced by an opinion receiver. For example, a person may
recommend a favourite hotel to his friend. In response, the opinion receiver gives his own comments on
that hotel. Finally, the opinion leader may come to realize that the hotel is too small, too isolated and
offers fewer amenities than other hotels.

5. Specific Characteristics : Opinion leaders possess distinct personality traits. These include self-confi-
dence and gregariousness. They are socially inclined, outspoken and knowledgeable.
OPINION LEADERS OPINION RECEIVERS
Self-Improvement MotivationsReduce the risk of making a purchase commitment
• Reduce post purchase uncertainty or dissonance• Reduce research time
• Gain attention or status Assert superiority and
expertise
• Feel like an adventurer
• Experience the power of “Converting” others
Product-Involvement MotivationsLearn how to use or consume a product
• Express satisfactionLearn what products are new in the market.
Social Involvement MotivationsBuy products that have the approval of others,
• Express neighbourliness and friendship by there by ensuring acceptance
discussing products or services that may be
useful to other

DIFFUSION OF INNOVATIONS : We as consumers always find a new innovation-idea or product or even

new service attractive. However, for the firm which is trying its hand at the new innovation, there is always a
question hanging around ‘How fast will the diffusion of the innovation take place?” This is to say that any
innovation has an element of risk involved. The firm will introduce a new concept or a new product after
intensive research is carried out by it. Thus, we see that the process of diffusion of innovation is very critical
to a firm.

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Diffusion : Diffusion is a macro process concerned with the spread of a new product an innovation from its
source to the consuming public. Adoption is a micro process that focuses on the stages through which an
indi- vidual consumer passes when deciding to accept or reject a new product. Diffusion of innovations is the
pro- cess by which acceptance of innovation (new products new services or new ideas) is spread by
communication (mass media, salespeople, informal conversation) to members of the target market over a
period of time
The Diffusion Process : The diffusion process follows a similar pattern, over time, irrespective of the social
group or innovation. The typical diffusion process shows slow growth or adoption. It later rises rapidly, and
then a period of slow growth is noticed. In a fast diffusion process, the product clicks immediately. The
spread of innovation is very quick. People patronize the product immediately, and later on there is slow
diffusion. In slow diffusion process, the product takes a lot of time to diffuse or spread, and the consumer
follows a pattern of adoption slowly by getting acquainted with the product.

Diffusion is the process by which the acceptance of an innovation (a new product, a new service, a new idea
or a new practice) is spread by communication (mass media, salespeople, or informal conversations) to
mem- bers of a social system (a target market) over a period of time. The four basic elements of this process
are:
1. The Innovation
2. The channels of Communication
3. The Social System
4. Time
Stages in adoption process Steps in extended decision-making

AwarenessProblem recognition

InterestInformation search

Evaluation AlternativeEvaluation

Trial Purchase

AdoptionPost-purchase evaluation

Diffusion Process

Stages of diffusion process : Let us look at the stages in the diffusion process in marketing, as originally
proposed by E.M. Rogers, An American communication theorist. They are as follows:

1. Knowledge : The consumer is exposed to the existence of the innovation and gains some understanding
of how it functions. In this stage, consumers are aware of the product but have made no judgment
concerning the relevance of the product to a problem or recognized need. Knowledge of a new

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product is considered to be the result of selective perception and is more likely to occur through the
mass media than in late stages which are more influenced by opinion leaders.

2. Persuasion : In this stage, usually, attitude formation takes place that is consumer forms favourable or
unfavourable attitudes toward the innovation. Consumers may mentally imagine how satisfactory a new
product might be in use, i.e., a “vicarious trial” of the product in the consumer’s mind.
It is also considered as the evaluation of the consequences of using the product. This means consumers
weigh the potential gains from adopting the product against the potential losses of switching from the
product now used
A person may seek out new stories, pay particular attention to advertising for the product, subscribe
to product rating services, talk to experts in that product category etc. This is basically done to reduce
perceived risk in adopting new products. Each of the above information search and evaluation strate-
gies has an economic and/or psychological cost.
Many persuasion methods are used by marketers. One of the common arid effective methods is cata-
logues, especially used for new products because this provides more information than the typical retail
setting. For example – marketers can show the advantages of one’s present solutions to hair problems.

3. Decision : Consumer engages in activities that lead to a choice to adopt or reject the innovation (i.e.,
adoption or rejection). Adoption can be defined as a decision to make full use of an innovation as
the best course of action. This means continued use of the product unless situational variables (lack of
availability, money etc.) prevent usage. Rejection means not adopting an innovation.
There may be some persons who first consider adopting an innovation or at least give a trial, but then
decide not to adopt it. This is called an active rejection. Others never consider the use of the innovation,
known as passive rejection.

4. Implementation : Implementation means the consumer, puts the innovation into use. Until this stage, the
process is a mental exercise, but in this stage, behavioural change is required Marketing plan is the
determinant of whether a good product has been communicated effectively (i.e., actual sales). The
marketing mix planned should be such that purchase is made easy. This means proper coordination of
the channels of distribution with new products and their communication process.

5. Confirmation : Consumer seeks approval/reinforcement for the innovation decision but may reverse
this decision if exposed to conflicting messages about the product. This stage is also influenced by com-
munication sources and consumers evaluate their purchase experiences. After evaluating, they try to
support their behaviour and later decide to continue or discontinue using the product.
Marketers consider studying discontinuance to be equally important as the rate of adoption. They study
so that marketing strategies can be tailor-made with respect to the reasons for the same. It is seen that
people who adopt the product later than early adopters are more likely to discontinue. Therefore,
marketers try to upgrade follow–up service and feedback as sales of a new product expand.

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Types Of Customers in The Market Diffusion Process : Let us look at different types of customers that
can be identified based on their behaviour and characteristics. These customer types play a role in the
adoption and diffusion of new products or innovations:

Innovators : Innovators are the first customers to adopt a new product or innovation. They are often ad-
venturous, risk-takers, and eager to try new ideas. Innovators are willing to invest time and money in new
offerings and have a high level of technical expertise. Their early adoption behaviour can influence the
perceptions and decisions of other customer types.

Early Adopters : Early adopters are the second group to embrace a new product or innovation. They are
opinion leaders and influencers within their social networks. Early adopters are characterized by their will-
ingness to take risks, openness to new ideas, and desire to gain a competitive advantage. Their adoption
behaviour helps create initial momentum and generate buzz for the product.

Early Majority : The early majority represents a larger segment of customers in the market. After observing
and learning from innovators and early adopters, they adopt a new product or innovation. The early major- ity
is more cautious and deliberative in their adoption decisions. Before adopting, they rely on recommenda-
tions, reviews, and evidence of the product’s effectiveness and value.

Late Majority : The late majority is the group of customers who adopt a new product or innovation after
most of the market has already embraced it. They are more skeptical and cautious about change. The late
majority may have concerns about the product’s reliability, affordability, or compatibility. They adopt out
of necessity or due to peer pressure rather than a desire for innovation.

Laggards : Individuals in this category are the last to adopt an innovation. Unlike some of the previous cat-
egories, individuals in this category show little to no opinion leadership. These individuals typically have an
aversion to change agents and tend to be advanced in age. Laggards typically tend to be focused on “tradi-
tions”, likely to have the lowest social status, and lowest financial fluidity, be the oldest of all other adopters,
in contact with only family and close friends, very little to no opinion leadership.
AIDA marketing model : The AIDA marketing model is a marketing, advertising and sales approach meth-
odology designed to provide insight into the customer's mind and represent the steps needed to cultivate
leads and generate sales.
The AIDA model was introduced by businessman Elias St. Elmo Lewis in the late 19th century. As an

acronym,
AIDA breaks down into the steps required for successful marketing: Attention, Interest, Desire (or, in some
variations, Decision) and Action. The AIDA marketing model is a cornerstone of modern marketing, to the
extent that missing one step is thought to almost guarantee an unsuccessful result
The four stages of AIDA include :
Attention – To make customers aware of offerings, a marketer needs to catch their attention and notice or
take in visual media. Various approaches are implemented to get the attention of potential customers, like

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the placement of an ad in an unusual but noticeable place. Personalized messages, like those used in one-
to-one marketing, are harder to ignore than generic proposals. Shock value advertising, such as the use of
graphic images, also garners attention by provoking sharp emotional reactions.

Interest – Customer interest must be piqued and held long enough to gain information about the product.
One approach to maintaining interest is presenting concise and well-paced information, delivered by an
interesting character, voice actor or mascot.

Desire (or Decision) – Desire is often built up by selling on a product's features, showing superiority over
similar products and demonstrating versatility. Essentially, this is the presentation of a product or service's
value proposition, the compelling benefits that induce a consumer to select this particular offering, leading
to the decision to purchase.

Action – If the customer has come this far, there is interest. The final step is closing the sale and convincing
the customer to act on interest, which may involve overcoming objections and making a call to action (CTA).
In the CTA, a product may start at a higher price that will be lowered, often to a third of the original. Prod-
ucts might be offered two-for-one and/or with free shipping. Improving the perceived value can motivate
the undecided customer. However, if the other steps are performed well, the customer should be left with a
lasting positive impression of the product even if they choose not to purchase.

Consumer adoption process : The consumer Adoption process is a strategy to make you aware of a product,
create interest among the customers, organize a trial run to check how the product is performing and, in the
end, allow the customers to adopt your product.
This process is adopted by many organizations as this strategy helps allow customers to evaluate the product
and ultimately allow them to purchase it. This strategy will never change irrespective of technology change,
or market scenario change.

Stages in the Adoption Process : Consumers go through five stages in the process of adopting a new product

Stage 1 : Product Awareness : The first stage in the consumer adoption process is simply creating
awareness that the product is available, so the company develops a successful marketing strategy to make
customers cognizant of the new product. This strategy might include creating a strong presence for the
product in social media, for example. The goal here is to reach as many customers as possible at a relatively
low cost. Let’s assume for a minute that you’re watching a football game on Saturday afternoon, and you see
a television commercial for a mouthwash that whitens your teeth while you rinse. You’re now aware of the
product, thanks to that commercial!

Stage 2: Product Interest : In this stage, consumers are aware of the product, and it has piqued their
interest. The company should guide consumers by providing easily accessible information on the product,
such as a website, blog posts, tutorials, or instructional videos.

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They could be:

• Directly asking the company or their representatives for more information.
• Searching online for reviews and ratings of the product.
• Using social media channels like Facebook and Twitter to find out more about it.
• Searching on Google, Bing, Yahoo, or any other search engine that they know of.

Let’s go back to our mouthwash example. You’re intrigued with the concept that a mouthwash can whiten
your teeth, so you call your brother who’s a dentist to ask if he’s familiar with the product and what he has to
say about it. That’s product interest.

Stage 3 : Product Evaluation : Before they buy it, consumers will typically examine, compare, and evalu-
ate the product. They haven’t purchased it yet, and they often look to social media channels, such as online
reviews and recommendations, to see how other consumers feel about the product or service. Think about
it: How many times have you viewed customer reviews on Amazon prior to purchasing a product? In our
exam- ple of the mouthwash, you might do an Internet search to read reviews of the product before you
actually purchase it. That’s product evaluation.

Stage 4 : Product Trial : This is the stage in the consumer adoption process where the consumer actually
tries the product out. It might be a free sample in a retail store or a “100 percent money-back guarantee” trial
purchase of an online product. This is also the stage in which marketers are hoping that the product will de-
liver on consumer expectations.

Stage 5 : Product Adoption : When consumers enter this phase, they’re ready to buy, whether it’s online or
in a retail store. As a marketer, hopefully, you’ve made the acquisition and payment process as seamless as
possible so that your customers can easily obtain your product.

LEVELS OF DECISION MAKING : While decision-making is defined as the selection of an alternative to solve
a problem, the time and effort required to complete the process varies across situations. We may define three
kinds problem solving spread over a continuum; these are referred to as the levels of consumer decision
making;
Extensive problem solving (EPS)
Limited problem solving (LPS)
Routinized problem solving (RPS) or routinized response behaviour.
These are explained as follows:

Extensive problem solving (EPS) : In EPS, the consumer is unfamiliar with the product/service category; he
is not informed of the product or service offering, and thus, the situation requires extensive information
search and evaluation. The consumer is not aware: - of the various decision criteria used to evaluate the
product or service offering. - of the various brands that are available and from which to evaluate. The result is
that the

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purchase process involves significant effort on the part of the consumer. He has to gather knowledge about
the decision criteria and the brands available; and make a choice amongst the brands.
The types of products and/or situations where we generally have EPS:
1. These goods are ones of high involvement; they are expensive; they are infrequently bought; there is
a considerable amount of risk involved.
2. These are generally first-time purchases. Examples: Jewellery, electronic goods, Real estate and prop-
erty etc

Limited problem solving (LPS) : The consumer is familiar with the product or service offering, but he is
unaware of the various brands. The case is one where the buyer is familiar with the product category but
unfamiliar with the brands. The consumer : is aware of some brands and also of the various criteria used
to evaluate the product or service offering. is unaware of the new brands that have been introduced. has
not evaluated the brands amongst the awareness set and has not established preferences amongst the
group of brands. The result is that the purchase process is more of a recurring purchase and it involves
only a moderate effort on the part of the consumer. He has to gather knowledge to add/modify the
existing knowledge that he has in his memory. Thereafter he has to make a decision.
The types of products and/or situations where we generally have LPS:
1. These goods are ones of low involvement; they are generally moderately priced; they are frequently
bought; there is a lesser amount of risk involved.
2. These are generally recurring purchases. Exceptions: There may also be cases where an expensive
product is being repurchased. Examples: A laptop replacing a desktop, a second TV for the home.

Routinized problem solving (RPS) or routinized response behaviour : The consumer is well-informed and
experienced with the product or service offering. The consumer is aware of both the decision criteria as well
as the various brands available. Here, the goods are ones of low involvement; they are inexpensive; they are
frequently bought; there is no risk involved. These are routine purchases and area direct repetition, where the
consumer may be brand loyal. The result is that the purchase process involves no effort on the part of the
consumer. It is simple and the process is completed quickly; purchases are routine and made out of habit.
The types of products and/or situations where we generally have RPS:
1. These goods are ones of low involvement; they are inexpensive; they are frequently bought; there is
no risk involved.
2. These are routine purchases and the consumer is brand loyal. Examples: Cold drinks, Stationery etc.

Models of consumer decision making

1. Economic View or Model : This model assumes that a consumer is a rational person and makes rational
decisions. He compares various products, evaluates their benefits and disadvantages, and then makes
a purchase decision based on the information collected. He is aware of all product alternatives and is

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capable of ranking products in terms of benefits and disadvantages. However, this model is considered
unrealistic as people are limited by skills, habits, existing values and perceptions and they are not
always rational when making a purchase decision.

2. The Passive View or Model : Unlike the rational economic view of man, the passive view portrays the
consumer as someone who is carried away by the promotional and self-oriented efforts of the market-
er. As per the passive view, consumers are perceived to be impulsive make irrational purchase deci-
sions, and are influenced by the promotional offers of the marketers. The passive model is criticized as
it fails to take a pragmatic view of the consumers. It is argued that in a buying situation, the consumer
will be involved in a decision-making process wherein he seeks information on the product, evaluates
all the alternative brands, and then makes a selection based on the brand which provides him maxi-
mum satisfaction. At times the consumer’s purchase decision is also based on emotions or moods. So, it
is wrong to assume that the consumer will be passive while making purchase decisions.

3. A Cognitive View or Model : As a consumer, man is usually involved in thinking and problem-solving.
He is constantly involved in an active search for goods and services that will not only satisfy his needs
but enrich his life also. As per the cognitive view consumers are involved in an information-seeking and
processing method. They try to gather all the necessary information from various sources, such as a
trusted friend, an expert, and so on. Once he feels that he has sufficient information, to make a ‘sat-
isfactory choice decision’, he will cease to gather more information and will ultimately decide on his
purchase intention.

This model of man as a thinker views the consumer as an information processor. All the focus is on the
processes by which consumers seek and evaluate information about the concerned brands and the
respective retail outlets.

The advertisement on Panasonic can work as a cognitive appeal to customers seeking information for
purchasing high-end television. The ad provides information on the technology benefits in terms of V-
Real Technology, Advanced Smart Sound Speaker System, and HDAVI control offered by the Pana-
sonic brand of TV Series.

Thus, according to the cognitive model of the consumer, the above-mentioned ad will make the
consum- er think about the benefits of Panasonic. The consumer will finally make the purchase
decision based on his satisfaction with the information received.

In other words, the problem-solving view or model of the consumer talks of a person who in the
absence of the total information or knowledge of all the available product alternatives, would actively
seek ‘satisfactory information and thereby attempt to make satisfactory decisions accordingly.

4. An Impulsive or Emotional View of Consumer : Another aspect of consumer decision-making is that

they can be emotional or impulsive while making purchase decisions. Very often, we, as consumers are

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involved in purchases made on impulse or on a whim.

For such emotional buying, the consumer may not undergo the usual process of carefully searching,
evaluating, and then deciding on the brand or outlet to purchase from Rather he is more likely to
purchase the product (brand) based on a whim or an impulse. Such consumer decisions are said to
be ’emotionally driven’.

For emotional or impulse purchases, in the absence of a search for pre-purchase information, it is the
mood and feelings of the consumer that will decide on the emotional purchase decision. Emotional
decisions could be rational to some extent. That is, the consumer may make an emotional decision to
purchase a product but he will be rational while deciding or choosing one brand over another.

This type of behaviour is displayed while making purchases of apparel, and gifts, selecting holiday
destinations or toys (for children). In all the above situations, the final decision may be made based
on emotion.

Advertisers are projecting, their products or services in a way to appeal to the emotions of the particular
target market. Such emotional appeals can be seen in the advertisements of Johnson and Johnson
baby products, Huggies diapers, Wipro Baby Soft, Fisher Price toys and so on.

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