The Consumer Decision

Process
Dr. Rohit Vishal Kumar
Xavier Institute of Social Service

From the book: “Consumer Behaviour” 10/e

R.D. Blackwell, P.W. Miniard and J.N. Engel
Covers Chapters: 3, 4, 5, and 6

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The Consumer Decision Process
 Also known as the EKB (Engell, Kollat and Blackwell) Model
 Seven major stages of consumption

Need Recognition

Search for Information

Pre-Purchase Evaluation of Alternatives

Purchase

Consumption

Post Consumption Evaluation

Divestment
2
How the CDP Model is Used?
 Identify relationships between variables that affect consumer decisions
 Identify topics for additional research
 Develop and Implement Marketing Mix Strategies

3
Factors influencing the Process:
 Individual Factors:
 Demographics & Psychographics
 Personality 
 Consumer Resources
 Motivation 
 Knowledge
 Emotions 
 Environmental Influences
 Culture, Sub-Culture and Social Class 
 Family 
 Group Influences 
 Situational Behaviours
 Psychological Influences
 Information Processing
 Perception and Learning 
 Attitude and Behaviour Change
4
Types of Decision Process (1/2)
 Extended Problem Solving (EPS)
 The decision process is detailed and rigorous
 Time taken is extremely long
 All 7 stages of CDP are likely to be followed
 Midrange Problem Solving (MPS)
 The decision process is detailed but not so rigorous
 Time taken is fairly long
 All 7 stages of CDP may not be followed
 Limited Problem Solving (LPS)
 The decision process is quick
 Time taken is short
 All 7 stages of CDP are likely not to be followed

EPS MPS LPS

High Medium Low
Personal Involvement
Risk of Product Purchase 5
Types of Decision Process (2/2)
 Habitual Decision Making:
 Brand Loyalty
 High involvement with the brand
 No incentive to change until compelling evidences dictate otherwise
 Inertia
 Low involvement with product / brand
 Purchase is habitual in nature
 Change can occur with little incentive
 Impulse Purchase
 Sudden and spontaneous desire to act accompanied by urgency
 State of psychological disequilibrium
 Minimal Objective Evaluation, emotions dominate
 A lack of regard for consequences
 Variety Seeking
 Seeking change / excitement for no known cause
 Extremely brand disloyal

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 Stage 1:
Need Recognition

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What is need recognition?
 Need recognition occurs when there is a discrepancy between the actual
state (consumer’s current situation) and desired state (the situation the
consumer wants to be in)

 Importance of Need Recognition

 Reveals market segment with unsatisfied desires
 Reveals barriers to success
 Provides the starting point for a new business

 Types of Need Recognition

 Generic Need Recognition:
 Occurs when the need for an entire product family is stimulated
 EG: Need to have milk or milk products
 Selective Need Recognition:
 Occurs when the need for a specific brand within a product category (selective
demand) is stimulated
 EG: Will have Amul’s Toned Milk
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 Stage 2:
Search for Information

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What is Search?
 Search represents the motivated activation of knowledge stored in
memory or acquisition of information from the environment about
potential need satisfiers

 Types of Search Process:

 Internal Search:
 When memory is searched for a solution to the problem
 If internal search fails, external search is undertaken
 External Search:
 Occurs when we collect information from the marketplace
 Pre-Purchase Search
 When the external search is motivated by an upcoming purchase decision
 On-Going Search
 Information is acquired on a relatively regular basis regardless of purchase need

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Conducting External Search
 External Search Set:
 Those choice alternatives that a consumer gathers information during pre-
purchase search
 Apply a Funnel Search Strategy

Total Set

Retrieval Set

Awareness Set

Consideration Set

Choice Set

Decision
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Where we get Information?
 Personal Source
 Opinion Leaders
 Sales Personnel
 Other Shoppers
 Family & Friends
 Co-Workers & Colleagues
 Impersonal Source
 Product Labels
 Store Signage
 Point-of-Purchase Materials
 Internet Forums
 Advertising
 Catalogues
 Magazines
 Television and Radio
 Websites
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 Stage 3:
Pre-Purchase Evaluation

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Evaluation of Alternatives
 From Retrieval Set, a consumer narrows down his choice by evaluating
alternatives before purchase

 Evaluation Strategies:
 Relying on pre-existing evaluation
 Occurs when consumer already have information stored in their memory
 Branding very important in developing pre-existing evaluation
 Construction of new evaluation
 Categorization Process:
 Evaluation of choice alternatives depends on particular category to which it is assigned
 Brand Extension is a strategy under the categorization process
 Piecemeal Process:
 A evaluation is derived from consideration of alternatives advantages and disadvantages
along important product dimensions

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Piecemeal Process
 Products are broken down into set of features
 Feature by feature comparison takes place
 The minimum acceptable feature performance is known as a “cut-off”
 Is of two types:
 Non-Compensatory Strategy
 Lexicographical Strategy
 Elimination by Aspect Strategy
 Conjunctive Strategy
 Compensatory Strategies
 Simple Additives
 Weighted Additives

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Lexicographical Strategy
Attribute Importance Brand A Brand B Brand C Brand D

Taste 1 5 5 4 5
Price 2 4 3 5 2
Nutrition 3 3 3 1 5
Convenience 4 2 3 3 5
1: Poor 2: Fair 3: Good 4: Very Good 5: Excellent

 Brands are compared on the most important attribute

 If one brand is perceived superior on this attribute the brand is selected
 Else the next most important attribute is taken up

 1st Comparison : On Taste { A, B, D }

 2nd Comparison : On Price {A} 

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Elimination by Aspect Strategy
Attribute Importance Brand A Brand B Brand C Brand D

Taste 1 5 5 4 5
Price 2 4 3 5 2
Nutrition 3 3 3 1 5
Convenience 4 2 3 3 5
1: Poor 2: Fair 3: Good 4: Very Good 5: Excellent

 Brands are compared on the most important attribute

 If one brand is perceived superior on this attribute the brand is selected
 Else minimum acceptable cut-offs are imposed and the process repeated

 Suppose the minimum acceptable cutoff Taste is “Very Good” and on Price it is “Excellent”
 1st Comparison : On Taste { A, B, C, D }
 2nd Comparison : On Price { C }


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Conjunctive Strategy
Attribute Importance Brand A Brand B Brand C Brand D

Taste 1 5 5 4 5
Price 2 4 3 5 2
Nutrition 3 3 3 1 5
Convenience 4 2 3 3 5
1: Poor 2: Fair 3: Good 4: Very Good 5: Excellent

 Minimum acceptable cut-offs are imposed on all attributes

 Brand failing to meet the cutoff are rejected

 Suppose the minimum acceptable cutoff on all attributes is “Good”

 1st Comparison : {B} 

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Simple Additive Strategy
Attribute Importance Brand A Brand B Brand C Brand D

Taste 1 5 5 4 5
Price 2 4 3 5 2
Nutrition 3 3 3 1 5
Convenience 4 2 3 3 5
1: Poor 2: Fair 3: Good 4: Very Good 5: Excellent

 Attribute ranks are added up and the brand with the highest rating selected

 Brand A : 14
 Brand B : 14
 Brand C : 13
 Brand D : 17


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Weighted Additive Strategy
Attribute Importance Brand A Brand B Brand C Brand D

Taste 1 5 5 4 5
Price 2 4 3 5 2
Nutrition 3 3 3 1 5
Convenience 4 2 3 3 5
1: Poor 2: Fair 3: Good 4: Very Good 5: Excellent

 Attribute ranks are weighted with importance added up and the brand with the highest rating
selected
 This process is similar to multi-attribute modeling

 Brand A : (1x5 + 2x4 + 3x3 + 4x2) / (1+ 2 + 3 + 4) = 3.00

 Brand B : (1x5 + 2x3 + 3x3 + 4x3) / (1+ 2 + 3 + 4) = 3.20
 Brand C : (1x4 + 2x5 + 3x1 + 4x3) / (1+ 2 + 3 + 4) = 2.90
 Brand D : (1x5 + 2x2 + 3x5 + 4x5) / (1+ 2 + 3 + 4) = 4.40


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How good are we at evaluation?
 Pathetic at rational evaluation of products
 Largely we tend to equate quality with price
 Lack of knowledge is the prime culprit
 Marketers can modify “cues” / “signals” by advertising or promotions

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Exercise
 Groups to Present: A and B
 Have a Power-Point presentation ready (4-5 pages)
 The groups would be called to present in the class
 Evaluation will be out of 15 marks

Question A

Interview three students and identify three recent instances when they engaged in
Extended, Midrange and Limited Problem Solving. What factors were common to
decision making?

Question B

What sources of information would be used by students while making the

purchase of the following items: Laptops, Scooty or Motorcycles and Valentine
Day Cards. Are there individual differences. How can the Valentine Day Card
Manufacturer bridge these differences. [Interview 3-5 students to get the answers]
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 Stage 4:
Purchase

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Purchase Decisions
 Whether to Buy ?
 “To buy or not to buy” – that is the question
 When to Buy ?
 Occasion of purchase
 What to Buy ?
 Product type and Brand
 Where to Buy ?
 Retail and Store Decisions
 How to Buy ?
 Payment related decisions

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Types of Purchase
 Fully Planned Purchase
 Both the product and the brand are chosen in advance
 Partially Planned Purchase
 Intent to buy the product exists but brand choice is deferred until shopping
 Unplanned Purchase
 Both the product and brand are chosen at the point of sale
 Mostly impulse purchase
 Need triggered by point of purchase display
 Accounts for 54% – 68% of items purchased in USA

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Why People Shop?
 Personal Motive
 Role Playing
 Diversion
 Self Gratification
 Learning about new trends
 Physical Activity
 Sensory Stimulation
 Social Motive
 Social Experience outside home
 Peer Group attraction
 Status and Authority
 Pleasure of Bargaining

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The Retail Store Choice (1/3)
 Store Image:
 The overall perception of a store

 Determinants of a Retail Success / Failure

 Location
 Perceived vs. actual time taken to reach store
 Ease of parking
 Quality and Presentation of Merchandising
 Checkout Procedures
 Nature and Depth of Assortment
 Depth, Breadth and Quality of Assortment
 Price
 Importance of price depends on the nature of buyers
 Customers may think of price as “total price” in terms of all retail activities
 Consumers react to short term change in price

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The Retail Store Choice (2/3)
 Determinants of a Retail Success / Failure (Contd…)
 Advertising and Promotion
 Image Advertising:
 used to form store level expectation
 Big Bazar – “isse sasta aur accha kuch nahin”
 Information Advertising
 Used to form product level expectation
 Big Bazar – Buy products Rs. 500 and 5 kg Atta free
 Sales Personnel
 The interaction point between the consumer and the company
 Perceived knowledge and expertise
 Perceived trustworthiness
 Customer Knowledge
 Adaptability

“In Service Marketing Sales Personnel Play a Key Role”

The interaction between a sales personnel and the customer is known as
sales encounter or service dramaturgy
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The Retail Store Choice (3/3)
 Determinants of a Retail Success / Failure (Contd…)
 Services Offered
 Self Service, Ease of Merchandise Return
 Home Delivery, Credit System etc.
 Physical store Attributes
 Color, Layout, Washrooms, Ambience, Music etc. of the store
 Also referred to as “store atmospherics”
 Creates a “gestalt” for store recognition
 Store Clientele
 What kind of people patronize the store
 POP Material:
 Old Methods still popular – pop, banner, festoons etc.
 E-Theatre, d-POP, Computer Enhanced Merchandising, Digital Self Service
 Customer Logistics
 Is the speed and ease with which customers move through retail and shopping
process
 Focuses on in-store experience of shopping and checking-out
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Types of Retailing
 Changing Retail Landscape:
 Location Based Retailing:
 Value Oriented Retailing
 Hyper-markets : Typically greater than 1,50,000 sq. ft.
 Category Killer : Hyper-markets with restricted product line
 Big-Box Stores : Hyper-markets selling to wholesale purchasers
 Shopping Malls
 Mom-n-Pop Stores (Kirana stores)
 Direct Marketing:
 Refers to strategies used to reach customers outside the store
 Direct Selling : face-to-face contact between sales person and customer away from a store
 Catalog Selling : Sales using mail based catalog system (Burlington)
 Tele-Marketing : Sales using telephones. Inbound Telemarketing refers to use of a toll-free
number to place orders directly
 Internet Based Marketing

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What People Spend in Purchase
 Money Budget
 Consumers spend money for purchase
 Time Budgets
 Consumer Spend Time during purchase
 Paid Time: is the time for you get paid i.e. office hours
 Discretionary Time: is the leisure time
 Non-Discretionary Time: is the obligated time
 Physical Obligation: spend on taking care of self needs (sleep, hair cut etc)
 Social Obligation : spend on socialization
 Moral Obligation : spend on ethical aspects
 How consumers use time is referred to as their “time-style”
 Cognitive Budgets
 Consumers are exposed to a lot of stimulus during shopping
 Can lead to limited attention span

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 Stage 5:
Consumption

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What is Consumption?
 Consumption is the act of using the acquired product

 Market segmented in to 2 types on the basis of consumption:

 Non User
 User
 When is the product consumed?
 Where is the product consumed
 How is the product consumed?
 How much of the product is consumed?

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When does Consumption Occur?
 Refers to the time of consumption
 Consumption and Purchase need not occur simultaneously

 Consumption occurs with reference to:

 Time of the day
 I eat egg only at breakfast
 Occasion or Celebration
 Mutton is consumed every Sunday
 Season
 Mango’s are consumed during summer
 Norms
 Suit and Tie are expected dress of an executive
 Without any reason (“Compulsive Consumption”)

 Estimated 10% of product purchased is not consumed

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Where does Consumption Occur?
 Sales are sensitive to the place of consumption
 In-home consumption
 Out-of-home consumption
 Typically more of any product is consumed out-of-home

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How is the Product Consumed?
 A product can be consumed in many ways

 Straight Consumption:
 Product is consumed without any modification
 EG: Rice consumed at Dinner
 Modified Consumption:
 Product is consumed with some modification
 EG: Rice is mixed with mutton to create Biryani
 Ingredient Consumption:
 Product is consumed after using it as an ingredient in another product
 EG: Rice is crushed to make a new product Dosa
 Innovative Consumption:
 Product is consumed in an entirely new way
 EG: Washing Machines are used to make lassi at Dhabas in Punjab

Increasing Consumption is a key strategy in

Igor Ansoff’s Product-Market Strategy Matrix 36
How much is consumed?
 Consumption depends on various factors
 Judgment about the container in which the product is consumed
 Judgment about how much will be needed in the future
 Presentation of the product
 Sensory aspects of the product

 Markets can be segmented on how much is consumed:

 Heavy Users
 Medium Users
 Light Users

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 Stage 6:
Post Consumption
Evaluation

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What is it?
 Post consumption evaluation (PCE) refers to the experiences, feelings
and satisfactions that a consumer feels after or during the consumption
of a product or a service

 PCE normally starts simultaneously with the consumption

 May be formed even when the product is not consumed fully

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Post Purchase Dissonance
 Refers to the doubts that the consumer has – regarding the correctness
of purchase – after the purchase has been made

 The intensity of dissonance is governed by:

 The degree of commitment of the decision
 The importance of decision to the consumer
 The difficulty of choosing amongst the alternatives
 The individuals normal tendency to experience anxiety

 Post Purchase Dissonance occurs because

 No product can offer everything that a consumer wants
 Consumers have to choose between alternatives
 Some trade-off is involved in purchase

 “Consumption Guilt”
 a related aspect in which the consumer feels guilty after making a purchase
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Consumer Satisfaction
 Refers to whether the consumption of the product meet the expectation
from the product or not:

Product Performance >> Customer Expectation : Delight

Product Performance > Customer Expectation : Pleasure
Product Performance = Customer Expectation : Satisfaction
Product Performance < Customer Expectation : Dissatisfaction
Product Performance << Customer Expectation : Divorce

 Divorce can lead to:

 Regret:
 Occurs when consumer believes that alternative course of action was a better
choice
 Rage:
 Occurs when consumer are extremely upset

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Why is Satisfaction Important ?
 It influences Repeat Buying
 It shapes word-of-mouth communications
 It converts satisfied user to brand promoters
 Satisfaction lowers consumers price sensitivity
 Dissatisfaction can lead to complaints and lawsuits
 It ultimately affects shareholder value

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Reasons for Dissatisfaction
 Core Service Failure : 44%
 Mistakes, billing errors etc that harm a consumer
 Service Encounter Failure: 34%
 Inability of service employees to deal with customers properly
 Price Failure: 30%
 High price, price increase, unfair trade practices, deceptive pricing
 Inconvenience: 21%
 Inconvenient locations, hours of operation, waiting time etc.
 Response to Service Failure: 17%
 Failure to respond, negative response etc
 Ethical Problems: 7%
 Dishonest behaviour, unsafe and unhealthy practices etc

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Dissatisfaction Responses
 Take No Action:
 Less favorable attitude
 Take Action:
 Complaint to store or manufacturer
 Stop Buying the brand
 Warn Friends and relatives
 Complaint to private or governmental agencies
 Initiate Legal Action

Damages caused by dissatisfaction can be controlled by:

Relationship Marketing & Consumer Loyalty Programs 44
 Stage 7:
Divestment

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Divestment
 Package Divestment:
 Store for future use
 Use for Original Purpose
 Use for New Purpose
 Throw away as garbage or litter
 Product Divestment:
 Recycle
 Throw away as garbage or litter
 Exchange or trade-in
 Sell to end user, middlemen
 Give away as gift

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Exercise
 Groups to Present C and D
 Have a Power-Point presentation ready (4-5 pages)
 The group would be called to present in the class
 Evaluation will be out of 15 marks

Question C

Visit two retail stores selling the same type of merchandise and prepare a
presentation on their use of POP displays. Explain reasons for difference if any

Question D

Design a consumer loyalty program for a restaurant of your choice. Explain how
it will help reduce dissonance and dissatisfaction

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