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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

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

Factors influencing the Process:

Individual Factors:

Environmental Influences

Demographics & Psychographics


Personality
Consumer Resources
Motivation
Knowledge
Emotions
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)

Midrange Problem Solving (MPS)

The decision process is detailed and rigorous


Time taken is extremely long
All 7 stages of CDP are likely to be followed
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

High

Medium
Personal Involvement
Risk of Product Purchase

LPS
Low

Types of Decision Process (2/2)

Habitual Decision Making:

Brand Loyalty

Inertia

Low involvement with product / brand


Purchase is habitual in nature
Change can occur with little incentive

Impulse Purchase

High involvement with the brand


No incentive to change until compelling evidences dictate otherwise

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
6

Stage 1:
Need Recognition

What is need recognition?

Need recognition occurs when there is a discrepancy between the actual


state (consumers 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 Amuls Toned Milk

Stage 2:
Search for Information

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 prepurchase 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
12

Stage 3:
Pre-Purchase Evaluation

13

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

15

Lexicographical Strategy
Attribute Importance

Brand A

Taste
1
Price
2
Nutrition 3
Convenience

5
3
3
2

5
4
3
4

Brand B Brand C Brand D


4
5
1
3

1: Poor

5
2
5
3
2: Fair

3: Good

5
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
2nd Comparison : On Price

{ A, B, D }
{ A}

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Elimination by Aspect Strategy


Attribute Importance

Brand A

Taste
1
Price
2
Nutrition 3
Convenience

5
3
3
2

5
4
3
4

Brand B Brand C Brand D


4
5
1
3

1: Poor

5
2
5
3
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

Taste
1
Price
2
Nutrition 3
Convenience

5
3
3
2

5
4
3
4

Brand B Brand C Brand D


4
5
1
3

1: Poor

5
2
5
3
2: Fair

3: Good

5
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

Taste
1
Price
2
Nutrition 3
Convenience

5
3
3
2

5
4
3
4

Brand B Brand C Brand D


4
5
1

5
2
5
3

3
1: Poor

2: Fair

3: Good

5
4: Very Good

5: Excellent

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

Brand A
Brand B
Brand C
Brand D

: 14
: 14
: 13
: 17

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Weighted Additive Strategy


Attribute Importance

Brand A

Taste
1
Price
2
Nutrition 3
Convenience

5
3
3
2

5
4
3
4

Brand B Brand C Brand D


4
5
1
3

1: Poor

5
2
5
3
2: Fair

3: Good

5
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
Brand B
Brand C
Brand D

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


: (1x5 + 2x3 + 3x3 + 4x3) / (1+ 2 + 3 + 4) = 3.20
: (1x4 + 2x5 + 3x1 + 4x3) / (1+ 2 + 3 + 4) = 2.90
: (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
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answers]

Stage 4:
Purchase

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Purchase Decisions

Whether to Buy ?

When to Buy ?

Product type and Brand

Where to Buy ?

Occasion of purchase

What to Buy ?

To buy or not to buy that is the question

Retail and Store Decisions

How to Buy ?

Payment related decisions

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Types of Purchase

Fully Planned Purchase

Partially Planned Purchase

Both the product and the brand are chosen in advance


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

Nature and Depth of Assortment

Perceived vs. actual time taken to reach store


Ease of parking
Quality and Presentation of Merchandising
Checkout Procedures
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:

Information Advertising

used to form store level expectation


Big Bazar isse sasta aur accha kuch nahin
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

Physical store Attributes

What kind of people patronize the store

POP Material:

Color, Layout, Washrooms, Ambience, Music etc. of the store


Also referred to as store atmospherics
Creates a gestalt for store recognition

Store Clientele

Self Service, Ease of Merchandise Return


Home Delivery, Credit System etc.

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

29

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

Occasion or Celebration

Mangos are consumed during summer

Norms

Mutton is consumed every Sunday

Season

I eat egg only at breakfast

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:

Modified Consumption:

Product is consumed with some modification


EG: Rice is mixed with mutton to create Biryani

Ingredient Consumption:

Product is consumed without any modification


EG: Rice consumed at Dinner

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 Ansoffs Product-Market Strategy Matrix

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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:

Post Purchase Dissonance occurs because

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

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 :

21%

Inconvenient locations, hours of operation, waiting time etc.

Response to Service Failure: 17%

30%

High price, price increase, unfair trade practices, deceptive pricing

Inconvenience:

34%

Inability of service employees to deal with customers properly

Price Failure:

Mistakes, billing errors etc that harm a consumer

Service Encounter Failure:

44%

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

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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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