The Consumer Decision Process

LO1 Articulate the steps in the consumer buying process.

The consumer decision process model represents the steps that consumers go through before,
during, and after making purchases.
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Because marketers often find it difficult to determine how
consumers make their purchasing decisions, it is useful for us to break down the process into a
series of steps and examine each individually, as shown in Exhibit 5.1.
Need Recognition
the consumer decision process begins when consumers recognize they have an unsatisfied need
and they would like to go from their actual, needy state to a different, desired state. The greater
the discrepancy between these two states, the greater the need recognition will be. For example,
your stomach tells you that you are hungry, and you would rather not have that particular feeling.
If you are only a little hungry, you may pass it off and decide to eat later. But if your stomach is
growling and you cannot concentrate, the needthe difference between your actual (hungry)
state and your desired (not hungry) stateis greater, and youll want to eat immediately to get to
your desired state. Furthermore, your hunger conceivably could be satisfied by a nice healthy
salad, but what you really want is a bowl of ice cream. Wants are goods or services that are not
necessarily needed but are desired.
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Regardless of the level of your hunger, your desire for ice
cream will never be satisfied by any type of salad. Consumer needs and wants like these can be
classified as functional, psychological, or both
Search for Information
The second step, after a consumer recognizes a need, is to search for information about the
various options that exist to satisfy that need. The length and intensity of the search are based on
the degree of perceived risk associated with purchasing the product or service. If the way your
hair is cut is important to your appearance and self-image, you may engage in an involved search
for the right salon and stylist. Alternatively, an athlete looking for a short buzz cut might go to
the closest, most convenient, and cheapest barber shop. Regardless of the required search level,
there are two key types of information search: internal and external.
Evaluation of Alternatives
Once a consumer has recognized a problem and explored the possible options, he or she must sift
through the choices available and evaluate the alternatives. Alternative evaluation often occurs
while the consumer is engaged in the process of information search. For example, Katie Smith
would rule out various stores because she knows they wont carry the style she needs for the job
interview. Once in the store, she would try on lots of dresses and eliminate those that dont fit,
dont look good on her, or arent appropriate attire for the occasion. Consumers forgo alternative
evaluations altogether when buying habitual (convenience) products; youll rarely catch a loyal
Pepsi drinker buying Coca-Cola.
Purchase and Consumption
After evaluating the alternatives, customers are ready to buy. However, they dont always
patronize the store or purchase the brand or item on which they had originally decided. Their
choice may not be available at the retail store or there may be some other stumbling block.
Retailers use the conversion rate to measure how well they convert purchase intentions into
actual purchases. One method of measuring the conversion rate is the number of real or virtual
abandoned carts in the retailers store or on its website.
Retailers use various tactics to increase the chances that customers will convert their positive
evaluations into purchases. They can reduce the number of abandoned carts by making it easier
to purchase merchandise. Most important, they should have the merchandise in stock that
customers want. They can also reduce the actual wait time to buy merchandise by having more
checkout lanes open and placing them conveniently inside the store. To reduce perceived wait
times, they install digital displays to entertain customers waiting in line.
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The conversion rate is particularly low for consumers using an Internet channel because they are
able to look at products, throw them in their cart, and delay a purchase decision. To encourage
customers to make a purchase decision, Zappos.com and Overstock.com create urgency by
alerting customers when an item they have put in their shopping cart is almost sold out. Other
sites, such as Gilt, offer items for a specified 36-hour period or until they run out, and Neiman
Marcus runs two-hour, online-only sales. Many retailers send reminder e-mails to visitors about
items in carts they have abandoned.
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Postpurchase
The final step of the consumer decision process is postpurchase behavior. Marketers are
particularly interested in postpurchase behavior because it entails actual rather than potential
customers. Satisfied customers, whom marketers hope to create, become loyal, purchase again,
and spread positive word of mouth, so they are quite important. There are three possible positive
postpurchase outcomes, as illustrated in Exhibit 5.3: customer satisfaction, postpurchase
cognitive dissonance, and customer loyalty (or disloyalty).


Qno2 consumer behavior factor affecting
consumer behavior: it is the study of consumers and the processes they use to choose, use
(consume), and dispose of products and services.

Factor affecting
Culture
Culture is one factor that influences behaviour. Simply culture is defined as our
attitudes and beliefs. But how are these attitudes and beliefs developed? As an
individual growing up, a child is influenced by their parents, brothers, sister and other
family member who may teach them what is wrong or right. They learn about their
religion and culture, which helps them develop these opinions, attitudes and beliefs
(AIO) . These factors will influence their purchase behaviour however other factors
like groups of friends, or people they look up to may influence their choices of
purchasing a particular product or service. Reference groups are particular groups of
people some people may look up towards to that have an impact on consumer
behaviour. So they can be a singer like the Lady Gaga or your immediate family
members. Opinion leaders are those people that you look up to because your respect
their views and judgments and these views may influence consumer decisions. So it
maybe a friend who works with the IT trade who may influence your decision on what
computer to buy. The economical environment also has an impact on consumer
behaviour; do consumers have a secure job and a regular income to spend on goods?
Marketing and advertising obviously influence consumers in trying to evoke them to
purchase a particular product or service.
Social Status
People's social status will also impact their behaviour. What is their role within
society? Are they Actors? Doctors? Office worker? and mothers and fathers also?
Clearly being parents affects your buying habits depending on the age of the children,
the type of job may mean you need to purchase formal clothes, the income which is
earned has an impact. The lifestyle of someone who earns 250000 would clearly be
different from someone who earns 25000. Also characters have an influence on
buying decision. Whether the person is extrovert (out going and spends on
entertainment) or introvert (keeps to themselves and purchases via online or mail
order) again has an impact on the types of purchases made.
Qno 3
Role of consumer behavior in Adversiting
Advertising used properly is a major tool in the hands of marketing
managers which helps enable them to sell products, services and ideas.
The idea is to sell products to the consumers. This has been proved by
the fact that companies are investing a lot of time and resources into
developing ad campaigns for their products
Advertising has gone through many phases. The first era was
production-oriented. Here mass production was seen as a means to
selling products by pumping in huge volumes into the market place. As
a result demand exceeded supply; hence there was no need to
advertise products (Holt, D,1983). They sold themselves.
However with the passing of time and due to rising competition,
surplus goods were available. As a result of this companies were
required to sell their products using a sales oriented mechanism. This
typically involved pitching in their products, highlighting their USPs, so
as to convince customers to buy their products rather than their
competitors. As a result products became de linked to the volumes in
which they were being produce (Belk, Russell.1974).
To better approach the problem of selling companies tried many
techniques. These techniques combined with the support activities of
marketing can be called as advertising. Advertising has been considered
important since the time when trade started, then was the time for
advertising by mouth, now we have different media platforms for the
same purpose. But still the traditional word of mouth holds the best
appeal in respect to all advertising platforms.
In its initial phases advertising was limited in both time and space.
Broadcast commercials are generally 10 to 60 seconds in length. Print
ads are generally no larger than two pages, and often much smaller.
Advertising therefore needed to do its job in an effective manner. Its
primary tasks were to capture the consumers attention, identify itself
as being aimed at meeting the needs of that consumer, identifying the
product, and delivering the selling message.
How does Adversiting motivate consumer
Advertising influences people through education, persuasion and
reassurance. It also influences the shopping experience, by making
shopping simpler and helping to moderate the prices of advertised
Advertising is an effective means of communicating information about
products and services to a large number of consumers at once. This
information plays a key role in educating people about different brands'
functions and features, like how they work, what they cost and where they
can be purchased. Because the information in ads comes directly from the
manufacturer, it is more likely than secondhand reports to be verifiable and
reliable. This helps buyers make choices most likely to satisfy their

Using creative techniques like direct brand comparisons, advertising can
persuade people that one product will be better than another in improving
their lives or delivering benefits they seek. It can often motivate them to
take immediate action, like trying a new brand, redeeming a coupon or
requesting more information. dvertising also encourages people to buy in
bigger volume and/or more frequently than they otherwise would.

Qno 4 consumer psychology
Consumer psychology is a specialty area that studies how our
thoughts, beliefs, feelings and perceptions influence how
people buy and relate to goods and services. One formal
definition of the field describes it as "the study of individuals,
groups, or organizations and the processes they use to select,
secure, use, and dispose of products, services, experiences, or
ideas to satisfy needs and the impacts that these processes
have on the consumer and society"."
Geographic segmentation: Where?
A market can be divided according to where consumers are located. On a
trip abroad you might have noticed that people enjoy more outdoor
activities than back home. You could also be surprised by the amount of
people that like drinking hot coffee at the beach in Rio de Janeiro. If you
visit this website you will see differences in food preferences around the
world.
Understanding cultural differences between countries could be pivotal for
business success, consequently marketers will need to tailor their
strategies according to where consumers are.
Geographic segmentation is the division of the market according to
different geographical units like continents, countries, regions, counties or
neighbourhoods. This form of segmentation provides the marketer with a
quick snapshot of consumers within a delimited area.
Geographic segmentation can be a useful strategy to segment markets
because it:
provides a quick overview of differences and similarities between
consumers according to geographical unit;
can identify cultural differences between geographical units;
takes into consideration climatic differences between geographical
units;
recognises language differences between geographical units.
But this strategy fails to take into consideration other important variables
such as personality, age and consumer lifestyles. Failing to recognise this
could hinder a company's potential for success.
For example some youth groups across the world appear to be somewhat
similar. Youth groups will tend to listen to similar music and follow similar
fashion trends. If you were to do a quick check of people's nationalities in a
18s-30s club in Mexico, you would find a very international clientele. You
might have found that you can befriend foreign people of your same age
easily because you share common interests
Demographic segmentation: Who?
A very popular form of dividing the market is through demographic
variables. Understanding who consumers are will enable you to more
closely identify and understand their needs, product and services usage
rates and wants.
Understanding who consumers are requires companies to divide
consumers into groups based on variables such as gender, age, income,
social class, religion, race or family lifecycle [insert diagram g].
A clear advantage of this strategy over others is that there are vast
amounts of secondary data available that will enable you to divide a market
according to demographic variables
Examination paper 2011-2012
Qno 2
2.2 Family Life-Cycle Influences on Consumption Patterns
LEARNING OBJECTIVE
1. Explain the family life cycle and its influences on consumption.
In 1960, about three-quarters of all adults ages eighteen and older were married; today we find
ourselves in a country where that fraction is down around one-half. Consider France and Sweden,
where the number of children born outside marriage is 48 percent and 56 percent, respectively.
These children are not necessarily born to single parents, as the data favor cohabitating, committed
couples.
[1]
These numbers indicate an important trend when looking at the family unit and family life
cycle.
While household and family composition has changed, it is still important to consider the
consumption changes that may occur as individuals move from living with parents to creating their
own households, either alone or with others, over the course of their lives. What kinds of products
are purchased and consumed by what types of families and households? To answer this question, we
must first understand that just as individual consumers and their buying habits differ from person to
person and from situation to situation, each family or household has similar variations. Several
factors influence the ways in which they spend. Most important among them are family life cycle (or
life stage) position, reference group, social class, subculture, and culture. Lets now turn our attention
to family life cycle. As people find themselves in various positions in the life cycle, such as single,
married, married with children, or widowed, their needs change. Hence different mixes or types of
products or services are required to allow them to properly function.
Figure 12.1 Stages of the Family Life Cycle

One main concern of marketing research firms is how to identify the similarities and
differences between various life-stage segments.
Source: Courtesy of Mediamark Research, Inc.
One approach divides the family life cycle (FLC) into five clear stages, as shown in Figure 12.1 "Stages
of the Family Life Cycle": young singles, newlyweds, young couples, households with teens, and mature
couples. Other approaches to life-cycle divisions include additional groupings such as retired couples
and solitary survivors. The basis for the various life-cycle categorizations include such demographic
factors as age of the household head, marital status of the household head, presence of children, ages
of children, presence of children in college, employment status of the household head (working,
receiving government financial assistance, or retired), employment status of the spouse (if any),
number of other adults, household size, and survivor status of the household head (retired and
widowed or single).
[2]
In its early incarnations, the FLC would often assume that marketers should
think of FLC categories in a progressive mannerthat everyone moved through
from single to married to empty nest categories. As noted earlier, the family has undergone significant
changes in the recent past in regards to remaining single, single parents, couples without children,
and unmarried same-sex couples. Still, it is important to remember that categories of the FLC can
provide valuable insights into consumption patterns. If you look at the stages, it becomes clear that
product mixes would probably shift based on the needs of members of each category. Marketers can
position their offerings to help facilitate easier transitions from one stage to another.
The following sections lay out the five life stages mentioned for such a comparison.
[3]

Young Singles
Young singles between eighteen and twenty-four represent 7.8 percent of all adults
in the United States. The majority of them live with parents; a minority, one in four,
live with roommates. These consumers are much more likely than other adults to
buy snack foods, cookies, and ice cream. They share, to some degree, grocery-
shopping chores. They tend to buy more staples such as bread, butter, canned soup,
spaghetti sauce, laundry detergent, and facial tissue than does the average adult.
They also consume more beer, ale, wine, and spirit coolers. Discretionary income is
spent mostly on entertainment, movies, compact discs, sports and recreation
equipment, and shoes. Ownership of motorcycles by this group is 15 percent above
average. Young singles tend to be heavy magazine readers, television viewers,
computer/Internet users, and cell-phone users. The programming they prefer is late-
night talk/variety, weekend professional basketball, situation comedy, and prime
time. The focus of these individuals is primarily on themselves.
Newlyweds
The newlywed market is made up of 5.16 million people who have been married one
year or less. The largest segment43 percentis twenty-five to thirty-four years old.
Newlyweds thirty-five years and over own their own homes and tend to buy such
household furnishings as sofas, wall units, wall-to-wall carpeting, dining room
furniture, kitchen and cooking appliances, and table settings, including fine china.
Younger and older newlyweds buy basic furnishings, linens, and cooking appliances
at much higher rates than the general adult population. Newlyweds are cognizant of
the needs of each other and often work together to select goods and services that
reflect this. Joint decision making on goods and services is common. Older
newlyweds may bring children into the marriage, and this will affect consumption
patterns of the family depending on the ages and genders of the kids.
Young Couples without Children
Young couples, aged thirty to thirty-nine, married without children, number 3.89
million people. In the 1980s and 1990s such couples were called yuppies. These
consumers are mostly highly educated professionals, earning $50,000 a year or
more, who live mostly in cities or suburbs. As one would expect, young couples
without children, whether in professional or other jobs, spend more time and money
entertaining friends or relatives at home, going to bars or nightclubs, dancing, and
dining out than do such couples with children. They consume above-average
quantities of distilled spirits and bottled water. They own two cars in many cases,
and the more affluent buy new rather than used. The yuppie group is more likely
than other adults to travel overseas, purchase fine china and crystal, invest in
collections of antiques and art, and remodel their homes. Not big investors, they
prefer to spend rather than save. The professional young couples frequently read
magazines and watch less television than do young singles. Their favorite programs
are weekend baseball, weekend professional basketball, and news specials.
Married Couples with Children
Married couples with children are divided into two groups with very different
lifestylesdual-earner couples and other married couples (typically a working
member and a homemaker member). Dual-earner couples make more money than
other married couples, they have less free time, and their home life is often more
hectic. The ages of the children directly affect the consumption patterns of the
family. Having preschool children brings the need for day care, baby foods, early
childdevelopment learning materials, and so on. When the children enter grade
school, there are needs such as school clothing, sports equipment, skill lessons
(dance, music, sports, etc.), youth-group activity support, and peer-influenced
clothing and music. Having preteens in the family also affects product and service
needs. What would be some of these changes? The distinction between the two
groups is reflected in popular television shows.
[4]
Which current television shows do
you think are targeted to these two different types of families?
Households with Teenagers
Totaling 30.6 million people, households with teenagers have an average family
income of $30,000, more than 24 percent above the average. In the majority of
households, both spouses are employed. Households with teenagers tend to buy
more than the average quantities of brownie and cookie mixes, ice cream, ice milk
and sherbet, snack cakes, salty snacks, frozen pizza, and pizza mixes. They typically
own cars, motorcycles, recreational vehicles, audio equipment, and compact discs.
Television viewing includes late-night movies, drama, early morning news, and
weekend sports.