Types of Consumer Decision
A large number of consumer purchase decisions are related to apparently a single problem such as running low on laundry detergent or table salt.
At other times, the problem may be associated with discarding the old car, causing a feeling of inadequacy, and buying a new but economical one, to boost self-esteem and be more in line with the present job status.
The decision process may become further complicated when consumer begins to consider the initial cost and the running cost and evaluates whether to buy a petrol or diesel driven vehicle. Finally, the consumer may wind up buying a higher-priced diesel model.
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In another situation, a consumer noticing a simple need for laundry detergent may want to economize and avoid one or more relatively expensive national brands and decide to buy a medium-priced brand that is on promotion and gets a small pack of toothpaste free.
There are various types of consumer decision processes. It is useful to view purchase decision involvement as a continuum and as the consumer moves from a low level of involvement with the purchase situation to a high level of involvement, purchase decision-making becomes progressively complex.
Based on the amount of effort that goes into decision-making, consumer researchers have found it convenient to think that on one end is the habitual purchase decisionmaking or nominal decision-making and at the other extreme is extended decision-making.
Many decisions fall somewhere in the middle and are characterized by limited decision-making. It should be kept in mind that the types of decision processes are not distinct but rather blend into each other.
Nominal Decision Making
Nominal decision-making is generally the outcome of continued satisfaction with a brand that was initially chosen after an extended decision-making process, or the consumer does not attach much importance to the product category or purchase.
The consumer buys Aquafresh toothpaste without further consideration because it meets her/his overall needs, even though using the best available toothpaste is important to her/him. In the second situation, consumers may not attach much importance to the salt or sugar they buy for household consumption.
Having tried Tata Salt and found it satisfactory, they now repeat purchase it without any thought when needed. In this category, sales promotions can lead to considerable brand switching.
Limited Decision Making
Limited decision-making is usually more straightforward and simple. It involves internal (long-term memory) and limited external search, consideration of just a few alternatives, simple decision rules on a few attributes, and little post-purchase evaluation.
As pointed out earlier, it covers the middle ground between nominal and extended decision-making. Buyers are not as motivated to search for information or evaluate each attribute enthusiastically but actually use cognitive shortcuts.
According to Wayne D. Hoyer, when the level of consumer involvement is lowest, limited decision-making may not be much different than nominal decision-making.
For example, while in a store, the consumer notices a point-of-purchase display of Nescafe, and picks up one pack based on her/his memory that its aroma and taste are good.
If the consumer’s decision rule is to buy the cheapest brand of instant coffee available, she/he looks at different brands of coffee for prices and buys the least priced brand. Sometimes, emotional factors may influence limited decision-making.
For instance, a consumer may buy Colgate Total toothpaste instead of her/his regular brand just because she/he desires a change and not because of dissatisfaction with the earlier brand.
Such a decision may involve just reading what is written on the carton and noticing that it has some different flavor than the brand she/he had been using.
Extended Decision Making
Consumer purchases involving extended decision-making correspond most closely to the traditional decision-making perspective.
Such decisions involve extensive internal (long-term memory) and external (outside sources) information searches followed by a rigorous evaluation of several alternatives because consumers do not possess any meaningful information about the product or service and need much of it.
The evaluation often involves careful consideration of the attributes of one brand at a time and taking stock of how the attributes of each brand measure up to a set of desired characteristics. All this happens in response to a high level of consumer involvement in making a purchase decision.
Such complex decisions are relatively few and may relate to buying a computer, stereo system, washing machine, laser printer, or a new house, etc. Post-purchase evaluation is more likely to be complex and dissonance-causing.
Extended decision-making may also be involved in certain emotional decisions such as choosing a birthday gift for the girlfriend, deciding to buy jewelry for the wife, choosing a designer dress, or going on a holiday abroad with family, etc.
Some of these decisions may appear to be related to cognitive effort. However, the needs being met and the criteria being evaluated are largely emotions or feelings rather than product or service attributes. Because of the involvement of emotions or feelings, there is less external information to search for.
Problem Recognition
Before studying the first step of the consumer decision-making process, let us first understand in short all the steps which usually a consumer undergoes before and after making a purchase.
- Problem recognition: If there is no need, there is no purchase. This recognition happens when there is a lag between the consumer’s actual situation and the ideal and desired one.
- Information search: Once the need is identified, it’s time for the consumer to seek information about possible solutions to the problem. He will search for more or less information depending on the complexity of the choices to be made and also his level of involvement.
- Alternative evaluation: Once the information is collected, the consumer will be able to evaluate the different alternatives that offer to him, evaluate the most suitable to his needs, and choose the one he thinks it’s best for him.
- Purchase decision: Now that the consumer has evaluated the different solutions and products available for response to his need, he will be able to choose the product or brand that seems most appropriate to his needs. Then proceed to the actual purchase itself.
- Post-purchase behavior: Once the product is purchased and used, the consumer will evaluate the adequacy of his original needs. Whether he has made the right choice in buying this product or not.
He will feel either a sense of satisfaction with the product. on the contrary, a disappointment if the product has fallen far short of expectations.
Problem recognition is the first stage in the consumer decision process and occurs whenever the consumer perceives a difference of sufficient magnitude between what is perceived as the desired state of affairs and what is the current state of affairs, enough to arouse and activate the decision process to achieve the desired or ideal state.
The current state is the way a consumer perceives her/his feelings and situation to be at the present time and the desired state refers to the way a consumer wants to feel or be at the present time.
Approaches to Active Problem Solving
There are two basic approaches to activating problem recognition:
- Generic problem recognition focuses on helping consumers feel a discrepancy that a number of brands within a product category can reduce. Generally, a marketer will use this approach when the problem is either latent or of low importance and one of the following conditions exists.
- The product is in the early stage of its life cycle.
- The marketer has a very high market share.
- After problem recognition, consumers’ external search tends to be limited.
- It is a situation of industry-wide cooperative effort.
Several banks offering personal loans to consumers use telephone sales programs and attempt to evoke problem recognition, in part, because the salesperson can then limit the external search to one bank. We often see cooperative advertising campaigns promoting milk or egg consumption.
An increase in generic problem recognition generally leads to the expansion of the total market for the category. In certain cases, when a firm has the dominant market share in a product category, it may focus on generic problem recognition hoping that sales increase will probably come to their brand.
However, it is also possible that a large market share firm can lose share to other marketers offering brands in the same product category if the problem recognition campaign is not done carefully.
- Selective problem recognition focuses on a discrepancy that only a particular brand can solve. Marketers use this approach to cause problem recognition in an attempt to increase or maintain market share.
It is possible that the consumer may develop a disposition to act. However, buying dispositions may not get converted into actual buying because of a change of mind, insufficiency of funds, forgetting about the intention, or non-availability of the product.
Furthermore, in the process of shopping, the consumer may develop new beliefs about product availability and attributes of other alternatives. Generally, consumers are likely to fulfill those buying intentions that they view as consistent with their long-term best interests.
Marketing Strategies and Problem Recognition
Marketers use a variety of approaches to determine consumers’ problems. Generally, they conduct surveys or use focus groups to determine the problems consumers face. Both surveys and focus groups tend to use one of the following approaches:
Activity Analysis
This approach focuses on a particular activity such as cleaning the house, preparing meals, or traveling by train, etc. The survey or the focus group is conducted to determine what problems consumers face in the course of performing the activity.
Product Analysis
Product analysis focuses on examining the purchase and/ or use of a particular product, service, or brand. Respondents may be asked about problems they encounter while using the product, or consuming the service.
Problem Analysis
Problem analysis starts with a list of problems and the respondents are asked to identify which activities, products, or brands they associate with the problems listed.
Human Factors Research
This type of research is quite helpful in identifying consumers’ functional problems of which they are not aware. It is employed to determine the effect of lighting, temperature, sound, and product design on human capabilities such as vision, fatigue, response time and flexibility, etc.
Such research usually makes use of observational methods such as video recording, time-lapse and slow-motion photography. For example, computer usage can influence vision adversely. Computers can also cause a physical condition resulting from repeating the same movements over time (called carpel tunnel syndrome).
Emotion Research
It is believed that emotions often have a very powerful effect on problem recognition. T Collier and others have noted that marketers use focus group research, personal interviews, or projective techniques to determine consumers’ emotions associated with a particular product or product that generate or reduce certain emotions.
Problem recognition depends on the importance and magnitude of the discrepancy between the desired state and the current state.
Thus, marketers can seek to influence the degree of discrepancy by altering consumers’ desired state or perceptions about the current state or influencing the perceptions about the importance of an existing discrepancy.
Marketers also attempt to influence the desired state by advertising the attributes and benefits of products or services and hope that consumers will be influenced, to a degree, that they will desire these benefits.
Marketers also attempt to influence consumers’ perceptions about their existing state. For instance, many ads for personal care products adopt this approach. Women do not want to use a soap that dries their skin.
They desire to have fresh and smooth skin and the advertisement of Dove soap is designed to generate concern about the existing state of their skin. It provides the desired benefit that presumably other soaps do not. Such ad messages are designed to instigate individuals to question if the current state coincides with this desired state.
Information Search
Once consumers recognize their problems and have no inhibiting constraints to take the next step in their decision-making process, they need adequate information to choose the appropriate solution. Problem recognition is an ongoing process for consumers and they use internal and external searches to solve these problems.
Information search takes time, energy, money, or giving up desirable activities and may involve both mental as well as physical activities. The benefits of information search often exceed the cost of the search. For instance, the search may lead to finding a better price, higher quality, or greater confidence in product choice.
Consumers vary in their propensity to actively seek information. Some are active searchers of information and want to interact with the firm while others buying the same product spend little or no effort to acquire product or brand information before making a purchase.
Consumers’ Sources of Information
There are five primary sources of information available to consumers:
- Long-term memory: Stored information based on earlier searches, personal experiences, and low-involvement learning.
- Personal sources: These include family, friends, neighbors, and peer groups.
- Independent sources: Such sources include newspapers, magazines, journals, consumer reports, and government agencies.
- Marketer-controlled sources: These include advertising, sales personnel, direct mail, etc.
- Experiential sources: This refers to the inspection of products or product trials.
It is the consumer’s prerogative to decide how many and which sources of information to use. According to C.B. Jarvis, a purchase decision requires a subset of decisions associated with information search.
At some point in time, consumers acquire information from external sources that gets stored in long-term memory. For most consumers usually, this stored information, referred to as internal information, serves as the primary source of information most of the time as is evident in nominal or limited decision-making.
Of the five sources of information mentioned above, marketer-controlled sources represent just one potential source. A.A. Wright and J.G. Lynch, Jr, found that marketer-controlled messages have only limited direct value for consumer decisions.
It is possible that consumers may report only limited direct influence by marketer-controlled sources of information; other evidence indicates that the influence may be stronger. L.M. Lodish et al report that there is substantial evidence indicating that advertising for consumer nondurables can have a significant effect on sales even in the short run.
Consumers tend to view personal sources, such as friends, as more important in the case of professional services. It is, however, interesting to note that the marketing activities of organizations influence all five sources of consumer information.
Marketing activities, such as product attributes, promotional messages, and product distribution determine the basic information available about the product in the market. Product reports that appear in magazines or journals, which are independent sources of information, are based on the functional attributes of the product.
Similarly, friends, family members, or neighbors – all personal sources of information – also base their word-of-mouth information either on personal experience with the product, views of others who have had contact with the product, or marketer-controlled promotional messages.
Internet as a Source of Information
It is assumed that every educated person today knows that the Internet represents information, e-commerce, e-mail, and entertainment.
The Internet or World Wide Web is a network of computers that is accessible to anyone with a computer, modem, telephone connection, and an Internet account.
The Internet consists of websites that are specific addresses or files in the network and search engines (programs designed to search the various websites and provide addresses of and/or access to those with the requested attributes).
According to recent figures (Reader’s Digest, July 2002), there are an estimated 6.4 million PCs in India as against 16.3 million in China. The number of Internet users in India is estimated to be about 10 million and 30 million in China.
According to D.L. Hoffman and T.P. Novak, the Internet is altering consumer information searches in ways that are not yet fully understood.
Some other companies, besides providing information about products and companies contain additional features and activities such as contests, entertainment, and other relevant information, designed to draw consumers to the website and are called “active sites.”
Such sites help marketers in developing a relationship with customers over time. Active sites should generally have a natural tie-up to the activities that they provide for consumers.
Appropriate Alternatives
Once the consumer has established the evaluative criteria, she/ he probably starts searching for the appropriate alternative which could be brands or perhaps stores. As a result of internal search or inquiry, the consumer may recall or learn that the available brands of computers include IBM, Compaq, Dell, Wipro, Zenith, Vintron, and Apple.
Of course, the consumer is unlikely to be aware of all the brands in the market. Wayne D. Hoyer and Deborah J. McInnis (Consumer Behaviour, 2nd ed. 2001) notes that consumers tend to recall a subset of two to eight brands.
The seven brands of computers that the consumer has recalled or learned about as potential solutions are known as the awareness set or the consideration set. The awareness set is composed of the evoked set, the inept set, and the inert set. D. R. Lehman and Y.
Pan notes that these three categories of the awareness set are of considerable importance to marketers.
Evoked set comprises those brands that the consumer will evaluate for the solution to a particular problem. If a consumer does not have an evoked set for computers (desktop or laptop), or lacks confidence about the adequacy of her/his evoked set, she/he would probably engage in an external search to learn about additional alternatives.
The consumer’s evoked set is of particular importance in structuring further information searches and making a purchase decision.
Those brands that the consumer finds totally not worthy of any consideration constitute the inept set. The consumer actively dislikes or avoids these brands to the extent that even if positive information is readily available, she/he tends not to process it.
Generally, an inept set is made up of brands that have been rejected from purchase consideration because of an unpleasant experience or negative feedback from reliable others.
The consumer’s inert set includes alternatives that she/he is aware of but would not consider buying and these brands are treated with indifference. The consumer does not have any positive or negative evaluative opinion about these brands.
Consumers will generally accept favorable information about brands in the inert set and which may be acceptable when preferred brands are not available.
Generally, consumers make final evaluations and make a purchase decision from the brands in the evoked set and, due to this reason, marketers must strive to help consumers not only recall their brand in response to recognized problems but also consider the brand a worthy potential solution.
Evaluation of Alternatives and Selection
As already pointed out, most purchase situations involve little or no evaluation of alternatives. Any discussion of consumer decision-making seemingly describes a situation in which consumers apparently make logical, structured, rational, and deliberate decisions.
The reality is that consumers often make purchase decisions that appear to be far from being rational and more likely to be viewed as emotional and less than optimal.
Decision Rules
There are two approaches to making decisions:
- Non-compensatory decision rules
- Compensatory decision rules
In the case of non-compensatory decision rules, negative evaluation leads to immediate rejection of the brand from the evoked set. Good performance on one evaluative criterion does not offset or compensate for low performance on another evaluative criterion of the brand.
For instance, the knowledge that a product is foreign-made might prevent staunch believers in the swadeshi concept from considering the brand. Non-compensatory rules are easier to apply and require less cognitive effort than compensatory rules.
Consumers may use several varieties of non-compensatory rules such as conjunctive, disjunctive, elimination-by-aspects, and lexicographic decision rules.
Conjunctive Decision Rule
Following this rule, the consumer establishes minimum levels of acceptability for each evaluative criterion (brand attributes) and selects one or more brands that surpass these minimum performance levels. In effect, each evaluative criterion important to the consumer will have a cut-off point.
For example, if the consumer’s cut-off criterion for a laptop computer processor is 800 MHz, she/he will consider only those brands that have this attribute and select the one that exceeds all others on this attribute. Similarly, the decision rule will be applied to the other remaining evaluative criteria.
Any of the brands falling below any of the minimum established standards would be eliminated from further consideration.
Disjunctive Decision Rule
Consumers use disjunctive rules when they establish a minimum acceptable performance level that each brand must meet. That is, all brands that meet or exceed the minimum performance standard for any key attribute are viewed as acceptable.
The decision rule will then be to choose the brand that beats others by the maximum margin with regard to the criterion selected. Let us assume that consumer ‘A’ is using the disjunctive decision rule in the case of a laptop computer and the cut-off points for attributes are as follows:
| Price | 5 | Key attribute |
| Processor | Not key attribute | |
| Display quality | 5 | Key attribute |
| Memory | Not key attribute | |
| Weight | 5 | Key attribute |
| Battery life | Not key attribute |
Elimination-by-aspects Decision Rule
In this approach to decision-making, attributes are first listed in terms of their importance and a cut-off point for each criterion is established. First of all, the brands are evaluated on the most important criterion and the ones that do not exceed the cut-off point are dropped from further consideration.
In case two or more brands exceed the cut-off point, the second most important criterion is compared to these brands. The process continues until only one brand emerges as meeting all the criteria. The rank order and cut-off points are as follows for laptop computers:
| Attribute | Rank | Cut off point |
|---|---|---|
| Price | 1 | 3 |
| Weight | 2 | 4 |
| Display quality | 3 | 4 |
| Processor | 4 | 3 |
| Memory | 5 | 3 |
| Battery life | 6 | 3 |
Lexicographic Decision Rule
In the lexicographic decision approach, consumers rank the criteria in order of importance and select the brand that outperforms others on the most important attribute.
If a tie develops among two or more brands on this attribute, they are evaluated on the second most important attribute. The process of attribute evaluation continues until only one option emerges as the winner, outperforming all others.
In the case of the lexicographic rule, the highest-ranked attribute often may reveal something about the consumer’s shopping orientation. For example, the consumer’s “buy the best” approach might indicate that the consumer places more value on quality.
If the consumer happens to be status conscious, probably her/his approach might be to “buy the most prestigious brand.”
In using compensatory decision rules, consumers choose the brand that has the maximum number of positive features compared to negative ones. This approach represents a type of mental cost-benefit analysis.
An important aspect of this approach is that the positive features of others can compensate for a negative evaluation of one attribute. The idea is that brand strengths can compensate for brand weaknesses.
Much research has focused on brand-based compensatory decision rules (also called multi-attribute decision models). The theory of reasoned action discussed under the topic of ‘attitudes’ presents one such decision rule.
It indicated that the attitude of consumers towards an intended behavior, their belief about what others think is appropriate behavior; predicts the consumers’ buying intentions of products or services. According to William L. Wilkie and Edgar A. Pessimier, various other models have been proposed and most of them are computed mathematically.
These models differ with respect to the inclusion of (1) belief strength (2) evaluation and (3) the importance consumers attach to the attribute or outcome. An example of a multiattribute model is presented here which is the same as the multi-attribute attitude model:
where:
Rb = Overall rating of brand b
Wi = Importance of weight attached to evaluative criterion I
Bib = Evaluation of brand b on the evaluative criterion I
n = Number of evaluative criteria considered relevant
If our consumer of earlier examples used the relative importance scores mentioned below, she/he would get the highest preference score for Acer.
| Attribute | Importance score |
|---|---|
| Price | 30 |
| Weight | 25 |
| Display Quality | 20 |
| Processor | 10 |
| Memory | 10 |
| Battery life | 05 |
By applying the rule, the score for Acer will be:
Racer = 30 (4) + 25 (4) + 20 (3) + 10 (5) + 10 (3) + 05 (3)
= 120 + 100 + 60 + 50 + 30 + 15 = 375
According to additive difference decision rules, consumers compare two brands at a time by attributes. The positive differences in one attribute can offset a negative difference in another attribute.
Consumers evaluate the differences between brands on each attribute, make trade-offs between positive and negative differences and then combine them into an overall preference.
Post-purchase Action
Many businesses have begun focusing on customer relationships and loyalty programs. The purpose is to increase customer satisfaction, commitment, and retention of important customers. Consumers engage in a constant process of evaluating the things that they buy as these products are integrated into their daily consumption activities.
In the case of certain purchases, consumers experience post-purchase dissonance. This occurs as a result of the consumer doubting her/his wisdom of a purchase. After purchase, most products are put to use by consumers, even when they experience dissonance.
Other purchases may be followed by non-use because the consumer returns or keeps the product without using it.
Post-Purchase Evaluation
Consumers’ post-purchase evaluation process is influenced by the purchase process itself, post-purchase dissonance, product use, and disposal of product/package. These are potential influencing factors and all purchases are not necessarily influenced by all these four factors.
Consumers may evaluate each aspect of the purchase decision process right from the stage of information search to ultimately the product performance.
The satisfaction with one aspect such as product performance may be affected by the degree of satisfaction with other factors such as price or behavior of the salesperson.
In case of nominal or limited decisions, a consumer gets involved in active evaluation only if some component, such as an obvious product malfunction, directs attention to the purchase decision.
Consumers choose a particular brand, or retail outlet, because they perceive it as a better overall choice compared to other alternatives that were evaluated while making the purchase decision. They expect a level of performance from their selected item or retail store, which can range from quite low to quite high.
Expectations and perceived performance are not independent and consumers tend to perceive performance in line with their expectations.
After using the product, service, or retail outlet, the consumer will perceive some level of performance, which could be noticeably more than the expected level, noticeably below the expectations, or match the expected level of performance.
Thus, satisfaction with a purchase is basically a function of the initial performance level expectations and perceived performance relative to those expectations.
| Perceived performance relative to expectation | Below minimum desired performance | Above minimum desired performance |
|---|---|---|
| More than expected | Satisfaction* | Satisfaction/Commitment |
| Same as expected | Not-satisfactory** | Satisfaction |
| Worse than expected | Dissatisfaction | Dissatisfaction |
The consumer is neither satisfied nor dissatisfied and does not complain.
As one may expect, a positive post-purchase evaluation results in satisfaction and a negative evaluation causes dissatisfaction.
The figure shows that if the performance expectations with a product, service or retail outlet were low and the actual product or outlet performance as perceived by the consumer matches up to that level, the consumer is neither satisfied nor dissatisfied (non-satisfaction).
Such a purchase outcome is likely to encourage the consumer to search for a better alternative on the next purchase occasion.
In case the consumer’s perceived performance level is below expectations and fails to meet the expectations, this will definitely cause dissatisfaction and the product or the outlet will be most likely pushed in the inept set and dropped from being considered on future occasions.
Thus, the consumer is also likely to initiate complaint behavior and spread negative word-of-mouth.
Product Disposal
In its simplest form and at the most basic level, disposal is just throwing away used-up or meaningless items by consumers without any thought. Disposal of the product or its container may occur before, during, or after product use.
This occurs on a regular basis for most consumers except in cases where the product is completely consumed such as an ice cream cone.
Disposal action by consumers is increasingly becoming important for governments and marketers because of major environmental concerns that involve growing dioxins, lead, and mercury. In India, many state governments have banned the use of certain types of plastic bags.
Huge loads of product packages are disposed of every day in the form of containers. These containers are thrown away as garbage, used in some way by consumers, or recycled. There is growing concerned about using the minimum amount of resources in creating packages for economic reasons.
It is also a matter of social responsibility. Many consumers consider the recyclable nature of the product container to be an important product attribute. Marketers are responding to consumers’ concerns with recyclable packaging.
Example: Canon, Epson, and some others boldly mention on the package that it is made from recycled material.
There are various alternatives for disposing of a product or package. However, we live in a throwaway society, and, by far, the most widely used and perhaps the most convenient method from consumers’ point of view seems to be “throw it away.”
This creates problems for the environment and also results in a great deal of unfortunate waste. The problem is more severe in underdeveloped and developing countries where, for a variety of reasons, consumers are simply not bothered about garbage and filth.
Throwing away empty packages, which they think cannot be reused, is a somewhat reflexive action. In fact, most vacant plots are used as dumping grounds in rural areas and in most towns and cities.
Training consumers to recycle has become a priority in many countries. For example, Japan recycles about 40 percent of its garbage. This is because of the social value the Japanese place on recycling. Garbage trucks take periodic rounds through the streets playing classical music or children’s songs and collecting properly placed packets of waste.
There are several other disposal alternatives but little is known about the characteristics of consumers such as the demographic or psychological characteristics of individuals who tend to favor certain disposal methods.
It is believed that situational variables, such as the current needs of friends or colleagues, the availability of recycling or charitable organizations, or the availability of storage space may also influence the disposal behavior of consumers.
