Marketers must consider how consumers decide to buy their product. Consumers use nominal, limited, and extended decision making. Watch this video to learn more about the different types of consumer decisions.
Consumer Decisions and Strategy
In order to successfully reach their target market, marketers must have some idea of how much time and effort consumers will put into a purchase decision. Let's say your company makes top-of-the line cleats for kids. Although kids are your end user and have some input in the decision process, for the most part, parents are ultimately in charge of the buying decision.
After many observations of the decision-making process, you see that parents typically spend little to no time deciding which cleats to buy for their kids. They take into consideration any requests from their kid, then usually check the newspaper ads to find the lowest-priced product. In the end, price is the deciding factor because, after all, kids quickly outgrow or wear out sporting equipment.
Knowing this information, would you spend 70 percent of your advertising budget on a slick website with tons of product detail and demo videos to advertise your latest high-performance football cleats? Probably not, since you understand that time-pressed parents are doing little more than glancing at the Sunday paper and having a quick conversation with Junior on the way to the sporting goods store. Knowing what type of decision the target consumer will go through can help marketers carefully craft a marketing strategy that is most effective.
Types of Consumer Decisions
There are three major categories of consumer decisions - nominal, limited, and extended - all with different levels of purchase involvement, ranging from high involvement to low involvement.
The types of consumer decisions exist on a purchase involvement continuum.
While it would make a marketer's job much easier to think of most purchases fitting neatly into one of these categories, the truth is they're usually somewhere in between. Because there are so many different shades of consumer decisions, it's easier to think of the three decision types as points on a continuum, ranging from high to low involvement. Let's build the continuum of consumer decisions to get a better idea of how these concepts work together.
As our base, purchase involvement is how much time we spend considering alternatives before making a purchase. Purchases on the higher end of the involvement scale are often there for a handful of reasons:
- The product is a large ticket item
- There are many risks involved with making the wrong purchase
- The product has a great significance to the consumer's life
At the other end of the scale, purchases falling on the lower end are usually lower-priced, routine purchase types of goods.
Nominal Decision Making
The first point on our continuum is nominal decision making. It's the least involved type of decision making. We realize we have a need, reach back in our long-term memory, and make a repeat purchase. The only time nominal decision making moves into a more evaluative state is when the product fails to meet our expectations.
Keep in mind, at one point, this nominal decision might not have been so nominal. You may have initially sought out several different alternatives and gone through an extensive decision-making process before choosing one particular brand that you feel outperforms all others. In this case, your purchase is now nominal because you're brand loyal.
For instance, you may have found yourself on a quest for the perfect shampoo to tame your long, curly hair. After reading reviews of several different types on your favorite beauty supply website, chatting with other curly-haired friends about their favorites, and trying a handful, you settled on Silky Supreme because you found it works the best. You're now loyal to the Silky Supreme brand and make a nominal, routine purchase whenever you run out of shampoo.
Initially, marketers may have invested a considerable amount of their budget into promotions and advertising to build up this brand loyalty. They may have offered free samples, coupons, or built elaborate point-of-purchase displays to draw you in. Once your loyalty is established, and the purchase becomes nominal, marketers simply need to perform maintenance-type activities, like ensuring their product is available where you shop and creating ads to help you maintain long-term memory associations to their brand.
Limited Decision Making
The next point is limited decision making. Our football cleat example from the beginning of the lesson is a good example of this type of decision. Being the middle point on our continuum, while it's not quite as simple as nominal decision making, it's also not as extensive as our next stop, extended decision making.
When considering alternatives in limited decision making, we look internally, or to our long-term memory, and briefly evaluate external alternatives. So, the decision rule the parent in our example set of finding the lowest-priced cleat for Junior, paired with the quick glance through the Sunday newspaper ads, makes up limited decision making in that purchase process. Some post-purchase evaluation may occur, but it's very minimal and mainly brought on when a product does not meet expectations.
For limited decisions, it's key for marketers to use market research to determine where decision rules might be made for that purchase: whether price is the deciding factor, quality, product availability, style, or something else. Once they have this information, they can focus their promotional activities on accentuating the benefits of their product in that area compared to competitors.
Extended Decision Making
Extended decision making is the type of decision making that comes to mind for most people when you think of buying a house or car. It's at the high end of the involvement scale, requiring the most extensive evaluation of alternatives.
Extended decision making includes an internal search for alternatives and a lot of external research, like seeking opinions, reading articles, and Internet searches, followed by spending a considerable amount of time evaluating all of the possible alternatives.
This is also the point on the continuum where post-purchase evaluation is most extensive. As a consumer, you're more likely to second-guess your decision and keep evaluating alternatives after you've made the purchase decision.
Being the most involved type of consumer decision, this is where the most extensive marketing activity takes place. For one, marketers must make sure advertising is prevalent enough to make sure their product is even considered in the decision-making process. It's also crucial they provide enough information through other sources, like websites and product forums, to aid during the external research phase. Lastly, they must make sure they follow up with customers after a purchase is made to reassure them of their decision.
To review, purchase involvement is how much time a person invests in making a purchase decision, ranging from very little to quite a bit. There are three different types of decisions consumers make, ranging from low involvement to high involvement. The three types are nominal decision making, which requires little to no search for alternatives; limited decision making, which requires some but not much of a search for alternatives; and extended decision making, which requires extensive evaluation of alternatives and post-purchase evaluation.
Depending on the type of decision-making process, marketers use different strategies that match the level of involvement - lower involvement purchases require more basic promotion strategies, while high involvement purchases need a more pervasive marketing strategy with lots of information provided through several different channels.
At the end of this lesson, you'll be able to:
- Describe the purchase involvement continuum, including the three points along it: nominal, limited and extended decision making
- Explain the different marketing strategies involved with different levels along the purchase involvement continuum