Purchase Decision: Definition & Hierarchy

Instructor: JC Wright
In this lesson, you will learn the five stages of purchase decisions that all consumers make when making a product choice. You will also see why this decision process is important to businesses that are building their customer base.

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Purchase Decisions

John is a recent college graduate, and he has finally landed his first job. John works as a paralegal for the state of Georgia. The first three months of being a productive citizen of the world have been great for him. No more Ramen noodles for breakfast, lunch and dinner. No more shopping at the thrift store for clothes. Everything was going well for John until one rainy morning. John's car broke down on the side of the highway. Keep in mind, John is the fourth owner of his current vehicle. The previous owners were his dad and two older siblings. By the time John got the car, it had 196,000 miles and had gone through a series of repairs by the previous family of drivers. Now, John is at a critical decision-making crossroads that all buyers must faceā€¦ purchase decisions.

A purchase decision is exactly how it sounds. Specifically, when making a purchasing decision, there are five stages that consumers carry out.

  1. Problem/Need Recognition
  2. Information Search
  3. Evaluation of Alternatives
  4. Purchase Decision
  5. Post-Purchase Behavior

These stages were introduced in 1910 by a psychologist named John Dewey. According to Dewey, these stages are a framework for evaluating consumer buying behavior leading up to and after the purchase transaction has been completed. With that being said, a consumer will not always follow these steps with every purchase. For example, if a consumer wants a pack of M&Ms, the buyer will identify a need (step one) then skip to step four (purchase decision). There will be no need to search for information on the product or evaluate alternatives.

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Purchase Decision Stages

Problem/Need Recognition

  • This first step is the most important of all the steps in the decision-making process. A purchase transaction cannot be completed unless a need for an item is first desired. In the case of Jon's car, the external stimulus of the car breaking down triggered John's need to want a new car. Abraham Harold Maslow introduced a hierarchy of needs and determined that only when a person has fulfilled the needs at a certain stage that they can move to the next stage.

Information Search

  • The information search is the stage where the buyer attempts to locate the best answer to the problem/need that was identified in stage one. John will now scour the newspapers and Internet to gain as much information regarding his problem/need. Buyers like John will typically use TV advertisements, radio ads, and print media to gain the knowledge needed for the purchase.

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Evaluation of the Alternatives

  • Now that the information has been gathered, the buyer evaluates the brands and their respective attributes to see if they will deliver the desired problem/need. This particular stage is really driven on the level of involvement of the buyer or the importance to the buyer. If the buyer has a high focus on the end result, then the evaluation process will be extensive; the buyer will potentially review a large number of different products. In John's case, the need of a car is very important given that he still needs to make a good impression at the company. John's process of evaluating will need to be quick but will also be well executed to ensure he finds a reliable car.

Purchase Decision

  • This is the fourth stage and is where the actual purchase is made. This is a critical stage in the decision-making process. The consumer has now settled on which product is the best based on stage one. Also in this stage, consumers can be easily deterred from purchasing a product by external factors such as negative feedback regarding the product or unforeseen financial obligations. For example, if John's brother purchased the same car John has finally decided to purchase, however, John's brother has had a number of issues with his purchase. This may affect John's choice. Or if one week prior to the purchase of his car, John discovers that his roof is leaking, he will either have to cancel the purchase process altogether or choose another option.

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