Consumer Decision-Making Process

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Jeremy Cook, Jennifer Lombardo, Joseph Shinn

Author
Jeremy Cook
Jeremy taught elementary school for 18 years in in the United States and in Switzerland. He has a Masters in Education from Rollins College in Winter Park, Florida. He's taught grades 2, 3, 4, 5 and 8. His strength is in educational content writing and technology in the classroom
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Instructor
Jennifer Lombardo
Jennifer Lombardo received both her undergraduate degree and MBA in marketing from Rowan University. She spent ten years in consumer marketing for companies such as Nielsen Marketing Research, The Dial Corporation and Mattel Toys. She is currently an adjunct professor of marketing at Rowan University and a social media marketing consultant.
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Expert Contributor
Joseph Shinn
Joe has a PhD in Economics from Temple University and has been teaching college-level courses for 10 years.
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Learn about the consumer decision-making process. Study the steps in the consumer decision-making process, including need recognition and evaluation of alternatives. Updated: 12/09/2021

Consumer Behavior
The Consumer Decision-Making Process
Steps in the Consumer Decision-Making Process
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For each of the examples below, determine which of the give steps in a consumer's decision-making process (need recognition, information search, evaluations of alternatives, purchase, post-purchase behavior) is being described. In addition to including a discussion about why you believe this is the correct step, you should also describe the selected step.

You decide you want to switch from cable television to a streaming service (i.e. Hulu and Netflix). Before making the switch, however, you compile a list of all of the options and their main attributes and prices.
You are in the fruit section of the supermarket. After narrowing down your fruit selection to apples, oranges, and grapes, you are considering which option will bring you the most enjoyment from consumption.
You decide that you want to go on vacation this summer with your family, but realize that you need to figure out where you want to visit.
After purchasing a new car, you are driving it around town and are having buyers remorse. That is, you think that you might have bought the wrong car and should have gone with the alternative.
After looking at all of your options for a new T.V. you decide to buy the new Samsung 60 inch 4K television.

What are the five steps in the consumer decision-making process?

The five steps of the consumer decision-making process were created by economist John Dewey. They are Need Recognition, Information Search, Comparing Alternatives, Purchasing and Post-Purchase Behavior.

What is the consumer decision-making process?

The consumer decision-making process is the steps that a consumer goes through beginning with the recognition that there is a need to make a purchase and ends after the purchase when the product is in use. There are five agreed on steps that were laid out by economist John Dewey.

Consumer Behavior

The television in the family room finally died and it's time to go and get a new one. What is the process that a person goes through when they need to replace the television? They might research brands or types. They might look at upgrading the type or the size. The process that a consumer goes through when purchasing a product is different from person-to-person, but the entire process is known as the consumer decision-making process.

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Consumer Behavior

What influences you in a purchase situation? Why did you purchase the specific laptop or tablet computer? Was it for price or quality? Did you ask friends or family for help in your decision? Did an ad catch your eye? Consumers are constantly evolving in their buying behavior based on their life situations. Consumer behavior is the process consumers go through when they make purchases and it involves factors that influence their decision and usage. The consumer decision-making process involves five steps that consumers move through when buying a good or service. A marketer has to understand these steps in order to properly move the consumer to the product and close the sale.

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The Consumer Decision-Making Process

In 1910, economist John Dewey developed the idea that a consumer's decision-making process came down to five distinct steps. Those steps were the foundation of his theories on consumer behavior. Since the theory was developed in 1910, there will be parts of certain steps that might have some nuances in the 21st century. Dewey's five steps in the consumer decision-making process are:

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Steps in the Consumer Decision-Making Process

As mentioned in the opening section, there are many different factors that affect each step.

Need Recognition

Most elementary school students learn the difference between a need and a want. Needs are described as things like food, water, clothing and shelter which are then placed on a pyramid chart at the very bottom. Wants are described as anything that people don't need to physically survive. But when kids grow into adults, the lines between a need and a want begin to blur. Dewey labeled the first step of the decision-making process as the identification of a need. But needs are a grey area in the process and it's important to understand that grey area.

The extreme ends of this bell curve show the obvious wants and needs. The blue area represents the area where consumers would differ on what was a need vs a want.

For most consumers, it's easy to identify the outliers on both sides of the needs and wants bell curve. An expensive video game system is a want and food is a need. But once the bell begins to curve, the grey area appears, and outside factors play a huge role. One example that highlights this is the need or want for a car. A person who lives in downtown New York and can walk, ride share, bike or take the subway to work would label a car a want. They don't need it to function in their daily lives. The person who lives on the outskirts of a rural town and works 40 miles away with no access to public transportation would consider a car a need.

So, what exactly is need recognition? Need recognition is the realization on the part of the consumer that there is a product that needs to be purchased that fulfills a perceived need. Need recognition comes in different forms and depends on the circumstances.

Need Recognition	Description	Example
Replacement	Replacement is need based on the need to replace an existing product for one reason or another.	A person's refrigerator dies and they need to purchase a new one.
Upgrade	Upgrade is when a consumer perceives a need to purchase an improved version of a product they already own.	An iPhone owner wants to get the newest version of the device.
Performance	Some consumers perceive the need for a new product because the performance of a current is lacking or reduced.	A consumer might want to replace a cordless vacuum if the battery performance starts to degrade.
Change of Circumstance	Often, a need is recognized by a change in life circumstances like moving or changing jobs.	A person takes a work-from-home position and needs products to setup an at home office.
Convenience	Convenience is a perceived need that falls into the grey area where a new product is not necessary but improves the efficiency or convenience of a person's life.	A consumer purchases a robot vacuum to make it easier to keep the floors clean.
General Need	General needs are the most common and include any need that arises in life that are not replacing something that the consumer already has.	An example would be the purchasing of school supplies at the beginning of a school year.
Desire	Needs and wants are two different things, but when a consumer turns a desire into a perceived need, they will go through the decision process.	A consumer decides they want a fancy hand-made Italian leather jacket.

Information Search

Once a consumer has made the decision to act on the recognized or perceived need, they begin the process of deciding how they are going to solve the need.

When consumers search for information, they employ two different methods. One method is an internal search and the other is an external search. An internal search is when a consumer uses their memory and experiences to decide on information. If they have experience fixing the lawnmower, they might be able to do it again.

An external search is when the consumer goes to secondary sources for information. This usually involves searching the internet or asking other people.

These consumers are using external information to comparison shop in the second step of the consumer decision-making process.

Evaluations of Alternatives

Once the consumer decides that a new product is needed, the next step is to decide what product to buy. This step involves deciding between the many alternatives and brands on the market. This step is sometimes skipped for consumers who are replacing an existing product with the exact same product. When looking at the different alternatives, consumers will often compare attributes of the available products to help them make a better decision. A good way to highlight these factors is to use the same example for each factor. The factors will be based on a home-office worker who needs to replace their 20-inch computer monitor.

Available Options - One of the first things consumers will do is look at the options that are available to them. If the need is immediate, a product that is out of stock might be eliminated right away.
Features - What are the features of the available alternatives that are available to the consumer. The home office worker replacing their monitor will look at monitor size, style, quality, inputs, resolution and functionality.
Special Considerations - Sometimes consumers must evaluate if the alternative will work with their existing situations. The home office worker replacing the monitor will need to consider their office setup when looking at monitors. It might be that a monitor larger than 34 inches will not fit in their space.
Brands - Consumers will look at the available brands that offer the product they want to buy. This can be heavily influenced by internal experience. The home office worker might lean toward a Samsung monitor because they have the same brand of television and they are happy with the television.
Price - Price is a big consideration when looking at alternative products, but pricing is often done once the consumer narrows down the products they want and the features they desire. The home office worker has narrowed down their search to monitors between 24 and 32 inches, they want a curved monitor and prefer a few specific brands. They eliminate monitors above 30 inches because they are too expensive.
Return Policies - Return policies make a huge difference to consumers because they want to know if they can easily change their minds. Most products offer return policies, but some are more generous than others. The home office worker can eliminate a few other alternatives because they have strict return policies.

Purchase

Once the consumer decides on a specific product, they move into the fourth stage of the consumer decision-making process. The consumer has to make sure they are confident and ready to buy. Consumers can get stuck in this stage because they aren't quite ready to make the final purchase. Hesitancy can be affected by price, return policies and need. When the consumer does decide to purchase the product, they need to decide where and how they are going to make the purchase. Are they going to buy the product online or from a physical store? Do they need to have the product delivered or installed?

These questions will ultimately determine how, where and when the consumer will purchase the product.

Post-Purchase Behavior

People might wonder why there is a step beyond the purchase of the product once the consumer makes the decision to buy if the process is about the purchase. The entire decision-making process includes the consumers feelings and behavior after the purchase. The post purchase step involves a psychological concept called cognitive dissonance. Cognitive dissonance is the inconsistent thoughts that people have relating to a decision or change. Most people have experienced this after buying something, especially if it was an expensive purchase.

This step is a big focus for product marketers because cognitive dissonance is a huge cause for returning products to the store after a purchase. While companies like to market products, it's equally important to ensure that consumers keep the products because companies lose money on returns. Returned products require a different sales category, often called open box.

To combat cognitive dissonance, marketers for products have strategies and procedures that help consumers feel better about their purchases.

Communication of Benefits - Good marketing will provide the consumer with a lot of features and benefits before they purchase to ensure that the product does what the consumer wants it to do. Poor marketing of features and details leads to consumers returning products because they don't do all the things they need them to do.
Gifts and Discounts - A customer who bought a new big screen TV might be tempted to return it if they paid full price and are unsure of their decision. However, if there was a free sound system that came with it or the price was 20% percent off, they are much less likely to return it.
Follow-Ups - For larger purchases like cars, companies will have follow-up communication as well as services in the future that will help to bolster consumer confidence in their products.
Financing Tricks - Nothing is harder for a consumer that outlaying a large amount of cash for a purchase. It is the method that causes the most cognitive dissonance and returns. If a customer buys a television for $1000 on their debit card, they see their account balance drop instantly. Returning the television would see that balance go back up immediately. Companies will offer financing deals with no interest or no down payment, or even a few months before a payment is due. The elimination of the immediacy of cash reduces the chances consumers will change their minds.

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Lesson Summary

The process of a person deciding and buying a product is called the consumer decision making process. It's the process that begins when a consumer identifies that they need a product and ends after the product is home and in use. Economist John Dewey mapped out the process into five steps back in 1910. Those steps are recognizing a need, searching for information, comparing alternatives, purchasing and post-purchase behavior.

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The consumer decision-making process consists of five steps, which are need recognition, information search, evaluations of alternatives, purchase and post-purchase behavior. These steps can be a guide for marketers to understand and communicate effectively to consumers. One note is that consumers do not always move in the exact order through the process; it can depend on the type of product, the buying stage of the consumer and even financial status.

Need Recognition

The very first step in the process is when consumers realize that they have a need for something. Marketers want to create an imbalance in consumers between their present status and their preferred status. This imbalance will create a need and make a consumer search out and buy a product or service. Need recognition occurs when a consumer is faced with a difference between an actual and a desired state. A need can occur immediately and can be a very basic impulse that you experience, such as when the ninja develops hunger pains. This is called an internal stimulus. Or it can be a change in the ninja's lifestyle, such as when he finds out that he is going to be expecting a baby ninja.

An external stimulus is when you are affected by outside influences, such as when a friend tells you about a fantastic movie, restaurant or an ad for a car. The key weapon of a marketer to create an imbalance/consumer need is to use advertising and sales components. When consumers recognize an unfulfilled need and that a product will satisfy it, they have created a want. The marketer can then tailor new products and current products to reach the consumers and create a successful purchase situation.

There are three ways that consumers recognize unfulfilled wants. The first way is when a consumer becomes frustrated with the fact that a product he or she has is not performing properly. Perhaps the car that the consumer owns is now requiring time in the shop for repairs, or the jeans he owns have developed holes. The consumer now has developed a want and need for a new car and new jeans. Marketers will even act fast and use advertising and sales to further move the consumer to a new purchase. Car brochures, test drives, sales, promotions and rebates are all ways for the consumer to be drawn further into the need recognition process.

Another way that a consumer recognizes an unfulfilled want is when the consumer runs out of the product. This can be as simple as an empty shampoo bottle or a need for more bread. Marketers can tempt consumers to purchase their products through coupons, deals, contests and promotions.

The last way consumers can recognize an unfulfilled need is if they become aware of a product that is better than their current product. Marketers love to create newer versions of their product in order to tempt consumers to upgrade their old versions, such as technology and automobile companies, which consistently upgrade to newer models.

Information Search

After the consumer has developed a want or a need, he or she needs to start an information search about the different alternative selections that they can purchase to satisfy their need. Our ninja has decided he needs a new ninja hideout. He will look both internally and externally for his information to help him make a decision. An internal information search consists of utilizing information from memory, such as past experiences with the product.

An external information search is the process of seeking information in the outside environment. The ninja will start by asking personal ninja friends and family about their experiences with acquiring a new ninja hideout. They can also research public sources, such as consumer reports for ninja hideouts with the best ratings.

Another external information source for the ninja would be marketing-controlled sources, such as radio, television ads, brochures, etc. The amount of time dedicated to this step usually depends on the consumer's past experience with buying the product, the risk involved and the level of interest. The new ninja hideout would be of high interest and have a large risk due to the fact the ninja wants to be well protected. Once the ninja has created a set of alternative ninja hideouts to choose from, he has created an evoked set. This set consists of the ninja's most preferred alternatives. Once the evoked set has been decided upon, the ninja will then conduct final research to further shrink his choices.

Evaluation of Alternatives and Purchase

After consumers have recognized a need, conducted information research and created a final decision set (or evoked set), they then must make a decision. Our ninja must choose which ninja hideout he will purchase with what options.

In order to make the final decision, consumers usually decide on one product attribute that is the most important. It could be quality, price, location, option, etc. Another method of making a final decision is for the consumer to create a specific cutoff. This could be financially based; such as the limit for a ninja hideout could be $25,000. A marketer has to realize which attribute is most important to the consumer and communicate away any potential obstacles. For instance, suppose our ninja has decided that he will make his decision based on a price cutoff of $20,000. A marketer could then promote that the ninja could still afford the $25,000 hideout by using excellent financing.

Economic issues can also affect purchase outcomes. For example, in the aftermath of the 2008 financial crisis, PewSocialTrends.org (a national demographic and trend survey company), noted that only six percent of consumers had increased their spending. In fact, 62% of Americans said in the survey that they had curtailed their consumer spending amounts. Respondents were also quizzed about their future spending patterns once the economy improved; 31% said they would spend less in future years.

Post-Purchase Behavior

After a consumer makes a decision to buy a product, they expect satisfaction to occur from the purchase. If the product does not meet their requirements, then dissatisfaction can occur and the consumer will talk poorly about the product publicly, return the product and also possibly not be a repeat buyer. A smart marketer will make sure that their consumer is completely satisfied and does not develop any negative post-purchase feelings. Cognitive dissonance is the inner tension that a consumer experiences after recognizing an inconsistency between behavior, value and opinions. Marketers can prevent cognitive dissonance by excellent communication of their product's benefits and features, customer service follow up by email and even small gifts, such as calendars or pens with the company name.

Lesson Summary

Once a consumer has identified that they have a need or a want that has to be satisfied, the consumer then moves through a decision making process. This 5-step process consists of need recognition, information search, evaluation of alternatives, purchase and post-purchase recognition. A marketer must guide the consumer through each of these steps in order to have a chance of a sale.

Marketers can use marketing-controlled information sources (such as radio, Internet ads, newspaper, television and magazine ads) to help educate consumers about their product or service. Consumers can use non-marketing controlled information sources (such as friend and family opinions, consumer reviews, report studies and other public sources) to help make an informed decision. After the consumer purchases a product, it is important for marketers to follow up with post-purchase support to reduce cognitive dissonance, or the inner tension concerning making the correct purchase.

Learning Outcome

After watching this lesson, you should be able to:

List and summarize the five steps of the consumer decision-making process
Define internal stimulus, external stimulus, internal information search, external information search, evoked set and cognitive dissonance
Understand ways to influence consumers toward a product in the decision-making process

Video Transcript

Consumer Behavior