In this lesson, you'll see how a consumer moves through a decision making process in order to purchase a product or service. Learn what methods marketers use to take advantage of this process.
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.
Consumer Decision-Making Process
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.
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 consumers 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.
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 have really affected the purchase outcome due to the recession. According to PewSocialTrends.org (a national demographic and trend survey company), only six percent of consumers have increased their spending since the recession hit in 2007. In fact, 62% of Americans said in the survey that they have curtailed their consumer spending amounts. In the survey, the respondents were quizzed about their future spending patterns once the economy improves; 31% say that they will spend less in the next few years. The final part of this step is that the consumer has to decide to buy or not to buy.
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.
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 magazines 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.
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