Unit 9: Consumer Decision Making

Definition

Consumer decision-making refers to the process through which individuals select, purchase, use, and dispose of
goods and services to satisfy their needs and wants.

Key Stages of the Consumer Decision-Making Process

1. Problem Recognition
o The process begins when the consumer identifies a need or problem (e.g., "I need a new phone").
2. Information Search
o Internal Search: Recalling past experiences or knowledge.
o External Search: Seeking information from friends, advertisements, online reviews, etc.
3. Evaluation of Alternatives
o Consumers compare various products or brands based on features, price, quality, and other
criteria.
4. Purchase Decision
o After evaluating, the consumer makes a decision on what to buy and where to buy it.
5. Post-Purchase Behavior
o The consumer evaluates the product after use (satisfaction or dissatisfaction).
o May lead to repeat purchases or returns and can influence brand loyalty.

Types of Consumer Decision-Making

1. Routine Response Behavior

o Low involvement, frequently purchased items (e.g., toothpaste).
2. Limited Decision Making
o Moderate involvement; occasional purchases (e.g., clothing, small appliances).
3. Extensive Decision Making
o High involvement, high-cost items (e.g., car, house, laptop).
4. Impulse Buying
o Unplanned, spontaneous purchases with little thought or information search.

Factors Influencing Consumer Decision-Making

• Cultural Factors: Culture, subculture, and social class.

• Social Factors: Family, roles, peer groups.
• Personal Factors: Age, occupation, lifestyle, economic situation.
• Psychological Factors: Motivation, perception, beliefs, attitudes, and learning.

Models of Consumer Behavior

 1. Economic Model – Assumes rational behavior to maximize utility.
2. Psychological Model – Focuses on internal motivations.
3. Sociological Model – Emphasizes the influence of society and culture.
4. Pavlovian Model – Based on stimulus-response conditioning.
5. Howard-Sheth Model – Complex model combining inputs, perceptual and learning constructs.

9.1 Defining Decision

A decision is the process of selecting the best course of action from two or more alternatives to achieve a
desired result.

In the consumer context, a decision refers to the choice a consumer makes regarding the purchase or
rejection of a product or service based on personal needs, preferences, and available information.

Key Aspects of a Decision

1. Alternatives Exist: A decision only occurs when there are multiple options to choose from.
2. Goal-Oriented: Decisions are made to fulfill a need or solve a problem.
3. Involves Evaluation: Consumers assess each option based on criteria like price, quality, features, etc.
4. Requires Judgment: A decision often involves weighing pros and cons before making a final choice.
5. Leads to Action: A decision results in a specific consumer behavior, such as purchasing or not
purchasing.

Example in Consumer Behavior

A customer deciding between three smartphones compares features, prices, and brand reputation before making
a final purchase. This entire process is a consumer decision.

9.2 Levels of Consumer Decision Making

Consumer decision-making varies depending on the involvement level, familiarity with the product, and the
complexity of the decision. The three main levels are:

1. Extensive Problem Solving

2. Limited Problem Solving
3. Routine Response Behavior (often included in full outlines, though not mentioned in your current list)

9.2.1 Extensive Problem Solving

• Definition: This occurs when a consumer is purchasing a product or service for the first time or when
the purchase involves high risk and importance.
• Characteristics:
o High consumer involvement
o Lack of prior experience or knowledge
 o Long decision-making process
o Significant time spent on information search and evaluation
• Examples:
o Buying a car
o Choosing a university
o Purchasing a house or expensive electronics

9.2.2 Limited Problem Solving

• Definition: Occurs when a consumer has some prior experience with the product category but is still
making a relatively new or unfamiliar choice.
• Characteristics:
o Moderate involvement
o Some information search, but less than extensive problem solving
o Shorter decision time
• Examples:
o Buying a new brand of shampoo
o Selecting a moderately priced kitchen appliance
o Trying a different restaurant

9.3 Routinized Response Behavior

Definition:
Routinized (or Routine) Response Behavior refers to consumer decisions that are made quickly and with
little to no conscious effort, usually involving products that are purchased regularly and with which the
consumer is very familiar.

Characteristics:

• Low consumer involvement

• Minimal decision-making effort
• Little to no information search
• Brand loyalty is often strong
• Quick and habitual purchases

When It Occurs:

• When the product is low-cost, frequently purchased, and carries little risk
• When consumers have prior experience and trust in the brand

Examples:

• Buying toothpaste or soap

• Purchasing a favorite snack or beverage
• Refilling a brand of laundry detergent

Implications for Marketers:

• Focus on brand recognition and consistent quality

• Use advertising and packaging to maintain brand loyalty
• Make products easily available and visible in stores

9.4 Models of Consumers: Four Views of Consumer

Decision Making
Consumer behavior has been studied from different theoretical perspectives. Scholars have identified four
major views or models that explain how consumers make decisions:

1. The Economic View

• Assumption: Consumers are rational decision-makers who aim to maximize utility (satisfaction) based
on complete information.
 • Key Features:
o Decisions are logical and informed.
o Consumers evaluate all alternatives before buying.
o Price, quality, and value are the main decision factors.
• Limitations: Assumes perfect knowledge and rationality, which is not always realistic in real-life
scenarios.

2. The Passive View

• Assumption: Consumers are impulsive and irrational, often manipulated by marketing and advertising.
• Key Features:
o Consumers react to marketing stimuli without active thought.
o Decisions are emotional or influenced by persuasive techniques.
• Criticism: This view underestimates the intelligence and awareness of consumers.

3. The Cognitive View

• Assumption: Consumers are problem-solvers who make decisions based on processing information and
learning.
• Key Features:
o Decisions involve memory, perception, and judgment.
o Consumers compare, evaluate, and select the best alternatives.
o Supports the idea of information search and rational processing.
• Example: A buyer comparing several laptop models based on features, reviews, and price.

4. The Emotional View

• Assumption: Consumers make decisions based on feelings, moods, and emotions rather than logic or
reasoning.
• Key Features:
o Emotional appeals in advertising influence choices.
o Impulse buying and brand attachment are common.
o Experiences, aesthetics, and sensory perceptions matter more than practical details.
• Example: Buying an expensive perfume because it evokes a sense of luxury or nostalgia.

Summary Table:

View Focus Key Traits Example

Economic Rational decisions Logical, utility-maximizing Comparing prices of similar
smartphones
Passive Manipulated by Unthinking, reactive Buying a product just because it’s
marketers advertised
 Cognitive Problem-solving Informed, thoughtful decision- Researching before purchasing a new
making appliance
Emotional Feelings and Impulsive, emotionally driven Buying chocolate to feel better
experiences emotionally

9.5 Model of Consumer Decision Making

A model of consumer decision making illustrates how consumers process information, evaluate alternatives,
and make choices about purchasing products or services. These models help marketers understand why and
how consumers buy.

One widely accepted structure divides the process into three main components:

1. Input Stage

This stage involves external influences that affect the consumer before any decision-making begins.

Components:

• Marketing Stimuli: Product, price, promotion, place

• Sociocultural Influences: Family, social class, culture, reference groups
• Situational Factors: Time, physical environment, occasion

2. Process Stage

This is the core decision-making phase, where the consumer evaluates options and forms preferences.

Steps:

1. Need Recognition: Realizing a gap between current and desired state.

2. Information Search:
o Internal (memory, experience)
o External (ads, friends, online reviews)
3. Evaluation of Alternatives: Comparing options based on features, cost, etc.
4. Purchase Decision: Selecting the product/brand/store.

Note: Psychological factors like motivation, perception, learning, attitudes, and personality play a key role
in this stage.

3. Output Stage

This stage covers post-purchase behavior and its impact on future decisions.
Includes:

• Purchase: The final act of buying.

• Post-Purchase Evaluation:
o Satisfaction or dissatisfaction
o Cognitive dissonance (buyer’s remorse)
o Brand loyalty or switching behavior

INPUT STAGE
↓
Marketing Mix, Culture, Social Influences
↓
PROCESS STAGE
↓
Need Recognition → Info Search → Evaluation → Decision
↓
Psychological Factors (motivation, perception, etc.)
↓
OUTPUT STAGE
↓
Purchase → Post-Purchase Evaluation → Feedback for future decisions

Key Takeaway:
This model shows that consumer decision-making is not a one-time event, but a cyclical process influenced by
both external (marketing, culture) and internal (psychological) factors.

9.6 Consumer Gifting Behavior

Definition:

Consumer gifting behavior refers to the process of selecting, purchasing, and giving goods or services to
others as a gift. It is a unique form of consumer behavior where the purchase is not for the buyer’s personal
use but intended for another individual or group.

Key Characteristics:

• Involves two parties: the gift giver and the recipient.

• Driven by social, cultural, psychological, and emotional factors.
• Often involves symbolism, representing affection, obligation, or celebration.
• High involvement decisions, especially for meaningful or expensive gifts.

Stages of Gifting Behavior:

1. Gift Occasion Recognition

o Birthdays, weddings, festivals, anniversaries, promotions, etc.
2. Gift Selection
o Involves choosing an item that reflects the giver’s relationship with the recipient, the occasion,
and cultural norms.
3. Purchase Decision
o May involve budget, store choice, brand preference, packaging, etc.
4. Presentation of the Gift
o Wrapping, personal notes, and the setting of gift exchange add emotional value.
5. Post-Gifting Reaction
o Giver observes recipient’s response; influences future gift choices and relationships.

Types of Gifts:

• Altruistic Gifts – Given with no expectation of return.

• Reciprocal Gifts – Expectation of future return (e.g., social or cultural obligation).
• Promotional Gifts – Businesses give to customers to build relationships.
• Self-Gifting – Buying something for oneself as a reward or celebration.

Factors Influencing Gifting Behavior:

 • Cultural Norms (e.g., Diwali in India, Christmas in the West)
• Relationship Strength (family vs. acquaintances)
• Personalization Desire
• Budget Constraints
• Social Status and Impression Management

Marketing Implications:

• Brands can target gifting behavior through:

o Seasonal promotions
o Gift packaging and customization options
o Advertisements emphasizing emotional value
o Loyalty and referral programs

Example:

A person buying an expensive watch for their father’s retirement is likely to consider emotional significance,
brand image, and long-term value—making it a high-involvement gifting decision.

9.7 Beyond the Decision: Consuming and Possessing

Overview:

Consumer behavior doesn't end at the point of purchase. Post-purchase behavior, particularly consumption
and possession, plays a vital role in understanding how consumers derive value, satisfaction, and meaning from
what they buy.

Consuming

Definition:
Consuming refers to the actual use or experience of a product or service after purchase.

Key Points:

• It reflects how the product performs and meets the consumer’s expectations.
• Includes both functional (e.g., how well a phone works) and emotional (e.g., the joy of wearing a
designer outfit) aspects.
• The consumption experience can shape:
o Customer satisfaction
o Word-of-mouth
o Brand loyalty or switching behavior

Example:
Using a new smartphone—how well it functions, its battery life, and how it fits into your daily routine affects
your perception of the brand.

Possessing

Definition:
Possessing refers to the emotional attachment and identity associated with owning a product.

Key Points:

• Ownership can contribute to self-expression, status, and personal meaning.

• Some possessions become part of a person’s extended self (e.g., favorite car, family heirloom).
• People may place sentimental value on certain items regardless of their actual use or cost.

Example:

A person may feel proud owning a luxury car not just for driving it, but because it reflects their success or
status.

Why It Matters to Marketers:

• Understanding what consumers value post-purchase helps brands:

o Improve product design and performance
o Create more meaningful customer relationships
o Design experiences (not just products)
o Encourage positive reviews and long-term loyalty

9.8 Relationship Marketing

Definition:

Relationship marketing is a strategic approach focused on building and maintaining long-term

relationships with customers, rather than simply focusing on individual sales or transactions.

It aims to foster customer loyalty, retention, and satisfaction by creating meaningful, ongoing connections
between the business and its customers.

Key Objectives:

• Increase customer lifetime value

• Encourage repeat purchases
• Build brand trust and emotional engagement
 • Promote positive word-of-mouth

Key Features:

1. Long-Term Focus: Emphasizes continuous interaction over time, not just one-time sales.
2. Customer-Centric: Understanding and meeting individual customer needs and preferences.
3. Two-Way Communication: Encourages feedback and engagement through multiple channels.
4. Personalization: Offers customized experiences, products, and services.
5. Trust and Commitment: Built through consistency, transparency, and value delivery.

Relationship Marketing vs. Transactional Marketing

Transactional Marketing Relationship Marketing

Focuses on single sales Focuses on long-term engagement
Short-term goals Long-term value
Product-oriented Customer-oriented
Limited customer interaction Continuous communication and feedback
Price is key driver Trust, service, and personalization are key

Tools & Strategies:

• Loyalty programs (e.g., reward points, discounts for repeat buyers)

• Email marketing with personalized offers
• CRM (Customer Relationship Management) systems
• Social media engagement
• After-sales service and support
• Customer feedback mechanisms

Examples:

• Amazon: Personalized recommendations, Prime memberships, and reliable service.

• Starbucks: Rewards app, personalized offers, and consistent customer service.
• Apple: Builds brand communities and loyalty through superior user experience and ecosystem
integration.

Benefits of Relationship Marketing:

• Higher customer retention

• Increased brand advocacy and referrals
• Better customer insights
• More effective and efficient marketing