Welcome to Topic 5: The Consumer Decision-making Process.
We all make numerous decisions during the day that affect our daily lives. Many of these are done without considering how we arrived at a decision or the decision-making process. A consumer’s purchase decision is often referred to as ‘the moment of truth’. It conveys whether the company’s communication strategy and marketing mix has been effective. As a result, marketers are very interested in understanding the decision-making process of consumers, using concepts and frameworks from social, cultural, and psychological, studies. There are three levels of decision-making, which include extensive problem solving, limited problem solving and routinised response behaviour. All decision-making processes involve some level of risks that can be separated into functional, physical, financial, social, psychological and time risks.
In this topic, you will learn about:
- Consumer decision-making model
- Innovation and the adoption process.
These relate to the Subject Learning Outcomes:
- Explain the basic psychological and sociological principles, theories and models influencing consumer behaviour.
- Discuss the current trends in consumer behaviour and apply them to the marketing mix.
- Identify the impact of social and cultural factors on consumer behaviour.
- Discuss how consumers make decisions that impact on their buying behaviour.
Welcome to your pre-seminar learning tasks for this week. Please ensure you complete these prior to attending your scheduled seminar with your lecturer.
Click on each of the following headings to read more about what is required for each of your pre-seminar learning tasks.
Read Chapter 9 and Chapter 10 of the prescribed text - Solomon, MR 2020, Consumer behaviour: Buying, having, and being, 13th edn., Pearson Education Ltd.
Task: Summarise key insights from the textbook in your own words in your reflective journal. You can access the reflective journal by clicking on ‘Journal’ in the navigation bar for this subject.
Watch the following four (4) videos:
- Winchester, M 2017, Low involvement and high involvement consumer decision-making , streaming video, YouTube.
- Ariely, D 2009, Are we in control of our decisions? streaming video, YouTube.
- Directive, 2018, 5 Stages of the consumer decision-making process and how it’s changed, streaming video, YouTube.
- Trustway Marketing 2019, Decision-making process: How consumers make buying decisions? streaming video, YouTube.
Task: Identify three (3) key takeouts from each of the videos and reflect on your own decision-making processes. Submit your answers to your reflective journal.
Read and watch the following content.
Consumer decision-making model
The consumer decision-making model includes three components:
- input
- process
- output.
The following figure brings together the ideas on consumer decision-making and consumption behaviour in a simplistic and holistic way. However, it does not consider all the complexities of the two concepts.
Input
The input consists of the marketing mix, sociocultural influences, and communication sources. The marketing mix includes the strategic design of the four Ps – namely product, pricing, promotion, and place (distribution) – to reach consumers and convince them to purchase the product or service. The socio-cultural influences include the reference group, culture, subculture, family, friends, peers, and social class. Communication through various communication sources and channels deliver these two inputs to the consumer.
Process
The process component of the model is linked with how consumers make decisions by considering the psychological concepts including perceived risk and the evoked set of brands. It considers the influences of:
- motivation
- perception
- learning
- personality and attitudes
- awareness of choices available
- information gathering
- evaluation of alternatives (Schiffman & Wisenblit 2019, p. 376).
Type of Decision
The decision spectrum considers the three levels of decision-making:
- extensive problem solving
- limited decision-making
- routinised-response behaviour (Schiffman & Wisenblit 2019, p. 376).
Extensive problem solving often occurs when purchasing expensive or technologically complicated or high-risk products. It also takes place when people do not have specific criteria for evaluating a product category or have not narrowed down the number of brands to a small, manageable subset.
Limited decision-making usually involves an established set of basic criteria without fully established brand preferences.
Routinised-response behaviour, also referred to as habitual buying patterns, occurs when consumers have experience with a product or category of products and services and thus only require little to no additional information to decide what to buy.
The extensiveness of the decision-making process or problem-solving task relates to the:
- selection criteria
- importance
- risk
- relevance of the decision
- how much information has been obtained about each brand and alternative choices (Schiffman & Wisenblit 2019).
Pre-purchase information search
The pre-purchase information search starts with a problem to be solved, a need to be satisfied or is part of an ongoing search. Consumers recall previous purchases and search their memory for previous experiences in relation to brands, attributes, evaluations and experiences before seeking external information from brands, manufacturers, friends and family, word-of-mouth and customer reviews.
The less a consumer knows about a product and category and the more important the buying decision is to them, the more extensive the pre-search phase becomes. The internet (search, metasearch, websites, social media and online communities) provides access to unlimited information, which can result in a cognitive challenge due to consumers’ limited information processing capacity (Schiffman & Wisenblit 2019).
The following table contrasts two types of searches, the pre-purchase search, and the ongoing search.
| Pre-purchase search | Ongoing search | |
|---|---|---|
| Determinants |
|
|
| Motive |
|
|
| Outcomes |
|
|
Advances in technologies, such as chatbots, QR codes, 360 videos, virtual tours, virtual reality (VR), augmented reality (AR) and shopping avatars, have created tools that marketers can use to help consumers to process information. These interactive digital tools have a positive effect on product knowledge and brand attitude, as well as support the decision-making process. For example, Hugo Boss has a virtual dressing room, Accor uses chatbots and tourism destinations use virtual reality so consumers can better imagine themselves on a holiday (Hoyer et al. 2018).
Various situational factors play a role during the search phase as well as three contextual factors:
- task complexity
- information organisation (format)
- time constraints (Schiffman & Wisenblit 2019, p. 379).
The following figure describes, in simple terms, the brand set considered during an evaluation process. It is the marketer’s responsibility to develop content and promotions that ensure that their product or service is relevant and favourable to get included in the evoked set of brands to become a consideration. Research has found that brand credibility, which relates to expertise and trustworthiness, plays an important role to increase the chances of inclusion in the evoked set.
The inept set of brands are related to brands that are excluded from the process while the inert set refers to brands the consumer is indifferent about (Schiffman & Wisenblit 2019).
Watch the following video to better understand evoked, inept, and inert sets of brands.
Marketers should also be familiar with the decision rules customers apply for selecting their product or services as it enables them to deliver promotional messages in such a way that it helps facilitate consumer information processing and decision-making. Decision rules are often referred to as heuristics, decision strategies or information processing strategies (Schiffman & Wisenblit 2019).
Consumer decision rules
Consumer decision rules are often categorised as compensatory and non-compensatory rules. For the compensatory rules, consumers evaluate brand options based on weighting relevant attributes. Non-compensatory decision rules include the:
- conjunctive decision rule
- disjunctive decision rule
- lexicographic decision rule
- elimination-by-aspects rule.
Using the conjunctive decision rule, a consumer develops a minimum level of attributes as a cut-off point. The disjunctive rule allows consumers to establish a cut off level for each attribute and if an option exceeds the minimum attribute level, it is automatically accepted. The lexicographic decision rule helps consumers to rank attributes with regards to how relevant and important they are. The elimination-by-aspect rule is like the lexicographic decision rule but goes through each important attribute and follows an elimination process (Schiffman & Wisenblit 2019).
Watch the following video to better understand the non-compensatory and compensatory models.
Output
The final component in the above consumer decision-making model is the output, which includes:
- purchase behaviours
- consumption patterns
- post-purchase evaluation
- post-purchase behaviour.
The following figures explain the process of post-purchase evaluation and the consequences thereof.
It has been found that consumers make three types of purchases including trial, repeat, and long-term commitment purchases. Repeat, long-term commitment purchases are closely related to the notion of customer loyalty.
Consumers make post-purchase evaluations, especially when a new product is being trialled. Satisfaction derives from expectations being met. These expectations can be divided into three types:
- Equitable performance expectations – where product or service performances are what they ought to be.
- Ideal performance expectations – where product or service performance meets best-case scenario.
- Expected performance – where product or service performances meets expectations.
The outcomes can be separated into performance matching expectations, exceeding expectations or failing to meet expectations, which leads to dissatisfaction. All possible outcomes can influence positive or negative customer reviews. Consumers aim to reassure themselves that they have made the right decision and as such attempt to reduce the so-called post-purchase cognitive dissonance.
Watch the following video to better understand post-purchase behaviour.
Watch the following video to understand the meaning of post-purchase cognitive dissonance.
Innovation and the adoption process
New products and services help consumers satisfy needs and improve their quality of life. The acceptance of new products and services is a major issue in marketing and consumer behaviour.
There is no universally endorsed definition of the term product innovation or new product. Often innovation is classified into
- Firm-orientation
- Product-orientation
- Service-orientation
- Market-orientation
- Consumer-orientation.
Firm-orientation treats an innovation considers a product to be new when it is new to the company. This view may not be as useful as consumer-orientation, which gives greater insights into how marketers can influence the acceptance and spread of an innovation.
Product-orientation is concerned with new features that may result in changes in consumer behaviour. It can be divided into three different types, some of which are more disruptive than others:
- Continuous innovation – where modified products are introduced to the market.
- Dynamically continuous innovation – which is more disruptive and may involve the creation of a new product but no changes in behaviour.
- Discontinuous innovation – where a new product is launched, resulting in a significant change in consumer behaviour patterns.
The service-orientated definition is concerned with the diffusion of service innovation.
Market-orientated definitions appraise the newness of a product, which can be highly subjective. Researchers often prefer the consumer-orientated approach in which consumers judge how new a product is. In other words, the newness is based on the consumer perception rather than features or the realities of a market (Schiffman & Wisenblit 2019).
Acceptance of new products by consumers
Not all new products have the same potential to be accepted by consumers and some take longer than others. Researchers with a focus on diffusion have found five product characteristics that appear to significantly influence the acceptance of new products by consumers:
- Relative advantage
- Compatibility
- Complexity
- Trialability
- Observability (Schiffman & Wisenblit 2019, p.465).
Relative advantage is concerned with perceived product superiority. Compatibility is concerned with meeting consumers’ needs, values and beliefs, while complexity is the degree to which a new product can be understood. Trialability is concerned with whether the new product can be trialled or tested in small amounts for consumers to evaluate how it satisfies their needs and decide whether to adopt it or not. Observability refers to the ease of observation of product benefits and attributes. Products that have a level of social visibility, such as fashion items, tend to diffuse faster than products for personal use. Diffusion also must take different cultural contexts into consideration (Schiffman & Wisenblit 2019).
The diffusion process
The area of consumer research known as the diffusion of innovation can be divided into two related processes, the diffusion process, and the adoption process.
Diffusion is the macro-process that deals with the reach and spread of new products or services amongst consumers. The process of diffusion includes four factors:
- The innovation itself
- The communication channel
- The social system
- Time.
How fast innovation is dispersed depends on the communication between marketers and consumers and the spread of word-of-mouth. Consumers are nowadays much more part of the communication or innovation process itself, instead of just being at the passive, receiver end of a message. Marketers use websites, social media, blogs, communities, podcasts, short-films, infographics and videos in addition to traditional forms of media such as radio, print and TV (Schiffman & Wisenblit 2019).
The social system
The social system has been found to greatly influence the speed and extension of the acceptance of innovation. Modern social systems positively support the acceptance of new innovations while traditional social systems may hamper them. Modern social systems have a positive attitude towards change, skilled labour force, advanced technology, respect for education and science and an outreach orientation.
The innovation adaption process
The innovation adaption process includes five stages:
- Awareness
- Interest
- Evaluation
- Trial
- Adoption (Schiffman & Wisenblit 2019, p. 389).
It provides a framework for the types of information consumers find value in the specific stages of the decision process. Mass media has been found to be valuable to create initial product awareness and as the purchase decisions move through the different stages.
Time and diffusion
Time is the heart of the diffusion process and can be divided into the identification of adopter categories, the rate of adoption and the amount of purchase time. The five different adopter categories include innovators, early adopters, early majority, late majority, and laggards. The rate of adoption refers to the time it takes for a product to be adopted by the social system which appears to be getting faster and shorter. Overall, there seems to be a global trend of rapid diffusion (Schiffman & Wisenblit 2019).
The diffusion of innovation
Watch the following video to better understand the diffusion of innovation.
Consumer innovators
Consumer innovators are consumers who are the first to purchase a new product or service and this group plays a significant role as early adopters of a product or service. Innovators are often referred to as opinion leaders and can influence the broad acceptance of a new product or discourage followers quickly. As such, they can influence a product’s market success or failure.
Consumer innovators are less likely to watch TV and have greater exposure to magazines and special interest publications. Consumer innovators are more upmarket including having undergone more formal education and have a propensity for higher income and occupational status. Personality traits that are associated with innovators include open-mindedness, uniqueness, extroversion, liberalism, creativity, high risk, and willingness and ability to deal with complex stimuli (Schiffman & Wisenblit 2019).
Consumer innovators often have a special interest in special product categories and seek information from a variety of informal and mass-media sources. Consumer innovators usually tend to focus on one or closely related general product categories and as such continue to innovate within that category. Marketers can take advantage of that knowledge and target consumers that have previously tried a new product in the same category.
Change leaders are usually high-tech innovators and help broaden the acceptance of technology innovations such as the mobile phone or GPS system. A new product retains its innovativeness for usually the first three months of its availability. Therefore, consumer innovators often adopt a new product during this timeframe (Schiffman & Wisenblit 2019).
The marketing objective for new products is to gain broad market acceptance and high penetration quickly with the purpose of establishing market leadership. This is often achieved through integrated marketing campaigns that create market demand, introductory prices that may deter the competition, and by positively influencing marketing intermediaries.
Knowledge check
Complete the following three (3) tasks. Click the arrows to navigate between the tasks.
Key takeouts
Congratulations, we made it to the end of the topic. Some key takeouts from Topic 5:
- There are three levels of consumer decision-making including extensive problem solving, limited problem solving and routinised response behaviour.
- The model of consumer decision-making has three significant elements: input, process and output.
- For a product to be considered by the consumer it requires to be in the evoked set of brands.
- Adoption is a major process in the diffusion of innovation.
- Diffusion is the macro-process and is known as the process by which the acceptance of an innovation is spread by communication to members of a social system over a period of time. It includes four factors including the innovation itself, the communication channel, the social system and time.
- Innovation can be classified into firm-orientation, product-orientation, service-orientation, market-orientation and consumer-orientation.
- Consumer innovators are early adopters of a product or service and often have a special interest in specific product categories.
Welcome to your seminar for this topic. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.
Click here to access your seminar.
The following learning tasks will be completed during the seminar with your lecturer. Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.
Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)
In-seminar learning tasks
The in-seminar learning tasks identified below will be completed during the scheduled seminar. Your lecturer will guide you through these tasks. Click on each of the following headings to read more about the requirements for each of your in-seminar learning tasks. The lecturer will start off with a re-cap on pre-seminar learning tasks for Topic 5.
For this learning task, your lecturer will assign you to a breakout room where each student will add a question to a shared Microsoft Word document. Your questions should reflect a concept from Topic 5 that you do not confidently understand.
You will discuss each question as a group, sharing relevant industry examples and academic articles. A summary of the discussion and answers will be captured by the student who posted the question. Be ready to share the summary with your lecturer during the seminar.
Your lecturer will provide further instructions about this process during your scheduled seminar. If you are unable to attend the seminar, you can complete this activity on your own and add your question to your reflective journal and share it with the lecturer.
Brainstorm the following question:
How can Apple use the consumer decision-making process model in designing a marketing strategy for a new iPad?
For this learning task, your lecturer will assign you to a breakout room where you will work together as a team and use the consumer decision-making process model to design a marketing strategy for a new iPad. The marketing strategy will be captured in a shared Microsoft Word document. Your lecturer will assist you with further instructions on this process during your scheduled seminar.
If you are unable to attend the seminar, you can complete this activity on your own and post your contribution to your reflective journal and discuss with your lecturer.
Welcome to your post-seminar learning tasks for this week. Please ensure you complete these after attending your scheduled seminar with your lecturer. Your lecturer will advise you if any of these are to be completed during your consultation session. Click on the following headings to read more about the requirements for your post-seminar learning tasks.
There are discussion forum activities for this topic, which will enhance your knowledge and give you the opportunity to interact with your peers. You can access the activities by clicking on the following links. You can also navigate to the forum by clicking on 'MKT101 Subject Forum' in the navigation bar for this subject.
Select at least one of the following discussion forums to complete. You can complete them all, if you’re feeling up to it:
It is now time to start preparing for Assessment 2. The first step is to read the case study and start taking notes about key information. Write down any questions you have about the case study or the assignment. You can find all this information in your Study Guide.
Don’t forget to make a time to meet with Learning Support so you get your assignment planner started.
This learning task is to be completed during the consultation session.
- Using your smartphone or a webcam, create a video (2-5 minutes) to describe your very own decision-making process for:
- low-involvement purchases
- high-involvement purchases.
- Upload your video to your reflective journal and share the link. Ensure you capture how your decision-making process is similar or dissimilar to the theoretical frameworks discussed in this topic.
- Comment on at least one (1) other video, which can be a reflection of your own experience compared to that of your peer.
Each week you will have a consultation session, which will be facilitated by your lecturer. You can join in and work with your peers on activities relating to this subject. These session times and activities will be communicated to you by your lecturer each week. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.
Click here to access your consultation session.
Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.
Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)
Read the following journal articles:
- Petcharat, T & Leelasantiham, A 2021, 'A retentive consumer behaviour assessment model of the online purchase decision-making process', Heliyon, 7(10):1-18.
- Voramontri, D & Klieb, L 2018, 'Impact of social media on consumer behaviour', International Journal of Information and Decision Sciences, 11(3):209–233.
References
- Ariely, D 2009, Are we in control of our decisions? streaming video, YouTube, https://www.youtube.com/watch?v=9X68dm92HVI&t=1s
- Directive, 2018, 5 Stages of the consumer decision-making process and how it’s changed, streaming video, YouTube, https://www.youtube.com/watch?v=a9lpVg54u-k
- Hoyer, WD, MacInnis, DJ, Pieters, R, Chan, E & Northey, G 2018, Consumer behaviour, Asia-Pacific edn., Cengage Learning.
- Interview Fundas 2020, Post purchase dissonance, streaming video, YouTube, https://www.youtube.com/watch?v=RNTJ7QwUsZ4
- Lui, K 2017, MARK2051: Post-purchase behaviour, streaming video, YouTube, https://www.youtube.com/watch?v=Uw3XiD0uzzM
- Rare 2015, Diffusion of innovation theory: The adoption curve, streaming video, YouTube, https://www.youtube.com/watch?v=9QnfWhtujPA
- Schiffman, LG & Wisenblit, JL 2019, Consumer Behavior, 12th edn., Pearson Education Ltd.
- Sethna, Z & Blythe, J 2019, Consumer behaviour, Asia-Pacific edn., Sage Publications Ltd.
- Solomon, MR 2020, Consumer behavior: Buying, having, and being, 13th edn., Pearson Education Ltd.
- Soisitjustme 2017, Evoked, inept and inert sets of brands, streaming video, YouTube, https://www.youtube.com/watch?v=iPU2lvLsBBA
- Trayd27 2010, Noncompensatory and compensatory models, streaming video, YouTube, https://www.youtube.com/watch?v=CKM9u65kZHg
- Trustway Marketing 2019, Decision-making process: How consumers make buying decision?, streaming video, YouTube, https://www.youtube.com/watch?v=k5V8U8tn5s0
- Winchester, M 2017, Low involvement and high involvement consumer decision-making, streaming video, YouTube, https://www.youtube.com/watch?v=77ESDNJtc1Q
