🛒Consumer Behavior Unit 13 – Consumer Decision Making Process

Key Concepts and Theories

• Consumer decision making process framework outlines the stages consumers go through when making purchase decisions
• Rational choice theory assumes consumers make decisions based on maximizing utility and minimizing costs
• Bounded rationality recognizes limitations in consumer decision making due to cognitive constraints, time pressure, and incomplete information
• Prospect theory proposes that consumers make decisions based on potential gains or losses relative to a reference point
  • Consumers are more averse to losses than they are attracted to equivalent gains (loss aversion)
• Heuristics are mental shortcuts used to simplify decision making (availability, representativeness, anchoring)
• Involvement level influences the extent of the decision making process (high involvement leads to extensive problem solving)
• Perceived risk affects consumer decisions and can be mitigated through information search and risk-reduction strategies

Stages of Consumer Decision Making

• Problem recognition occurs when a consumer identifies a need or want triggered by internal or external stimuli
• Information search involves gathering data about potential solutions to the recognized problem
  • Internal search relies on memory and prior experiences
  • External search seeks information from outside sources (friends, reviews, advertisements)
• Evaluation of alternatives compares the attributes and benefits of different options to determine the best choice
• Purchase decision is the selection of a product or service based on the evaluation stage
• Post-purchase evaluation assesses the consumer's satisfaction with the purchase and informs future decisions
  • Cognitive dissonance may occur if the consumer experiences doubt or regret about their choice
• Divestment is the disposal of the product through resale, donation, or discarding

Factors Influencing Consumer Decisions

• Cultural factors shape consumer preferences, values, and behaviors through shared beliefs, norms, and traditions
  • Subcultures and social classes further influence consumer decisions within a broader cultural context
• Social factors include the impact of reference groups, family, and social roles on consumer choices
• Personal factors encompass demographic characteristics (age, gender, income), lifestyle, and personality traits
• Psychological factors involve an individual's motivation, perception, learning, and attitudes
• Situational factors are temporary conditions that affect the decision making process (time pressure, physical surroundings, purchase occasion)
• Marketing mix elements (product, price, place, promotion) are controllable variables that influence consumer decisions
• Economic factors such as disposable income, consumer confidence, and market conditions impact purchasing power and willingness to spend

Psychological Aspects of Decision Making

• Motivation drives consumer behavior and can be intrinsic (internal desires) or extrinsic (external rewards)
  • Maslow's hierarchy of needs suggests that consumers prioritize different levels of needs (physiological, safety, social, esteem, self-actualization)
• Perception is the process by which consumers select, organize, and interpret information from the environment
  • Selective attention, distortion, and retention filter and shape consumer perceptions
• Learning occurs through experiences and influences future consumer behavior
  • Classical conditioning associates a stimulus with a response (brand jingles)
  • Operant conditioning reinforces behavior through rewards or punishments (loyalty programs)
• Attitudes are learned predispositions to respond consistently to an object or idea
  • Cognitive (beliefs), affective (feelings), and conative (intentions) components shape attitudes
• Personality refers to an individual's unique psychological characteristics that influence behavior
  • Brand personality ascribes human traits to brands to create emotional connections with consumers

Marketing Strategies and Consumer Choices

• Segmentation divides the market into distinct groups of consumers with similar needs or characteristics
  • Demographic, geographic, psychographic, and behavioral segmentation bases are commonly used
• Targeting selects the most attractive and profitable segments to focus marketing efforts on
• Positioning creates a distinct and favorable image of the product or brand in the minds of target consumers
  • Perceptual mapping visually represents consumer perceptions of competing brands along relevant attributes
• Branding builds strong, positive associations and loyalty through consistent messaging and experiences
• Advertising influences consumer decisions by creating awareness, providing information, and persuading purchase
  • Appeals to emotions, humor, fear, or rationality are used to capture attention and motivate action
• Sales promotions offer temporary incentives to encourage product trial or purchase (coupons, samples, contests)
• Personal selling involves direct interaction between salespeople and consumers to build relationships and close sales

Real-World Examples and Case Studies

• Apple's iPhone launch revolutionized the smartphone industry by creating a strong brand identity and loyal customer base
  • Effective positioning as a sleek, innovative, and user-friendly device
  • Consistent advertising campaigns emphasizing design, functionality, and customer experience
• Coca-Cola's "Share a Coke" campaign personalized the product with popular names and phrases printed on cans and bottles
  • Encouraged social sharing and increased sales by appealing to consumers' desire for connection and individuality
• Patagonia's "Don't Buy This Jacket" ad challenged consumers to consider the environmental impact of their purchases
  • Aligned with the company's values of sustainability and responsible consumption
  • Appealed to environmentally conscious consumers and strengthened brand loyalty
• Ikea's showroom layout and product displays create an immersive shopping experience that influences consumer decisions
  • Encourages consumers to visualize products in their own homes and provides inspiration for home furnishing
  • Strategically placed impulse purchase items near checkout to increase average order value

Ethical Considerations in Consumer Behavior

• Deceptive advertising misleads consumers by making false or exaggerated claims about a product or service
  • Violates trust and can lead to negative consequences for both consumers and brands
• Targeting vulnerable populations (children, elderly, low-income) raises ethical concerns about exploiting their vulnerabilities
• Privacy issues arise from the collection, use, and protection of consumer data for marketing purposes
  • Informed consent and transparency are essential for maintaining consumer trust
• Sustainable consumption encourages responsible decision making that considers the environmental and social impact of purchases
  • Promotes products and practices that minimize waste, conserve resources, and support fair labor conditions
• Socially responsible marketing aligns business practices with the well-being of society and the environment
  • Cause-related marketing, corporate social responsibility initiatives, and ethical sourcing demonstrate commitment to social issues

Applying Consumer Decision Making Models

• Engel, Kollat, and Blackwell (EKB) model outlines five stages: problem recognition, information search, evaluation, purchase, and outcomes
  • Emphasizes the importance of environmental influences and individual differences in the decision making process
• Howard-Sheth model focuses on three key variables: inputs (stimuli), perceptual constructs (attention and information search), and outputs (attitudes, intention, purchase)
  • Highlights the role of learning and feedback in shaping future consumer decisions
• Nicosia model illustrates the dynamic relationship between a firm's marketing communications and the consumer's decision making process
  • Consists of four fields: firm's attributes, consumer's attributes, search and evaluation, and feedback
• Stimulus-Response model simplifies the decision making process into input (stimuli), process (consumer characteristics and decision process), and output (purchase response)
  • Useful for understanding the impact of marketing stimuli on consumer behavior
• Consumer decision journey (CDJ) maps the non-linear path consumers take as they move through the stages of consideration, evaluation, purchase, and post-purchase experience
  • Recognizes the influence of digital touchpoints and the iterative nature of modern consumer decision making