CHAPTER TWO

CONSUMERS DECISION MAKING

11/30/2024
By Yazachew M.
.

 CONT..

11/30/2024
A decision is the selection of an option form two or
more alternative choices.
 This definition implies that, for a person to make a de-

By Yazachew M.
cision, a choice of alternatives must be available.
 When a person has a choice between making a pur-

chase and not making a purchase, a choice between

brand X and brand Y, or a choice of spending time do-
ing A or B, that person is in a position to make deci-
sion.
 When consumers buy your products or services,

11/30/2024
they engage in a decision-making process.
 Many factors can influence the individual through-

By Yazachew M.
out this process.
 By understanding consumer behavior, you can help a

consumer move through this process smoothly.

 RECOGNIZING FACTORS THAT INFLUENCE
THE PURCHASE DECISION

11/30/2024
 When it comes to the consumer decision-making process,
There are two categories of personal influence regarding the
purchase decision. They include the following

By Yazachew M.
 Internal influences: These influences include perceptions, atti-

tude, lifestyle, and roles.

 External influences: These influences include cultures, subcul-

tures, household structures, and groups that have an effect on

the individual
 CONT..

11/30/2024
 As a business owner or marketer, you can influence
the entire process and not just the purchasing decision.

By Yazachew M.
 By taking the time to understand your customer's
needs and concerns as they move through that deci-
sion-making process, you increase your chances of
winning their business.
 LEVELS OF PROBLEM SOLVING
Extensive problem solving
Consumers have no established criteria for evaluating a product
category or a brand or have not narrowed the number of brands to
a small, manageable size.
Consumers need a great deal of information to establish a set of
criteria.
Limited Problem Solving
Consumers have established the basic criteria for evaluating the product.
Consumers have not fully established preferences about a select group of
brands.
Additional information is needed to select among the various brands.
Routinized Response Behavior
The consumer has experience with the product category
The consumer has a well established set of evaluation criteria.
The consumer searches for a small amount of additional information simply to
review what they already know.
 TYPES OF BUYING BEHAVIOR

11/30/2024
 Consumer decision making varies with the type of buying deci-
sion

By Yazachew M.
 The decision to buy tooth paste, a tennis racket, a personal

computer, and a new car are all very different

 Complex and expensive purchases are likely to involve more

buyer deliberation and more Participants.

Henry Assael distinguished four types of consumer behavior
 11/30/2024 By Yazachew M.
CONT..
CONT…

11/30/2024
1. Complex Buying Behavior
Complex buying behavior involves a three step

By Yazachew M.
Process.
First the buyer develops beliefs about the product.
Second he or/she develops attitudes about the product.
Third he/she makes a thoughtful choice.
 CONT..

11/30/2024
 Complex buying behavior; when consumers are highly involved
in a purchase and aware of significant difference among brands;

By Yazachew M.
 This is usually the case when the product is expensive, bought

infrequently, and highly self expressive, like an automobile.

 The marketer of a high involvement product must understand

consumers’ information gathering and evaluation behavior

 CONT…

11/30/2024
 The marketer needs to develop strategies that assist the buyer
in learning about the product, the product’s attributes and
their relative importance.

By Yazachew M.
The marketer needs to differentiate
• The brand's features,

• Use print media to describe the brand’s benefit.

• motivate sales personnel and the buyers to the final brand
choice.
 CONT…
2. Dissonance-reducing buyer behavior

11/30/2024
Some times the consumer is highly involved in a purchase but

sees little difference in brands.

By Yazachew M.
The high involvement is based on the fact that the purchase is

expensive, infrequent, and risky.

In the case above the buyer will shop around to learn what is

available.
 CONT…

11/30/2024
 If the consumer finds quality differences in the brands, he/she
might go for the higher price.

By Yazachew M.
 If the consumer finds little difference, he/she might simply

buy on price/convenience
3. Habitual Buying Behavior
 Many products are bought under conditions of low involve-

ment and the absence of significant brand differences.

CONT…

11/30/2024
 Consider salt, consumers have little involvement in the prod-
uct category. They go to the store and reach for the brand.
 If they keep reaching for the same brand, it is

By Yazachew M.
out of habit, not strong brand loyalty.
 With this products, consumer behavior does not pass through

the normal sequence of belief, attitude, and behavior.

 Consumers do not search extensively for information, evalu-

ate characteristics, and make decisions.

CONT…

11/30/2024
 Consumers for this products are passive recipients of informa-
tion in television or print Ads,
 Ad repetition creates brand familiarity rather than brand con-

By Yazachew M.
viction.
 For low involvement products, the buying process begins with
brand beliefs formed by passive learning, followed by pur-
chase behavior, which may be followed by evaluation
 CONT…

11/30/2024
 Marketers of such products find it effective to use price and
sales promotion to stimulate product trial

By Yazachew M.
 Television advertising is more effective than Print because it is

a low involvement medium suitable for passive learning

4. Variety seeking behavior
Some buying situations are characterized by low involvement but
significant brand differences
 CONT…

11/30/2024
 Here consumers often do a lot of brand switching.
 Think about cookies, the consumer has some beliefs

By Yazachew M.
about cookies,
 chooses a brand of cookies without much

evaluation, and evaluates the product during

Consumption.
CONT…
 Next time, the consumer may reach for another Brand out of

11/30/2024
wish for a different taste.
 Brand switching occurs for the sake of variety rather than dis-

By Yazachew M.
satisfaction.
 You may encourage variety seeking behavior by offering lower
prices, free samples, and advertising that presents reasons for
trying something new.
CONT…

11/30/2024
Decision-Making Process
Research shows that customers go through a five-stage

By Yazachew M.
decision-making process in any purchase, whether it’s a
product or a service
 BUYER DECISION PROCESS

Purchase

11/30/2024
Decision Post
purchase
Behavior

By Yazachew M.
Evaluation
of Alterna-
tives
Information
Search
Need
Recognition
CONT…

11/30/2024
Phase 1: Recognizing a Need or Desire
 During the first phase of the decision-making process, a con-

By Yazachew M.
sumer recognizes that he has a need.
 The buyer recognizes and senses a gap between his actual

state and his desired state.

 A need can be triggered by internal stimuli or external stimuli

 Internal stimuli are those things from within that make the

consumer to do or buy something.

CONT…

11/30/2024
 For example, an internal stimulus might be feeling sleepy
and wanting rest, being hungry and wanting food.

By Yazachew M.
External stimuli are the outside influences that get you to do or
buy something.
Consumers recognize needs in the following three ways
 Advertisements or conversation with friends that cause an

awareness of a need. (These are external stimuli.)

 CONT…

11/30/2024
 Consultative selling, which is the seller’s ability to uncover a
need. (This is an external stimulus.)

By Yazachew M.
 The consumer’s evaluation of his current situation, which
causes him to detect an area of dissatisfaction.(This is an in-
ternal stimulus, so you can’t influence it.)
 CONT…

11/30/2024
 After a consumer realizes he has a need or a problem, he must
find a solution.

By Yazachew M.
Phase 2: Seeking and Researching Possible Solutions (information
search)
 Consumers begin the information search process by conducting

an internal search of what they’re looking for and what will ful-
fill their need and desire on a personal level.
 CONT.
 Then they follow up with an external search for information

11/30/2024
from friends, family members, salespeople, and advertisements.
Consumers often use several sources for information, including

By Yazachew M.
the following.
 Personal sources Family, friends, neighbors, and acquaintances.

 Commercial sources Advertising, salespeople, dealers, product

packaging, retail displays, and the Interne.t

 Public sources Mass media.

 Experiential sources Handling, examining, and using the product

—perhaps on a trial basis.

 CONT…

11/30/2024
Phase 3: Evaluating the Alternatives
 During this phase, the consumer processes information and

By Yazachew M.
arrives at his decision.
 He does so by evaluating, identifying, and assessing the value

of the alternatives.
 The consumer looks at the features that he wants.

 The depth of evaluation often depends on the individual con-

sumer and the importance attached to the specific buying sit-

uation.
 CONT…..

11/30/2024
 Criteria for making that decision can include one or more of
the following

By Yazachew M.
 Color, Durability, Options, Price, Quality, Safety, Status, Style,
and Warranty
 In some situations a consumer will use careful calculations and
logical thinking.
 CONT…

11/30/2024
 High-involvement purchases
This type of purchase includes products or services that involve a

By Yazachew M.
high expenditure or a great deal of personal risk.
 Examples of high-involvement purchases are buying a car or

home or making investments.

When a purchase is highly involving, a consumer goes through a
more in-depth evaluation process.
 CONT…

11/30/2024
 He/She puts more time, attention, and energy
into the research phase of the buying process.

By Yazachew M.
 The consumer is making a value decision by weighing several

equivalent products and trying to make the best decision she

can based on her individual criteria.
Low-involvement purchases
 This type of purchase includes products or services that involve

a lower expenditure and less personal risk

 CONT…

11/30/2024
 Examples of low-involvement purchases are choosing a hair
shampoo,

By Yazachew M.
 Low-involvement purchases are less about value and more often

about convenience, which is why they require a simple evalua-

tion process.
 CONT…

11/30/2024
 Phase 4: Assessing the Value of the Chosen Product or
Service(purchase)

By Yazachew M.
 After a consumer evaluates and selects the best alternative,

he/she’s ready to purchase.

 The consumer must now determine whether she feels that

she’s buying a product or service that has value.

CONT….

11/30/2024
 How this phase works
 The two factors that come into play when de-

By Yazachew M.
termining buying value is the quality and the
customer service the consumer receives.
 CONT…

11/30/2024
How you use this knowledge in your marketing
 The more you can help the consumer, the better off you will be.

By Yazachew M.
If the consumer is satisfied with your service, experience, and
shopping atmosphere, the purchase is made
 If he’/she’s dissatisfied, they may delay the purchase or end up

not buying from you at all.

CONT…
Post purchase/ satisfaction

11/30/2024
Phase 5: Evaluating the Purchase after the deed is done
After the purchase is complete, your job is done, correct?

By Yazachew M.
Wrong.
 Remember that the end of the sale isn’t always the end of the

buying process
 In fact, it could be the beginning of another sale if you follow

the process through to completion and satisfaction.

 CONT…

11/30/2024
How this phase works
 We can categorize post-purchase outcomes in one of the follow-

By Yazachew M.
ing three categories:
Outcome 1: Purchase is below expectation
 The chances of this customer returning and asking for a refund

or exchange are high

 He has evaluated his purchase and he isn’t happy

 The purchase didn’t meet his expectations.

 CONT…

11/30/2024
 This unhappy consumer will return and expect you to make the
situation right.

By Yazachew M.
 The chances of him recommending your product to any of his

friends, family, or associates are slim to none.

 When a consumer doesn’t return to your business because he’s

unsatisfied, this can spur negative word-of-mouth advertising.

CONT…

11/30/2024
Outcome 2: Purchase matches expectation
 The purchase the customer has made matches the expecta-

By Yazachew M.
tion that he had.
 In the post-purchase phase, you probably hear back from

this customer
 The customer becomes to satisfied

Outcome 3: Purchase exceeds expectation

 If you achieve this outcome, you’ve reached what all busi-

nesses hope to reach

 The consumer becomes to delighted
 CONT…

11/30/2024
 Your customer feels that he has received value from the pur-
chase and that you provided top-notch service.

By Yazachew M.
 This customer will likely be a repeat customer and will send

new buyers through word-of-mouth marketing

In this phase, the consumer is comparing his level of satisfaction
or dissatisfaction by comparing his expectations with his per-
ceptions of what he has received from the purchase
 CONT….

11/30/2024
Making sure your products and services deliver on their prom-
ises.

By Yazachew M.
 Offer quality products and services, and market them in a way

that will meet the expectation of the customer.

 For example, if you know a product isn’t meant for children,

don’t market it as a product for children.

 If you know a product has an unfavorable flavor, don’t say it

tastes great.
 CONT…

11/30/2024
Mitigating cognitive dissonance
 Summarizing the product’s benefits after the purchase.

By Yazachew M.
 Repeating to the customer why the product is better than the al-

ternative.
 Emphasizing how satisfied the customer will be

 Providing toll-free numbers to encourage communication after

the sale.
 Offering liberalized return and refund polices and making your

customer aware of them.

CONT…

11/30/2024
Following up after the sale and handling dissatisfaction
 After the sale or provision of service, it’s important as a busi-

By Yazachew M.
nessperson that you help customers deal with post-purchase
discomfort.
To ensure overall satisfaction and a repeat purchase
 train your staff on how to deal with customer complaints, and

implement a follow-up program that includes a post-purchase

evaluation
 CONT…

11/30/2024
 This assessment, which is performed on customers after
they’ve purchased from you, helps to measure their satisfac-
tion.

By Yazachew M.
By developing post-purchase activities and services, you have the
ability to;
 reduce a customer’s anxiety,

 build goodwill, and

 Lay the groundwork for future sales.

 CONT…

11/30/2024
 You conduct a post-purchase evaluation by;
 Using customer-satisfaction surveys

By Yazachew M.
 Making follow-up phone calls

 Mailing cards or letters

 Sending e-mail follow-ups

Post purchase communications to buyers have

been shown to result in fewer product returns
and order cancellations.
CONT…

11/30/2024
Post purchase use and disposal
Marketers should also monitor how buyers use

By Yazachew M.
and dispose of the product
 If consumers store the product in a close set,

the product is not probably satisfying, and

word of mouth will not be strong
 If they sale or trade the product, new product

sales will be depressed.

CONT…

11/30/2024
 If consumers throw the product away, the marketer

By Yazachew M.
needs to know how they dispose of it, especially if it
can hurt the environment