THE CONSUMER DECISION MAKING

2015 - CONSUMER BEHAVIOR DR. AHMAD FARAZ – CBA - UOD

Consumer Decision Making: Basis, Influences,

Models & Process.


Lecture

3


Why Consumer Buying Decision Process?

How many of you bought something today?How many have seen or heard an ad today?How many of you consumed something today?How many of you engaged in word of mouth about a product or service today?


The Processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and the product use

Definition Consumer Buying Decision Process

Consumer buying behavior is the study of What, Why, When, Where and How people do or do not buy a product.


Defining Consumer Buying Decision Process

Consumer Behavior blends elements from psychology, social anthropology and economics.

Research has shown that consumer behaviour is difficult to predict, even for experts in the field.

Psychology: Study of behavior and mental possess: Human activities are directed towards meeting certain needs. (Maslow`s Need Hierarchy)Social anthropology: Study of people in relation to their culture. Effect of reference group, society, role in society, etc.Economics: Study of people’s consumption of goods and service. Human is a rational buyer who wants to take maximum utility out of fixed/minimum price.


Maslow Hierarchy of Needs

http://www.google.com.pk/url?sa=i&rct=j&q=maslow's+hierarchy+of+needs&source=images&cd=&cad=rja&docid=-ky8a2oavPuRxM&tbnid=8yOF2By3A31oMM:&ved=0CAUQjRw&url=http://www.thyseo.com/maslowneeds.html&ei=dZAvUcfcF5HFtAbQxIGgBg&psig=AFQjCNGn060MCEB2JzEeLBOW-SomqcFgzA&ust=1362157035286252


Basis of Consumer Buying Decisions

- What consumers buy? - Where they buy? - When they buy? - Why they buy?- How they buy? & how much they buy?

Brands, Showrooms, Discount Outlets, Online, Occasions, Seasons, Income, Need, Culture, Life Style, Cash, Credit, Sale.

http://www.google.com.pk/url?sa=i&rct=j&q=clothes+shop&source=images&cd=&cad=rja&docid=GiN0y9EYdaXLVM&tbnid=0ToAMborhBfuNM:&ved=0CAUQjRw&url=http://depositphotos.com/1808631/stock-photo-Clothes-shop.html&ei=F4szUcb3OIeLhQfOuIDYDg&psig=AFQjCNF0K1SWlFae0cQLEArnuRcVI58fgQ&ust=1362418701409992


Types of consumers• Friendly/co-operative buyer• Timid/reserved/shy buyer• Price or quality conscious buyer• Silent buyer• Undecided buyer• Argumentative buyer• Suspicious buyer• Impatient buyer• Impulsive buyer

• Bargain buyer• Over-cautious buyer• Slow-thinking buyer• Rude/ill-mannered

buyer• Clever/intelligent

buyer


Who is involved in Consumer Buying Decision Process

The person who suggests buying a product or service.The initiator:

The person whose point of view or advice will influence the buying decision. It may be a person outside the group. (singer, athlete, actor, etc.) but on which group members rely.

The influencer:

The person who will choose which product to buy. In general, it’s the consumer but in some cases it may be another person.

The decision maker:

The person who will buy the product. Generally, this will be the final consumer.

The buyer:


Factors Influencing Consumer Buying Decision Process

Cultural

Social

Economical

Personal

Psychological


Consumer Buying Decision ProcessConsumer’s Buyer Behaviour and the resulting purchase decision are strongly influenced by cultural, social, personal, economic and psychological characteristics. Marketers will be able to develop suitable marketing mixes to appeal the target customers. Good understanding of these influencing factors is essential.

CULTURAL factors include a consumer’s culture, subculture and social class. These factors are often inherent in our values and decision processes.

SOCIAL factors include groups (reference groups, aspirational groups and member groups), family, roles and status. This explains the outside influences of others on our purchase decisions either directly or indirectly.

ECONOMIC factors includes consumer’s those are influenced largely by economic factors, such as disposable income, savings,

PERSONAL factors include such variables as age and lifecycle stage, occupation, economic circumstances, lifestyle (activities, interests, opinions and demographics), personality and self concept. These may explain why our preferences often change as our `situation' changes.

PSCHOLOGICAL factors affecting our purchase decision include motivation (Maslow's hierarchy of needs), perception, learning, beliefs and attitudes.


CULTURAL Influence in Consumer Buying Decision Process

• Cultural factors are coming from the different components related to culture or cultural environment from which the consumer belongs.

• Culture is crucial when it comes to understanding the needs and behaviors of an individual.

• An individual will be influenced by his family, his friends, his cultural environment or society that will “teach” him values.

• Cultural factors plays an important role in the perception, habits, behavior or expectations of consumers.

• Every society is composed of several sub-cultures. Subcultures are the nationalities, religions, ethnic groups, age groups, gender of the individual, etc..

• Subcultures are often considered by the brands for the segmentation of a market in order to adapt a product or a communication strategy to the values or the specific needs of this segment.


CULTURAL factors in Consumer Buying Decision Process


SOCIAL Influences in Consumer Buying Decision Process

• Social classes are groups that form a social hierarchy. • We usually find similar values , lifestyles, interests and

behaviors in individuals belonging to the same social class, (family, reference groups).

• We often assume three general categories among social classes : Lower class, Middle class and Upper class.


SOCIAL Influences in Consumer Buying Decision Process

People from different social classes tend to have different desires and consumption patterns.

Disparities resulting from the difference in their purchasing power.

Research showed, behavior and buying habits would also be a way of identification and belonging to its social class.


ECONOMIC Influences in Consumer Buying Decision Process

- Income/ disposable income- Price of product- Size of family- Savings- Consumer credit- Price of Replacement- Propensity to consume- Social Value

The Economic Factor = foundation of a purchasing decision.


People can’t buy what they can’t afford no matter how badly they need it or want it. Affordability is often argued as a matter of perspective “Creative budgeting”.

ECONOMIC Influences in Consumer Buying Decision Process

Humans are rational buyer who wants to take maximum utility out of fixed/ minimum price.


PERSONAL Influences in Consumer Buying Decision Process

Age & Life-Cycle Stage Occupation Economic Situation Lifestyle Personality & Self-

Concept

Decisions and buying behavior are obviously also influenced by the characteristics of each consumer.

Consumer lifestyle, values , environment, activities, hobbies and habits evolve with age.

Adopting change in diet from unhealthy products (fast food, ready meals) to healthier diet.



During the age 25 to 65 years the social value is more important in the decision making.


PSYCHOLOGICAL Influences in Consumer Buying Decision Process

Motivation (inner drive to act n compete) Perception (interpret stimuli into a meaningful

picture) Learning (permanent change in behavior due to

experience) Beliefs & attitude (the way we think, feel & act toward our environment)

Psychological characteristics determines how a person responds to his or her environment.

Personality is help full in marketing, because no two people are exactly the same, marketers can look for certain similar personality traits in different consumers. These consumers can then be grouped together based on this identified personality.

Product Personality includes: manly, adventurous, sporting, stylish, mature, etc.



Motivation is directly related to the need of the consumer.

•Motivation will drive consumers to develop a purchasing behavior. It is the expression of a need is which became pressing enough to lead the consumer to want to satisfy it. It is usually working at a subconscious level and is often difficult to measure. •To encourage consumers, brands should try to create, make conscious or reinforce a need in the consumer’s mind so that they develops a purchase motivation. Consumer will be much more interested in considering and buy their products.•According to research, the type of product they sell and the consumers they target, pick out the motivation and the need to which their product respond in order to make them appear as the solution to the consumers’ need.



• Perception is the process through which an individual selects, organizes and interprets the information he receives in order to do something that makes sense.

• The perception of a situation at a given time may decide if and how the person will act.

• Depending to his experiences, beliefs and personal characteristics, an individual will have a different perception from another.

• Each person faces every day tens of thousands of sensory stimuli (visual, auditory, kinesthetic, olfactory and gustatory).

• It would be impossible for the brain to process all consciously. That is why it focuses only on some of them.



• Learning is through action. When we act, we learn. • Learning implies a change in the behavior resulting

from the experience. The learning changes the behavior of an individual as he acquires information and experience.

• For example, if you are sick after drinking milk, you had a negative experience, you associate the milk with this state of discomfort and you “learn” that you should not drink milk. Therefore, you don’t buy milk anymore.

• Rather, if you had a good experience with the product, you will have much more desire to buy it again next time.



• Beliefs is a conviction that an individual has on something.

• Through the experience he acquires, his learning and his external influences (family, friends, etc..), he will develop beliefs that will influence his buying behavior.

• Attitude can be defined as a feeling, an assessment of an object or idea and the predisposition to act in a certain way toward that object. Attitudes allow the individual to develop a coherent behavior against a class of similar objects or ideas.

• Beliefs as well as attitudes are generally well-anchored in the individual’s mind and are difficult to change. For many people, their beliefs and attitudes are part of their personality and of who they are.


PSYCHOLOGICAL Influences in Consumer Buying Decision Process

Brand personality means assigning characteristics of human personality to a brand so as to achieve differentiation. These characteristics signify brand behaviour through individuals representing the brand.

Personality reflects individual differences:

Personality is consistent and enduring: Personality is subject to change over

time:

Colour can influence our emotions, our actions and how we respond to various people, things and ideas.


The family is maybe the most influencing factor for an individual. It forms an environment of socialization in which an individual will evolve, shape his personality, acquire values. But also develop attitudes and opinions on various subjects such as politics, society, social relations or himself and his desires.

FAMILY – An Influence in Consumer Buying Decision Process

But also on his consumer habits, his perception of brands and the products he buys.

We all kept, for many of us and for some products and brands, the same buying habits and consumption patterns that the ones we had known in our family.


The position of an individual enjoys within his family, at work, in his country club, his group of friends, etc.. – All this can be defined in terms of role and social status.

A social role is a set of attitudes and activities that an individual is supposed to have and do according to his profession and his position at work, his position in the family, his gender, etc.. – and expectations of the people around him.

Social roles & Status – An Influence in Consumer Buying Decision Process

Social status meanwhile reflects the rank and the importance of this role in society or in social groups. Some are more valued than others.

The social role and status profoundly influences the consumer behavior and his purchasing decisions. Especially for all the “visible” products from other people.


• The lifestyle of an individual includes all of its activities, interests, values and opinions.

• The lifestyle of a consumer will influence on his behavior and purchasing decisions.

Life Style – An Influences in Consumer Buying Decision Process

Example: a consumer with a healthy and balanced lifestyle will prefer to eat organic products and go to specific grocery stores, will do some jogging regularly (and therefore will buy shoes, clothes and specific products), etc..


Classification of consumer

Based on the readiness to try new products Innovators Early adopters Early majority Late majority Laggards


Model of Consumer Buying Behavior


Most buying decisions are Emotional ?

Our decisions are emotional, not logical.

Our emotions drive us to make those decisions. All fast decisions are emotional decisions, less than 0.1 second.

The outcomes of emotions often confuse us, especially in decision-making. They seem to defy logic and reason.

Whether it's a personal choice or a strategic business decisions, emotions often crowd out objectivity.


5 stage model of Consumer Buying Decision Process

Need Recognit

ion

Perceiving a need

Information Search

Seeking value

Alternative

Evaluation

Assessing value

Purchase Decision

Buying value

Post purchase BehaviorValue in

Usage and

Consumption


Post purchase behavior can be varied?Satisfied?

Happy?

Delighted?

Unsatisfied?

Unhappy?

Annoyed?


Satisfied?

Happy?

Delighted?

Unsatisfied?

Unhappy?

Annoyed?

Post purchase behavior can be varied?


Buying Behavior Models

Economic Model: Consumers divide their fixed income in a certain rational way.Learning Model: The response of satisfaction reinforces the relationship. Behavior can be manipulated by the drives, stimuli etc.Psychoanalytical Model: Consumer has the set of deep rooted motives that drives him to purchase or not to purchase. Sociological Model: As his role, status, interaction, influence, group relation, lifestyle, income, occupation, place of residence, social class. Nicosia Model: A link establishes between consumer and the firm. The advertising messages of the firm influence the predisposition of the consumer. Howard-Sheth Model: consumer receives inputs in the form of stimuli and ending with purchase.

Must Read from the book to get a detailed overview of these models.


Buying Behavior Model (Summary)


Thank you and Good Bye, till next class.


THE CONSUMER DECISION MAKING

Marketing

Transcript of THE CONSUMER DECISION MAKING