Unit -3

Consumer Decision Making Process

The consumer decision-making process refers to the steps a consumer
goes through when deciding whether to purchase a product or service. It
typically consists of five stages:
 Problem Recognition: This is the first step in the decision-making
process. It occurs when a consumer perceives a need or a problem
that requires a solution. For example, a person might realize that their
phone is outdated and no longer meets their needs.
 Information Search: Once the problem is recognized, the consumer
starts searching for information to solve it. This could involve
researching products online, asking friends or family for
recommendations, or visiting stores to learn more. The search can be
internal (drawing on previous experiences) or external (seeking out
new information from various sources)
 Evaluation of Alternatives: After gathering information, consumers
evaluate the different options available. This is where they compare
the features, prices, quality, and other attributes of the alternatives.
They may also consider factors such as brand reputation, reviews, or
whether the product will meet their specific needs.
 Purchase Decision: After evaluating the alternatives, the consumer
decides which product or service to purchase. This stage can be
influenced by factors like promotions, sales, or a sense of urgency.
For example, the consumer may be swayed by a discount or limited-
time offer.
 Post-Purchase Behavior: After the purchase, consumers evaluate
their decision. If the product or service meets or exceeds their
expectations, they may feel satisfaction. However, if it falls short,
they may experience buyer’s remorse or dissatisfaction. The
consumer may also share their experience with others, either
positively or negatively, which can influence future buying decisions.

Each stage is influenced by various psychological, social, and emotional

factors, and companies aim to guide consumers through this process in a
way that leads to a purchase and fosters brand loyalty.
Model of Consumer Decision Making
The problem recognition stage in the consumer behavior model is the
initial step in the decision-making process

Problem Recognition Stage

1. Need or want identification: The consumer becomes aware of a
discrepancy between their current state and a desired state.
2. Problem awareness: The consumer recognizes a problem or need that
requires a solution.
3. Triggering event: An internal or external stimulus triggers the problem
recognition, such as a product running out or a change in lifestyle.

Types of Problem Recognition

1. Active problem recognition: The consumer is actively seeking a
solution to a problem.
2. Passive problem recognition: The consumer is not actively seeking a
solution but becomes aware of a problem through external stimuli.

Factors Influencing Problem Recognition

1. Internal factors: Personal characteristics, such as demographics,
lifestyle, and personality.
2. External factors: Environmental factors, such as social media,
advertising, and word-of-mouth.

Consequences of Problem Recognition

1. Information search: The consumer begins to search for information
about potential solutions.
2. Evaluation of alternatives: The consumer evaluates different options to
solve the problem.
3. Purchase decision: The consumer makes a purchase decision based on
their evaluation.

Models of Problem Recognition

1. Engel-Kollat-Blackwell (EKB) Model: A comprehensive model that
outlines the consumer decision-making process, including problem
recognition.
2. Howard-Sheth Model: A model that focuses on the cognitive processes
involved in consumer decision-making, including problem recognition.

By understanding the problem recognition stage, businesses can develop

effective marketing strategies to address consumer needs and influence
their decision-making process.
Information Search
The pre-purchase search process significantly influences various stages
of the consumer decision-making journey. Here's how:

Pre-Purchase Search Influences

1. Information Search: Pre-purchase search provides consumers with
relevant information about products or services, helping them make
informed decisions.
2. Alternative Evaluation and Selection: The information gathered
during pre-purchase search enables consumers to evaluate and compare
different options, ultimately selecting the best fit for their needs.
3. Outlet Selection and Purchase Decision: Pre-purchase search also
influences where consumers choose to make their purchase, with factors
like convenience, price, and availability playing a role.
4. Post-Purchase Behavior: The pre-purchase search process can impact
post-purchase behavior, including satisfaction, loyalty, and potential
word-of-mouth recommendations.

Factors Influencing Pre-Purchase Search

1. Internal Factors: Personal characteristics, such as demographics,
lifestyle, and personality.
2. External Factors: Environmental factors, like social media, advertising,
and word-of-mouth.
3. Product Complexity: The complexity of the product or service can
influence the extent of pre-purchase search.
4. Perceived Risk: The level of risk associated with the purchase can also
impact pre-purchase search behavior.

Information Sources Used in Pre-Purchase Search

1. Online Reviews: Consumer reviews and ratings on websites and social
media platforms.
2. Word-of-Mouth: Recommendations from friends, family, and peers.
3. Advertising: Print, digital, and broadcast advertisements.
4. Product Websites: Company websites and product information pages.
5. Social Media: Social media platforms, including influencer marketing
and sponsored content.

By understanding the pre-purchase search process and its influences,

businesses can develop effective marketing strategies to engage with
consumers and drive sales.
Alternative evaluation is a critical stage in the consumer decision-
making process.

Alternative Evaluation Stage

1. Identifying alternatives: Consumers identify potential products or
services that can solve their problem or meet their needs.
2. Evaluating alternatives: Consumers evaluate each option based on
various criteria, such as features, benefits, price, and quality.
3. Comparing alternatives: Consumers compare the pros and cons of each
option to determine which one best meets their needs.

Factors Influencing Alternative Evaluation

1. Product attributes: Features, benefits, and characteristics of the product
or service.
2. Brand reputation: The reputation and image of the brand.
3. Price: The cost of the product or service.
4. Quality: The perceived quality of the product or service.
5. Social influence: Recommendations from friends, family, and peers.
6. Personal factors: Lifestyle, personality, and values.

Types of Alternative Evaluation

1. Compensatory evaluation: Consumers weigh the pros and cons of each
option and make a decision based on the overall evaluation.
2. Non-compensatory evaluation: Consumers use a cutoff point for each
attribute and eliminate options that do not meet the criteria.

Consequences of Alternative Evaluation

1. Purchase decision: The consumer selects a product or service based on
their evaluation.
2. Post-purchase behavior: The consumer's evaluation influences their
satisfaction, loyalty, and potential word-of-mouth recommendations.

Marketing Strategies for Alternative Evaluation

1. Product differentiation: Highlighting the unique features and benefits
of a product or service.
2. Brand positioning: Creating a unique brand image and reputation.
3. Price competition: Offering competitive pricing to attract consumers.
4. Quality assurance: Providing warranties, guarantees, and quality
certifications to build trust.

By understanding the alternative evaluation stage, businesses can develop

effective marketing strategies to influence consumer decisions and drive
sales.
The purchase decision and post-purchase evaluation stages are crucial
in the consumer decision-making process.

Purchase Decision Stage

1. Final evaluation: Consumers make a final evaluation of the alternatives
and select a product or service.
2. Purchase intention: Consumers form an intention to purchase the
selected product or service.
3. Purchase decision: Consumers make the actual purchase.

Factors Influencing Purchase Decision

1. Product attributes: Features, benefits, and characteristics of the product
or service.
2. Price: The cost of the product or service.
3. Sales promotion: Discounts, promotions, and special offers.
4. Store atmosphere: The physical and emotional environment of the
store.
5. Salesperson influence: The influence of sales personnel on the
purchase decision.

Post-Purchase Evaluation Stage

1. Satisfaction: Consumers evaluate their satisfaction with the purchase.
2. Expectation confirmation: Consumers compare their expectations with
the actual performance of the product or service.
3. Disconfirmation: Consumers experience a discrepancy between their
expectations and the actual performance.

Consequences of Post-Purchase Evaluation

1. Loyalty: Satisfied consumers are more likely to become loyal
customers.
2. Word-of-mouth: Satisfied consumers are more likely to recommend the
product or service to others.
3. Repurchase intention: Satisfied consumers are more likely to
repurchase the product or service.
4. Complaint behavior: Dissatisfied consumers may engage in complaint
behavior, such as returning the product or seeking a refund.

Marketing Strategies for Post-Purchase Evaluation

1. Customer service: Providing excellent customer service to ensure
satisfaction.
2. Warranty and guarantee: Offering warranties and guarantees to build
trust.
3. Follow-up communication: Engaging in follow-up communication to
ensure satisfaction and gather feedback.
4. Loyalty programs: Implementing loyalty programs to reward repeat
customers.

By understanding the purchase decision and post-purchase evaluation

stages, businesses can develop effective marketing strategies to drive
sales, build customer loyalty, and improve customer satisfaction.

Situational Influences on Consumer Decision Making Process

Situational influences play a significant role in the consumer decision-

making process. These influences can affect how consumers behave,
perceive, and make purchasing decisions.

Types of Situational Influences

1. Physical surroundings: The physical environment in which the
consumer is making a purchase, such as a store or online platform.
2. Social surroundings: The presence of others, such as friends, family, or
salespeople, that can influence the consumer's decision.
3. Time constraints: The amount of time available to make a purchase,
which can affect the consumer's decision-making process.
4. Purchase occasion: The specific occasion or event that is driving the
purchase, such as a birthday or holiday.
5. Task definition: The specific task or goal that the consumer is trying to
accomplish, such as buying a gift or finding a solution to a problem.

Effects of Situational Influences

1. Perception: Situational influences can affect how consumers perceive
products, services, and brands.
2. Attitudes: Situational influences can shape consumers' attitudes
towards products, services, and brands.
3. Behavior: Situational influences can influence consumers' behavior,
such as their purchasing decisions and consumption patterns.

Examples of Situational Influences

1. Shopping with friends: When shopping with friends, consumers may
be more likely to try new products or brands.
2. Time pressure: When under time pressure, consumers may make more
impulsive purchasing decisions.
3. Special occasions: Consumers may be more likely to splurge on special
occasions, such as holidays or birthdays.
4. In-store promotions: In-store promotions, such as sales or discounts,
can influence consumers' purchasing decisions.

Marketing Strategies for Situational Influences

1. Store design: Designing stores to create a welcoming and engaging
atmosphere.
2. In-store promotions: Offering in-store promotions, such as sales or
discounts, to influence purchasing decisions.
3. Event marketing: Creating events and experiences that drive sales and
engagement.
4. Personalized marketing: Using data and analytics to create
personalized marketing messages and offers.

By understanding situational influences, businesses can develop effective

marketing strategies to influence consumer behavior and drive sales.

Cognitive Dissonance

Cognitive dissonance is a psychological concept that refers to the

discomfort or tension that arises when an individual holds two or more
conflicting beliefs, values, or attitudes.

Definition
Cognitive dissonance is a state of mental discomfort or tension that
occurs when an individual experiences a discrepancy between their
beliefs, values, or attitudes and their behavior or new information.

Causes of Cognitive Dissonance

1. Conflicting beliefs: Holding two or more conflicting beliefs or values.
2. New information: Receiving new information that challenges existing
beliefs or values.
3. Behavioral inconsistency: Engaging in behavior that is inconsistent
with existing beliefs or values.

Effects of Cognitive Dissonance

1. Discomfort: Feeling uncomfortable or tense due to the conflicting
beliefs or values.
2. Anxiety: Experiencing anxiety or stress due to the conflicting beliefs or
values.
3. Motivation to change: Feeling motivated to change one's beliefs,
values, or behavior to reduce the discomfort.
Reducing Cognitive Dissonance
1. Changing beliefs: Changing one's beliefs or values to align with new
information or behavior.
2. Justifying behavior: Justifying one's behavior to reduce the discomfort.
3. Denial: Denying the existence of the conflicting information or
behavior.
4. Rationalization: Rationalizing the conflicting information or behavior
to reduce the discomfort.

Marketing Implications of Cognitive Dissonanace

1. Post-purchase dissonance: Consumers may experience cognitive
dissonance after making a purchase, which can affect their satisfaction
and loyalty.
2. Brand loyalty: Consumers may experience cognitive dissonance when
considering switching to a different brand, which can affect their loyalty.
3. Advertising: Advertisers can use cognitive dissonance to create
awareness and motivate consumers to take action.

By understanding cognitive dissonance, businesses can develop effective

marketing strategies to reduce discomfort and increase customer
satisfaction and loyalty.

What is Diffusion of
Innovation?
Diffusion of Innovation (DOI) is a theory popularized by American communication
theorist and sociologist, Everett Rogers, in 1962 that aims to explain how, why, and
the rate at which a product, service, or process spreads through a population or social
system. In other words, the diffusion of innovation explains the rate at which new
ideas and technology spread. The diffusion of innovation theory is used extensively
by marketers to understand the rate at which consumers are likely to adopt a new
product or service.
In the diffusion of innovation theory, there are five adopter categories:
1. Innovators: Characterized by those who want to be the first to try the
innovation.
2. Early Adopters: Characterized by those who are comfortable with change and
adopting new ideas.
3. Early Majority: Characterized by those who adopt new innovations before
the average person. However, evidence is needed that the innovation works
before this category will adopt the innovation.
4. Late Majority: Characterized by those who are skeptical of change and will
only adopt an innovation after it’s been generally accepted and adopted by the
majority of the population.
 5. Laggards: Characterized by those who are very traditional and conservative –
they are the last to make the changeover to new technologies. This category is
the hardest to appeal to.

Rogers provides the distribution of the five adopter categories as follows: Innovators
represent the first 2.5% of the group to adopt an innovation, followed by 13.5% as
early adopters, 34% as early majorities, 34% as late majorities, and finally,16% as
laggards. Note that the size of the laggards category is much larger than that of the
innovators category on the opposite end of the spectrum.

Diffusion of Innovation: Innovators

Innovators are those who want to be the first to acquire a new product or service.
They are risk-takers, price-insensitive, and are able to cope with a high degree
of uncertainty. Innovators are crucial to the success of any new product or service, as
they help it to gain market acceptance.
For example, individuals who stay overnight outside a movie theatre to be the first to
purchase the first showing to a movie are considered innovators.
Diffusion of Innovation: Early Adopters

Early adopters are those who are not quite as risk-taking as innovators and typically
wait until the product or service receives some reviews before making a purchase.
Early adopters are referred to as “influencers” or “opinion leaders”, and are often
regarded as role models within their social system. They are key in helping the spread
of a product or service achieve “critical mass”.
Therefore, if early adopters of a product or service are small, the total number of
people who adopt the product or service will likely be small as well. Individuals who
wait a couple of days and spend some time reading reviews before going to see a
movie are regarded as early adopters.
Diffusion of Innovation: Early Majority

Early majorities represent the majority of the market – 34%. Early majorities are not
risk-taking and typically wait until a product or service is tested or used by a trusted
peer. These individuals are prudent and want to purchase things that are proven to
work.
Individuals who go to a movie after it’s been out several weeks and gotten good
reviews and made profits at the box office are early majorities.
Diffusion of Innovation: Late Majority

Late majorities also represent an important percentage of the market – 34%. Late
majorities are the last large group of consumers to enter the market. They are deemed
conservative and are often technologically shy, very cost-sensitive, skeptical, and
cautious in making a purchase. In addition, late majorities are often peer pressured
into purchasing the product or service.
People who wait for a movie to become available online or on Netflix are regarded as
late majorities.
Diffusion of Innovation: Laggards

Laggards are the last to adopt a new product or service. They resent change and may
continue to rely on traditional products or services until they are no longer available.
In other words, they typically only adopt the new technology when virtually forced to.
Laggards perhaps finally catch a hit movie when it’s shown on network TV.
Importance of the Diffusion of Innovation

The diffusion of innovation theory explains the rate at which consumers will adopt a
new product or service. Therefore, the theory helps marketers understand how trends
occur, and helps companies in assessing the likelihood of success or failure of their
new introduction. By utilizing the diffusion of innovation theory, firms can predict
which types of consumers will purchase their product/service and create effective
marketing strategies to push acceptance through each category.
The Adoption process
The adoption process refers to the series of stages that a consumer goes through when
considering the adoption of a new product, service, or idea.
Stages of the Adoption Process
1. Awareness: The consumer becomes aware of the new product, service, or idea.
2. Interest: The consumer develops an interest in the new product, service, or idea
and seeks more information.
3. Evaluation: The consumer evaluates the new product, service, or idea and
considers its potential benefits and drawbacks.
4. Trial: The consumer tries the new product, service, or idea on a small scale or
through a trial or demonstration.
5. Adoption: The consumer decides to adopt the new product, service, or idea and
makes a purchase or commitment.
6. Confirmation: The consumer evaluates the effectiveness of the new product,
service, or idea and confirms their decision to adopt.
Factors Influencing the Adoption Process
1. Perceived benefits: The consumer's perception of the benefits of the new product,
service, or idea.
2. Perceived risks: The consumer's perception of the risks associated with the new
product, service, or idea.
3. Social influence: The influence of others, such as friends, family, or peers, on the
consumer's decision to adopt.
4. Personal characteristics: The consumer's personal characteristics, such as their
values, attitudes, and lifestyle.
5. Marketing efforts: The marketing efforts of the company, such as advertising,
promotion, and sales.
Marketing Strategies for the Adoption Process
1. Building awareness: Creating awareness of the new product, service, or idea
through advertising and promotion.
2. Generating interest: Generating interest in the new product, service, or idea
through demonstrations, trials, and other experiential marketing efforts.
3. Evaluating alternatives: Helping consumers evaluate the new product, service, or
idea and compare it to existing alternatives.
4. Facilitating trial: Facilitating trial or demonstration of the new product, service, or
idea to reduce risk and increase confidence.
5. Encouraging adoption: Encouraging adoption through incentives, discounts, and
other promotional offers.
By understanding the adoption process, businesses can develop effective marketing
strategies to promote the adoption of new products, services, and ideas.

Resistance to Innovation
Resistance to innovation refers to the tendency of individuals or organizations to resist
or oppose new ideas, products, or services.
Reasons for Resistance to Innovation
1. Fear of change: Fear of the unknown or fear of change can lead to resistance to
innovation.
2. Lack of understanding: Lack of understanding or awareness of the innovation can
lead to resistance.
3. Perceived risk: Perceived risk or uncertainty about the innovation can lead to
resistance.
4. Habit: Existing habits or routines can make it difficult to adopt new innovations.
5. Social influence: Social influence or peer pressure can lead to resistance to
innovation.
Types of Resistance to Innovation
1. Active resistance: Active resistance involves deliberate efforts to oppose or block
the innovation.
2. Passive resistance: Passive resistance involves a lack of enthusiasm or support for
the innovation.
Factors Influencing Resistance to Innovation
1. Personal characteristics: Personal characteristics, such as age, education, and
personality, can influence resistance to innovation.
2. Organizational culture: Organizational culture and values can influence resistance
to innovation.
3. Social norms: Social norms and peer pressure can influence resistance to
innovation.
4. Communication: Effective communication can help to reduce resistance to
innovation.
Overcoming Resistance to Innovation
1. Education and awareness: Educating individuals about the innovation and its
benefits can help to reduce resistance.
2. Involvement and participation: Involving individuals in the innovation process
can help to build support and reduce resistance.
3. Addressing concerns: Addressing concerns and addressing perceived risks can
help to reduce resistance.
4. Building trust: Building trust and credibility can help to reduce resistance to
innovation.
Marketing Strategies for Overcoming Resistance to Innovation
1. Segmentation: Segmenting the market and targeting specific groups can help to
reduce resistance.
2. Positioning: Positioning the innovation as a solution to a specific problem or need
can help to reduce resistance.
3. Communication: Effective communication and education can help to reduce
resistance.
4. Incentives: Offering incentives or rewards can help to encourage adoption and
reduce resistance.
By understanding resistance to innovation, businesses can develop effective
marketing strategies to overcome resistance and promote the adoption of new ideas,
products, and services.