Importance of understanding customer decision making process

Introduction

The main focus of this assignment will be consumer behaviour and how important is for marketer to understand process of buyer decision making. Consumers are people who buy goods and services for their own use or for gift to other rather to make something else to sell or to run organization. In order to create value for consumers and profit for organization, marketers need to understand why consumers buy certain products and not the others.

To obtain this challenging task, “marketers study consumer behaviour, which can be defined as the thoughts, feelings, and actions of consumers and the influences on them that determine exchanges” [1] .

The behaviour of consumers is often irrational and unpredictable. They say one thing but do another. Still, the effort spend trying to understand the way people think when they go about purchasing behaviour is a key factor in successful marketing.

The Customer Buying Process (Decision- Making Process)

The consumer buying process includes five stages of activities that consumers may go through in buying goods or services. However, in more routine purchases, customers often skip or reverse some of the stages. For example a student buying a favourite sandwich would recognize a need (hunger) and go right to purchase decision, skipping stages search for information and evaluation. Another example is when customers who are loyal to product or brand will skip some stages and most likely to simply purchase the same product they bought last time. However marketers need to consider all buying process rather than just the purchase decision (when it may be too late for a business to influence the choice!) [2] .

The buying process begins with a recognized need. This recognition may come from an internal feeling such as hunger, thirst or fatigue (e.g. we have headache and need to buy painkillers or we hungry and we’re buying food), or it may come from external stimuli such as advertising, window shopping, interacting with sales people or talking with friends and family. [3] External stimuli can also arouse internal responses such a hunger; for example watching McDonald’s advertisement you might feel hungry.

When consumers have identified a need, they may look for information about how to satisfy it. A lorry driver who feels hungry might start looking for billboard advertising restaurants near motorway. Customer needs to decide how much information (if any) is required. If the need is strong and there is a product or service that meets the need close to hand, then a purchase decision is likely to be made there and then. If not, then the process of information search begins.

Five general sources:

Internal sources – memory. For example, if student wants to go to cinema watch move, he or she might first search his/her memory for past experience.

Group sources – friends and relatives (word of mouth). E.g. to choose which movie student will see, he/she might rely on a recommendation of friends or family.

Marketing sources – advertising, salespeople, retailers, dealers, packaging. E.g. alternatively, student might check newspapers or inline.

Public sources – television, newspapers, radio, specialist magazines etc. E.g. alternatively, student might check newspapers or inline.

Experiential sources – handling, examining, using the product

The challenge for the marketer is to identify which information sources are most influential in their target markets.

Having collected the information, the consumers clarify and evaluate the alternatives. The evaluation of alternatives is the ‘black box’ of consumer behaviour because it is typically the hardest for marketers to understand, measure or influence. At this stage buyers base their evaluation on a number of different criteria, which usually equate with a number of product attributes [4] . Suppose that you want to buy a new car and you have narrowed your car choices to three brands. And suppose that you are primarily interested in four attributes – styling, operating economy, warranty and price. By this time you have probably formed beliefs about how each brand rates on each attribute. Clearly, if one car rates best on all attributes, we could predict that you would choose it.

There are several important considerations for marketers during the evaluation stage. Marketer’s product must be in the evoked set of potential alternatives that’s why marketer needs to constantly remind consumers of his or her company and its product offerings. Marketers must often design marketing programs that change the priority of choice criteria or change consumers’ opinions about product image.

After considering the possible options, consumer may make a purchase. At this stage marketers still should be careful to don’t loose potential customer. Buyer might always postpone the purchase due to unforeseen circumstances such as an illness or job loss; sales-person might angry customers; mistake in buyer credit check. To eliminate those problems marketers can reduce the risk of purchase through warranties or guarantees and make purchase stage as easy as possible. Key issues for marketer during that stage are product availability and possession utility. For example if person doesn’t find a product from certain brand in a store, will buy from someone else who could deliver the product. The main goal is put product within consumer’s reach wherever that consumer happens to be. This task is closely related to possession utility. To increase utility marketer can offer delivery and installation of product like furnisher or home delivery like Pizza Hut, Tesco, newspapers etc.

After buying a product consumers consider whether they satisfied with experience of making a purchase and with the good or services they bought. Usually, consumer experience post-purchase dissonance. In other words, they regret their purchase decision. The consumer, having bought a product might feel that an alternative would have been preferable. In these circumstances that customer will not repurchase immediately, but is likely to switch brands next time [5] . For example after eating an Indian meal, may think that really you wanted a Chinese meal instead. In another example, person usually go to tanning bed, decide to use something new like “airbrush” tanning method which cost £30-£50, significantly more then “fake tanner” or tanning bed. In this case he or she might feel “cognitive dissonance” because person knows a product has some disadvantages, such as being expensive and some advantages, such as being free from harmful ultraviolet rays. And disadvantage of higher cost battles the advantage of no harmful UV ray [6] .

Marketers can help consumers feel good after about major purchase by reducing any lingering doubts that decision was sound. The most important is effective communication between seller and buyer. For example, sales person might slip thank-you latter inside the package that restates many of the benefits of the product selected. In this tanning example, the tanning saloon may offer 100 % money back guarantee.

Types of Consumer Decision Making

Consumers are faced with purchase decisions nearly every day. But not all decisions are treated the same. Some decisions are more complex than others and thus require more effort by the consumer. Other decisions are fairly routine and require little effort. For example, students give a lot more thought to buying college education or a vacation trip than they do to buying cheese or car wash. In general, there are three types of consumer decision making; routine decision making, limited decision making and extensive decision making.

To purchase low cost goods and services, consumer typically applies routine decision making, require little search and decision time. Consumers do not consider this type of purchase an important one and are not highly involve in it. Usually, buyer knows few brands of product but stick with one.

To attract consumers who use routine decision making, marketers must what characteristic consumer evaluate. For example, if some buyers choose whatever brand of bread or soda is cheapest, marketers may focus on setting a low price or offering frequent discount.

Limited decision making usually occurred when consumer has previous product experience but is unfamiliar with current brands available. For example, when housewife needs to buy washing-up liquid and the one which she knows is sold out, she will be forced to choose another brand. She will search for information from several sources, such as advertising and consider various alternatives.

To reach consumers in limited decision making, marketer may use eye-catching advertising and public relations messages to get their brands in the minds of consumers so that they will be in consideration set [7] .

Consumers practise extensive decision making when buying unfamiliar and expensive product. This type of purchase involves comparing many alternatives and evaluating them in terms of many characteristic. The process of extensive decision making requires a significant investment of time and effort. For example, when family want to buy new car, house or computer they want to know as much as they can about product category and available brands. They spend much time seeking information and use several criteria to evaluating there options.

To serve consumers who think they should be doing extensive decision making but dislike the effort involved, retailers could deliver value by training salespeople to be knowledgeable about a number of brands so they could narrow the search for their consumers.

Factors That Affect the Consumer Buying Process

Consumers are different, products that they buy are different, and the situations in which consumers make purchase decision are different. A number of factors affect consumer buying process, including social factor, situational factor, personal factor and psychological factor. Of these four influences, the social influence is the strongest. Marketers must to understand the role played by the buyer’s culture, subculture, social class, reference groups, and family. Among these social influences, none is more important then family. Growing up in a society, a child learns basic values, perceptions, wants and behaviours from the family and other important institutions [8] . Reference group and opinion leaders also have an important impact on customer buying process. Reference groups act as a point of comparison and source of product information.

A number of situational influences can affect consumer buying process. They include physical factor such as a store’s buying locations, layout, music, lighting, and even smell. It means marketers should make the physical factors in which consumers shop as favourable as possible. If they can’t, they utilize other tactics such as discounts. The consumer’s social situation, time situation, the reason for their purchases, and their moods also affect their buying behaviours. For example, hungry consumers who are in a hurry often grab the quickest lunch they can find – that’s why a chain of fast food restaurant Pret A Manager succeed by offering people pre-packaged fresh, organic food. Other situational influences can affect specific product choice. For example, if you eat dinner with your boss your product choices may differ from you make in everyday purchases of food and drink. Likewise, when you shop with your friends you would likely to buy more expensive items for gift.

A person’s buying decisions are also influenced by personal characteristics that are unique to each individual, such as gender and personality. Physiological differences between men and women result in different needs, such as health and beauty products. Studies show that man and women share similar motivation in terms where to shop (seeking reasonable prices, merchandise quality and friendly environment) but they don’t feel the same about shopping. For example, most women enjoy shopping and they can spend hours at the shopping centre while men shops only when necessary. Marketers can not forget that each consumer has a unique personality. Personality is usually described in terms of traits such as self-confidence, dominance, sociability, autonomy, defensiveness and aggressiveness. Personality can be useful in analysing consumer behaviour for certain product or brand choice. For example, coffee marketer discovered that heavy coffee drinkers tend to be high on sociability so to attract consumer Costa and other coffee shops create environments in which people can relax and socialise over a cup of coffee. In order to understand buyer behaviour marketer must first understand relationship between consumer self-concept and possessions [9] . For personal factors we can also included: age and life cycle stage, occupation, economic situation and life style.

The last factor which is also very important for marketers is psychological influence on consumer buying decision such as motivation, perception, beliefs and attitudes.