The consumer decision process

The consumer decision process Section 1: The Consumer Decision Making Proccess The foundation of this research project is to analyse why consumers make purchase decisions through the theoretical paradigm of the Consumer Decision Process (CDP) (Blackwell, Miniard, Engel 2006) it is therefore essential to understand how the CDP works and its uses and limitations. The CDP is a model used to understand how consumers make decisions and the processes they go through before purchasing products. Diagram 3 shows the core process of the CDP which starts with need recognition, this is where a consumer feels a need which has not yet been met, or a problem which has not been solved. Consumers then search for information on satisfying their needs and problems, once they have collected enough information consumers evaluate suitable products identified in the search. Consumers may then purchase the product that they think will meet their needs. Once the purchase has been made consumption occurs, this is where the consumer actually uses the product. Consumers then evaluate the experience and decide whether it met their needs, this last process will influence the chances of repeat purchases and brand loyalty. A benefit of using the CDP is it gives marketers an understanding of what happens after the purchase of a product. This is useful for marketers as it helps them realise that for consumers to purchase an item again, the consumer needs to be satisfied in the consumption and post evaluation phase. Consumer decision process limitations and critisisms A limitation of the model is that it is a simplistic view of how consumers purchase products. Many consumers do not go through a search for information or evaluation before purchasing an item, they may just get what is cheap or something that is easily available. Many consumers also shop in whats known as beta mode (reference) meaning they are not actively evaluating products but choosing items they are familiar with. To thoroughly analyse how consumers make purchase decisions it is necessary to adapt the CDP model and extend it to encompass other needs and decision making processes. Diagram iofreof overleaf shows an extended version of the CDP which includes important influences on decision making such as memory, environmental influences and individual differences. This model gives a more in-depth insight into how consumers make decisions and is a useful tool for locating problems in existing marketing strategies. Although the extended model encompasses further aspects of consumer behavior further criticism has been directed at the rationality of the CDP model for presenting an idealised version of the way consumers make purchase decisions. Arguments against the rationalistic nature of the CDP model suggest that consumers operate in an imperfect world and often posses limited knowledge and skills and that certain values might dominate their goals and decisions. Rational consumer behavior thus seems too idealistic and simplistic (Eramus, Boshoff, Rouseau 2001 pp.84). Dr Dhar on the subject of the CDPs explanation of irrational purchases adds that:   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  The assumption made in hierarchical models of consumer decision-making, namely that the decision to choose is independent of which alternative to choose, and that the decision-making process necessarily proceeds through the various stages to come to a final decision, may not always be valid. Consumers often decide to choose or not to choose depending on the existing situation. This implies a more definite impact of in store search activities during consumer decision-making rather than preparedness before entering the store. Traditional consumer decision-making models do not portray this possibility clearly. The rationalistic approach of the CDP has also been critised by (reference stewart)who argues that the CDPs assumption that consumers make a purchase after need recognition, search and evaluation is overly simplistic. Futrthermore he argues that consumers often do not know the reasons for their actions and behavior because decisions often become automated (Stewart, D. 1990). Stewart reinforces his argument with an alternate model which proposes that consumer decision processes have no obvious beginning or end. Although it is true not all consumer searches lead to purchase behavior, and consumers solemnly make informed purchase decision, the extended CDP still offers the most relevant and practical way of understanding consumers. The criticisms against the CDP specifically focus on its simplicity, logical process and lack of flexibility; however it could be argued that these are its strengths which allow marketers to effectively analyse consumer behavior better than other consumer decision models. John Whitney argue that in reality the decision making process happens much quicker than implied by the CDP model, but none the less follows its basic structure of need recognition, limited search evaluation and the possibility of purchase (John and Whitney 1983 pp.661-666). This theory is supported by Du Plessis, Rosseau, Blem who take the view that involvement determines how strictly a consumer follows the process (Du Plessis, Rosseau, Blem 1991), for example if a consumer is highly involved in the purchase decision they may undertake a thorough evaluation of competitor products and possibly purchase, however if they have low involvement they may just purchase a trusted brand name. When using the CDP to analyse consumer behavior it is advisable to allow for some flexibility to cover irrational purchase decisions and ones which feature low involvement, as suggested by its critics and supporters. An example of using the CDP in a flexible and analytical way would be analyzing a consumer purchasing chewing gum whilst buying coffee to freshen their breath after consuming the coffee, the consumer would have recognised the need and purchased the gum without any additional search or pre-purchase evaluation undertaken. Section 2: Need Recognition Need recognition is defined as the perception of a difference between the desired state of affairs and the actual situation sufficient to arouse and activate the decision process (Blackwell, Miniard, Engel 2006). There are many theories which suggest how needs are satisfied and why consumers develop the need to purchase certain items, one of the most widely used theories is Maslows hierarchy of needs. Maslows hierarchy of needs is a theory that suggests a consumers needs and desires are graded by importance and can only be satisfied once lower level needs are met. Image jkdnvkidsn below shows a diagram of Maslows hierarchy of needs, on the bottom layer there are fundamental needs such as breathing, food and water which people need to function and stay alive. Once these basic lower level needs are met consumers then strive for higher level needs such as self esteem, creativity and problem solving, these needs are important for a good quality of life but not necessary to survive. The drawbacks of Maslows theory are that consumers needs are rarely met in this structured order, for example people may forgo sleep to work hard at something which to them provides self esteem. The theory is difficult to use in practice particularly when dealing with consumer behavior (Jahnsson-Boyd 2010), empirical research has also suggested that there is little or no support for a hierarchy of needs. To effectively examine consumer needs an alternate approach is needed to Maslows Hierarchy of Needs. A more adaptive view of why consumers seek to satisfy needs through consumable items is the theory of need recognition (Blackwell, Miniard, Engel 2006) which is explained in diagram iuriuhw. The advantage of using this model over Maslows is its broad nature of satisfying needs, it does not segment needs in terms of importance or place them in a hierarchical sequence which in reality rarely happens, furthermore it also explains how marketers can in fact stimulate a need through education of a consumers current state of affairs. A possible problem with the need recognition theory is a lack of detailed information as to what needs take precedence or what the possible end purchase decision satisfies in terms of tangible and intangible benefits. Catherine V. Jansson-Boyd suggests that this can be explained by separating needs into utilitarian; such as the need to eat, and heuristic needs; such as eating at an expensive restaurant to meet a self image need (Jansson-Boyd 2010). This theory explains the short comings of the need recognition model and illustrates how needs develop, thus allowing marketers to analyse how and why needs are stimulated. As suggested by the CDP model needs are commonly stimulated by marketer and non-marketer controlled stimuli an example of a marketer controlled stimuli would be an advert which educates a consumer about the dangers of spyware on computers, after seeing this advert they may feel a need to purchase an item which will safe guard their computer. A non-marketer channel may be a word of mouth (WOM) recommendation from a friend who has bought a new TV and recommends it. This theory works well with the need recognition mentioned above as it explains why actual state and desired state perceptions change and create needs. Section 3: Search After consumers have recognized a need the CDP suggests that consumers then commence a search for a product to satisfy those needs. As mentioned in section 1 consumers may sometimes forego searching for an item and purchase a brand they trust or a product they have tried and tested, however it is arguable that a preliminary search would have been carried out and stored in memory for future purchase decisions. It is therefore assumed that for most consumer purchase decisions some form of a search however small has been carried out. Although this theory is useful when analyzing what routes consumers use to search for product information it does not begin to explain what part internal searches such as memory have in the search process. Memories of past purchase decisions or information stored from personal or impersonal sources relating to the current product search will significantly affect how the search is carried out. The CDP model suggests that consumers either make internal or external searches or a combination of the two this explains how consumers use memory in product searches however it does not explain why consumers choose internal searches over external or vice versa. For consumers to purchase products solely from an internal search they must possess some confidence in their knowledge of the product category and the reliability of memories related to personal or impersonal stimuli of the product. When consumers lack confidence in their memory or existing knowledge of the product then some form of external search may be conducted if only to validate the adequacy of existing knowledge (Blackwell, Miniard, Engel 2006). This also explains why consumers can become brand loyal, as consumers who are satisfied with a previous purchase decicion remember that satisfaction and can sometimes only undertake an internal search based on previous memorized experience (Geoffrey, Kiel, Roger 1981). This is also highlighted in the consumption and post evaluative consumption segments of the CDP model. The level of involvement during the search phase of the CDP is an important factor for marketers to analyse as it can highlight places where consumers go to search for information and provides them with opportunities to market products more effectively. There are many theories relating to why consumers undertake extensive searches for information when purchasing products. One view of why there are different levels of individual search involvement is the cost versus benefit perspective which suggests that:   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  People search for decision-relevant information when the perceived benefits of the new information are greater than the perceived costs of acquiring this information. This theory explains the amount of effort consumers are willing to make when purchasing items but does not take into account a theory by Kiel and Layton that as potential consequences rise in significance perceived risk also increases so extensive searching is carried out to minimize risk (Kiel, Layton 1981). Research by Betty, Sharron and Smith also suggests that as total search effort increases positive attitudes towards shopping for the product also increases (Sharron, Smith REFERENCE!), this phenomena can in some way be explained by both Urbanys theory and the model put forward by Kiel and Layton, as feeling s of risk minimization and making more informed purchase decisions result in greater perceived benefits, this would ultimately lead to positive feelings of the overall shopping experience. Section 4: Pre-purchase evaluation of alternatives Before consumers can compare contrast and evaluate alternative products and services they need to know which products to specifically evaluate, this process has been identified as producing a consideration set. A consideration set is defined as the product or service alternatives considered during decision making (Hauser, Wornfelt 1990). This theory suggests that once consumers have undertaken a search they then choose a selection of items to critically evaluate and compare, however it has been theorised that if consumers are brand loyal to a particular product then they may forgo composing a large consideration set. What is important to marketers is how consumers construct these consideration sets before making a decision, the CDP proposes that consumers use the same stimuli (marketer dominated and non-marketer dominated) used in the search phase of the CDP. Information gathered from marketer and non-marketer stimuli in internal and external searches stored in memory and easily retrieved become known as the retrieval set (Alba, Chattopadhyay 1985). The retrieval set is important for consumers when constructing their consideration sets as the ability to recall or recognize products seen in marketer or non marketer stimuli increases the chances of that product being considered for purchase. This partly explains why brand names are so important to consumers when making purchase decisions. Consideration sets are a plausible theory of explaining how consumers choose products to consider for purchase however what remains a wide subject of debate is how consumers evaluate and compare the products selected within their consideration set. One of the most famous and widely regarded theories on how consumers evaluate products based on their attitudes and beliefs is Fishbeins multi attribute model (Fishbein 1963) which suggests that consumers purchase goods and certain brands because they have favorable thoughts and feelings for the products salient and determinate attributes. To illustrate how Fishbeins model works table yvuvuv shows a comparison of three mobile phones, the scores would be filled in by consumers who have a scale of -3 for disagrees strongly to +3 agrees strongly. In table uyvbuyv the iPhone scores highly in terms of fashion, size, colour, price and simplicity. This means the marketers at Apple have been effective in shaping consumers beliefs towards these attributes. The one area where the iPhone does not score so well is unique purchase, meaning how unique the act of purchasing an iPhone is. This weakness could be exploited by other brands who could market their product as possessing this attribute. By using Fishbeins model brands can also try and change how important this belief is to consumers, thus altering the evaluative criteria. By using Fishbeins equation in box 1 and calculating the totals shown in table mlkmlkm, the theory clearly illustrates how favorable beliefs about the product add up to create a favorable attitude valence t owards the product. The benefit of using Fishbeins theory is its diagnostic power, which enables marketers to see what consumers believe about the products salient and determinate attributes and how important these beliefs are as evaluative criteria. The theory is also useful when analyzing purchase decisions which require extensive evaluation between products or purchasing a particular product category for the first time. A drawback of using Fishbeins multi attribute model is it relies on assuming the consumers has perfect knowledge of the product their buying (which is rarely the case) it therefore does not explain what part memory plays in evaluating products and how it can skew consumers perception of the product and brand they are purchasing. The Accessibility- Diagnosticity theory (Feldman, Lynch 1988) attempts to explain how memory influences pre-purchase decision making. Accessibility relates to how easily a piece of information can be retrieved from memory, and is increased when a stimulus is highly salient, vivid or when the consumer engages in elaborative processing. Diagnosticity is to do with the perceived relevance and increases as the perceived relevance between two variables increases. The Feldman and Lynch theory helps to explain the effect of memory and consumer knowledge on pre-purchase evaluation and explains why consumers will sometimes decide to purchase inferior goods because of a lack of knowledge or because of past negative experiences. A criticism of Fishbeins and Feldan and Lynchs models is that they do not explain why consumers make purchase decisions with minimal pre purchase evaluation. Catherine V. Jansson-Boyd proposes that there are a number of ways consumers make decisions when there is low involvement and motivation these are shown in table niunciw and are collectively known as choice heuristics (Jansson-Boyd 2010). Choice heuristics offers a more realistic view on how consumers make pre-purchase decisions with low involvement and its theories are likely used by every consumer at some stage in their life. Throughout this section focus has been directed as to how consumers evaluate different products, to gain a thorough understanding of why consumers make certain purchase decisions it is necessary to briefly analyse how marketers can influence consumers perceptions, attitudes and beliefs. In all of the models and theories previously mentioned in this section it is assumed that consumers make purchase decisions based on the attributes of the product, these attributes can either relate to the products tangible or intangible properties. Attributes therefore send signals to consumers which they then use to evaluate products and services (Blackwell, Miniard, Engel 2006), an example of this would be a high price may signal quality to certain consumers (Dodds, Monroe 1991) or a cheap price as lower quality (Raghubir, Corfman 1999). The signals that products send are crucial to how consumers will evaluate their consideration set and is one of the reasons company spend so much on advertising to create favorable signals. Table iebhwwb shows how marketers can influence signals by using different advertising tools, which can shape consumers attitudes and beliefs towards products and services (Lutz 1975). Section 5: Purchase After consumers have evaluated the product they can then proceed to purchase their chosen item. Purchase decisions can however change for a number of reasons such as unavailability, a change in the expected perceived attribute of the product i.e price, or lack of motivation. It is important to understand that when consumers go shopping for items to satisfy their needs they may not always have a specific brand, or specific product in mind to satisfy those needs. Blackwell, Miniard and Engel suggest that that once a consumer decides to purchase an item to satisfy their needs it can lead to three types of purchase; A fully planned purchase (product and brand chosen in advance), a partially planned purchase (intent to buy the product exists but brand choice deferred to until shopping), or an unplanned purchase decision (both the product and the brand are chosen at point of sale) (Blackwell, Miniard, Engel 2006). Assuming that this theory is correct it suggests that the retail environment influences and motivates a considerable amount of consumer purchase decisions. In a retail environment consumers are exposed to hundreds possibly thousands of advertisements promoting individual products and services all of which are trying to grab consumers attentions so they are considered for purchase. Consumers cannot however take in every piece of advertising information in a store therefore they become selective of the advertisements they choose to process. For consumers to focus their intention on advertisements it is thought that adverts must pass through three phases of consumer cognitive resources (Atkinson, Shiffrin 1968) diagram uinf shows how attention grabbing stimuli pass from being noticed by a consumers senses through to being stored in their long-term memory. The cognitive resource model gives a good explanation and understanding of how consumers process advertisements and marketer controlled stimuli and is therefore an essential tool for understanding why and how some advertisements work so well and increase brand awareness. It is however important to remember that this model does not cover the broad aspects of consumer attention such as subliminal messages and is therefore limited in its capacity to analyse all types of advertising however for the purposes of this research it is useful as it illustrates how conspicuous advertising works. If consumer attention is to be analysed through the framework of the cognitive resource model then it suggests that for an advertisement to be successful it has to significantly stimulate the sensory store, be thoroughly processed in short term memory and memorable enough to be stored in long term memory. Table uhiru below shows a brief list of ways marketers have used different tools to stimulate consumer sensory stores for their advertised products to be noticed and processed. The CDP model suggests that if marketers have been successful in focusing the attention of consumers on their product and sufficiently motivated them a purchase may be made. This theory however can be disputed as to logical because this type of purchase behavior only happens in a perfect setting it therefore does not take into consideration factors outside the marketers control such as availability or accessibility. The focus of this research is however on what marketers can do to influence the CDP process so although criticisms can be drawn from this view of purchase decisions it still arguably offers marketers the most information as to how they should theoretically sell their products. Section 6: Consumption After a purchase has been made consumption can occur, consumption is the point where consumers make judgments on the products they have bought, these judgements will influence consumers perception of satisfaction and increase or decrease the chances of the product being bought again. One of the problems marketers have with building brand loyalty is influencing consumption behavior after the product has been bought, influencing consumption behaviors is important as it can affect the amount of satisfaction gained from the item and the speed at which it is consumed. Table nuiernu below shows different consumption variables and how marketers try to influence them to increase satisfaction for consumers. Although the above table describes how marketers can affect consumption patterns it does not offer an analysis as to how consumer satisfaction and dissatisfaction influences the consumers experience and chances of repeat purchases. Blackwell, Miniard and Engel theorise that the chances of products being repurchased depends upon the feelings experienced during consumption (Blackwell, Miniard, Engel 2006). These feelings can either lead to positive reinforcement; where a consumer receives a positive outcome from the consumption experience, negative reinforcement; where consumption enables consumers to avoid a negative outcome and punishment; where consumption leads to negative outcomes, these three processes are shown below in Diagram ueinwfi. What this model does not include is more complex consumption such as watching old videos that remind consumers of previous experiences or family heirlooms that consumers may feel proud and privelaged to use. A model of consumption proposed by Schiffman, Kanuk and Hansen aims to include these complex emotions in a broad description of how consumers consume items (Schiffman, Kanuk, Hansen 2008) this is shown in diagram iunieun. Although this model attempts to explain how consumers complex emotions are connected with consumption it still does not signify how any of these positive or negative feelings link to repeat purchases or brand loyalty, it is therefore assumed that although Blackwell, Miniard and Engels model does not give a complex view of how consumers experience the consumption phase of the CDP it does offer an explanation as to how consumers use experiences for future purchase decision. Section 7: Post-consumption Evalaution Once consumers have consumed their purchased product according to do the CDP satisfaction or dissatisfaction then occurs (Blackwell, Miniard, Engel 2006). The CDP suggests that if consumers are satisfied they will either purchase the product again or at least consider it for future purchases, however it has been argued that satisfaction does not always ensure repeat purchases and that consumers must experience some sort of delight which only occurs when consumers are expectations of the product are exceeded and completely satisfied (Higgins 1997). This theory has been proven by research conducted which suggests consumers who report to be totally satisfied are also six times more likely to purchase the same product again (Thomas, Jones, Sasser 1995) customer satisfaction has also been shown to lower consumers price sensitivity when purchasing the product again. Although it is helpful for marketers to realise what satisfaction can do for a business it is also important to analyse what actually creates feelings of satisfaction in the minds of consumers. It has been suggested that there are three different determinates which influence customer satisfaction (Blackwell, Miniard, Engel 2006) the first of which is the products performance which relates to how the product actually performed during consumption. The second determinate is the feelings consumers have when consumption occurs this was briefly mentioned in the previous section and featured in diagram urinefvu. The last determinate is how the product met consumers prior expectations, which has been conceptualised in Richard Olivers expectancy disconfirmation model. The expectancy disconfirmation model proposes that satisfaction depends on a comparison of pre-purchase expectations to consumption outcomes ()based on this proposition Olivers suggests that consumers can experience three outcomes when comparing expectations; negative disconfirmation where a product does not live up to expectations confirmation where the product performed as expected and positive disconfirmation where the product exceeded expectations. This theory offers an explanation as to how consumers become satisfied with products, however it is not complex enough to be able to explain why some consumers will purchase items again even if they have had a negative experience, and why other consumers choose to purchase an alternative product, over a previous product they were satisfied. It is therefore assumed that that the two other determinates in consumer satisfaction (product performance and feelings) further influence the way consumers perceive the product to have met expectations. Consumers may also purchase alternative products rather than ones they are satisfied with as consumers often have a need for variety. Although expectations cannot fully explain repeat purchases and consumer satisfaction it is still a significant contributing factor, it is therefore important that marketers set expectations at a reasonable level to ensure expectations are either confirmed or positively disconfirmed. Methodology 500 research design To analyse the research question a mixed method approach to gathering data will be used. The quantitive research will predominately look at secondary data such as Colgates financial reports and industry information that highlights current trends in the market. Primary quantitive information from the questionnaire shown in appendices urnein will be used in conjunction with the financial and market data to analyse consumer behaviour in relation to the toothpaste market and the Colgate brand. Primary qualitive information will be used to interpret the results of the quantitive research, this will include Colgate promotional material, packaging designs and in-store promotions and positioning. A mixed method has been used to analyse the research question as it allows the CDP process to be examined from a consumer point of view whilst including information as to how their feelings have affected the popularity, sales and brand loyalty of the Colgate brand. Survey design The survey design has been constructed to answer specific questions about how Colgate has influenced the CDP with its existing customers and how Colgate can possibly attract consumers who are not using the brand. Consumers who have not purchased Colgate previously will still be allowed to fill out a smaller section of the survey, as it is hoped that by looking at their decisions before purchase it may highlight oppurtunities that Colgate could use to appeal to these consumers. The questionnaire will be placed online where participants can fill out their information; the website used will be www.surveymonkey.com an established site which hosts multiple questionnaires from internet users from around the world. To gain a broad perspective of consumer behaviour and identify popular trends 100 participants will be required to participate in the survey which will give a sample size of uniern? Survey pilot To ensure the survey design is coherent and unambiguous to participants filling out the survey 10 pilot tests were carried out to monitor and gather information about how the participants interacted with the survey. Table inireunf below shows the comments and criticism made by the participants and the modifications made to correct the problems a comparison between the pilot survey and the survey actually used for the research project can be found in appendicies urnieun. Limitations and criticism of methodology Several limitations arise when using questionnaires to study behaviour, as there is no guarantee that participants will answer the questions honestly or indeed understand how their natural consumption behaviour works. An ideal setting to test consumer behaviour would be in a controlled environment where consumers can be observed whilst purchasing toothpaste, however due to constrained resources this type of research s not possible but is recommendable for future studies on the subject. As the answers given are multiple-choice, participants are limited to what answers they can give, the problem with this is that answers participants may wish to give may not be available and therefore important behavioural information may be lost. Allowing participants to enter their own information may be the best way to analyse their CDP however to get a sense of general feelings towards Colgate a set of defined answers is necessary. Participants who take part in the survey are not segmented in