Consumer Behavior and Consumer Decision Making Models - Essay Example

Introduction Rational decision making means that whenever a consumer is confronted with a problem, he gathers relevant information on the then he generates and evaluates alternatives, and then he chooses the one that could provide him the best solution to the problem at hand. This concept of rational decision making adheres to the belief that all the time consumers make educated decisions based on research and alternatives evaluation. The argument that consumer choice is sophisticated function/benefit oriented always undermines the weight of emotions or impulse buying in the decision making process. It is true that consumers are rational decision makers because the final choice made by the consumer addresses his need and resolves his problem; even a choice influenced by emotions can be rational or a choice made on impulse can also be rational. Rationality of a choice in marketing has more to do than just functionally balancing the cost and benefit for a consumer, as in economics. Marketers have always made efforts to restrain consumers for impulse shopping, however, their efforts on the whole prompts consumers to do impulse shopping and choose their competitive brands (Keller, 2007). Consumers are overpowered by information, advertising, sales promotions, direct marketing, product assortment, ease of purchasing etc. These facilities may either stick a consumer to his favorite brand or leave him in market place with uncertainties which will eventually repel him to competitors’ brands. The more one marketer is educating and facilitating a consumer the more his competitors are competing on the same areas (Mooij, 2000). Consumers are free and powerful decision takers. There are many factors accompanying their choice criteria. Therefore, instead of limiting consumers from impulse buying the marketers should rather focus on creating and enhancing their brand loyalty. For this purpose, marketing personals focus on more profound aspects of a decision which stems from both rational and emotional behavior of a consumer. According to CBBE (Consumer Based Brand Equity) model, any decision made by the consumer is neither solely rational nor irrational (emotional/impulse). However, at the final stage of creating strong relationship with the consumer to reinforce brand loyalty, consumers’ emotions play pivotal role in creating attitudinal attachment, behavioral loyalty, sense of community and active involvement with the brand (Bagozzi, & Dholakia, 1999). Moreover, consider the Maslow’s hierarchy of needs model; it highlights the fact that the material needs are in low priority to consumers than non-material needs i.e. the strong emotional needs of social contact, community association and self actualization. Emotional needs are intangible in nature (Hawkins, & Mothersbaugh, 2009). These are a part of both consumer’s external environment and his internal behavior determinants. CONSUMER BEHAVIOR AND CONSUMER DECISION MAKING MODELS Consumer behavior lies amongst three variables. 1. Stimulus variables: Stimulus variables include all those elements that generate consumer sensory inputs. Such as see, smell, taste, touch, listen, thinking and intuition. These exist in a consumer’s external environment as well as individual determinants of behavior. 2. Response variables: These variables are the reactions of a consumer generated in response to stimulus variables. Like, glimpse of a zinger burger’s billboard can potentially generate consumer appetite. 3. Intervene variables: These surfaces between stimulus and response variables; possess the potential to magnify, modify or even abridge the effect of stimulus and response variables. Intervene variables are internal to the consumers (Neal, Quester, & Hawkins, 2004). EXTERNAL ENVIRONMENT External environment encompasses the following areas: a. Culture Culture is a combination of religious beliefs and social values, prevailing norms and ethics, art and heritage, fashion, customs, taboo, law and code of conduct and the culture determines the behavior of the people in a society. These values outline what is acceptable or unacceptable behavior. All the elements of a culture are not merely rational but each have an emotional aspect. Cultural values adopted by the people have both rational as well as emotional benefit and acceptability. b. Subcultures Subcultures are subsets of culture i.e. segments of people within one culture; having some extra or unique characteristics, traditions, values that identify them as a separate group. People form subcultures to share and satisfy common rational as well as emotional demands (Aggarwal, 2004). c. Social class influences Social class influences refer to fragmentation of a society into different segments on the basis of characteristics, values, lifestyle mutually shared by each segment. A consumer’s belonging to any of the segment of a society has both rational and emotional bindings. d. Social groups Social groups refer to different social networks and bounds that consumers develop to share similar interests and activities. Consumers have emotional attachments associated with these groups. e. Family influences A family is a consumer’s most powerful influence in his decision making criteria. They have all the potential to exert pressure on the consumer choice. A consumer’s family is an important source of emotional attachment. Any decision taken by a consumer can be potentially diverted because of family emotions. f. Personal influences These are opinion leaders who posses all the relevant information that a consumer might require to assist his decision making. These are important to consumers because they could spread positive or negative word of mouth regarding a particular choice in the consideration set of a consumer (Edell, & Burke, 1987). g. Other influences Other influences would refer to different situational factors such as physical surroundings, cash available, interpersonal setting etc. that could assist or hinder the decision choice of the consumers. All of the above factors have certain emotional and rational influences on the consumer’s decision making. All the external environmental factors bear both emotional and rational effects on the consumer choice but they do not directly affect the consumer. So, eventually the decision is dependent on his personal internal determinants. INTERNAL DETERMINANTS OF BEHAVIOR The internal determinants include different elements which impact the overall consumer decision making process in relation to a particular product. On the other hand the external stimuli do not directly influence the consumer decision making process and are changed by the internal elements. Some of these influences are as follow: i. Personality and self concept Personality and self concept play important role in consumer choice making, i.e. how a person sees himself and what characteristics he possess determines his choice. A consumer’s choice is always a match to his personality and self image. Marketers use psychographics; based on consumers’ activities, lifestyle and interests, to understand the consumers’ decision process. All these three areas have profound values, associated with and, dependent on both rational and emotional needs. ii. Attitudes It refers to evaluative judgments that a consumer holds towards anything under consideration. Attitude is a combination of and based on, a consumer’s experience, knowledge, perception and cognitive skills. It changes the way different consumers see and evaluate a situation. iii. Motivation and involvement Motivation and involvement of a consumer in a decision making situation depends on what prompts a consumer to make a decision; whether it is a rational benefit or some irrational desire, or a combination of both. Motives are those internal factors that derive energy and active engagement of a consumer in decision making process. iv. Information processing It is a consumer’s ability to analyze, interpret and utilize the information gathered to assist his decision making. It is relatively more of a rational processing than irrational evaluation. Because the consumer would be examining the facts and data more logically rather than emotionally. v. Learning and memory This is again consumer’s own capability to learn, keep and even recall facts or experiences gathered previously, which may help in making a final choice. One important aspect of learning and memory is that consumers easily learn and recall experiences that trigger their stimuli or evoke their emotions. DECISION PROCESS FRAMEWORK HIGHLIGHTING CONSUMER RATIONAL AND EMOTIONAL BEHAVIOR NOTE: Factors that lie in yellow circle are internal determinants of behavior. Factors in pink that lie outside the circle are external environmental factors. The steps identified in purple highlights consumer’s decision making DECISION MAKING PROCESS a. PROBLEM RECOGNITION This is the first stage of a consumer decision process. At this stage, a consumer identifies sufficient gap in his real state and ideal state of affairs. Once a problem is identified, the consumer determines whether an immediate solution is required or the problem is expected at some time in future. Moreover, consumer involvement in a particular problem situation also determines the seriousness of the next level of decision process i.e. information seeking and generating alternatives (Gardner, 1985). Problems that are expected later in future provides consumer sufficient time for research. However, a situation which requires urgent solutions motivates consumers for making a choice right away. Here, the choice could be totally impulse, emotional, function oriented (rational), or even combination of all. The outcome of problem recognition either continue the decision process or the consumer may be restrained by the environmental factors to continue the process. b. INFORMATION GATHERING & EVALUATING ALTERNATIVES A consumer’s search process encompasses three areas; ongoing search, internal and external search. Ongoing search is done by every individual for a problem could be expected but is not actually realized yet. It can also be called as routine search and information exploration. Internal search is consumer’s filtration and recall of experiences, attitudes, knowledge etc from his memory. Advertisements, word of mouth, visuals or anything else could aid the consumer’s internal search. If internal search is insufficient than the consumer proceed to external search (Wells, Ponting, & Peattie, 2010). External search first enhances awareness about the product’s existence and availability. Second, it assists consumers in forming evaluation criteria by providing relevant information. Lastly, it deepens the consumers understanding of available alternatives across all possible dimensions. Finally using different evaluation techniques (such as compensatory and non-compensatory etc), a consumer can make an educated and well informed decision choice, which leads to purchasing process. c. PURCHASING PROCESSES This stage is crucial for interest and is most relevant with our discussion. Purchase decision not only involves a consumer in making simply a purchase but it also encompasses all those activities that a consumer engages in while making the purchase. It includes consumer’s store choice, factors related to store location, merchandising, products assortment, prices, advertising, sales promotion, sales services etc. All these influence a consumer’s store decision. These are crucial for consumers who undergo in-store purchasing (Varadarajan, & Menon, 1988). At this stage, consumer can be influenced through merchandising techniques, personal selling and in-store advertising. These efforts could help consumers make impulse buying for your brand or enhances your brand loyalty. This stage is the last touch point between a marketer and his consumer. If this stage of decision process is undervalued by the marketer the competitor may take the advantage and consumer may be motivated for impulse purchase of a competitor brand. Moreover, today’s hi-tech savvy and hi-fi e-marketing has revolutionized purchasing process. This has lead to in-home shopping which includes TV based shopping, teleshopping and even internet shopping. All these revolutions have provided opportunity, and also have posed a threat of impulse, or rational and emotion purchase. d. POST-PURCHASING BEHAVIOR The consumer behavior evolved after making a purchase decision refers to post purchase behavior. This stage is also important for consumers as well as for marketers. Consumer satisfaction at this stage develops positive associations with the brand which further initiate purchasing process thus developing and reinforcing brand loyalty. A consumer may judge the actual sincerity and performance of a brand through its post sale activities and services. This stage could serve the consumer as evaluation criteria for future decision process. Nevertheless, this stage of decision making process leads a consumer post-purchase information seeking behavior. For marketers, in the long run, post purchase behavior entails product disposition behavior which indicates that the consumer is again in need of a new product. Eventually this information highlights the opportunity for marketers to target these consumers with the latest and relevant market offerings. IMPACT OF E-COMMERCE ON CONSUMER BEHAVIOR The advent of internet in the business world has borne both opportunity as well as threat to marketers. However, it has greatly facilitated the consumers across several dimensions. i. CONVENIENCE Internet has gifted consumers with the ease of shopping from their home, offices, subways etc, i.e. it has blurred the physical boundaries between a consumer and the marketers. Now consumers can shop any time anywhere without having to go physically somewhere. ii. TIME SAVING This magical aspect of internet shopping has enabled consumers to save their valuable time for other activities. In this way, marketers facilitate consumers to enjoy shopping along with their routine jobs and schedules. iii. URGENCY On important aspect of e-shopping is its response to urgency, i.e. consumers can easily counter immediate problem situations by simply browsing across few websites. They have a huge list of related alternatives available just a few clicks away. This has made educated decision making possible even in urgent problem settings. iv. TWO-WAY COMMUNICATION AND FEEDBACK E-commerce has allowed consumers to register their valuable feedback over any or every aspect of a product, brand, services etc. Consumers are no more passive players in the business and marketing world. They can communicate, appreciate, and complain directly to the marketers. v. EASE OF INFORMATION GATHERING Consumers can now gather detailed information much more easily on every dimension of a products, brands, services etc. Without any physical effort and just a few clicks in time e-commerce has facilitated consumers with extensive information sources, which could benefit and assist the consumer decision process. Thus, enabling the consumer to make a sound purchase choice. vi. EASE OF APPROACH E-business has revolutionized the consumer world. World is now a global village in its true sense. Every thing now is in approach to consumers, whether it’s about contacting marketers, evaluating competing products, obtaining information, making a purchase or providing feedback. Everything has drawn nearer to consumers to ease them. vii. CREDIBILITY Consumers are not sure about the credibility of the seller involved in purchase decision. Moreover, surety about the quality and performance of the product displayed at a website is also a matter of consideration to the consumers. To what extent the actual product is similar to the imagery presented by the website is a question to consumer. viii. RISK AND UNCERTAINTY Besides all the merits of e-commerce, one of the major drawbacks is the risk associated with the uncertainty of the parties involved in a transaction. Many risks are eliminated during a physical exchange undertaken between buyer and seller. When making a purchase decision consumer physically observe many areas that develop trust and establishes rapport with the selling personals. ix. UNREGULATED BUYING BEHAVIOR E-shopping promotes unregulated buying behavior i.e. it supports more impulse shopping and leads to problematic shopping compulsion. When consumers shop in a physically restricted environment his shopping habits are controlled by themselves and somewhat by marketers. Marketers guide consumers or to some extent they direct the consumer preferences. This is done by limiting exposure of the consumer to the information sources, products, brands, services and marketplace on the whole; so that the impulse buying or uncontrolled buying behavior of consumers can be regulated. Moreover, networking websites have further lead to proliferation of impulse buying pattern and chain purchasing behavior (Tsang, Ho, & Liang, 2004). x. PAYMENT MECHANISM The payment mechanism is also made easy for business clientele as well as end user consumers. Consumers do not have to bear cash for making extensive purchases. There are many payment mechanisms established to facilitate distant transactions in a much easier manner. Reference list Aggarwal, P 2004, ‘The Effects of Brand Relationship Norms on Consumer Attitudes and Behavior’, vol. 21, no. 1, pp. 87-101. 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