“Consumer Behaviour” is a huge topic and has a significant impact on businesses. In fact, knowing how consumers behave is the most critical aspect of doing business.

However, studying consumer behaviour can help us become better – more equipped and conscious consumers ourselves and this comes with a huge set of benefits.

In the previous post, I made an introduction to consumer behaviour which is a multidimensional science that captures the dynamic journey of consumers.

Now, we are diving deeper into this science to examine the consumer decision-making process, that is, a series of steps (stages) that consumers go through when considering and making purchases of goods and services. 

In a nutshell, understanding this process helps businesses craft innovative marketing strategies, tailor their marketing efforts to meet consumers’ needs at each stage and build long-term relationships with their customers.

On the other hand, studying consumer behaviour equips individuals (us) with the tools to make conscious, well-informed, and responsible consumer choices. It allows us to navigate the marketplace more effectively while considering our own needs and values. 

Additionally, it fosters a sense of empowerment and awareness that can lead to more meaningful and satisfying consumer experiences.

Are you ready?

Consumer Decision-Making Process

In-Depth Analysis & Book

Video Overview

The Decision-Making Consumer

The effectiveness of marketing is evaluated when consumers choose to buy or reject a product. Marketers are keen on understanding the process consumers go through to make purchase decisions. For a decision to be made, consumers need to have choices among alternatives, including the option not to buy.

There are many theories of consumer decision-making. The variety of patterns that emerge is due to the assumptions that researchers make about the nature of people. The various “models of man/consumer” (such as economic, passive, cognitive, and emotional) describe consumers and the decision-making processes they follow in very different ways.

Factors that Influence Consumer Behaviour

Consumer behaviour is influenced by a wide array of factors:

1. Demographic Factors.
2. Geographic Factors.
3. Socioeconomic Factors: social class, cultural background, education level, occupation, income, family structure, social influences, values and beliefs, leisure activities, digital engagement.
4. Psychological and Psychographic Factors: motives, needs and desires, personality, attitudes, lifestyle (activities, interests, opinions).
5. Behavioural Characteristics: volume usage, usage habits, purchasing behaviour and preferences, purchasing history, purchase reasoning and drivers, purchase frequency, types of products, loyalty status, preferences, price sensitivity, usage occasion, benefit expectations, readiness stage, user status, media consumption, brand interactions, interactions with apps/websites/businesses.
6. Industrial Market Insights.
7. Language: keywords, idioms, colloquial expressions.
8. Influences: social, interpersonal, situational.
9. Global Market Insights.
10. Involvement/Engagement Level: personal relevance, functional importance, symbolic significance, emotional appeal, hedonic value, brand importance, perceived risk, interest and passion, situational and environmental cues, past experiences, digital and social influences, cultural and societal influences.
11. Perception: selective perception, the memory system, sensation, consumer’s portray/imagery, product (image, quality, price-quality ratio, pricing, packaging, distribution, positioning/placement), store image, web presence, advertisements, multimedia.
12. Cognitive Biases and Heuristics.
13. Emotional Influences.
14. Needs and Pain Points.
15. Limitations.
16. Goals and Aspirations.
17. Innovation and Trends.
18. Technology.
19. eCommerce, Traditional Retail.
20. Environmental Concerns.
21. Ethical considerations.
22. Social Responsibility and Corporate Citizenship.
23. Marketing Strategy, Communications, Advertising, and Sales.
24. Customer Service & Support.
25. Brand Loyalty and Advocacy.
26. External Influences: media, peer pressure, and more.

These factors interact in complex ways, making the study of consumer behaviour a multidisciplinary field that combines elements of psychology, sociology, cultural anthropology, economics, and marketing to understand why and how people make the choices they do.

I’ll be analysing these factors extensively in this series of “consumer behaviour” (various articles and guides – see below in the conclusion).

Statistics

1. According to eMarketer via LinkedIn, global e-commerce sales reached $4.28 trillion in 2020, representing 27.6% growth compared to the previous year.
2. According to eMarketer, in 2022, worldwide eCommerce sales will exceed $5 trillion for the first time. After two years of unusual growth patterns, we expect worldwide retail and eCommerce spending to continue to grow through 2025.
3. A survey by GlobalWebIndex found that 54% of social media users research products on social platforms
4. BrightLocal’s Local Consumer Review Survey revealed that 87% of consumers read online reviews for local businesses and 79% trust online reviews as much as personal recommendations.
5. Statista reported that mobile e-commerce sales accounted for 72.9% of total e-commerce sales in 2021, emphasizing the importance of mobile-friendly shopping experiences.

These statistics showcase the significant impact of eCommerce, social media, and online reviews on consumer behaviour. They highlight the need for businesses to have a strong online presence and to actively manage their reputation in the digital space.

Consumer Decision-Making Process Overview

The consumer decision-making process is a series of steps that individuals go through when considering and making purchases. Here’s an overview of the typical consumer decision-making process:

1. Problem Recognition/Need Arousal
2. Information Search
3. Perception
4. Preferences
5. Evaluation of Alternatives
6. Purchase Decision
7. Purchase
8. Post-Purchase Evaluation
9. Post-Purchase Behaviour
10. Loyalty and Advocacy

It’s important to note that not all consumers go through every stage for every purchase. The extent and depth of each stage can vary based on factors like the complexity of the decision, the individual’s level of involvement, and the type of product or service in question.

Understanding this process helps businesses tailor their marketing efforts to meet consumers’ needs at each stage and build long-term relationships with their customers.

Various Consumer Behaviour Models

Researchers in consumer behaviour and psychology have developed various models of consumer decision-making, often based on different assumptions about human behaviour.

Consumer Behaviour Models Significance

Consumer behaviour models serve various purposes in marketing, research, and business strategy. Here’s how they are commonly used:

1. Understanding Consumer Behaviour
2. Market Segmentation
3. Product Development
4. Advertising and Promotion
5. Price Determination
6. Customer Satisfaction
7. Competitive Analysis
8. Forecasting and Planning
9. New Market Entry
10. Risk Assessment
11. Customer Retention
12. Decision Support

These are just a few areas where the study of consumer behaviour can help a business.

Economic Model

It is a model that describes the consumer as a completely rational being (rational consumer) who objectively judges and ranks each alternative product and chooses the one that gives them the greatest value. The model assumes that the consumer knows all brands of the product as well as their marginal utilities.

• Assumption: Consumers are rational decision-makers who seek to maximize utility or satisfaction while minimizing costs.
• Key Characteristics: Consumers carefully weigh the benefits and costs of each choice and make decisions based on a rational assessment of available information.
• Example: Economic models are often used in classical microeconomics to explain how consumers allocate their budgets among different goods and services.

An example:

Budgeting for a Vacation:

• Situation: A family plans a vacation to a popular tourist destination.
• Economic Model Behaviour: The family sets a budget for the trip, taking into account expenses such as transportation, accommodation, meals, and entertainment.
• Decision-Making Process: They prioritize activities and accommodations that offer the most satisfaction (utility) relative to their cost. They may make trade-offs, such as choosing a less expensive hotel to allocate more funds for activities they value more.
• Outcome: The family’s vacation spending aligns with their budget, reflecting a rational approach to maximizing enjoyment within their financial constraints.

In this example, consumers exhibit behaviours consistent with the economic model by actively seeking information, evaluating choices, and making decisions that aim to optimize their utility or satisfaction given their constraints. They consider costs and benefits when choosing products, planning expenditures, or making financial investments.

Passive Model

This model is a theory that sees man as a consumer who is a docile (compliant-obedient) recipient of marketing efforts and product promotions.

• Assumption: Consumers are passive and easily influenced by marketing and advertising.
• Key Characteristics: This model suggests that consumers don’t engage in extensive information processing and are heavily influenced by external cues, such as brand image and advertising.
• Example: In this model, consumers may make choices based on what is most prominently displayed in a store or what they’ve seen advertised recently.

An example:

Grocery Shopper:

• Situation: A consumer is at a grocery store to buy breakfast cereal.
• Passive Model Behaviour: The consumer approaches the cereal aisle without a specific brand or type in mind.
• Decision-Making Process: The consumer selects a cereal based on what is visually appealing or familiar to them without actively comparing ingredients, nutritional information, or prices.
• Outcome: The consumer chooses a cereal without extensive analysis or comparison shopping. They rely on visual cues or familiarity to make their selection and do not actively seek out the best value or nutritional option.

In this example, the consumer’s behaviour aligns with the passive model at the point of purchase. They make choices based on convenience, visual cues, or familiarity rather than engaging in an active decision-making process that involves comparing product attributes or prices.

Cognitive Model

Here the consumer is described as an active collector of information related to products of interest to them so that they are able to make satisfactory purchasing decisions.

• Assumption: Consumers are active information processors who engage in deliberate, systematic thinking when making decisions.
• Key Characteristics: This model emphasizes the role of cognitive processes like problem-solving, evaluation, and information search in consumer decision-making.
• Example: Cognitive models explore how consumers gather and process information, compare alternatives, and make choices based on cognitive assessments.

An example:

Smartphone Shopper:

• Situation: A consumer is in an electronics store looking to buy a new smartphone.
• Cognitive Model Behaviour: The consumer conducts thorough research before making a decision.
• Decision-Making Process: The consumer starts by identifying their specific needs, such as camera quality, processing power, and budget constraints. They gather information from online reviews, consult with friends or family, and visit multiple stores to compare options.
• Outcome: After extensive research and consideration, the consumer selects a smartphone that best aligns with their needs and preferences. They make an informed decision based on their research.

In this example, the consumer’s behaviour aligns with the cognitive model of consumer decision-making. They engage in a systematic and analytical process, considering various factors and conducting research to make an informed choice about the product that best meets their needs.

Emotional Model

This model sees the consumer making purchasing decisions based on subjective criteria, such as love, fear, pride, affection, etc., rather than based on objective criteria resulting from objective judgment.

• Assumption: Emotions play a central role in consumer decision-making.
• Key Characteristics: This model suggests that consumers’ emotions and affective states heavily influence their choices. Emotions can override rational decision-making in some cases.
• Example: Emotional models examine how feelings like joy, fear, or desire can impact consumer choices, particularly in branding and advertising strategies.

An example:

Luxury Car Buyer:

• Situation: A consumer is considering buying a luxury car.
• Emotional Model Behaviour: The consumer’s decision is primarily influenced by emotional factors.
• Decision-Making Process: The consumer is drawn to the prestige, status, and emotional appeal associated with luxury cars. They visit dealerships, test drive several models, and are captivated by the sleek design, advanced technology, and the feeling of opulence.
• Outcome: The emotional connection and desire for luxury lead the consumer to choose a high-end luxury car, even if it means stretching their budget. The sense of satisfaction and status associated with the purchase is a significant driver of their decision.

In this example, the consumer’s behaviour aligns with the emotional model of consumer decision-making. Their choice is driven by emotions, including the desire for luxury, prestige, and the emotional satisfaction derived from owning a high-end product. These emotional factors play a central role in their decision-making process.

Behavioural Economics Model

This model examines consumers who are guided by the principles of behavioural economics and might make purchasing decisions influenced by various psychological biases and heuristics. 

• Assumption: Consumers often deviate from rational behaviour due to cognitive biases and heuristics.
• Key Characteristics: This model combines elements of psychology and economics to study how individuals make decisions. It explores the systematic ways in which people depart from traditional economic models.
• Example: Behavioural economics considers phenomena like loss aversion, anchoring, and status quo bias, which can lead to decisions that appear irrational from a purely economic perspective.

An example: Let’s consider the concept of “anchoring bias.” This bias occurs when a consumer relies heavily on the first piece of information encountered when making decisions, even if it’s arbitrary or irrelevant. In this case:

Smartphone Shopper:

• Scenario: Imagine a consumer is shopping for a new smartphone. They walk into an electronics store and immediately notice a prominently displayed smartphone with a “sale” sign showing its original price as $1,000 and the sale price as $699. This is the first smartphone they encounter in the store.
• Consumer’s Thought Process: The consumer may anchor their perception of the smartphone’s value to that initial price of $1,000. This high anchor sets a reference point in their mind. As a result, the sale price of $699 seems like a significant discount, even if they hadn’t planned to spend that much on a phone.
• Purchase Decision: Influenced by the anchoring bias, the consumer is more likely to purchase this particular smartphone because they perceive it as a great deal compared to the high anchor price. They may not explore other smartphone options thoroughly because they’re anchored to the $1,000 reference point.

In this example, the behavioural economics model consumer’s decision is influenced by the anchoring bias, a psychological heuristic. They might make a purchase that they otherwise wouldn’t have made if the initial anchor price had been different.

Behavioural economics explores how individuals deviate from purely rational decision-making, considering psychological and emotional factors that influence choices.

The Disadvantages of Consumer Behaviour Models

In general, the disadvantages of consumer behaviour models are summarized as follows:

1. Include Only Common Elements
2. Variability in Element Importance
3. Varied Importance for Different Uses
4. Applicability Across Consumers
5. Varying Decision Complexity

From my own experience as a consumer; I purchase specific products like clothing instantly based only on emotional factors, but I also decide on other products based on a step-by-step evaluation process, i.e. for more expensive products like taking a vacation, buying a computer, etc. For other products like food, I base my decision on past experiences and my overall education about healthy nutrition that is constantly evolves.

The Input-Process-Output Factors

There is a need for a simplified consumer decision-making model that encompasses input, process, and output factors.

Input factors include marketing efforts and socio-cultural influences.

The decision-making process involves psychological elements affecting needs recognition, information search, and product evaluation.

Output factors comprise the purchase and post-purchase evaluation, influencing future decisions.

Such a model is valuable for understanding consumer behaviour, aiding marketing decisions, quantifying influencing variables, enabling segmentation, and guiding marketing strategies.

In essence, a consumer behaviour model proves beneficial when it::

1. Fosters a comprehensive and interconnected perspective of consumer behaviour, facilitating segmentation and linking consumer thoughts to decisions.
   2. Aids in identifying the requisite information for informed marketing decisions.
   3. Encourages the quantification of the various factors and variables influencing consumer decisions.
   4. Provides a foundation for effective market segmentation.
   5. Serves as a basis for the development of well-informed marketing strategies.

The General Model of the Consumer’s Purchasing Behaviour

The consumer decides on the purchase of a product by responding to various stimuli they receive. These stimuli are processed by the consumer’s mind, which is characterized as a “black box” precisely because the processes that take place inside it are not clear (figure A).

The consumer behaviour researcher can only roughly determine the process that a particular consumer followed in arriving at the decision (response) to purchase the product. The response is obvious, but not exactly what preceded it.

Figure B below shows a more specific form of the first figure describing what factors mediate before, during, and after making a decision to purchase products.

It is important to understand the importance of the post-purchase behaviour of the consumer since the role of marketing should not stop with the purchase of the product. Marketing efforts should be aimed at high repeat purchases.

Consumers evaluate the product after each purchase and use, and the results of these evaluations continuously feed into the consumer experience around the product. This experience is part of the whole decision-making process.

Need Arousal

To induce consumer needs, specific conditions must be met. Consumers enter the decision-making process with a psychological set and various internal and external inputs. This set contains subjective criteria that shape their brand attitudes.

Before taking action (like making a purchase), consumers gather information
and evaluate brands. Their psychological set evolves with new experiences and knowledge.

However, the trigger for recognizing a need is exposure to stimuli from the environment, such as advertising.

The connection between exposure and need recognition happens during tense situations, pushing consumers to seek information. Need recognition initiates the decision-making process, influenced by marketing or internal stimuli, like disappointment or physiological needs.

Information Processing and Brand Evaluation

To make a decision and evaluate brands, consumers gather and process information, considering their criteria for need satisfaction with the right brand. Recognizing the need requires exposure to stimuli that gain attention, are understood in line with existing beliefs, and are retained in memory, especially if relevant to the consumer’s needs.

A relevant message can change the criteria for need satisfaction, potentially altering
attitudes toward other brands. These changes influence the consumer’s future needs, their prioritization, and the specific evaluation of each brand using decision rules.

This process ultimately leads to the consumer’s expected satisfaction with each alternative brand based on the need association.

Searching and Processing Information for Decision-Making

The quantity and quality of information consumers use to decide on products significantly impact their choices. Although more information is often assumed better, research by Keller and Staelin in 1987 suggests that too much information can lead to suboptimal decisions. They argue that quality enhances decision-making while quantity hinders it, especially with an excess of high-quality information.

Consumer confidence in choices is influenced by the quality, quantity, and recentness of information, according to the same study. The information environment affects how consumers process information, impacting decision effectiveness.

The presentation of product information also matters. Levin and Gaeth in 1988 conducted an experiment using minced meat and found that how information was framed influenced consumer perceptions. Personal experience moderates this effect; when consumers have personal experience with a product, they are less influenced by information presentation.

They presented minced meat as

• a) “75% fat-free”, or
• b) “with 25% fat”.

Consumers were more positive about the “75% fat-free” minced meat.

The order in which information is received plays a role in decision-making. The averaging model of information integration suggests that the first information source holds more weight. Levin and Gaeth’s experiment supported this notion.

Time availability affects information gathering. Hauser, Urban, and Weinberg in 1993 found that time constraints limit the quality and quantity of information consumers gather.

Consumer age influences information seeking. Cole and Balasubramanian in 1993 showed that younger consumers are more likely to seek information and make accurate choices based on nutritional information, especially when they can write down gathered data.

Involvement, the interaction of individual and task, affects information search (Punj and Stewart, 1983). Beatty and Smith in 1987 found positive relationships between information-seeking and consumer market involvement, attitude toward shopping, and time availability. However, consumer knowledge about a specific product category was negatively related to information search.

The findings of this study contradict those of the Moorman study in 1990, which argued that age is positively correlated with an individual’s ability to process and use nutritional information.

Gender differences exist in information processing. Meyers-Levy and Maheswaran in 1991 found that women focus on details in advertising messages, while men rely on the overall message. However, these differences can disappear under certain conditions.

Stigler’s theory (1961) posited that consumers seek satisfactory information for optimal product purchases, but Avery (1993) showed it applies better to information searches outside the store. Avery (1996) applied Stigler’s (1961) Economics of Information Theory to consumer search for grocery items, considering cost-benefit factors. Pre-store and in-store information searches are separate but complementary stages in food shopping.

Overall, various factors, including information quantity, quality, presentation, personal experience, time availability, age, involvement, and gender, influence how consumers search for and process information when making decisions.

Extended Decision-Making

Extended decision-making is a consumer approach where they meticulously evaluate multiple product brands, actively gathering extensive information. This method is typically employed for products that are expensive, have a long life cycle, pose high investment risk, are technologically advanced, require significant consumer involvement and demand active information gathering. Examples include cars, apartments, and stocks.

From a marketing perspective, when the target market predominantly uses extended decision-making, it is crucial for marketers to understand how consumers gather and assess information. It’s important to educate consumers about the key criteria where their brand excels compared to competitors. Informative advertising and comparative advertising play significant roles in facilitating this information-gathering process for potential customers.