How Do Consumers Make Decisions?

Published by MBA Skool Team, Published on August 30, 2015

The term “decision making” is broadly defined as the cognitive process which leads to selection of a belief or an action among various possible options. Decision making process specifically refers to the journey which he travels towards the destination of the final purchase of product or service. To understand it completely, we need to study the consumer decision making process in detail.

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There are various phases in this journey-:

1. Problem recognition- This is the first stage in the decision making process for an individual or consumer. It basically defines the identification of need for a certain product/service by an individual. Problem can be recognised through various mediums-:

a) Out of stock- This is the most common problem recognition method. If some product goes out of stock, then need for the product is felt. Common examples being shampoo bottle getting empty, no cooking oil left in cooking jar etc. This signifies the need for the purchase of the said product.

b) Dissatisfaction- There can also be cases when a person is dissatisfied with his current use and wants a change or an upgrade to the current product of use i.e. his needs are not met by the current offering in use. This comes under dissatisfaction. In this, consumer changes his brand or product to adopt a different one.

c) New needs/wants- In some cases, marketers introduce new items catering to totally different needs or in fact new needs or wants are realised by that product which was never been experienced before. For e.g. launch of ultra-modern tech gadgets like iPod, push mail technology etc. fall under this category of new needs/wants.

d) Similar or related products/accessories- Certain offerings may increase or double the efficiency or the utility of product in use. For e.g. a portable charger may increase the utility of a smartphone as it would increase its battery life i.e. it can be used at a stretch for a longer period of time. Other examples being a replaceable coating for a non-sticky pan which may increase its life and protect from damage.

e) Induced problem recognition- Sometimes there may not be a problem as such but such for the sake of the product, a problem is made to be realised to the consumers by the marketers. The common examples of this being mouthwash, flavoured deodorants etc. Life is purely perfect without these but a problem is created to make these items the solvers or saviours in a consumer’s life hence arousing the need for the purchase of that product.

2. Information Search- After the problem has been recognised, the next stage in consumer decision making process in gathering information for the solution to the problem i.e. the information about the product/service to counter that problem. There are various mediums by which consumer comes in contact with the information-the most common medium being the television, radio etc. Other sources of information search which have become quite poplar nowadays are the data and research available online. Companies pay a lot of attention in getting the consumers exposed to the information. Not only the quantity of the information is important but also the quality of info plays quite an important role in shaping the whole process. Quality of the info convey can be improved by the way of using innovative, creative and one of a kind ad that engages the consumer interest level along with passing info so as to retain a spot in the consumer’s mind.

3. Information Perceived- This stage defines the consumer attitude of perceiving the conveyed info. Not all perceive the info in the same way. This step is actually attained by three sub steps-:

a) Sensation- Direct response (unconscious) of the senses to the stimulus given. For e.g. a fragrance being picked up by a nostrils. May be it is not soothing or becomes unpleasant after some time but sensation is registered.

b) Selecting Information- The work of senses is just to receive information. How they are attended comes in the next step. Our brain only has limited capacity and at a particular point of time as all senses are active, only the selective information from a few senses is attended by the brain. For e.g. you are surfing on a site. Your eyes are scrolling through the ads listed at the side of the browser page. It is a fact that everything is being received but you must also know that only a few are being attended to.

4. Interpreting information- This is one of the most important steps in consumer decision making process- the impact of which can surely change the entire decision making process if touched upon right points. The interpretation of the info on the whole varies from individual to individual. Every individual has an inherent ability to interpret info in a way based on various factors of his background, profession, needs and the overall demographic status. Marketers need to tap that if they want to really sell their product. For e.g. an ad of a condom brand is perceived very differently by a mother of two children, her child, just married man etc.

5. Final retention- After the interpretation comes this step just making its way before the purchase. If the consumer interprets the advertisement in a favourable way that may be a solution to any of his problems, that product or brand is retained in his mind. It is not necessarily that the purchase would happen immediately after the retention but the very next time the need is aroused that retained product flashes in his mind unless a more effective product takes the place of that retained slot. This happens and that’s why marketers keep on updating their product and make multiple advertisements of the same product so as to convey various dimensions of information and increase the probability of the retention to remain for as long as possible. Obviously if the products are comparable, products more than one can be retained.

6. Final purchase- As already discussed in the previous point then the stage of final purchase is experienced by the customers.

The above discussion was a bird’s eye view of the cycle of the consumer decision making process. Obviously there are many more aspects and heuristics apart from the above discussed in the decision making process. Also an individual does not need to go through all these phases to make a purchase. There may also be incidents when his cycle starts at intermediate level itself. The journey could also vary depending on the uniqueness of the product. As marketer or potential ones if we are having an understanding and the knowledge of practical application of these concepts in real world, it makes very easy to make our own landscape and change the current landscape of decision making process making us the future leaders. If that fact is realised, purpose of writing this article is well achieved.

This article has been authored by Ankit Aggarwal from IIM Kashipur


Advertising & Promotion- George E. Belch, Michael A. Belch, Keyoor Purani

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