What is Consumer Decision Model?
The Consumer Decision Making Process Theory is the process by which consumers become aware of and identify their needs; collect information on how to best solve these needs; evaluate alternative available options; make a purchasing decision; and evaluate their post purchase.
Understanding the consumer decision making process is key to identifying marketing challenges and opportunities. It’s important to align marketing efforts with the steps customers undertake to decide what to buy. This is true both for B2C and B2B products and services.
Decision-making is both an art, and a science, which has been studied by experts across generations. Most of the time, the secret of marketing lies in learning exactly what the customer wants, and how their decisions can be influenced to purchase one product over its competition.
What are the Five Stages of Consumer Decision-Making?
The consumer decision-making process can seem mysterious, but all consumers go through basic steps when making a purchase to determine what products and services will best fit their needs.
5 steps of the consumer decision making process
- Problem recognition: Recognizes the need for a service or product
- Information search: Gathers information
- Alternatives evaluation: Weighs choices against comparable alternatives
- Purchase decision: Makes actual purchase
- Post-purchase evaluation: Reflects on the purchase they made
1. Problem recognition (Awareness)
The need recognition stage of the consumer decision making process starts when a consumer realizes a need. Needs come about because of two reasons:
- Internal stimuli, normally a physiological or emotional needs, such as hunger, thirst, sickness, sleepiness, sadness, jealousy, etc.
- External stimuli, like an advertisement, the smell of yummy food, etc.
Example: Looking for a new Smartphone
Think about it: Why does someone start looking for a new smartphone? Likely, their old smartphone isn’t working well anymore, or they simply want a nicer mobile. Maybe they have a vacation coming up. Or maybe they want to give the mobile as a present to their sister, who just had her first in College.
2. Search for information (research)
As soon as a consumer recognizes a need and begins to search for an answer, you must be there to help! And where do consumers generally go to look for answers today? Google!
Example: Researching smartphone
Now that the customer has realized a need to get a new camera, it’s time to find solutions to his problem. In this stage, it’s imperative that you are visible to the consumer searching for an answer.
Here are some things a consumer may be searching for:
- Best smartphone 2021
- What is the best affordable smartphone?
- Which smartphone are top-rated?
The amount of information a customer needs to search for depends on how much he already knows about the solutions available, as well as the complexity of choices. For example, let’s say there’s someone looking for a camera as a gift, and he has no idea which type of camera he wants, or what features he needs.
He will need more information than someone who already knows exactly the type of smartphone he wants to buy, but just needs to find the right product and the right way to purchase it.
The amount of searching necessary is entirely dependent on the situation, and it can vary widely.
3. Evaluation of alternatives (consideration)
Now that the consumer has done research, it’s time to evaluate their choices and see if there are any promising alternatives. During this phase, shoppers are aware of your brand and have been brought to your site to consider whether to purchase from you or a competitor.
Consumers make purchase decisions based on which available options best match their needs, and to minimize the risk of investing poorly, they will make sure there are no better options for them.
Their evaluation is influenced by two major characteristics:
- Objective: Features, functionality, price, ease of use
- Subjective: Feelings about a brand (based on previous experience or input from past customers)
Example: Comparison shopping for a smartphone
If you’re a smartphone seller or brand, your goal in the consideration stage is to convince customers your smartphone is the best choice. And the most effective way to do that is to keep them on your site longer and find ways to earn their trust.
Consumers will first weigh the objective characteristics of your smartphone. Does it have all the features I want? Is it easy to use? Is it in my budget? Then, the subjective consideration will kick in: Do other people think it has all the features it should? Has anyone else who bought it expressed any difficulty with learning how to use it? Is it generally considered a good value for the money?
4. Purchasing decision (conversion)
Alright, now it’s money time. This is the stage when customers are ready to buy, have decided where and what they want to buy, and are ready to pull out their credit cards.
But wait! Not so fast. You can still lose a customer at this stage. This is the stage when the purchasing experience is key – it’s imperative to make it as easy as possible.
Example: Abandoning checkout for a smartphone
Let’s say your potential customer has gotten to the checkout stage of his purchase, and has second thoughts: What if the recipient wants a different smartphone? What if this smartphone is missing a key feature that the recipient would want? How difficult will it be for the recipient to return the smartphone if it doesn’t meet their needs?
5. Post-purchase evaluation (re-purchase)
In this stage of the consumer purchase decision process, consumers reflect on their recent purchase. They think about how they feel about it, if it was a good investment, and most importantly, if they will return to the brand for future purchases and recommend the brand to friends and family.
In this stage, you need to have a post-purchase strategy to increase the likelihood that customers will engage with your brand again in the future. Return customers account for 1/3 of a store’s total income on average, so make sure you’re not missing out on this super valuable opportunity to increase eCommerce conversion rate by turning shoppers into repeat buyers.
Example: Getting feedback and encouraging repeat purchases
In the smartphone example, the customer has already bought from your brand and they’re evaluating their purchase. This is usually when they will leave a review about their experience. This is also when they are at their most engaged with your brand, and they can be susceptible to strategies that encourage long term engagement.
What are the types of consumer decision making?
There are three types of consumer decisions to consider:
1. Nominal Decision-Making
Nominal decisions are often made about low-cost products. They include frequent purchases, purchases from a familiar brand or product, buying that requires low involvement, or little search efforts.
If you’ve been using the same laundry detergent for twelve years, you’re unlikely to spend much time researching different brands unless you notice a problem with your existing purchase. In other words, you’ll keep picking up the same bottle without thinking about it.
Nominal decision-making doesn’t always start off as nominal. Initially, you may have spent weeks searching for a laundry detergent that was within your budget, smelled great, and kept your clothes soft. However, your purchase becomes nominal over time because of your loyalty to the brand you ended up choosing.
When purchasing your product is a nominal decision, marketers simply need to perform brand maintenance. In other words:
- Make sure the product is available where your customers are shopping
- Maintain the right pricing structure and introduce new concepts when interest drops
- Create advertisements that ensure memorability for your brand.
2. Limited Decision-Making
Limited decision-making is a little more involved than nominal decision-making, but it’s still not a process that requires in-depth research. Limited decisions are made about mid-cost products, semi-frequent purchases, or purchases from a somewhat familiar brand. They require a little involvement, and perhaps some searching.
When customers make limited decisions, they take a small amount of time to ponder over their purchase, but they might not go online to look for testimonials and reviews. Instead, they could consider their memory of their product, and make decisions based on logical inferences.
When it comes to addressing limited decision-making, it’s important for marketers and brands to examine their customer data, and understand the factors that influenced decision-making, such as:
- Product quality
- Product availability
- Packaging style
3. Extended Decision-Making
Finally, extended decisions are made about higher-cost products, and infrequent purchases. They require a lot of involvement, often center around unfamiliar brands or products, and need extended thought and search efforts to ensure buyer confidence.
For instance, we don’t buy a huge flat-screen television every day, so when the time comes to make this kind of investment, we want to know for sure that we’re making the right choice in everything from brand to picture quality.
When it comes to influencing extended decision-making, the best thing that any brand can do is work on building their positive online presence:
- Make sure that you have a social presence where people can share their opinions and thoughts about your products, and ensure that you reply and respond positively to negative comments
- Give people plenty of spaces to review your product and post testimonials so that people can find opinions online in a hurry
- Provide extensive product details on listing pages, and make sure that your staff members are well-equipped to answer any questions customers might have.
- Offer interactive guides and other tools that will help them through the decision-making process
What are the 7 Steps in Decision Making?
Decision making is the process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.
Step 1: Identify the decision
You realize that you need to make a decision. Try to clearly define the nature of the decision you must make. This first step is very important.
Step 2: Gather relevant information
Collect some pertinent information before you make your decision: what information is needed, the best sources of information, and how to get it. This step involves both internal and external “work.” Some information is internal: you’ll seek it through a process of self-assessment. Other information is external: you’ll find it online, in books, from other people, and from other sources.
Step 3: Identify the alternatives
As you collect information, you will probably identify several possible paths of action, or alternatives. You can also use your imagination and additional information to construct new alternatives. In this step, you will list all possible and desirable alternatives.
Step 4: Weigh the evidence
Draw on your information and emotions to imagine what it would be like if you carried out each of the alternatives to the end. Evaluate whether the need identified in Step 1 would be met or resolved through the use of each alternative. As you go through this difficult internal process, you’ll begin to favor certain alternatives: those that seem to have a higher potential for reaching your goal. Finally, place the alternatives in a priority order, based upon your own value system.
Step 5: Choose among alternatives
Once you have weighed all the evidence, you are ready to select the alternative that seems to be best one for you. You may even choose a combination of alternatives. Your choice in Step 5 may very likely be the same or similar to the alternative you placed at the top of your list at the end of Step 4.
Step 6: Take action
You’re now ready to take some positive action by beginning to implement the alternative you chose in Step 5.
Step 7: Review your decision & its consequences
In this final step, consider the results of your decision and evaluate whether or not it has resolved the need you identified in Step 1. If the decision has not met the identified need, you may want to repeat certain steps of the process to make a new decision. For example, you might want to gather more detailed or somewhat different information or explore additional alternatives.