Analysing consumer decision making

Decisions making is a large part of doing business. When it is only one person involved or affected by the decision, making that decision is comparatively easy. But when family or co-workers need to be taken into consideration, a group decision is the best solution. The decision amid individual and group decision making methods depends on the decision that has to be made, the group that will be affected and the decision maker’s leadership style.

Consumer behaviour refers to the behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs.

Consumer Decision-making:

Decision making has received a lot of attention in the management sciences besides economics, sociology and psychology but more into consumer and organizational behaviour. It is omnipresent as ‘there is no way a consumer can escape making decisions’ (Walters and Bergiel, 1989). But the visible part of the iceberg is the final purchase as that is the materialization of the entire Decision making process.

Consumer Decision making refers to the process by which consumers identify their needs, collect information about it, evaluate the alternatives, and finally make the purchase decision. These actions are determined by psychological and economical factors, which are influenced by environmental factors such as cultural, group, and social values (Business Directory, 2011)

Consumers are likely to cease their information-seeking effort when they perceive that they have sufficient information about some of the alternative to make a ‘satisfactory’ decision. An effective decision making is on of the major element in managing. Almost everyday we make important decisions in our day to day lives that affect the quality and success of the things we do. Even buying a product involves a wide range of decisions and variety of processes. Thus decision making is a cornerstone topic in marketing and consumer behaviour. The idea of understanding consumer behaviour as a sequential decision-making process is common in marketing (Engel et al., 1993; Wilkie, 1994; Solomon, 1993; Assael, 1992; Loudon and Della Bitta, 1993; (Kotler, 1997). The decision-making process is presented as a logical flow of activities, from the recognition of the problem to its purchase and to its post-purchase evaluation. The decision-making process is affected by a number of complex influences. Some of these influences are related to the wider environment from where the decision is made while others depend on the individual who makes the decision.

Therefore, in the marketing context, the term ‘consumer behaviour’ refers not only to the act of purchase but to any pre- and post-purchase activities (Foxall, 1985,1997; Ennew, 1993).

Pre-purchase activities include growing awareness of a want or need, and the search for it and the evaluation of information about the products that may satisfy it.

Post-purchase activities include the evaluation of the purchased item which would be currently in use and any attempt to reduce feelings of anxiety which is frequently accompanied by the purchase of expensive and infrequently purchased items like consumer durables.

Each of these has implications for purchase and repurchase and they are acquiescent to marketing communications along with the other elements of the marketing mix.

The traditional decision-making process, according to Engel et al., (1993), includes five stages: (1) problem recognition, (2) information search, (3) evaluation of alternatives, (4) purchase, and (5) post-purchase evaluation. These actions are determined by psychological and economical factors, and are influenced by environmental factors such as cultural, group, and social values.

Problem recognition is referred to as the realization, triggered by the internal or external factors, that a consumer or the organization has a problem which can be solved by the purchasing of goods or services.

Information search is the stage, where the person seeks information about how his wants might be met. It is an ongoing process; it does not stop when the holiday has been booked. One may search from their own experience, looking for ways he was satisfied from it in the past or even consult external sources of information, like friends, family, newspapers, advertising, packaging, etc. (Neva R. Goodwin, Julie A. Nelson, Frank Ackerman, Thomas Weisskopf , 2011)

Evaluation of Alternatives is done after gathering information, the consumer compares the alternatives about which he has gathered information. Goods and services are said to have attributes that are the real items of interest to the consumer.

(Neva R. Goodwin, Julie A. Nelson, Frank Ackerman, Thomas Weisskopf , 2011)

To Purchase is having developed an intention to buy something, the consumer will follow through and make the purchase and therefore to accomplish one’s desire.

Post- purchase evaluation is done after the purchase, where the consumer will decide whether he or she is satisfied or dissatisfied with the good or service. Consumption, in the marketing view, is seen as something of a trial-and-error process.

The input component of our consumer decision making model draws an external influence that serves as sources of information about a particular product and influences a consumer’s product-related values, attitudes and behavior. Chief among the input factors are the marketing mix act of an organization that attempt to communicate the benefits of their products and service s to potential consumer and the non marketing socio-cultural influences, which when internalized, affect the consumers purchasing decision.

The Classical theory portraits the consumer either as information processor, problem solver and risk reducer.

The information processing approach assumes that consumers are looking for and processing information continuously to improve the quality of their choices (Bettman, 1979)

Another popular approach is the problem solving in consumer decision making, which assumes that any need or desire creates a problem within an individual and the consumer in turn takes an action to satisfy that desire or need.

The view of a consumer as a risk reducer was proposed by (Bauer, 1960) and (Taylor, 1974). Risk is defined as a personal anticipation that an action will result in loss or an uncertainty. It can be either physical or psychological. According to this theory, it assumes that in the marketing decision the consumers risks tend to reduce to an acceptable level. It involves strategies like repeat purchase, brand loyalty and buying the goods that are more expensive and well-known.

Consumers do not have defined preferences but build them at the spot according to their needs, while making a choice. Consumer behaviour refers to the behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs.

The choice to participate or not to participate in a travel activity is not usually planned or rational by a consumer. The decision is one that is dictated by one’s micro system and macro system. Economic, social and environmental factors play an important factor in consumer’s decision to travel or not, whereas some will travel only when the behaviour fits directly into their lifestyle. It is not only enough that a specific destination has a reasonable price, many activities and an enticing ambience. But instead the destination must have the amenities that are specifically geared to the targeted consumer.

For example for a family it could concentrate on a location that is more easily accessible, children-friendly, best facility, cost-effective and good value. Whereas if its an individual who is interested in music, a special event like an opera or special event by a famous orchestra might help to induce travel behaviour. Not all the decisions taken are automatic and spontaneous. It is also dictated by causal history.

For a given behaviour, the combinations of theory facilitating and constraining factor are the path that leads to participation and non-participation of travel. These paths can be useful for building theories of leisure and travel behaviours.

In this case study we discuss and evaluate the decision-making processes and compare it with the traditional problem solving approach with consumer decision making process. 27 Belgian households which included singles, couples, families and group of friends were interviewed in-depth almost four times within a course of a year, i.e. three times before they went for their summer holiday and once after they had returned.

We see that the process of family decision making is more complex and different than that of an individual (Assael, 1998; Michie and Sullivan, 1990) as it involves a joint decision among all the members of the family (Assael, 1998) and are also high involvement decisions (Michie and Sullivan, 1990)

We focus on the three main cases of individuals:

Anne states that there are many other factors that decide if they could go for a holiday, like an administrative factor which in her case was a job hunt and if her husband would get a job which would start on 15th of June then they would not be able to ask for a holiday for the entire month of August and cannot refuse a job to go on a holiday. Thus she says that they do not have control over anything of going for a holiday.

Vincent who represented his group of friends said that it was better unplanned and to decide on the day as planning ahead was annoying. He states that seeing and discovering more about that place before reaching that place would give them a different perception when seeing the place directly as there would be more to discover and be amazed when seeing it for the very first time.

According to this, we can assess that a majority or holidaymakers can be categorised as low information seekers and do not organize their holiday in much details.

Daniele, another interviewee states that sometimes opportunities would just come their way in order to go on a holiday. They would neither decide it earlier nor know six months prior about where they would be going.

Therefore a holiday decision-making was proved to ongoing and did not characterise any fixed sequential steps.

Holiday plans are instrumental while achieving higher-order goals. The major goals are return on investment (utilitarianism) or satisfaction maximization (hedonism). Information accumulated were natural and non- purposive way from one source to the other without much search or effort.

Information collection is more important during the very last days before the booking is made and during the whole holiday experience. Further there is a shift from internal to external sources of information and from general (destination) to more specific (practical) information.

In conclusion, holiday decision-making is not necessarily as rational and cognitive as it has often been assumed to be. It entails emotions, adaptability and opportunism to a large extent. It is not just one process but a plurality of decision-making processes.