Alternative Evaluation Decision Rules-and- Purchase

Introduction
What is the consumer decision making process
The consumer decision-making process involves five basic steps. This
is the process by which consumers evaluate making a purchasing
decision. The 5 steps are problem recognition, information search,
alternatives evaluation, purchase decision and post-purchase
evaluation.

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
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.

Think about your own thought process when buying something— especially
when it’s something big, like a car. You consider what you need, research, and
compare your options before making the decision to buy. Afterward, you often
wonder if you made the right call.

If you work in sales or marketing, make more of an impact by putting yourself

in the customer’s shoes and reviewing the steps in the consumer decision-
making process.
Steps in the consumer decision process
Generally speaking, the consumer decision-making process involves five basic steps.

1. Problem recognition
The first step of the consumer decision-making process is recognizing the need for a service or
product. Need recognition, whether prompted internally or externally, results in the same
response: a want. Once consumers recognize a want, they need to gather information to
understand how they can fulfill that want, which leads to step two.

But how can you influence consumers at this stage? Since internal stimulus comes from within
and includes basic impulses like hunger or a change in lifestyle, focus your sales and
marketing efforts on external stimulus.

Develop a comprehensive brand campaign to build brand awareness and recognition––you want
consumers to know you and trust you. Most importantly, you want them to feel like they have a
problem only you can solve.

Example: Winter is coming. This particular customer has several light jackets, but she’ll need a
heavy- duty winter coat if she’s going to survive the snow and lower temperatures.
 2. Information search
When researching their options, consumers again rely on internal and external factors, as
well as past interactions with a product or brand, both positive and negative. In the
information stage, they may browse through options at a physical location or consult
online resources, such as Google or customer reviews.

Your job as a brand is to give the potential customer access to the information they want,
with the hopes that they decide to purchase your product or service. Create a funnel and
plan out the types of content that people will need. Present yourself as a trustworthy
source of knowledge and information.

Another important strategy is word of mouth—since consumers trust each other more than
they do businesses, make sure to include consumer-generated content, like customer
reviews or video testimonials, on your website.

Example: The customer searches “women’s winter coats” on Google to see what options
are out there. When she sees someone with a cute coat, she asks them where they
bought it and what they think of that brand.
 3. Alternatives evaluation
At this point in the consumer decision-making process, prospective buyers have
developed criteria for what they want in a product. Now they weigh their
prospective choices against comparable alternatives.
Alternatives may present themselves in the form of lower prices, additional product
benefits, product availability, or something as personal as color or style options. Your
marketing material should be geared towards convincing consumers that your
product is superior to other alternatives. Be ready to overcome objections—e.g., in
sales calls, know your competitors so you can answer questions and compare
benefits.

Example: The customer compares a few brands that she likes. She knows that she
wants a brightly colored coat that will complement the rest of her wardrobe, and
though she would rather spend less money, she also wants to find a coat made
from sustainable materials.
4. Purchase decision
This is the moment the consumer has been waiting for: the
purchase. Once they have gathered all the facts, including
feedback from previous customers, consumers should arrive at a
logical conclusion on the product or service to purchase.

If you’ve done your job correctly, the consumer will recognize that
your product is the best option and decide to purchase it.

Example: The customer finds a pink winter coat that’s on sale for
20% off. After confirming that the brand uses sustainable
materials and asking friends for their feedback, she orders the
coat online.
5. Post-purchase evaluation
This part of the consumer decision-making process involves reflection from both the
consumer and the seller. As a seller, you should try to gauge the following:

Did the purchase meet the need the consumer

identified? Is the customer happy with the purchase?
How can you continue to engage with this customer?
Remember, it’s your job to ensure your customer continues to have a positive experience
with your product. Post-purchase engagement could include follow-up emails, discount
coupons, and newsletters to entice the customer to make an additional purchase. You
want to gain life- long customers, and in an age where anyone can leave an online
review, it’s more important than ever to keep customers happy.

Tools to better understand your customer

Putting yourself in the customer’s shoes can help you steer consumers towards your
product. Here are some tools to help you analyze their decision-making process and
refine your brand marketing and sales tactics.
 Consumer Decision Making Process

An organization that wants to be successful must consider

buyer behavior when developing the marketing mix. Buyer
behavior is the actions people take with regard to buying and
using products.

Marketers must understand buyer behavior, such as how

raising or lowering a price will affect the buyer’s perception of
the product and therefore create a fluctuation in sales, or how
a specific review on social media can create an entirely new
direction for the marketing mix based on the comments
(buyer behavior/input) of the target market.
 The Consumer Decision Making
Process

Once the process is started, a potential buyer can withdraw at any stage of making the
actual purchase. The tendency for a person to go through all six stages is likely only in
certain buying situations—a first time purchase of a product, for instance, or when buying
high priced, long- lasting, infrequently purchased articles. This is referred to as complex
decision making.

For many products, the purchasing behavior is a routine affair in which the aroused need is
satisfied in a habitual manner by repurchasing the same brand. That is, past reinforcement
in learning experiences leads directly to buying, and thus the second and third stages are
bypassed. This is called simple decision making.

However, if something changes appreciably (price, product, availability, services), the buyer
may re-enter the full decision process and consider alternative brands. Whether complex or
simple, the first step is need identification (Assael, 1987).
 When Inertia Takes Over

When consumers make purchasing decisions out of habit, we call this

inertia.

This habitual form of purchasing involves little complex decision making

once the consider has recognized a need (i.e., “I am out of printer
paper”).

These types of purchases require little effort on the consumer’s side and
brands are easily substituted for others if the purchasing experience can
be made to be more convenient.

In contrast, brand loyalty occurs when consumers go out of their way to

repeatedly purchase a brand that they favour above all others.
 Using the ‘Rule of
Thumb’
Consumers don’t have the time or desire to ponder endlessly
about every purchase! Fortunately for us, heuristics, also
described as shortcuts or mental “rules of thumb”, help us
make decisions quickly and painlessly. Heuristics are
especially important to draw on when we are faced with
choosing among products in a category where we don’t see
huge differences or if the outcome isn’t ‘do or die’.

Heuristics are helpful sets of rules that simplify the

decision- making process by making it quick and easy for
consumers.
 Consumer Evaluations Made Easier

The evaluation of alternatives often involves consumers drawing on their evoke, inept, and insert sets to help them in the
decision making process.

Evoke Set

The brands and products that consumers compare—their evoked set– represent the alternatives being considered by consumers
during the problem-solving process. Sometimes known as a “consideration” set, the evoked set tends to be small relative to the
total number of options available. When a consumer commits significant time to the comparative process and reviews price,
warranties, terms and condition of sale and other features it is said that they are involved in extended problem solving. Unlike
routine problem solving, extended or extensive problem solving comprises external research and the evaluation of alternatives.
Whereas, routine problem solving is low-involvement, inexpensive, and has limited risk if purchased, extended problem solving
justifies the additional effort with a high-priced or scarce product, service, or benefit (e.g., the purchase of a car). Likewise,
consumers use extensive problem solving for infrequently purchased, expensive, high-risk, or new goods or services.

Inept Set

As opposed to the evoked set, a consumer’s inept set represent those brands that they would not given any consideration too. For
a consumer who is shopping around for an electric vehicle, for example, they would not even remotely consider gas-guzzling
vehicles like large SUVs.

Inert Set

The inert set represents those brands or products a consumer is aware of, but is indifferent to and doesn’t consider them either
desirable or relevant enough to be among the evoke set. Marketers have an opportunity here to position their brands
appropriately so consumers move these items from their insert to evoke set when evaluation alternatives
 Consumer Decision Rules
DECISION RULES
Decision rules are strategies consumers use to choose among alternatives.
Several factors can influence what decision rule consumers ultimately apply in a
specific situation.
Typically, the more important and less frequent a purchase decision is, the more time
and effort consumers are willing to expend making that decision. Choosing a resort
at which to spend a twenty-fifth wedding anniversary, for example, is a decision
most consumers face only once and therefore is likely to take a relatively long time
to make, and they are likely to be careful and thorough in evaluating alternatives.
On the other hand, a salesperson traveling frequently in a familiar territory likely
chooses a hotel using a routine process where far less time and consideration
are given to alternatives.
Further, brand-loyal customers might choose to stay with the same hotel chain
whenever possible, thereby avoiding a situation where they are forced to
choose among alternatives.
In general, the stronger a consumer is motivated to search and the greater the
Two general categories of decision rules are

compensatory and
non compensatory.
Compensatory Decision Rules :

Compensatory decision rules model consumers as deriving an overall

brand evaluation such that alternatives performing poorly on one
attribute can compensate for their respective shortcomings by positive
evaluations of other attributes.

For example, a high-priced hotel might not be perceived positively on the

dimension of room rates by some travelers; however, these same
travelers might be willing to spend more money knowing they will receive
better service or that the hotel is conveniently located—that is, in this
example, service and location compensate for the perceived
disadvantage of high room rates. The multi-attribute attitude model
described in the next section is perhaps the most popular compensatory
decision rule.
Non compensatory Decision Rules Although many factors (e.g., high involvement, high physical,
social, or economic risk) associated with a decision may lead consumers to use a compensatory
decision rule, the effort is relatively complicated and often too time- and effort-intensive for people
to employ for many day-to-day decisions. As suggested above, consumers may use a compensatory
decision rule if they spend a lot of time on the road, for a special vacation, or for an extended stay
abroad.

However, they are unlikely to use such an elaborate rule when purchasing a beverage at a gas
station or when they need to find inexpensive lodging in the middle of a long drive to visit friends.
Thus, many decisions are made using much simpler rules.
Non compensatory decision rules tend to simplify decision making; they may lead to less than
optimized results but are often employed when consumers satisfice, or seek an outcome that is
good enough rather than optimal.

When non compensatory decision rules are used, a brand or product cannot compensate for weak
performance on one attribute by performing well on other attributes when competing alternatives
are compared.
For example, if consumers choose a hotel based on the single criterion attribute of low room rates,
a hotel offering higher-priced accommodations with better service would not be chosen (unless
rooms are not available at the hotel offering lower rates). In this case, consumers do not trade off
room rates and service quality but make their decision guided solely by a property’s rates.
Compensatory Decision Rules: A type of decision rule in which a
consumer evaluates each brand in terms of each relevant attribute
a n d then selects the brand with the highest weighted score.
Non-compensatory Decision Rules: A type of consumer decision rule
by which positive evaluation of a brand attribute does not compensate
for a negative evaluation of the same brand on some other attribute.
• Conjunctive Decision Rule A non-compensatory decision rule in
which consumers establish a minimally acceptable cutoff point for
each attribute evaluated. Brands that fall below the cutoff point on
any one attribute are eliminated from further consideration.
• Disjunctive Rule A non-compensatory decision rule in which
consumers establish a minimally acceptable cutoff point for each
relevant product attribute.
• Lexicographic Rule A non-compensatory decision rule - consumers
first ra n k product attributes in terms of importance, then compare
brands in terms of the attribute considered most important.
• Affect Referral Decision Rule A simplified decision rule by which
consumers make a product choice on the basis of their previously
established overall ratings of the brands considered, rather t h a n on
specific attributes.
Example
The use of decision rules in these instances enables people to take shortcuts in
making decisions in the face of the apparently unlimited or overwhelming amounts
of information available regarding all possible alternatives.

Consumers usually work with a consideration set (i.e., a subset of alternatives from the
entire universe of choices) so they do not have to work as hard cognitively when
required to make a decision in a given product category. They then make a final
decision from this reduced set of alternatives. Such decision rules are referred to as
heuristics or rules of thumb.

Employing heuristics, people save time and limit complex information processing while
still making reasonable or satisfactory choices based on the few brand attributes or
characteristics most important to them at the time of choice. In the context of hotel
choice, brand attributes are things like location, room rates, and availability of a
swimming pool, restaurant, and so forth.