Understanding the Consumer Purchase Decision Process

Posted on Apr 29, 2024 in Economy

Stages of the Purchase Decision Process

Consumers go through a crucial decision-making journey known as the purchase decision process when making a purchase. This process begins long before the actual purchase and has lasting consequences.

1. Problem Recognition

The process starts when a buyer recognizes a need or problem. This could be triggered by internal stimuli (e.g., hunger, thirst) or external stimuli (e.g., advertising). For instance, a salesperson might highlight the superior sound and image quality of a DVD player compared to the potential buyer’s current device.

2. Information Search

Once a need is recognized, buyers seek information to find the best solution. They may consult personal knowledge, research online, or ask for recommendations.

3. Evaluation of Alternatives

Consumers evaluate different products or brands based on criteria such as price, quality, durability, and service. This stage helps them identify a set of suitable options (evoked set) and form perceptions of value.

4. Purchase Decision

After evaluating alternatives, consumers decide when and where to buy. Factors influencing the timing include discounts, sales pressure, and financial circumstances. The choice of supplier depends on factors like terms of sale, past experiences, and return policies.

5. Post-Purchase Evaluation

Consumers compare their expectations with the actual product experience, leading to either satisfaction or dissatisfaction. If they question their decision, they may experience cognitive dissonance, a state of psychological discomfort.

Market Segmentation and Targeting

Companies recognize that they cannot appeal to all buyers in the same way. Instead of competing in the entire market, they identify specific segments they can serve effectively. This involves dividing the market into smaller groups based on needs, characteristics, or behaviors.

Types of Markets

  • Consumer Markets: Goods intended for personal or family use.
  • Industrial Markets: Products and services purchased for organizational objectives.
  • Services Markets: Transactions involving intangible assets that fulfill specific needs and desires.

Market Measurement

  • Market: The set of current and potential buyers of a product.
  • Market Potential: Consumers with a high level of interest in the product.
  • Available Market: Consumers with interest, sufficient income, and access to the product.
  • Qualified Available Market: Consumers who meet the above criteria and are qualified to buy.
  • Target Market: The specific segment a company focuses its efforts on.
  • Penetrated Market: Consumers who have already purchased the product.

Competition

  • Direct Competition: Businesses selling similar products in the same market.
  • Indirect Competition: Businesses meeting the same needs with different products or approaches.

Levels of Market Segmentation

  • Mass Marketing: Targeting the entire market with a single offering.
  • Segment Marketing: Adapting offerings to the needs of specific segments.
  • Niche Marketing: Focusing on a small, well-defined segment with unique needs.
  • Local Marketing: Tailoring brands and offerings to local customer groups.
  • Individual Marketing: Personalizing products and marketing programs for individual customers.

Consumer Market Segmentation Variables

Consumer markets can be segmented based on:

  • Geographic: Location, region, climate.
  • Demographic: Age, gender, income, occupation.
  • Psychographic: Lifestyle, personality, values.
  • Behavioral: Benefits sought, usage occasions, brand loyalty.

Market Positioning

Companies need to establish a clear and distinctive position in the market. They should avoid:

  • Underpositioning: Failing to position the company effectively.
  • Overpositioning: Providing a limited view of the company.
  • Confused Positioning: Creating a confusing image for consumers.

Differentiation Strategies

Companies can differentiate themselves through:

  • Product: Offering unique features, performance, or design.
  • Service: Providing superior customer service, support, or convenience.
  • Personnel: Hiring and training better employees than competitors.
  • Image: Developing a strong and distinctive brand image.

By understanding the purchase decision process and effectively segmenting and positioning themselves in the market, companies can better meet the needs of their target customers and achieve success.