Business School 101: The Consumer Decision-Making Process

Introduction

• Purpose: Help companies understand how consumers complete the journey from awareness to purchase
• Importance: Critical for marketing and sales
• Stages: Five stages in the consumer decision-making process

Five-Stage Consumer Decision-Making Process

Stage 1: Recognition of Need

• Definition: Acknowledgment of need for a product or service
• Stimuli:
  • Internal (e.g., hunger)
  • External (e.g., advertisement)
• Example: Jenny wants to achieve a healthier lifestyle like her friends, decides to purchase a fitness tracking watch.

Stage 2: Information Search

• Activities:
  • Active pursuit: Searching online, speaking with reps/users, testing products
  • Passive: Viewing advertisements
• Example: Jenny speaks to friends, checks the retailer’s website, reads reviews online

Stage 3: Evaluation of Alternatives

• Process: Compare product with alternatives based on criteria (price, quality, features, etc.)
• Example: Jenny compares three alternative fitness trackers, considering price, features, and availability

Stage 4: Purchasing Decision

• Process: Decide on the best option and complete the purchase
• Example: Jenny returns to the retailer’s website, selects her preferred watch, inputs shipping and payment info

Stage 5: Post-Purchase Evaluation

• Actions: Evaluate product/service and retailer
• Questions:
  • Did it satisfy needs?
  • Am I happy with it?
  • What would I change?
  • How do I feel about the retailer?
• Example: Jenny rates her watch with five stars, leaves a review, decides to shop with the same retailer in the future

Importance for Companies

Benefits of Understanding the Consumer Decision-Making Process

1. Leverage Against Competition: Unique sales and marketing initiatives
2. Knowledge About Customer Base: Understand key characteristics and use it for campaigns, ads, product launches
3. Increased Sales and Customer Base: Relevant marketing materials and wider distribution methods lead to more revenue

Conclusion

• Summary: Importance of understanding the consumer decision-making process
• Engagement: Encourage questions and comments, like, and subscribe reminders