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Chapter 12
Decision Making I: Need Recognition and Search
Learning Objectives
After studying this chapter, the student should be able to accomplish the following objectives.
12-1 Understand the activities involved in the consumer decision-making process.
12-3 Explain the three major types of decision-making approaches.
12-5 Understand the factors that influence the type and amount of search performed by
consumers.
Lecture Example
A primary job for marketers is to understand the decision-making process that operates behind
consumer purchases. With ever-increasing amounts of information about products as well as
viable alternatives available to customers, sometimes what a company offers is different from
what the consumer wants. This discrepancy can negatively affect the sales of a company. For
example, according to a study conducted by Polk, an auto industry data company, 35% percent
or less of hybrid buyers will purchase another one. This decision has been facilitated by the cost-
factor of hybrids and includes concerns over fuel economy problems, with many owners trading
in their hybrids for electric cars. Growing strength of fuel economy among compact and midsize
competitors has also contributed to hybrid owners’ decision not to become repeat buyers.
Lecture Outline with PowerPoint® Slides
LO 12-1: Understand the activities involved in the consumer decision-making process.
I. Consumer Decision Making [Instructor PPT Slide 3]
Consumers encounter problem situations every day, and choices have to be made. The basic CB
consumption process is shown in Exhibit 12.1.The process revolves around value-seeking
activities that consumers perform as they go about satisfying needs.
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The decision-making process has been added to the exhibit. The decision-making process
generally includes the following five activities:
• Need recognition
• Search for information
• Evaluation of alternatives
• Choice
• Postchoice evaluation
Note that the activities found in the decision-making process are not referred to as steps. The
reason is that consumers do not always proceed through the activities in a sequential fashion, nor
do they always complete the process. Because consumers face numerous decision-making
situations daily, they often decide to simply defer a decision until a later time.
A. Decision Making and Choice [Instructor PPT Slide 4]
Decision-making processes lead to consumer choice. Choice does not necessarily mean
identifying what brand of product to buy. In fact, one of the very first choices that consumers
need to make when facing a decision is whether any purchase will be made at all.
Decision-making processes don’t always involve a tangible product. And consumers make
choices about behaviors not relating directly to a purchase.
Q: What courses did you sign up for in college? How did you select these courses?
Decision Making and Value
Both utilitarian value and hedonic value are associated with consumer decision making.
The car-buying experience involves both value types. First, a car is in itself a means to an
end. That is, owning cars enables consumers to transport themselves from place to place.
As such, an automobile delivers utilitarian value. Second, much of the car-buying
experience is based on hedonic value. The image associated with a particular model of car
and the feelings that go with sporty handling or comfort are hedonic benefits.
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Value perceptions influence decision-making activities. For example, consumers generally
continue searching for information about products only as long as the perceived benefits
that come from searching exceed the perceived costs associated with the process.
Decision Making and Motivation
Motivations are the inner reasons or driving forces behind human actions as consumers are
driven to address needs. It isn’t surprising, therefore, that decision making and motivation
are closely related concepts. The relationship between decision making and motivation is
well-known, and almost all consumer decisions revolve around goal pursuit.
Decision Making and Emotion
LO 12-2: Describe the three major decision-making research perspectives.
II. Decision-Making Perspectives [Instructor PPT Slide 5–7]
Consumer researchers view the decision-making process from three perspectives:
12.3.
A. Rational Decision-Making Perspective
This perspective is considered by many to be the traditional approach to studying decision
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making. The rational decision-making perspective assumes that consumers diligently gather
information about purchases, carefully compare various brands of products on salient attributes,
and make informed decisions regarding what brand to buy. This approach centers on the
assumption that human beings are rational creatures who carefully consider their decisions and
are rational is debatable.
B. Experiential Decision-Making Perspective
The experiential decision-making perspective assumes that consumers often make
purchases and reach decisions based on the affect, or feeling, attached to the product or
behavior under consideration. Behaviors are based largely on the sheer enjoyment involved
with consumption rather than on extensive cognitive effort.
C. Behavioral Influence Decision-Making Perspective
The behavioral influence decision-making perspective assumes that many decisions are
learned responses to environmental influences.
The behavioral influence perspective also helps to explain how consumers react to store
layout, store design, and POP (point-of-purchase) displays.
Q: Cite examples that illustrate the three decision-making perspectives.
LO 12-3: Explain the three major types of decision-making approaches.
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III. Decision-Making Approaches [Instructor PPT Slide 8]
Consumers reach decisions in a number of different ways. The decision-making approach that is
used depends heavily on the amount of involvement a consumer has with a product category or
purchase and the amount of perceived risk involved with the decision. In general, as involvement
and risk increase, consumers are motivated to move more carefully through the decision-making
process.
Consumer involvement represents the degree of personal relevance that a consumer finds in
pursuing value from a given act. Perceived risk refers to the perception of the negative
consequences that are likely to result from a course of action and the uncertainty of which course
of action is best to take. Consumers face several types of risk, including:
Risk varies across consumers and situations. Decision-making approaches can be classified into
three categories:
Exhibit 12.4 presents these categories in the form of a continuum based on involvement and risk.
[Instructor PPT Slide 9]
A. Extended Decision Making [Instructor PPT Slide 10]
When consumers engage in extended decision making, they tend to search diligently for
information that will help them reach a satisfactory decision. This information can come from
B. Limited Decision Making
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C. Habitual Decision Making [Instructor PPT Slides 11 and 12]
With habitual decision making (sometimes referred to as “routine” decision making),
consumers generally do not seek information at all when a problem is recognized. Two topics
are of special importance concerning habitual decision making: brand loyalty and brand
Brand loyalty affects consumption value in a number of ways.
Brand loyalty also has an impact on the value of the brand to the firm. As branding expert
David Aaker asserts, consumer brand loyalty influences the value of a product to a firm because
(a) it costs much less to retain current customers than to attract new ones, and (b) highly loyal
customers generate predictable revenue streams.
Final Thought on Decision-Making Approaches
Consumers go through decision-making processes, but these processes do not guarantee
maximum value. Consumers often make mistakes or settle for alternatives that they are
unsure of. In reality, many purchases are made with little prepurchase decision effort. In
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Q: Ask students to provide examples to illustrate brand loyalty.
LO: 12-4: Understand the importance of the consideration set in the decision-making
process.
IV. Need Recognition, Internal Search, and the Consideration Set
The recognition of a need leads the consumer to begin searching for information. Several
important issues are relevant here.
A. Need Recognition [Instructor PPT Slide 13]
The decision-making process begins with the recognition of a need. Simply put, a need is
recognized when a consumer perceives a difference between an actual state and a desired
state. A consumer’s actual state is his perceived current state, while the desired state is the
activities found in the decision-making process. Value is again important here. If the end goal
is not highly valued, consumers may simply put off a decision.
B. Search Behavior [Instructor PPT Slide 14]
When consumers perceive a difference between an actual state (an empty gas tank) and a
desired state (a full tank), the decision-making process is triggered. Consumer search
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Ongoing and Prepurchase Search
A consumer performs an ongoing search when she seeks information simply because she
is interested in a particular topic (such as a product or organization). Consumers who
perform ongoing searches are usually highly involved with the product category and seek
information simply for enjoyment.
simply too much information out there. Information overload refers to the situation in
which consumers are presented with so much information that they cannot assimilate it all.
One way that consumers can try to minimize information overload in the online
environment is by joining a specific group for a product or brand on a site like Facebook.
By focusing specifically on a group or fan page, consumers are able to look for relevant
information in one place and can gain a sense of which other posters they can and cannot
trust for information. Information search on social network sites can be either ongoing or
prepurchase.
Q: Ask students to provide an example of the steps involved in a prepurchase search.
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2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
such as a mobile phone. Seeking information about price, features, and requirements
would be the next step. A comparison of one model with another would also be a part
of the prepurchase search.
C. The Consideration Set [Instructor PPT Slide 15]
Internal search includes the retrieval of knowledge about products, services, and experiences
that is stored in memory. This type of knowledge is related directly to consumers’ experiences
with products and services. When confronted with a need, consumers begin to scan their
memories for available solutions to the problem that can aid in decision making. As such,
consumers most often perform internal searches before any other type of search begins.
consideration set (or the “evoked set”). The consideration set includes the brands or
alternatives that are considered acceptable for further consideration in decision making. There
are also alternatives in the awareness set that are deemed to be unacceptable for further
consideration. These alternatives comprise the inept set. The inert set includes those
alternatives to which consumers are indifferent, or for which strong feelings are not held.
LO 12-5: Understand the factors that influence the type and amount of search performed
by consumers.
V. External Search [Instructor PPT Slide 16]
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External search includes the gathering of information from sources external to the consumer,
including friends, family, salespeople, advertising, independent research reports (such as
Consumer Reports), the Internet, and search applications. In selecting the best information
source, consumers consider factors such as the following:
• The ease of obtaining information from the source
In general, consumers find that information from family and friends is dependable but that
information from commercial sources (like advertising or salespeople) is less credible for input
into decision -making. Personal factors like self-esteem play a role, however.
Q: What source of information would you use if you wanted to buy a computer or a book?
A. The Role of Price and Quality in the Search Process [Instructor PPT Slide 17 and 18]
The term evaluative criteria is used to refer to the product attributes that consumers consider
when reviewing possible solutions to a problem. Many things can become evaluative criteria.
However, two evaluative criteria are used across almost all consumer decisions: price and
quality. Consumers turn to price and quality very quickly as they consider most products.
Price represents an important type of information that consumers generally seek. But, what is a
price? A price is really a piece of information. More specifically, price is information signaling
how much potential value may be derived from consuming something.
However, a positive role for price also exists. In this sense, price signals how desirable a
product is and how much prestige may be associated with owning the product. Some consumers
are more sensitive to the positive role of price and tend to desire things with high prices as a
way of signaling prestige and desirability to others.
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Consumers also commonly search for information about a product’s quality. Consumers nearly
always consider quality an important evaluative criterion. Although quality can mean many
things to many people, from a consumer perspective, quality represents the perceived overall
goodness or badness of some product. In other words, consumers generally use the word quality
as a synonym for relative goodness.
A relatively new tactic regarding pricing and quality is the “pay what you want” (PWYW)
phenomenon. Products and services ranging from music downloads to sporting events to
restaurants now include PWYW options.
B. External Search and Emerging Technologies
In today’s fast-paced, information-rich environment, a tremendous amount of information is at
one’s fingertips. Due to the popularity of search engines, social networking sites, and
smartphone apps, consumers can find solutions to all sorts of problems at their fingertips.
What was once a novel computer tool has now become the first place that many consumers go
to find information. The Internet has dramatically affected search behavior. First, it lowers the
costs associated with search and can make the process more productive. Second, the search
C. Consumer Search and Smartphone Applications [Instructor PPT Slide 19]
Smartphone capabilities have greatly impacted search. Smartphone apps have made it easier for
consumers to search for information from practically any location, and they have played a major
role in the advent of mobile commerce. Although new technologies are introduced daily, the
following four advancements apply well to smartphone apps and mobile commerce. These
technologies have also contributed to the growing use of the phrase consumer discovery, which
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describes how consumers are constantly discovering new information about products, services,
experiences, and locations.
QR Codes
QR Codes (quick response codes) dramatically changed information availability. With a
QR code reader, consumers gain access to all types of product-related information. Early
on, marketers viewed QR codes as an essential part of marketing strategy whereby
Mobile Visual Search
Mobile visual search (MVS) technologies allow consumers to simply take a photo of an
object or scan it into their screen and quickly receive information about it. Not only does
this make it easier for consumers to gain information, it also makes the process faster.
Augmented Reality
GPS-Based Technologies
Other search technologies combine elements of GPS capabilities with consumer needs.
These apps allow consumers to quickly address specific needs that they have while they
are traveling.
It is easy to see how these technologies have affected consumer search processes. The
search and discovery processes really become “branded consumer experiences.” The
experience enables the consumer to learn about the product, interact with it, and begin to
forge relationships with it.
Q: Ask students if they have used any smartphone apps to make their purchases?
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D. Amount of Search [Instructor PPT Slide 20]
The amount of search that a consumer performs related to decision making can be measured
in a number of ways, including the number of stores visited, the number of websites and apps
visited, the number of personal sources (friends, family, salespeople) used, the number of
Product Experience
Prior experience with a product has been shown to influence how much a consumer
searches. As a general statement, evidence shows that moderately experienced consumers
search for purchase-related information more than do either experienced or
inexperienced consumers. This finding is shown in Exhibit 12.6.
Involvement
Purchase involvement is positively associated with search activities, especially for
ongoing searches. Because involvement represents a level of arousal and interest in a
product, search tends to increase when a consumer possesses a high level of purchase
involvement.
Perceived Risk
Value of Search Effort
When the benefits received from searching exceed the associated costs, consumers
derive value. When searching costs are greater than the benefits of the search process,
consumers no longer value the activity and search stops. Costs associated with search