Market research and Consumer Insights
How Do Customers Decide?
The purchase decision and its related preceding processes by which a customer decides to buy a product or a service is explained by many variables, including consumer motivation and needs as well as influences from the external environment. Consumer decision-making is often similar and yet can be unique. For example, the same buyer can be an extensive problem solver (EPS) for a purchase, engaging in a comprehensive and often time-intensive process; while for a different purchase, the same buyer can be characterized as a limited problem solver (LPS), where the brand may not yet be selected. In the case of familiar and repeat purchases, the buyer may exhibit routine response behavior (RRB), where a customer is confident about the product and does not require any specific information on making a decision.
Understanding consumers’ decision-making structures can be challenging and with significant implications for marketing spending. The role of market research is to capture the process, quantify the market opportunity, and provide insights to other functional areas in marketing. This may include product availability recommendations (distribution), price/value judgments by consumers (with implications for pricing, discounting, messaging and so on), information search and acquisition processes (digital and traditional media decisions, messaging, to name a few marketing implications) and even product changes. Observation methods can assist the market analyst in exploring the different facets of consumer decisions. Participant observation is the process that enables marketing managers to learn about the activities of the people under study in the natural setting through observing and participating in those activities. Hence, as a market analyst you need to direct who is observed, when and where they are observed, what is observed, and how the observations are recorded.
This week, you will explore the different types of decision-making structures and discuss the dynamics of the shopping experience.
