Perception and the Decision Making Process

Just to get you warmed up, here is a video demonstrating how something as simple as buying a bag of crisps (or as our colonial cousins would say "chips") for the family involves a decision process.

http://www.youtube.com/watch?v=yx-Z5hpZh48

Kotlers Buyer Decision Process

Here is a diagram of Kotlers buyer decision process. In the yellow box is the model and in the white box is the customers buyer decision process when purchasing a laptop.




Here is a video that further explains the model in a practical way.




Lets try another example.

1. You feel hungry and are craving a sugary snack - Need recognition

2.You go into a shop and look at all the chocolate bars, sweets and fizzy drinks - Information search

3.You look at a chomp and think is this filling enough? Then you decide to go for a twirl as it is bigger and will probably fill you up for a bit - Evaluation of alternatives

4.You see that the twirl is 60p! You think its a bit expensive and that they are ripping you off a bit but you are hungry and decide that it's only 60p after all so you buy it. - Purhcase Decision

5.You can't quite finish the twirl as it is a but sickly and you weren't as hungry as you thought you were, you wish you saved yourself 50p and went for the chomp instead. - Postpurchase Behavior

Kotler assumes that every purchase follows this model, they follow every step from need recognition to post purchase behavior. However is this really the case? Do we really follow the same steps, taking the same amount of time and effort to buy a brand new car as we do for a chocolate bar? Of course we don't.

Perceived Risk Model

The Harvard Business School suggest an individuals evaluation of the risk involved in buying a product weighs heavily on their purchase decision. If you had to take a bullet from a gun in the chest and had a choice of 5 bullet proof vests to buy to protect yourself then you will probably spend a great deal of time considering which one you are going to purchase. However if you need a new jumper to play football in and have a choice of 5 to buy, you probably wont spend anywhere near as much time considering the purchase. Why? One presents a huge element of risk and serious consequences if a wrong decision is made where as the other presents no real risk or consequences as a result of the decision.






But there is more than one type of risk.



Laurent & Kapferer - Measuring Involvement

There are 4 components that influence a consumers level of involvement, the first being importance and risk.

This can be broken down into 6 factors:

Finance - How much does it costs in relation to how much you earn/have.
Time - How much time are you going to spend using the item?
Performance - How well does it work?
Ego - How it makes you feel.
Physical - Can it harm you?
Social - How others perceive your purchase of the item.

Lets try an example, a 20 year old student man is thinking about buying a new car:

Finance - High risk, it will probably leave him broke once he has brought the car.
Time - High risk, he is going to spend a considerable amount of time driving the car.
Performance - Medium risk, whilst he wants a fast car, he is aware that this is not
realisitic for him and so performance is not as important as other
factors.
Ego - Medium risk, he wants to feel good driving his new car but no one his age has
the perfect car so he is not too fussed.
Physical - Low risk, the car is unlikely to cause him any real harm if he drives it
sensibly so he is not really to worried.
Social - Medium risk, he see's the car as more of a practical purchase but still
wants to look cool for the ladies, he doesn't want them to be embarresed
about riding in his car

As you can see different factors are either higher or lower risk given his current situation. Performance is not that important as he knows he does not have the money to buy a car that will take turns well and accelerate fast. If the same man had to purchase a pair of shoes then certain factors (such as social and ego) would have more risk attatched to them and others such as finance would have less, a different product will have different levels of risk for different factors. It should also be noted that a 40 year old working woman would attatch different levels of risk to each factor than the 20 year old man would. Different people + Different products = a huge variety in importance and risk levels.

Perceptual Maps

Perceptual maps provide an excellent visual indicator of peoples opinions and perceptions on a product in relation to the competition.



In the above example, the customer is being asked to plot a product name on a graph with finance and performance in mind, in this case how economical the product is and how it makes the customers hair look. After completing the graph with several products evaluated you can see exactly where your product stands against the competition based upon these factors. This gives you an excellent idea of the areas you need to work on.

For example if you work for Organics then you should realise that whilst the quality of your product is excellent, consumers are being put off by the less economical price. Whilst they are a very useful tool, many perceptual maps need to be completed in order for them to provide strong information. A drawback of the perceptual map is it can only be viewed on a customer by customer basis unless you have the relevant equipment and software to converge the information into a graph.

Thanks for reading part 3 of my Blog, part 4 coming soon!