The Consumer Decision Making Process: A Simple Guide

The consumer decision-making process is a complex activity influenced by cognitive, emotional and neurological factors. It’s nevertheless essential for marketers to understand it.

Consumers make constant decisions about purchase, use, opinions, and discarding of products and services. If you don’t have any idea of how consumers make these decisions, how are you supposed to influence them? Marketers need to understand how consumers make decisions in general, and what decision-making factors are most influential in their context.

In this article, we will delve into the science behind the consumer decision-making process. We will examine studies in cognitive psychology, neuroscience, and biology to shed light on the underlying mechanisms that shape consumer behavior. Once you reach the bottom of this page, you should have a solid grasp of how decisions are made, and be able to apply the learnings to your business.

What is the consumer decision making process?

Consumer decisions are complex series of steps people go through when making choices about products and services. The decisions may regard a purchase, but also the usage or disposal of a product.

Put simply:

The consumer decision-making process consists of multiple stages, from problem recognition to post-purchase evaluation. At each stage, consumers gather information, evaluate alternatives, and make decisions based on their needs, preferences, and perceptions.

Thinking of purchase decisions as a hierarchical sequence like this is useful and I recommend it. Though, be mindful that in reality some decisions may follow the predefined flow, but most will skip some steps and happen very fast. You also want to consider the context and how that influences decisions — but rest assured, we will cover that all in a moment.

A model of rational consumer decision making

Decision-making is an interdisciplinary topic that draws insights from sociology, psychology, neuroscience, economics, and even mathematics. As a consequence, there is no shortage of decision making models — and more are being introduced every year.

One of the most most widely applied models in a consumer context is the five stage decision making process introduced by Engel, Kollat and Blackwell in 1968,¹Engel, J.F., Kollat, D.T. and Blackwell, R.D. (1968) Consumer Behavior. Holt, Rinehart &Winston, New York. and later popularized by Philp Kotler and Kevin Keller²Kotler, P., & Keller, K. L. (2016). Marketing Management (14th edition). Shanghai: Shanghai People’s Publishing House. in their marketing textbooks. We will use this model as our baseline.

Steps in the consumer decision making process

The consumer decision making process has five steps. They are need recognition, information search, evaluation of alternatives, purchase, and post-purchase behavior. I will explain each of them now.

#1 Need recognition

When consumers recognize a need or problem, it triggers the first stage of the decision-making process: problem recognition. Various factors trigger problem recognition. They can be internal cues, such as physiological discomfort or unfulfilled desires. They can also be external cues, like advertising or social influences.

People tend to be susceptible to advertising at the problem recognition stage. If you manage to develop a system where you can identify when your customers or customers segments are in the process of recognizing their problems and needs, you will see high return on your marketing campaigns. The right stimuli at the right time can cause consumers to jump straight to purchase, effectively skipping the middle steps. Bur more on that later.

#2 Information search

After the need has been recognized, the consumer starts searching for options that may satisfy the need. People look inwards and evaluate their experiences with different products and services that may provide a solution. This internal search tends to be the preferred route because people want decisions to be easy and fast. Faced with a new situation, however, consumers need to look outward and seek external information about new products.

People may talk to friends and family to get recommendations. They may also scour the web for reviews, forum discussions, and blogs. How much time consumers dedicate to information search depends on multiple factors, such as time constraint, mood and whether the decision is high or low involvement.

Though people would maybe not seek out marketing material en masse, your campaigns are likely effective in capturing attention because consumers’ attention filters are now set on products relevant to their current need. Likewise, a faint memory of a previously seen ad may have substantial impact on the search process.

#3 Evaluation of alternatives

Once a user has finished their search and established their consideration set, he/she evaluates the alternatives. The objective is to pick the product or service that is best able to satisfy the need, and with it begins a process of elimination.

Consumers use mental scorecards with personalized criteria based on their unique circumstances. Price and quality are likely to be important factors, but convenience, ease-of-use, and availability may be just as important. Yet more factors like style, brand, ethical practices, and so on may also be relevant.

Evaluation of alternatives is similar to the information search in the sense that its extensiveness depends on whether the decision, ultimately, is high or low involvement. People buying a new toilet brush are unlikely to invest considerable mental efforts in finding and evaluating several different ones. There are certainly people like that, but it’s better to focus on the majority.

#4 Purchase

At last, it’s time to make the purchase. This stage is fairly straightforward as it simply entails obtaining the product. Whether that’s online or in a physical location doesn’t matter. Yet, there is still room for unexpected influences. People may start this stage with the intention of getting one product, but ending up with another.

The product must be available to be bought. If it’s not, the consumer may not wish to restart the whole process and just pick what is at hand instead. There may also be an attractive sales promotion that entices the consumer away from his or her initial purchase intention.

#5 Post-purchase behavior

After making a purchase, consumers evaluate whether their expectations were met. This stage is important because it’s all about customer satisfaction and future behavior — which we want to turn into repeat behavior.

Consumers review the expectations they had beforehand and reflect on how the product met them. If it meets or exceeds their expectations, they feel satisfied and are likely to purchase again. If it falls short, they may be disappointed and dissatisfied.

Example of rational decision making

We can think of the five stage model in terms of a smart phone purchase. Most people now a days have one and will have to go through the process of replacing it periodically. For most, this is a rather high involvement decision, given the price tag and the extensive use of the phone.

Let’s use a hypothetical character to explain. We’ll call him Sam.

Problem recognition

Sam uses his smart phone for three hours each day. He texts friends, scrolls social media, takes pictures, plays chess and reads his personal and professional emails. Sam also uses his phone extensively to diagnose plants in is job as a gardener.

Sam has had his phone for three years and its battery life has gotten quite bad. It lacks other essential features like a good camera and sufficient storage.

Sam realizes that he needs a new phone that meets his requirements.

Information search

Sam begins researching different smartphone models online. Reading reviews, comparing specifications, and seeking recommendations from friends and tech forums. Sam visits manufacturer websites, watches video reviews, and explores social media platforms to gather information about the available options.

Evaluation of alternatives

Sam narrows down his choices to three smartphone brands based on features, reputation, and price. He compares the camera quality, storage capacity, battery life, and overall user experience of each brand to identify the best fit for his needs.

Purchase decision

After careful evaluation, Sam selects a particular smartphone brand based on its camera quality, reasonable price, and positive reviews. He considers factors like durability, warranty, and customer service before making the final purchase decision.

Post-purchase evaluation

After using the new smartphone for a few weeks, Sam assesses his satisfaction. He finds that the camera quality exceeds their expectations, the storage capacity is sufficient, and the overall performance is smooth. This positive experience confirms Sam’s decision, leading to satisfaction and increases the chances that he’ll buy his next phone from the same brand.

How emotions affect decision making

The five stage model of the consumer decision making process is useful. It’s simple and quite accurate. But, it’s important to remember that it’s a rather drastic simplification. Too drastic to rely on by its own.

The model assumes that people are rational, but in reality we are quite irrational. Especially in everyday decisions. We go with our gut, intuition, and impulses — which are driven by emotions. In the sections below, I will attempt to clarify the role of emotions in the decision making process as clearly as possible, without diving too deep into the science itself.

Logical vs. emotional decision making

Consumer decision making is a dynamic interplay between logical reasoning and emotional responses. While logic guides the evaluation of options (when applicable), emotions play a significant role in influencing the final decision. For simplification, it’s useful to think about it as two types of decision making processes. One dominated by logic, and the other dominated by emotions. Daniel Kahneman coined the terms System 1 and System 2 for exactly this reason.

When I talk about rational decision making, I mean system 2 processes. System 2 uses logical reasoning and conscious thought to reach a conclusion. It’s highly analytical, sequential, and takes many aspects of the problem into account. But, it’s also slow because all that deliberation requires significant mental effort. Typical system 2 decisions include buying a new car, picking a job, renting a house, etc.

In theory, system 2 decisions should be accurate and free from bias. They are, however, resource-intensive and mentally exhausting, which can lead to poor decisions decisions.³Gigerenzer, G., & Gaissmaier, W. (2011). Heuristic decision making. Annual Review of Psychology, 62, 451–482. Humans are, after all, not computers.

System 1, on the other hand, is fast, automatic, and intuitive. It operates on heuristics, mental shortcuts, and learned associations. It’s also sometimes labeled as the automatic-, heuristic-, associative-, intuitive, implicit-, reflexive-, and experiential decision making process by researchers and practitioners. Broadly, they all mean the same, so don’t bother with it to much if you hear an unfamiliar term.

System 1 is our default decision making route for most everyday choices, like which toothpaste brand to purchase, instinctively stepping over dog poop on the sidewalk, or scanning a bus ad.

The interplay of logic and emotions

A common misconception about the two systems is that they are independent from each other. The idea of two systems is, however, meant to be an illustration of dominant thought patterns, not an absolute classification. There is still a lot we don’t know about how the brain operates when making decisions. But, we do know that emotions are always involved.

We default to fast and easy decision making guided by emotions and instincts. Only on occasion does logical reasoning intervene. Hence, the most accurate way to think about in terms of two systems is one type that is purely emotional and instinctive, and a second type that consists of both emotions and logical reasoning.⁴Evans, J. S. B. T. (2008). Dual-Processing Accounts of Reasoning, Judgment, and Social Cognition. Annual Review of Psychology, 59(1), 255–278. https://doi.org/10.1146/annurev.psych.59.103006.093629

4 emotional aspects that influence decision making

When making decisions, our rationality often takes center stage. We have now established, however, that emotions always play a significant role in shaping our choices, operating subtly beneath the surface. Let’s take it further and explore four concrete emotional aspects proven to influence decision making.

Namely, these are incidental emotions, integral emotions, loss aversion, and confirmation bias. Keep in mind that this is by no means exhaustive, but meant to give examples using prominent emotional influences.

#1 Incidental emotions

Emotions don’t always directly relate to the decision at hand, yet they exert a powerful influence on the consumer decision making process. Incidental emotions are emotional responses that arise to a stimuli that’s irrelevant to the choice we are making. As a result, they carry over from one situation to the next, biasing our choices. This carryover usually happens beneath consciousness.

One example of incidental emotions are when a person gets angry in one interaction and then carries that anger over to the next interaction with people who have nothing to do with it. Yet, they become it’s target. Researchers, likewise have found incidental emotions to positively moderate the relationship between sunny days and stock market performance.⁵Hirshleifer, D. A., & Shumway, T. (2003). Good Day Sunshine: Stock Returns and the Weather. Journal of Finance, 58, 1009–32. https://doi.org/10.2139/ssrn.265674. For example, we may find a similar pattern with consumers feeling more optimistic on sunny days and consequently more willing to purchase certain products.

#2 Integral emotions

While incidental emotions are irrelevant emotions that arise from a separate context, integral emotions are the opposite. They arise from the decision at hand. While this may sound trivial, integral emotions can have quite the dramatic impact on decision making, both consciously and subconsciously.⁶Lerner, J. S., Li, Y., Valdesolo, P., & Kassam, K. S. (2015). Emotion and decision making. Annual Review of Psychology, 66, 799–823. https://doi.org/10.1146/annurev-psych-010213-115043

Let’s go back to our Sam. Sam is deciding where to buy fresh produce for his restaurant. He can go with the established distributor in his town or the challenger who locally grows all the produce, but has not been in business long. Sam is feels very anxious about this decision because he’s had supply issues in the past. So, he decides to go with the established distributor because he considers it the safer option. Had Sam been feeling more confident, he might have gone local instead.

#3 Loss aversion

Loss aversion is a profound emotion that’s readily observable on second-hand marketplaces, to name one example. It refers to people’s tendency to avoid losses rather than seek gains of equal value. In practical terms, it means that the fear of losing something often weighs more heavily on our decisions than the potential for gaining something. Even if the objective worth is the same.

For instance, let’s imagine Sam runs a boutique store selling cloaks and travel equipment. Sam has $3,000 to invest. One option is to expand his inventory by purchasing new clothing lines. An alternative option is to invest in advertising to reach a wider audience. Due to loss aversion, Sam might lean towards expanding his inventory, prioritizing tangible assets over potential gains in customer reach.

In other words, receiving inventory alleviates the loss anxiety because he may believe that they are after all products he can sell, even if inventory racks up. The advertising investment on the other hand is more illusive and business doesn’t pick up, he may feel he has lost his $3,000 forever.

#4 Confirmation bias

Confirmation bias is the act of placing greater value on a piece of information that validates our existing beliefs about a given subject. In its extreme, it can cause people to completely discard information, arguments, and perspectives that do not fit their point of view.

Let’s say Sam is, again, researching the purchase of a new smartphone. He wants all the latest features and puts a lot of work into comparing models from all manufacturers. Sam doesn’t realize, however, that he’s a total Xiaomi fanatic. As a result, he subconsciously seeks out reviews and testimonials that reinforce Xiaomi as the best, while disregarding or rationalizing negative feedback about the brand.

This bias can limit his perspective, hinder objective evaluation, and potentially lead to a biased decision in favor of their preconceived notions.

Framework for holistic decision making

Now that you understand both the basics of rational decision making and the nuances of emotions, we can put everything we covered together into a holistic decision making framework. The framework builds on the model of rational consumer decision making and integrates with the general model introduced by Jennifer Lerner and her colleagues,⁷Lerner et al., 2015 p. 815 in addition to biases and external influences.

It’s a series of one-way and two-way relationships. Each is either System 1 or System 2, for the most part. As you can see it’s not exactly linear, but neither are our decisions.

Stimuli, responses and need recognition

We start with some type of external stimuli. This can be various marketing activities like advertising, products or news articles. Alternatively, it can be any other societal institution or physical sensation. Be it pop-culture, economics, politics, smell, sound, taste or whatever else. Consumers may become aware of the stimuli, appraise it and recognize a need. But, need recognition can also happen subconsciously with the need hiding within emotional responses.

For example, we may smell food walking down the street and consciously concur that we are hungry. We need food.

It’s also possible that we don’t cognitively appraise the sensation, but still our emotional state becomes one of moodiness and short temper. A situation known by many as being hangry. The hangriness eventually makes us aware of our need for food. But while we were figuring that out, we bailed on picking out a gift for our friend because nothing felt good enough. The looming hangriness became an incidental emotion to that specific decision process.

Contextual factors and evaluation

There are many factors that contribute to current emotions and need recognition. Decision maker characteristics and variables relating to the decision context explain some of the major ones. For example, a risky purchase can make us nervous, and our social class may have a lot to say about how we respond to a stimuli. These factors also moderate information search and evaluation of alternatives.

Information search and evaluation of alternatives can be a one-time linear process. Odds are, however, that we swing back and forth as we learn more and the decision context changes. This may also be a highly cognitive exercise using notepads and Excel-sheets, or it may happen in mere milliseconds. Looming in the background are various biases such as loss aversion and confirmation bias that skew how we interpret the information we find, and consequently, how we evaluate the alternatives.

Purchase and post-purchase behavior

Finally, we make a purchase. Either, it’s a highly informed one with careful evaluation of all the options and optimized for our specific needs — assuming biases and decision making characteristics have not let us astray. Or, it’s a simple matter of what we feel is right. Either/or is perhaps even not the right vocabulary as this is more like a continuum. The more involved we are in our decision, the more cognitive resources we expend on it. The less involved, the more we use heuristics and mental shortcuts.

Ultimately, our expectations emotionally influence our post-purchase behavior. If, they are met we are likely to be satisfied. Conversely, we might get irritated and become dissatisfied if what we expected from the purchase falls short. These, failed (or met) expectations in turn may shape our current mood in the next decision process.

Conclusion

The consumer decision-making process is a complex blend of logic and emotions, influenced by cognitive factors, biology, and neuroscience. By drawing insights from acclaimed studies in cognitive psychology, neuroscience, and biology, marketers can gain a deeper understanding of consumer behavior, accounting not only for thoughts but also emotions. This understanding can inform the development of targeted strategies that align with consumers’ needs and preferences, leading to more effective marketing campaigns.

References

• 1
  Engel, J.F., Kollat, D.T. and Blackwell, R.D. (1968) Consumer Behavior. Holt, Rinehart &Winston, New York.
• 2
  Kotler, P., & Keller, K. L. (2016). Marketing Management (14th edition). Shanghai: Shanghai People’s Publishing House.
• 3
  Gigerenzer, G., & Gaissmaier, W. (2011). Heuristic decision making. Annual Review of Psychology, 62, 451–482.
• 4
  Evans, J. S. B. T. (2008). Dual-Processing Accounts of Reasoning, Judgment, and Social Cognition. Annual Review of Psychology, 59(1), 255–278. https://doi.org/10.1146/annurev.psych.59.103006.093629
• 5
  Hirshleifer, D. A., & Shumway, T. (2003). Good Day Sunshine: Stock Returns and the Weather. Journal of Finance, 58, 1009–32. https://doi.org/10.2139/ssrn.265674.
• 6
  Lerner, J. S., Li, Y., Valdesolo, P., & Kassam, K. S. (2015). Emotion and decision making. Annual Review of Psychology, 66, 799–823. https://doi.org/10.1146/annurev-psych-010213-115043
• 7
  Lerner et al., 2015 p. 815