DECISION MAKING PROCESS OF CONSUMER

QUESTION

The Consumer & the buying decision making process:

• To be able to explore and explain the different types of consumer decision making (High /low involvement)
• To explain the consumer buyer decision making process and explore why understanding of consumer problem recognition and information search, evaluation of alternatives and choice processes are important to the marketer.

Describe the internal factors that can influence consumers’ decision- making processes

Consumers are increasingly using the internet as a method of purchasing goods and services Explain the typical objectives of the marketer at each stage of the decision making process and show how they attempt to influence each stage in the context of internet shopping. You must make reference to both low and high involvement products and services.

Questions which should be answered in the report:

1.   Does the journal articles link to buying behaviour and high and low decision making processes. If so how?

What are the marketing implications of the journal article

What are the marketing applications

SOLUTION

Buying behavior vs. high and low decision making processes

Consumer buying behavior varies with the importance of purchase to be made. Consumers utilize more time and effort in decision-making process for high involvement purchase (High cost or high personal risk) compared to low involvement one. The model given below (http://tutor2u.net) is important for preparing marketing strategy as it dictates the buying behavior.

For low involvement purchases, consumers may skip some steps of the decision making process. But for high involvement purchase, consumers go through all the phases and gather as much information as available to understand all possible consequences.

This model is important for marketing in many ways. Firms should manufacture products and render services only after understanding the needs/ problems of consumers. This model informs about the methods of information search and evaluation of alternatives before the consumer does actual purchase. This information can be utilized be marketing personnel for positioning the product and understanding the competitiveness of the product to be sold.

Background of Research Article

It is the age of e-commerce. Due to the technology expansion and availability of low cost, high performance Internet, a new dimension is added to the business. Banking and Financial service industry is not an exception of this case. A new technology based delivery system for financial services named Internet Banking is being offered by the banks to spear ahead in this age of competitiveness. Internet Banking can be used for various purposes such as to transfer funds, to pay bills and to receive/ update account information. There are various factors such as accuracy, security, ease of use, network speed, convenience and user involvementthat determine consumer perception about Internet banking.

Aim of the research

The research aims todetermine which of the preselectedfactorshave positive effect on the decision-making process of the consumers for the use of online banking services.

Methodology

For the purpose of study, Greek online banking market is used where Internet adoption is low (less than 20%). To find the relevance of factors on consumer decision-making about Internet banking, the research uses a seven-point scale for measurement of each factor. Relevant data was obtained using questionnaire (survey with population selected through random sampling). 500 of such questionnaire were sent to the people from the age group of 16 – 74 years. Data was received electronically to avoid researcher’s influence on participants. Logistics regression model was used on the data obtained through survey. Logistic regression model is a generalized linear model to estimate the factors that can affect the consumers’ decision positively.

Findings

After applying the statistical model on the research data, many factors were found to have influence on consumers’ decision-making process about using Internet Banking. These factors are given below.

1)     Speed of Transactions: Internet banking services provide consumers a mean to avoid delay and queues. Quick response time is an important factor for decision-making process, as evident from the positive response by more than 90% respondents.

2)     Lack of information about new system/ processes: Many consumers do not opt for online banking services because there is not enough information available about the new mode of service delivery.

3)     Difficulties of using the Internet: Internet banking is new for the bank customers. Many of the customers found it difficult to use. It was also an important factor when deciding about accepting or rejecting the new mode.

4)     Reaction to innovation: Some consumers believed that current banking system might succumb to the advances in technology and change into online system. Such a fear of change also prompted for rejection of online services.

5)     Age group and Education level of the consumer: Age group and education level play an important role for accepting the online services. Young people and population having technological knowledge are more likely to accept the online services.

One of the factors, costs associated with online services, that was considered for the research, was found to have insufficient influence on the decision making process of the consumers.

Market Implications

Consumers’ buying behavior is important for formulating marketing strategy. This also indicates about trends in the market and possibility of success for any product/ service. The research done about online banking has strong marketing implications that are given below.

1)     Future lies with technological advances. Consumers are gradually accepting online banking. The research indicates that consumers are ready to accept the new delivery method if some steps are takes. This indicates a bright future for rendering services online.

2)     To market any product/ service, some of the initial steps are segmentation, positioning and targeting. The research provides us with the information that indicates segmentation should be done based on demographics and educational levels of the consumers.

3)     Some of the factors are directly associated with knowledge about online banking and its usage. Consumers reject online facilities because perceived lack of information and difficulties in using the online systems. The research implies that consumer awareness is the key to solve these issues.

4)     Consumers are afraid of change in the banking system and processes. The perceived threat to existing system stems from the lack of information and future plans about the existing and new systems. If this issue were tackled, more and more consumers would opt for online services.

Marketing Applications

Findings of the research can be applied to marketing practices for banking firms. Some of the applications are given below.

1)     As the research indicated that age and education level play and important role in decision making process of consumers, banks should direct their marketing efforts to the young population and population with technical knowledge. Such marketing efforts shall provide better results with lower marketing costs.

2)     The research indicated that consumers reject Internet banking due to lack of information. Banks need to formulate a marketing strategy that can spread awareness about the Internet banking and other online services among consumers. Such a drive will provide public with relevant information and they will be ready to accept the changes.

3)     Besides technical awareness and user friendly interface will help the customers to tackle difficulties in using online banking systems.

4)     Many of the customers do not want to move to online banking because they are afraid of losing the current system. Marketing efforts are necessary to make people aware about various benefits of online systems and to convince them that existing systems will also work along with the online facilities.

References:

Horton Raymond L. (1984). Buyer Behavior: a decision making approach. NC: C.E. Merrill Pub Co.

Mavri Maria and Ioannou George. (2006). Consumers’ perspectives on Online Banking Services. International Journal of Consumer Studies, 30(6), pp552–560.

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