Republic of the Philippines

BATANGAS STATE UNIVERSITY– LIPA

Marawoy, Lipa City

College of Accountancy, Business and Economics

MKT. 102- Consumer Behavior

Chapter No.9. Consumer Decision Process & Problem Recognition

Lesson No.1 Consumer Decision Process

Consumer Decision Process - The consumer decision making process is the process by which
consumers become aware of and identify their needs; collect information on how to best solve
these needs; evaluate alternative available options; make a purchasing decision; and evaluate
their purchase.  To recognize marketing threats and opportunities, understanding the customer
decision-making process is important. Aligning marketing strategies with the steps consumers
follow to determine what to buy is critical. The consumer decision making process is the process
by which consumers become aware of and identify their needs; collect information on how to
best solve these needs; evaluate alternative available options; make a purchasing decision; and
evaluate their purchase.
 
MARKETING THEORIES – EXPLAINING THE CONSUMER DECISION MAKING
PROCESS

1.  Problem Recognition (I need new trainers) - The first stage of the process is working out
what exactly you or the customer needs. The customer feels like something is missing
and needs to address it to get back to feeling normal. If you can determine when your
target demographic develops these needs or wants, it would be an ideal time to advertise
to them.

2.  Information search (What trainers are out there?) - This is the search stage of the
process. One that is continually changing from old fashioned shopping around to the new
shop front which is Google (other search engines are available - apparently). Information
is not only gathered about stuff and on things but from people via recommendations and
through previous experiences we may have had with various products.

3. Evaluation of Alternatives (Do I need trainers and if so which ones?) - This is the time
when questions start being asked. Is this really the right product for me? Do I need a
different product? If the answers are either “No it’s not right” or “yes I need a different
product” then stage 2 may recommence. The stage 3 to 2 transition may happen several
times before stage 4 has been reached.

4.  Purchase (Buying the trainers)-  At this stage a customer has either assessed all the facts
and come to a logical conclusion, made a decision based on emotional
connections/experiences or succumbed to advertising/marketing campaigns, or most
likely a combination of all of these has occurred.

5.  Post Purchase satisfaction or dissatisfaction (Were they the right trainers for us?) -  The
review stage is a key stage for the company and for the customer likewise. Did the
product deliver on the promises of the marketing/advertising campaigns? Did the product
match or exceed expectations? If a customer finds that the product has matched or
exceeded the promises made and their own expectations they will potentially become a
brand ambassador influencing other potential customers in their stage 2 of their next
customer journey, boosting the chances of your product being purchased again. The same
can be said for negative feedback which, if inserted at stage 2, can halt a potential
customer’s journey towards your product.
The 5 Stages of the Consumer Decision Making Process — And How to Optimize 

1. Need recognition (awareness)

The need recognition stage of the consumer decision making process starts when a consumer
realizes a need. Needs come about because of two reasons:
  Internal stimuli, normally a physiological or emotional need, such as hunger,
thirst, sickness, sleepiness, sadness, jealousy, etc.
 External stimuli, like an advertisement, the smell of yummy food, etc.

Even if the core cause is vanity or convenience, at the most basic level, almost all purchases are
driven by real or perceived physiological or emotional needs.

Example: Looking for a new camera

Think about it: Why does someone start looking for a new camera? Likely, their old camera isn’t
working well anymore, or they simply want a nicer camera. Maybe they have a vacation coming
up. Or maybe they want to give the camera as a present to their sister, who just had her first
child. How in the world is this related to a physiological need? Simple. Without a camera, they
won’t be able to document special moments; therefore, they have an emotional desire to save
these moments so that they are happy and not sad. This emotional desire is the internal stimuli in
this situation. Sure, a camera isn’t a life necessity keeping them from surviving, but it does solve
a core emotional need. 
What happens after someone identifies a need? They begin looking for a solution! Which brings
us to the next step in the customer journey: searching for information. 

2. Search for information (research) 

Example: Researching cameras
Now that the customer has realized a need to get a new camera, it’s time to find solutions to his
problem. In this stage, it’s imperative that you are visible to the consumer searching for an
answer.
  Here are some things a consumer may be searching for:

 Best cameras 2020

 What is the best affordable camera?
 Which cameras are top-rated? 

The amount of information a customer needs to search for depends on how much he
already knows about the solutions available, as well as the complexity of choices. For
example, let’s say there’s someone looking for a camera as a gift, and he has no idea
which type of camera he wants, or what features he needs. 

The amount of searching necessary is entirely dependent on the situation, and it can vary widely.
So how do customers search for information? By using internal information (their previous
knowledge of a product or brand) as well as external information (information about a product or
brand from friends or family, reviews, endorsements, press reviews, etc.).
The biggest way you can optimize your online business during the need recognition and
awareness stage is by making sure you show up in search results — and that what the consumer
sees makes an impression.

3. Evaluation of alternatives (consideration)

Now that the consumer has done research, it’s time to evaluate their choices and see if there are
any promising alternatives. During this phase, shoppers are aware of your brand and have been
brought to your site to consider whether to purchase from you or a competitor.
Consumers make purchase decisions based on which available options best match their needs,
and to minimize the risk of investing poorly, they will make sure there are no better options for
them.
Their evaluation is influenced by two major characteristics:

 Objective: Features, functionality, price, ease of use

 Subjective: Feelings about a brand (based on previous experience or input from
past customers) 

4. Purchasing decision (conversion)

 This is the stage when customers are ready to buy, have decided where and what they want to
buy, and are ready to pull out their credit cards. 
Many businesses choose to display reviews on checkout pages. This can be effective if done
correctly. You need to focus on building trust, but don’t distract the customer from completing
the purchase. If you want to display user-generated content during checkout, use site reviews
rather than customer photos or product reviews, and make sure they aren’t clickable. You want
to focus on building trust and not distracting.

5. Post-purchase evaluation (re-purchase)

In this stage of the consumer purchase decision process, consumers reflect on their recent
purchase. They think about how they feel about it, if it was a good investment, and most
importantly, if they will return to the brand for future purchases and recommend the brand to
friends and family.  In this stage, you need to have a post-purchase strategy to increase the
likelihood that customers will engage with your brand again in the future. Return customers
account for 1/3 of a store’s total income on average, so make sure you’re not missing out on this
super valuable opportunity to get feedback and encourage repeat purchases. 

What Is the Importance of Pricing in the Consumer Buying Process? 

Brands will ask how consumers factor price into their buying decisions. When consumers are
evaluating a product, price is of course a huge factor. But it’s not just about the product price —
it’s about the entire cost of the purchase. Let’s say your cameras are a good value for the money,
competitively priced, and have decent reviews. What happens when your customers get to
checkout, and see that you have a high shipping cost? Instead of completing the purchase, they
are going to see what the shipping cost is on the other cameras they were considering. And what
if one of them offers free shipping? You may lose that customer.

You don’t want shoppers to be surprised by any additional costs when they get to checkout.
Make sure to calculate taxes and shipping costs before they get to the final step. The more
transparent you can be about your pricing up front, the more likely you’ll be to complete the
sale. 
If you want to turn a potential customer into a loyal brand advocate, it’s important to build trust
and keep them engaged at every step of the process. User-generated content is a powerful tool
for building brand awareness, highlighting the best things about your products, and ultimately,
growing your bottom line. 

Lesson No.2 Stage of Consumer Decision Making

A consumer goes through several stages before purchasing a product or service.

NEED

INFORMATION GATHERING/SEARCH

EVALUATION OF ALTERNATIVES

PURCHASE OF PRODUCT/SERVICE

POST PURCHASE EVALUATION

Step 1 - Need is the most important factor which leads to buying of products and services. Need
in fact is the catalyst which triggers the buying decision of individuals.
An individual who buys a cold drink or a bottle of mineral water identifies his/her need as thirst.
However in such cases steps such as information search and evaluation of alternatives are
generally missing. These two steps are important when an individual purchases expensive
products/services such as laptops, cars, mobile phones and so on. 

Step 2 - When an individual recognizes his need for a particular product/service he tries to gather
as much information as he can.
An individual can acquire information through any of the following sources:
Personal Sources - He might discuss his need with his friends, family members, co workers and
other acquaintances. Commercial sources - Advertisements, sales people (in Tim’s case it was
the store manager), Packaging of a particular product in many cases prompt individuals to buy
the same, Displays (Props, Mannequins etc)
Public sources - Newspaper, Radio, Magazine
Experiential sources - Individual’s own experience, prior handling of a particular product (Tim
would definitely purchase a Dell laptop again if he had already used one)  

Step 3 - The next step is to evaluate the various alternatives available in the market. An
individual after gathering relevant information tries to choose the best option available as per his
need, taste and pocket.

Step 4 - After going through all the above stages, the customer finally purchases the product.

Step 5 - The purchase of the product is followed by post purchase evaluation. Post purchase
evaluation refers to a customer’s analysis whether the product was useful to him or not, whether
the product fulfilled his need or not?
 
How to Nurture Customers at Each Stage of the Buying Decision Process?
As we went through the five stages of the buying decision process, you saw how a buyer could
start at the beginning and work their way through the phases.
But often, this theory doesn’t work out exactly as planned.

The buying decision process isn’t always linear, and customers rarely only enter at the
beginning. Instead, customers come and go throughout the process and enter the funnel at the
top, middle, and bottom of the process.

So you can’t focus on only catching customers at the beginning and hoping they find their way
through the rest of the process. You must optimize the buying decision process from top to
bottom to catch customers at every stage of their journey.

To accomplish this and improve the buying decision process in marketing for your brand. 
the 5 stages which a consumer often goes through when they are considering a purchase:
problem or need recognition, information search, evaluation of alternatives, purchase, and post-
purchase behavior. Need or problem recognition is oftentimes recognized as the first and most
crucial step in the process because if a consumer does not perceive a problem or need, he
generally will not move forward with considering a product purchase.   A need can be triggered
by internal or external stimuli. Internal stimuli refers to a personal perception experienced by the
consumer, such as hunger or thirst. 

According to Maslow’s theory, when a human being ascends the levels of the hierarchy having
fulfilled the needs in the hierarchy, one may eventually achieve self-actualization. Maslow
eventually concluded that self-actualization was not an automatic outcome of satisfying the other
human needs. Human needs as identified by Maslow: 

 At the bottom of the hierarchy are the “Basic needs or Physiological needs” of a
human being: food, water, sleep and sex.
 The next level is “Safety Needs: Security, Order, and Stability”. These two steps
are important to the physical survival of the person.
 Once individuals have basic nutrition, shelter and safety, they attempt to
accomplish more. The third level of need is “Love and Belonging”, which are
psychological needs; when individuals have taken care of themselves physically,
they are ready to share themselves with others, such as with family and friends.
 The fourth level is achieved when individuals feel comfortable with what they have
accomplished. This is the “Esteem” level, the need to be competent and recognized,
such as through status and level of success.
 Then fifth is the “Cognitive” level, where individuals intellectually stimulate
themselves and explore.
 Finally, there is the “Aesthetic” level, which is the need for harmony, order and
beauty.   “Need for Self-actualization” occurs when individuals reach a state of
 harmony and understanding because they are engaged in achieving their full
potential. 

Information search is considered the second of five stages that comprise the Consumer Decision
Process. During this stage, a consumer who recognizes a specific problem or need will then
likely be persuaded to search for information, whether it be internally or externally. This is also
when the customer aims to seek the value in a prospective product or service. During this time,
the options available to the consumer are identified or further clarified.

Evaluation of alternatives is the third stage in the Consumer Buying Decision process. During
this stage, consumers evaluate all of their product and brand options on a scale of attributes
which have the ability to deliver the benefit that the customer is seeking. The brands and
products that consumers compare – their evoked set – represent the alternatives being considered
by consumers during the problem-solving process.

The purchase decision is the fourth stage in the consumer decision process and when the
purchase actually takes place. During this time, the consumer may form an intention to buy the
most preferred brand because he has evaluated all the alternatives and identified the value that it
will bring him.

According to Philip Kotler, Keller, Koshy and Jha (2009), the final purchase decision, can be
disrupted by two factors:

1. Negative feedback of others and our level of motivation to comply or accept the
feedback. For example, after going through the need recognition, information
search, and alternative evaluation stages, one might choose to buy a Nikon D80
DSLR camera, but a close photographer friend might share negative feedback,
which could drastically influence personal preference.
2. The decision may be disrupted due to a situation that one did not anticipate, such as
losing a job or a retail store closing down.
3. From whom they should buy, which is influenced by price point, terms of sale, and
previous experience with or awareness of the seller and the return policy.
4. When to buy, which can be influenced by the store atmosphere or environment,
time pressures and constraints, the presence of a sale, and the shopping experience.
5. This is also a time during which the consumer might decide against making the
purchase decision. Alternatively, they may also decide that they want to make the
purchase at some point in the near or far future perhaps because the price point is
above their means or simply because they might feel more comfortable waiting.

Post-purchase behavior is the final stage in the consumer decision process when the customer
assesses whether he is satisfied or dissatisfied with a purchase. How the customer feels about a
purchase will significantly influence whether he will purchase the product again or consider
other products within the brand repertoire. A customer will also be able to influence the purchase
decision of others because he will likely feel compelled to share his feelings about the purchase.
 
Lesson No.3 CONSUMER DECISION RULE
Consumers’ choices are influenced by the goals they attempt to achieve. Once a person has
recognized a need and wants. He or she engages in an information search to identify alternatives
from which to choose. Understanding how consumers evaluate competing alternatives in their
purchase decision processes and rules. It is important to understand consumer decision rules
people are likely to apply in their evaluation process.
DECISION RULES
These are strategies that consumers use to choose among alternatives. Several factors can
influence what decision rule will consumers ultimately apply in a specific situation. Typically,
the more important and less frequent a purchase decision is, the more time and effort consumers
are willing to expend making that decision. Consumer decision rules are the procedures used by
consumers to facilitate brand (or other consumption related) choices. These rules reduce the
burden of making complex decisions by providing guidelines or routines that make the process
less taxing.
We need to understand the consumer decision making process is key to identifying marketing
challenges and opportunities. It's important to align marketing efforts with the steps customers
undertake to decide what to buy.
Consumer behavior is the actions and the decision processes of people who purchase goods and
services for personal consumption” – according to Engel, Blackwell, and Mansard,
Consumer buying behavior refers to the study of customers and how they behave while deciding
to buy a product that satisfies their needs. It is a study of the actions of the consumers that drive
them to buy and use certain products.
Study of consumer buying behavior is most important for marketers as they can understand the
expectation of the consumers. It helps to understand what makes a consumer to buy a product. It
is important to assess the kind of products liked by consumers so that they can release it to the
market. Marketers can understand the likes and dislikes of consumers and design base their
marketing efforts based on the findings.
Consumer buying behavior studies about the various situations such as what do consumers buy,
why do they buy, when do they buy, how often do consumers buy, for what reason do they buy,
and much more.
For example, consumer buying behavior is studied by consumer researchers and their aim is to
know why women buy moisturizers (to reduce skin problems), the most preferred brand (Olay,
L’Oréal), how often do they apply it (twice a day, thrice a day), where do the women prefer to
buy it (supermarkets, online) and how many times do they buy it (weekly, monthly).
It’s insightful to listen to some of the first cut opinions on Vocalley from consumers on how they
think about various brands and their expectations, when it comes to electronic products and
gadgets.
Two general categories of decision rules are;
Compensatory and
Non compensatory
Compensatory Decision Rules
Compensatory Decision Rules model consumers as deriving an overall brand evaluation such
that alternatives performing poorly on one attribute can compensate for their respective
shortcomings by positive evaluations of other attributes. And under compensatory rules, the
various evaluative criteria are listed as attributes. These are attributes are scored and rated for the
various alternative brands. A lower rating on a attribute may be offset by a higher rating on
another, i.e a higher rating on one attribute would compensate for a lower rating on another.
Based on the final scores, the brands are ranked; the one with highest score, being regarded as
the best. The consumer would then selected the brand that scores the highest among the various
alternatives that have been evaluated.
Compensatory decisions are rational decisions. They involve:
identifying the complete set of attributes that could impact the success of choosing any of the
available options – including both positive and negative impacts,
assigning a relative importance to each attribute,
computing an overall value for each option based on the impact of attribute and relative weight,
and selecting the option with the best value.
In compensatory decisions, when the final values for attributes are computed, negative attributes
can be compensated for by equal or higher value positive attributes. For instance, a plane ticket
that costs $50 more (negative attribute) may ultimately be the better choice because it is a direct
flight (positive attribute).
Compensatory decisions are rational. However, people don't make compensatory decisions.
Collecting and comparing all of the necessary data is simply too labor intensive.

Compensatory rules could assume two forms which is the simple and weighted.
SIMPLE SUMMATED is the attributes are rated for each brand and the scores are totalled.
WEIGHTED: the attributes are first given weights relatively based on the level of importance;
thereafter, the attributes are rated and finally scored after multiplication with the weights. The
weighted scores are then totalled.
NON COMPENSATORY RULES a type of consumer decision rule by which positive
evaluation of a brand attribute does not compensate for a negative evaluation of the same brand
on some other attribute. The consumer would then select the brand that scores the highest among
the various alternatives that have been evaluated.
Non-compensatory strategies are heuristics for decision making
In reality, we typically make non-compensatory decisions. This happens when people:
don't collect all the relevant information systematically,
fail to consider the relative importance of various attributes, or
do not trade off the benefits of some attributes against the deficits of others.
Non-compensatory decision making essentially shortcuts the compensatory process to make the
decision making process easier. For instance, in the airline example above, decision makers may
simply not collect information on all the relevant attributes. In our airline example, they may
CONJUCTIVE consider price but not stopovers or overall flight time.
Alternately, people may find the task of comparing the tradeoffs too much. Instead of weighing
price against layover, they may adopt strategies like "drop the choice with negative attributes."
Continuing the example, under this strategy the higher priced ticket goes without consideration
of the longer travel time. In reality, human decisions all include non-compensatory decision
strategies.
Non-compensatory rules could assume three forms: conjunctive, disjunctive and lexicographic.
CONJUCTIVE RULE is a minimally acceptable cut off point is established for each attribute.
The brands are evaluated, and, the brand that falls below the minimally acceptable limit on any
of the attributes is eliminated/rejected. Establishes minimum required performance standards for
each evaluative criterion and selects the first or all brands that surpass these minimum standards.
The conjunctive decision rule establishes minimum required performance standards for each
evaluative criterion and selects the first or all brands that surpass these minimum standards. In
essence, you would say: "I'll consider all (or I'll buy the first) brands that are all right on the
attributes I think are important." For example, assume that the following represent your
minimum standards for a notebook computer:

Any brand of computer falling below any of these minimum standards (cutoff points) would be
eliminated from further consideration. Referring to Table 16-1, we can see that four computers
are eliminated-IBM, Gateway, Dell, and Toshiba. These are the computers that failed to meet all
the minimum standards. Under these circumstances, the two remaining brands may be equally
satisfying. Or, the consumer may use another decision rule to select a single brand from these
two alternatives.
Because individuals have limited ability to process information, the conjunctive rule is
frequently used to reduce the size of the information processing task to some manageable level.
It first eliminates those alternatives that do not meet minimum standards. This is often .The
conjunctive decision rule is commonly used in many low-involvement purchases as well. In such
a purchase, the consumer evaluates a set of brands one at a time and selects the first brand that
meets all the minimum requirements.
If the conjunctive decision rule is used by a target market, it is critical to surpass the consumers'
minimum requirement on each criteria. Since the first brand the consumer evaluates that does so
is often purchased, extensive distribution and dominant shelf space are important. It is also
necessary to understand how consumers "break ties" if the first satisfactory option is not chosen.
one in the purchase of such products as homes, computers, and bicycles; in the rental of
apartments; or the selection of vacation options. A conjunctive rule is used to eliminate
alternatives that are out of a consumer's price range, outside the location preferred, or that do not
offer other desired features. Once alternatives not providing these features are eliminated,
another decision rule may be used to make a brand choice among those alternatives that satisfy
these minimum standards.
DISJUNCTIVE RULES: a minimally acceptable cut off point is established for each attribute.
The brands are evaluated, and, the brand that falls above the cut off point on any of the attributes
is selected.
establishes a minimum level of performance for each important attribute (often a fairly high
level). All brands that surpass the performance level for any key attribute are considered
acceptable. Using this rule, you would say: "I'll consider all (or buy the first) brands that perform
really well on any attribute I consider to be important." Assume that you are using a disjunctive
decision rule and the attribute cutoff points shown below:

You would find Gateway (price), Compaq (weight), and Dell (display quality) to warrant further
consideration (see Table 16-1). As with the conjunctive decision rule, you might purchase the
first brand you find acceptable, use another decision rule to choose among the three, or add
additional criteria to your list.
When the disjunctive decision rule is used by a target market, it is critical to surpass the
consumers' requirements on at least one of the key criteria. This should be stressed in advertising
messages and on the product package. Since the first brand the consumer evaluates that exceeds
one of the requirements is often purchased, again extensive distribution and dominant shelf space
are important, as is understanding how consumers "break ties" if the first satisfactory option is
not chosen.
LEXICOGRAPHIC RULE: The various attributes are ranked in terms of perceived importance.
First, the brands are evaluated on the attribute that is considered the most important. If a brand
ranks considerably high than the others on this attribute, it is selected. In case the scores are
competitive, the process may be repeated with the attribute considered next in importance.
A model used in the study of consumer decision processes to evaluate alternatives; the idea that
if two products are equal on the most important attribute, the consumer moves to the next most
important, and, if still equal, to the next most important, etc. Thus, the purchase decision is made
when one of the brands possesses more of an attribute, looked at in order of importance, than its
rival. Other models of brand evaluation include the expectancy-value model, ideal brand model,
conjunctive model, disjunctive model, lexigraphic model and determinance model.
AFFECT REFERRAL DECISION RULE: a type of consumer decision rule in which a consumer
makes a product choice on the basis of his previously experience and rating of the product/brand
rather than on specific attributes. ( consumers buy a brand with the highest overall rating
Problem Recognition is the process of a consumer identifying a need to buy something. It is a
basic type of consumer behavior that is relevant to marketing activities such as advertising a new
product. Problem recognition is the result of a discrepancy between ones desired state and an
actual state of satisfaction. An actual state is the way an individual perceives their feelings and
situation at the present time; while desired state is the way an individual actually wants to feel.
Without realizing a problem, there is no need for a consumer to make a decision, thus our ability
to recognize these problems and communicate our ability to solve them are vital to our success.
Whether we act to resolve a particular problem depends upon two factors: (1) the magnitude of
the discrepancy between what we have and what we need, and (2) the importance of the problem.
A consumer may desire a new Cadillac and own a five-year-old Chevrolet. The discrepancy may
be fairly large but relatively unimportant compared to the other problems they face. Conversely,
an individual may own a car that is two years old and running very well. Yet, for various
reasons, they may consider it extremely important to purchase a car this year. People must
resolve these types of conflicts before they can proceed. Otherwise, the buying process for a
given product stops at this point, probably in frustration.
Once the problem is recognized it must be defined in such a way that the consumer can actually
initiate the action that will bring about a relevant problem solution. Note that, in many cases,
problem recognition and problem definition occur simultaneously, such as a consumer running
out of toothpaste. Consider the more complicated problem involved with status and image–how
we want others to see us. For example, you may know that you are not satisfied with your
appearance, but you may not be able to define it any more precisely than that. Consumers will
not know where to begin solving their problem until the problem is adequately defined.
Marketers can become involved in the need recognition stage in three ways. First they need to
know what problems consumers are facing in order to develop a marketing mix to help solve
these problems. This requires that they measure problem recognition. Second, on occasion,
marketers want to activate problem recognition. Public service announcements (also referred to
as “PSA’s”) espousing the dangers of smoking when pregnant. Weekend and night shop hours
are a response of retailers to the consumer problem of limited weekday shopping opportunities.
This problem has become particularly important to families with two working adults. Finally,
marketers can also shape the definition of the need or problem. If a consumer needs a new coat,
do they define the problem as a need for inexpensive covering, a way to stay warm on the coldest
days, a garment that will last several years, warm covering that will not attract odd looks from
their peers, or an article of clothing that will express their personal sense of style? A salesperson
or an ad may shape their answers.

Lesson No. 4 PROBLEM RECOGNITION

In problem recognition, the consumer recognizes a problem or need or want. The buyer
recognizes a difference between his or her actual state and some desired state. Internal stimuli
refers to a personal perception experienced by the consumer, such as hunger, thirst, and so on.
For example, an elderly, single woman may feel lonely so she decides that she wants to purchase
a cat. External stimuli include outside influences such as advertising or word-of-mouth. For
example, a consumer who just moved to Minnesota may not realize he needs a heavy winter coat
until he sees a store advertising for it, which triggers the need in his mind.

The first step of the consumer decision-making process is recognizing the need for a service or
product. Need recognition, whether prompted internally or externally, results in the same
response: a want. Once consumers recognize a want, they need to gather information to
understand how they can fulfill that want, which leads to step 2.

But how can you influence consumers at this stage? Since internal stimulus comes from within
and includes basic impulses like hunger or a change in lifestyle, focus your sales and marketing
efforts on external stimulus. 

Develop a comprehensive brand campaign to build brand awareness and recognition––you want
consumers to know you and trust you. Most importantly, you want them to feel like they have a
problem only you can solve.
 Example: Winter is coming. This particular customer has several light jackets, but she’ll need a
heavy-duty winter coat if she’s going to survive the snow and lower temperatures.

In problem recognition, the consumer recognizes a problem or need or want. The buyer
recognizes a difference between his or her actual state and some desired state.
The need can be generated by internal stimuli when one of the person’s normal needs − hunger,
thirst, sex, etc. rises to a high level sufficient to become a drive. A need can also be generated
by external stimuli.
At this stage, the marketer should evaluate the consumer’s perspective by considering the basic
questions like −

 What kinds of needs or problems or efforts arise.

 What brought them about and
 How it led the consumer towards the particular product.

Maslow’s Hierarchy of Needs

American Psychologist Abraham Harold Maslow believes that, needs are arranged in a
hierarchy form. Only after a human has achieved the needs at a certain stage, does he move to
the next one. The pyramid diagram showing the Maslow needs hierarchy.
According to Maslow's theory, when a human being goes up the levels of the hierarchy has
fulfilled the needs and wants in the hierarchy, one may ultimately achieve self-actualization.
Maslow in the end concluded that, self-actualization was not a regular outcome of satisfying the
other human needs. Human needs as identified by Maslow are as follow −
 At the bottom of the hierarchy level are the "Basic needs or Physiological needs" of a
human being − food, water, shelter, sleep, sex etc.
 The next level is "Safety Needs − Security, Order, safety and Stability". These two steps
are important for the physical survival of the person.
 The third level of need is "Love and Belonging", which are psychological needs; when
individuals have taken care of themselves physically, they are ready to share themselves
with others, such as with family, friends and relatives.
 The fourth level is achieved when individuals feel comfortable with what they have
achieved. This is the "Esteem" level, the need to be capable and recognized, such as
position, status and level of success.
 The fifth level is the "Cognitive" or the "self-actualization" level, where individuals
intellectually stimulate themselves and explore for their growth.
Finally, there is the "Aesthetic" level, which is the need for harmony, unity, order and beauty.
Consumer Choice and Decision Making: Problem Recognition.  One model of consumer
decision making involves several steps. The first one is problem recognition—you realize that
something is not as it should be.  Perhaps, for example, your car is getting more difficult to start
and is not accelerating well.    The second step is information search—what are some alternative
ways of solving the problem?  You might buy a new car, buy a used car, take your car in for
repair, ride the bus, ride a taxi, or ride a skateboard to work.  The third step involves evaluation
of alternatives.  A skateboard is inexpensive, but may be ill-suited for long distances and for
rainy days.   Finally, we have the purchase stage, and sometimes a post-purchase stage (e.g., you
return a product to the store because you did not find it satisfactory).  In reality, people may go
back and forth between the stages.  For example, a person may resume alternative identification
during while evaluating already known alternatives.

Problems in Studying Consumer Behaviour

Importance of Problem Recognition (Need Recognition) or Identification of Needs
It is the first stage in decision-making.Problem recognition explains:
1. Why a buyer buys.
2. Gives definite direction to subsequent purchase behavior.
3. Helps the marketer exert his influence, so that the need is to be recognized. A virtual circle
exists between them (problem recognition and marketers stimuli).
 The figure shows three types of decision-making:
1. Habitual decision-making or routinized response behaviour: Here the information search is
low, the risk is low and the involvement is also low. These are products which are bought
with greater frequency like a toothpaste, shaving cream, blades, cosmetics, etc. There is
hardly any dissonance and very limited evaluation.

2. Limited decision-making: This is for products which have a higher time, risk and money
involvement. In this, information search takes place and the buyer wants to find out a number
of features, attributes and aspects of the product before finally making a decision to purchase.
The purchase is for items like a TV, computer, a machine, motor cycle, etc. In this there can
be limited dissonance if the product does not perform up to expectations.

3. Extended problem solving: In this category, the risk involved is high, the money involvement
is much more. The goods are not purchased frequently. These involve a lot of information
search and greater physical activity for finding out about the attributes of the products. These
items include a house, a motor car, jewellery or something which is valued most. A
professional photographer who is keen on taking pictures of very high quality, with alot of
gadgets may also go into his purchases after being highly involved in the same. He may have
to under take a high degree of information search, which is both internal and external.

Extended problem solving is carried out in case of

 High-priced products
 Medical products associated with risk
 Automobiles associated with functions
 Complex products (computers)
 Products associated with one’s ego or emotions (clothings, cosmetics etc.)

Problem recognition occurs whenever consumption situations exist. Many situations prompt
aconsumer to buy. Some situations are common and can’t be recalled. Some are special and can
be recalled. This depends on the degree of involvement. Some purchases are recognized and
concluded on the spur of the moment. These are impulse purchases.
Threshold Level
In problem recognition, this refers to the minimum amount of tension, energy or intensity which
is necessary for the feeling or “need” to occur. Tension can be increased by enhancing peer
comparison.

Explanation of Problem Recognition

Problem recognition is a perceived gap between existing and desired consumer position. Existing
consumer position is how one feels presently about the product.
Desired position is his expectation and anticipation about the products. The gap then results in
natural fashion. As the consumers grows financially, physically and psychologically,a perceived
gap is created between the existing and desired position, e.g., growing child first needs a tricycle,
then a bicycle, and then a motor cycle. Marketing stimuli influences the current or desired state
of mind or both.

At the current state of mind, the marketer may induce dissatisfaction in a current in use product
or, project their obsoleteness of style and technology. Most efforts are made to condition the
state of mind so that the new products are desired and bought.
Desired consumer position is achieved by advertising a new use of the product or,introducing
new accessories or promising his satisfaction. The consumer gets tempted to buy new
products, i.e., picture in picture television, bike with gears, easy credit facility, etc. These new
attributes and facilities lure and, customers fall for the effective marketing strategies,and use the
advertised products to their satisfaction and delight.

The gap between the existing and desired state of mind is provided by the marketing stimuli.
Every gap will not lead to a purchase but, has to cross a threshold level to become a felt need,
which will lead to purchases.
 The marketing effort is not only to increase the gap between the existing and desired state of
mind, but also to increase the tension level where need recognition is ensured.Marketeers
therefore make efforts to provide easy payment facility (credit), or through bank loans and other
financing companies. They also try to compare the consumers with their peers. All these tactics
of marketing lead to problem recognition, which leads to felt need and then to purchase. Without
problem recognition there is no need for a decision process. Problem recognition occurs when
there is a discrepancy between the actual and the desired state. The degree to which it is out of
alignment is also important. The desire to resolve a problem depends on the:
(a) magnitude of discrepancy and
(b) the relative importance of the problem,
e.g., if the discrepancy is small, a decision may not be made. Sometimes, the discrepancy is large
but the importance is small, so a decision may not be required, because of budget constraints,
time constraints, or both, or other more important problems like housing utilities etc. e.g., if an
individuals using a Bajaj Scooter for a long time and has been recommended an LML, which
may have some advantage on driving comfort or on mileage, which may not be very
substantial.The discrepancy may not be large enough to prompt him to change to a new scooter.
Also, if an individual has to change his scooter which is already serving his purpose but he had
other more pressing problems which may concern the house or his children. He may tend to
ignore the scooter problem and give greater preference to more pressing domestic engagements
and other more important work which would be given preference in comparison to his own
scooter problem.
The desire to resolve a recognized problem is therefore of relative importance. An individualities
to resolve a problem when it is convenient for him in terms of money, involvement, nature of the
problem to be solved and the advantages in changing over to a new situation or a new product.
Types of consumer problems may be active or inactive. Active is one in which the consumer is
aware or will become aware of, in the normal course of events, e.g., consumer is aware of the gas
lighter but insists on safety measures. A consumer may be aware of the advantages of flying, yet
is scared to do so.

Inactive Problem
When the consumer is not yet aware of the gas lighter or he may not be aware of the advantages
of a cell phone. The marketer must activate the problem recognition.

Marketing strategy and problem recognition

Marketers are concerned with the following:
1. What problems consumers are facing.
2. Managers must know what market mix to develop to solve the problem.
3. They actually want the consumers to recognize the problem.
4. Sometime managers suppress problem recognition.

Managers get to know the problem by intention and determine what improvement scan be made
but, the problem identified by managers may be of low importance to the consumer, therefore, the
problem is found by survey, focus group interviews,product analysis, problem analysis or activity
analysis, human factor research, or emotion research.

Activity analysis focuses on a particular activity maintaining a lawn, preparing dinner,lighting the

fire place.
Product analysis deals with the use of product, e.g., lawn mower, microwave oven.
Problem analysis takes an opposite approach. It states the problems and asks respondents to
associate a product brand or activity with it.
 Packages are hard to open.
 Does not pour well.
 Packages of ___ do not fit in the frigidaire.
 Packages of ___ waste too many resources.

Human factor research attempts to determine human capabilities in area of vision,strength,

response time, fatigue.
Emotions research marketers find the role of emotions in decision-making, i.e., emotions
associated with certain products or brands.
 Developing Marketing Mix
Once the problem is recognized, a marketing mix be offered to solve the problem product
development or alteration, modifying channels of distribution, changing pricing policy, revising
advertising strategy. Many people want to remain slim or away from diabetes, yet want to enjoy
sweets. Sugar free is their solution.

Weekend stores and night stores provide more shopping time. When you are financially
independent you are exposed to insurance and credit cards to solve your future problems.

Activating Problem Recognition

By increasing the importance and magnitude of discrepancy, advertising benefits promote asense
of excitement and personal freedom, questioning the perception of the existing state (are you
satisfied with the present offer?).
Consumers often realize a problem when it has already occurred, and they can not do much
about it, e.g., becoming aware of insurance after the accident.
 Want emergency medicines when they are seriously ill and cannot do much.
 Want flowers and forgot to plant them.

Marketers help solve such problems after they arise. Pharmacists can make home deliveries.They
should try to trigger the problem recognition in advance of the actual problem.

Suppressing Problem Recognition

In case of tobacco selling, they undermine the role of cigarettes as injurious, with such
advertisement as “Alive with pleasure”. They minimize problem recognition of it being
injurious. Thus, problem recognition plays an important part as the first step in decision making.
The marketers learn of the problem of the consumer, their needs and accordingly formulate a
strategy.

The problem recognition stage in the consumer decision making process has been generally
regarded as the event or "trigger" that initiates a purchase decision. It is the precursor of all
consumer-initiated activities, such as pre-purchase information search, evaluation and choice
processes, preceding any transaction. The idea that initial consumer actions affect future ones is
both simple and intuitively appealing. First, the problem recognition phase frames the problem-
solving situation. Second, other stages of the decision making process sequentially linked to the
problem recognition stage have a dependent relationship with it. Hence we can expect this stage
to have a crucial influence on all subsequent decision process activities. Surprisingly, despite the
potential significance of the problem recognition phase, it continues to be an area of limited
research (Bruner 1985; Bruner and Pomazal 1988), though its importance is recognized in most
models of consumer behavior (Howard 1989; Engel, Blackwell and Miniard 1986; Wilkie 1990).

The buyer feels a difference between his or her actual state and some desired state. Internal
stimuli can trigger the need. This occurs when one person’s normal needs, such as hunger, thirst,
sex, rise to a level high enough to become a driver. External stimuli can also trigger a need.

At this stage, the marketer should study the buyer to find answers to some important questions.
These are:

 What kinds of needs or problems arise?

 What is the root of these needs or problems?
 How they led the buyer or customer or consumers to a particular product?

This could be a simple as “I’m hungry; I need food.”

The need may have been triggered by internal stimuli (such as hunger or thirst) or external
stimuli (such as advertising or word of mouth).
 Need or Problem Recognition Process
When a consumer becomes aware that there is a difference between the desired state and an
actual condition, problem recognition occurs. Every individual has unsatisfied needs and wants
that create tension or discomfort.

Certain needs can be satisfied by purchasing and consuming goods and services. Deciding what
to buy starts when a need that can be satisfied through consumption becomes strong enough to
stimulate a person.

Thus, a problem is recognized when consumers have an unmet need, and everyday consumers
recognize purchase or consumption-related problems.
Consumers may have routine problems when they run out of daily necessities and may have
unexpected problems when major appliances suddenly go out of order. In addition to these two,
there is another type of problem that is subtle and evolve slowly over time, such as a desire to
buy a washing machine.

Consumer decision-making arises when an individual recognizes a problem or need that is not
met.
A problem or need exists when there is a discrepancy between a consumer’s actual state and the
desired state. This is shown in the following figure, along with different stages of the problem
recognition process.

Situations Leading to Problem Recognition

There could be many situations that may lead a consumer to recognize a problem to exist. Major
situations leading to problem recognition are;
 Insufficient Stock of Goods
 Dissatisfaction or Discontentment with the Stock
 Changes in the Environmental Characteristics
 Changes in the Financial Status
 Promotional Activities
 Consumer’s Previous Decisions
 Individual Development
 Efforts of Consumer Groups and Governmental Agencies
 Availability of Products

Insufficient Stock of Goods

The most common situation leading to problem recognition by a consumer is the depletion of the
stock of goods that he uses. If, for example, an individual runs out of necessities that he uses, he
will identify a problem to exist.

Dissatisfaction or Discontentment with the Stock

If a consumer becomes dissatisfied with the goods he owns or uses, he will recognize that he is
having a problem.
A family having a ten year’s old car may be willing to buy a late model car. Such a feeling will
lead to discontent, and as a result, the family will recognize a car-related problem.

Changes in the Environmental Characteristics

With the change in an individual’s or family’s environmental characteristics, the individual or
the family may recognize a problem.
For example, when a family moves from one stage of its life cycle to another stage, it requires
different types of products and services, and as a result, problems occur.
More so, friends and reference groups’ influence may demand new and different products to be
bought by an individual or a family. Such a situation also leads to the recognition of a problem.

Changes in the Financial Status

Changes in the financial status or position of an individual or a family may also lead to problem
recognition.
For example, if an individual’s financial position improves or worsens or anticipates an
improvement or deterioration, he may recognize a problem associated with his actual or
anticipated changing financial position.
Promotional Activities
By promotional activities, marketers try to trigger drives in consumers. Through different
promotional activities, marketers try to create a discrepancy between actual and desired states of
consumers. Such a situation will trigger problem recognition in consumers.

Consumer’s Previous Decisions

Other purchases made by a consumer may also lead to problem recognition.
For example, if an individual buys a television, it may trigger buying an antenna or a voltage
stabilizer. The purchase of a computer may lead to the recognition of the problem of not having a
printer.

Individual Development
With an individual’s mental development and change in outlook, he may recognize not having
certain products.

Efforts of Consumer Groups and Governmental Agencies

Activities of different consumer interest groups and different government agencies may also lead
to problem recognition. For example, if consumer groups advocate environmentally friendly
products, they may feel the need for such products creating problems.
If the government puts an embargo on using private vehicles on the city’s main roads, consumers
can buy bicycles, thus causing a problem.

Availability of Products
The availability of a product makes customers aware of it, making them feel to have one of
those. Such a feeling may also lead to problem recognition.

Marketing Strategy with Regards to Problem Recognition

Recognition of problems by consumers bears important marketing implications. They should
first identify the problems that consumers face, and, in the second stage, they should develop a
marketing mix aiming at consumers’ problem solutions.
Marketers may also create situations where consumers look for problems or create situations that
may suppress the consumers’ problem recognition.

Measuring Problem Recognition

The fast task is to identify the problems faced by the consumers or the problems they recognize.
A marketer can take many approaches in measuring problems recognized by the consumers. One
such approach is “intuition.”

By evaluating his product, a marketer can determine whether he should improve his product, and
if so, how can he do so. Second, he can conduct surveys to identify the problems recognized by
his customers.

A marketer can also conduct activity analysis focusing on consumers’ particular activity, such as
how breakfast items are prepared. A product analysis may also be undertaken to identify
consumers’ problems or problems using a particular product.

Another technique used in identifying problems consumers recognize to undertake problem

analysis. Here, consumers are requested to identify the problems they face and give suggestions
relating to such problems.

Marketing Mix Decision Aiming at Problem Solution

After the consumers’ problem is identified, a marketer may adjust their marketing mix
variables to help consumers overcome problems. This may be done through product
modification, changing the distribution strategy channel, adjusting prices, or changing
advertising or communication strategy.

Activating Problem Recognition

Marketers themselves may activate problem recognition by the consumers. Marketers may
activate problem recognition, first, by influencing the desired state. By emphasizing the benefits
of products, marketers may encourage people to buy a particular product they lack actively.
Through advertising, personal selling, and sales promotion activities, marketers can influence
consumers’ desired state, causing them to recognize problems. Marketers may also activate
problem recognition by influencing perceptions of consumers’ actual state.
For example, an individual buying a particular brand of a product may be given the idea that
another alternative is better than one he is having or using. This may also lead to problem
recognition by a consumer. Marketers may also activate problem recognition by influencing the
timing of problem recognition.

If a consumer thinks of buying a refrigerator before “Eid- Ul-Azha,” he may be given the idea
that refrigerators’ prices will rise during Eid time, causing him to recognize the problem now
instead of buying later.

Suppressing Problem Recognition

By this time, you are aware of the situations that trigger problems in consumers. Some of the
problems recognized by consumers may create problems for certain marketers. In such a
situation, marketers try to suppress the problem to be recognized by consumers.
A tobacco marketer may suppress problem recognition by the tobacco users caused by consumer
groups or other agencies by developing an advertisement that shows tobacco users in a lively
mood.

ELVIS B. LUMANGLAS, MDM

Course Instructor

ACADEMIC INFRASTRUCTURE
Textbook
T1 : Phillips, Jean M., Organizational Behavior Tools for Success,
International Edition, 2014 Wadsworth, Cengage Learning

References:
R1 : Newstrom, John W., 2007. Organizational Behavior; Human
Behavior at Work, McGraw Hill International Edition,
R2 : Medina, Roberto G. 2011. Human Behavior in Organization.
Quezon City: Rex Bookstore, Inc.

Online References:
https://www.iedunote.com/attitude-and-consumer-behavior