Topics the process of shopping decision makingof customers before purchase

Essay structure The content of the report will include 3 main parts: - PART I: OVERVIEW OF THE CONSUMER DECISION-MAKING PROCESS - PART II: NEED RECOGNITION - PART III: INFORMATION SEARC

SUBJECT: CONSUMER BEHAVIOR

TOPICS: THE PROCESS OF SHOPPING DECISION MAKING

OF CUSTOMERS: BEFORE PURCHASE

UNIVERSITY OF ECONOMICS AND LAW

FACULTY OF BUSINESS ADMINISTRATION

First and foremost, our group would like to sincerely express our gratitude to Ms.Cung Thuc Linh As we navigated through the study and exploration of this subject,

express our thanks for the valuable knowledge you shared right from the beginning, aswell as your teachings on applying theory to practical situations Your guidance notonly deepened our understanding of the subject but also allowed us to gain profoundinsights into social phenomena, ultimately aiding in the completion of our essay

In our quest for understanding, we turned to books, engaged in group discussions, andapplied the knowledge acquired from the course to analyze and complete our essay.During the essay writing process, mistakes are unavoidable, so we hope to receivevaluable feedback from you in order to refine and perfect our work

Once again, from the bottom of our hearts, we would like to express our appreciationfor all of your wonderful assistance with our education and personal growth

Group 6

CHAPTER 1: OVERVIEW OF THE ESSAY

1 Overview of the essay

2 Research objective

3 Research subject

4 Essay structure

CHAPTER 2: THEORETICAL BASIS AND APPLICATIONS

I Overview of The Cognitive Decision-Making Process

1 Definition

2 Model of consumer behavior process

3 Types of consumer decision-making processes

3.1 Habitual decision-making

3.2 Limited decision-making

3.3 Extended decision-making

Habitual decision-making

II NEED RECOGNITION

1 Status of Need Recognition

1.1 The Consumer Need Recognition Process

1.1.1 The Desired State

1.1.2 The Actual State

1.1.3 The Desire to Resolve Recognized Problems

1.2 Factors affecting the Desired State and Actual State

2 Marketing application of need recognition

2.1 Discovering Consumer Problems

2.2 Responding to Consumer Problems

III Information Search

1 Overview of Information search

2 Internal information search

2.1 Level of internal information search

2.2 Type data retrieved via an internal search

2.3 The precision of the inner search

3 External information search (Search for information from the environment)

3.1 Types of external searches

3.2 Information sources

3.3 Extent of performing external search

3.4 Type of information collected in external searches

3.5 How to conduct external information search

4 Marketing application of information search

4.1 Improving the information quality controllable source

4.2 Viral Marketing

4.3 Other marketing applications

CONCLUSION

TABLE OF FIGURES

Figure 1 Engel, Blackwell and Miniard model of Consumer behavior, 2000

Figure 2 Five-stage buying decision process model

Figure 3 MAO and the types of decision-making processes of consumers

Figure 4 The Process of Need Recognition

Figure 5 Problem Recognition: Shifts In Actual Or Ideal States

Figure 6 Marketers often attempt to cause consumers to recognize potential problemsfor which the marketer has a solution

CHAPTER 1: OVERVIEW OF THE ESSAY

1 Overview of the essay

To achieve their goals, marketing professionals strive to study consumer behavior toinfluence their purchasing decisions This is driven by the intense competition amongbusinesses in today's market, making it more important than ever to understandcustomer desires to gain a competitive edge

By meticulously analyzing customer trends and behaviors, businesses can accuratelyidentify what customers truly need and find suitable solutions for these needs Thishelps them attract customer interest and persuade them to choose their products orservices over those of their competitors

Starting from the significance of understanding customers, we have chosen the topic

"Customer’s purchase decision process: Before buying" to investigate its theoreticalbasis and practical implications

2 Research objective

The research objective of this topic is to explore the theoretical foundations of the

“Customer’s purchase decision process: Before buying” across the two stages of need,information search and the application of practical aspects into the business'smarketing strategies

3 Research subject: Customer’s purchase decision process: Before buying

4 Essay structure

The content of the report will include 3 main parts:

- PART I: OVERVIEW OF THE CONSUMER DECISION-MAKING PROCESS

- PART II: NEED RECOGNITION

- PART III: INFORMATION SEARCH

CHAPTER 2: THEORETICAL BASIS AND APPLICATIONS

I Overview of The Cognitive Decision-Making Process

1 Definition

The term "cognitive decision-making" indicates that a consumer meticulously assessesthe characteristics of a range of products, brands, or services by gathering as muchinformation as they can, taking into account their existing knowledge about a product,and methodically balancing the pros and cons of each option until they reach acontented choice

For example, consumers opt for a brand not due to specific attributes like price,

design, or functionalities, but because the brand evokes positive emotions or enjoysapproval from their friends

2 Model of consumer behavior process

a) Complex model

Figure 1 Engel, Blackwell and Miniard model of Consumer behavior, 2000

The model is organized based on a seven-step decision-making process, whichinvolves needing recognition, conducting information searches both internally and

externally, evaluating different options, making a purchase, reflecting on the purchaseafterward, and ultimately, making the decision to discontinue or divest from theproduct or service.

b) Simple Model

The decision-making process is made up of a five-step process: need recognition,information search, evaluation of alternatives, purchase decision, and post-purchaseevaluation

Figure 2 Five-stage buying decision process model

The before buying process include:

- Stage 1: Recognition of need

During this phase, a consumer recognizes a discernible disparity between their currentsituation and their desired optimal condition

For example, one person encountered a situation when he needed to buy his first car

He acknowledged the issue that he didn't have a car to facilitate his transportationneeds Furthermore, as he was in the process of learning to drive, he realized it wasessential to start searching for a car This was because he wanted the freedom to driveonce he obtained his provisional license

- Stage 2: Information search

The process of information search is commonly referred to as the pre-purchase search.This phase is activated when a consumer identifies a specific need and initiates asearch to acquire relevant information and data to address that need

For example, drawing from one person’s experience, he found himself in the position

of needing to commence his quest for various cars that aligned with my requirements

He initiated his search on various used car websites and visited car dealerships toexplore details about different car brands

3 Types of consumer decision-making processes

The decision-making process is categorized based on the level of involvement,categorized as either low or high MAO (Motivation, Ability, and Opportunity) when itcomes to brand or product purchases

As consumers shift from low MAO to high MAO, the decision-making processbecomes progressively intricate, leading to three categories: Habitual decision-making, Limited decision-making, and Extended decision-making

Figure 3 MAO and the types of decision-making processes of consumers

3.1 Habitual decision-making

Habitual decision-making doesn't precisely qualify as a conventional decision-makingprocess These decisions materialize when the MAO for purchases is low, resulting inrepetitive buying patterns A purely habitual decision implies that there is noconsideration of alternative options, such as choosing not to buy

For example, consumers may purchase Dove shower gel simply because they have runout of it at home They opt for the same brand without actively considering otherbrands, price variations, or other adaptive factors

Habitual purchasing decisions encompass two primary types:

a) Brand-loyal decision-making

Brand-loyal decision-making involves consumers consistently and steadfastly favoring

a specific brand or product when making purchase choices It's characterized by astrong belief that this brand effectively fulfills their needs and often includes a deep

emotional connection to the brand This loyalty leads to a consistent preference for thesame brand, even in the presence of alternatives, making it difficult for competitors toconvince these consumers to switch to other brands

For example, the choice to purchase Dove shower gel, as mentioned earlier, iscategorized as a decision demonstrating brand loyalty In this particular scenario, theconsumer has made a commitment to Dove based on the belief that this brand alignsbest with their requirements and is emotionally attached to it (expressing apreference) Consequently, it can be challenging to persuade these consumers toswitch to other rival brands

b) Repeat purchases

In contrast to brand-loyal decision-making, some consumers opt for a product based

on their assessment of their prior experiences with the product

For example, when a consumer initially uses Dove shower gel and has a positiveexperience, they often continue selecting Dove for their subsequent purchases,gradually forming a consistent buying pattern

Nevertheless, this habit suggests that consumers can potentially shift their choices ifthey encounter a compelling influence from competitors associated with the brandthey are currently utilizing

3.2 Limited decision-making

Limited decision-making occupies a position between habitual decision-making andextended decision-making At its most basic level (when the level of MAO is low),limited decision-making closely resembles habitual purchases Nevertheless, whenengaging in limited decision-making, consumers show greater interest in the productand actively seek information or assess various alternatives

For example, selecting a tea brand primarily based on the criterion of opting for a cost or promotional offer falls into the category of a limited purchase decision.Limited buying decisions stem from fulfilling personal emotional wants or responding

low-to group influences For instance, consumers might decide low-to switch low-to a new brand orproduct simply because they want a change, even if they are content with their

previous choice Moreover, if one person notices their friend ordering a certain drink,they might choose something similar.

3.3 Extended decision-making

Expansion decisions take place when the MAO for consumer brand or productpurchases is considerably high In such instances, extensive internal and externalsearches are conducted, followed by a detailed evaluation of multiple alternatives.After the purchase, the decision's accuracy is critically reviewed and reassessed Thesehighly intricate decisions are rather infrequent However, products like houses, cars,motorcycles, and computers often involve an extended decision-making process.Even in emotionally charged choices, a significant degree of rational effort is required.For instance, when consumers decide to purchase items like a Rolls-Royce or a Birkinbag, which aim to convey social status and provide immense enjoyment, they stillneed to put in effort This effort entails actively seeking external information,thoroughly appraising options based on attributes and benefits, and making a well-considered choice because these products carry substantial financial risks

The below table illustrates the level of MAO with corresponding decision-makingtypes

Degree Decision-making

processes

Low level

involvement Habitual decision-making

Short life Fast moving consumer

goods(low cost & risk): snack, shampoo, toothpastes,etcMedium level

involvement

Extended-decision

making

Long life Cars, surgery, property,

fixed assets, insurance contracts, etc (High risk and expensive)

II NEED RECOGNITION

1 Status of Need Recognition

1.1 The Consumer Need Recognition Process

The need for recognition is the result of a discrepancy between two main components:the desired state and the actual state The former refers to the way a person would like

a need to be met whereas the latter has to do with the degree to which a perceivedneed is actually being met Both the desired state and the actual state are influenced bythe consumer’s lifestyle and current situation

Figure 4 The Process of Need Recognition

1.1.1 The Desired State

A desired state (what the consumer would like) is the way an individual wants to feel

or be at the present time

Consumer desires are shown to be the result of the desired lifestyle of the consumerand the current situation (time pressures, physical surroundings, and so forth) Desiredstage affected by reference group information (family and friends), consumer noveltyseeking (try new product because of boredom or because of a motivation to engage invariety seeking) and cognitive thought processes

As our social groups change over time and as we change comparison groups, ourdesired states can likewise be influenced

1.1.2 The Actual State

An actual state (what the consumer perceives as already existing) is the way anindividual perceives his or her feelings and situation to be at the present time Perceptions of the actual state are also determined by a consumer’s lifestyle andcurrent situation Consumers’ lifestyles are a major determinant of their actual state

because that is how they choose to live given the constraints imposed by theirresources

1.1.3 The Desire to Resolve Recognized Problems

The level of one’s desire to resolve a particular problem depends on two factors:

- The magnitude of the discrepancy between the desired and actual states:

This factor is determined by the difference between the desired state and theactual state, and the importance of the problem to the consumer A significantdifference between what is wanted and what exists creates a sense of urgencyand a stronger desire for resolution

Example is if a person is currently owning a flip Motorola phone and desires tohave an Iphone 6 their magnitude of discrepancy is large and would pursue onthe second stage of the decision making process which is information search.However if a person desires to go from an Iphone 5 to an Iphone 6 he might not

go into the second stage in decision-making, which is information search

- The relative importance of the problem: It refers to the significance or

priority assigned to a particular issue in comparison to other concerns orobjectives Problems that are perceived as more important elicit a higher level

of desire to find a solution

For instance a person currently uses a Marlboro manufactured in Vietnamwhere a packet costs 20,000 vnd and desires to buy the imported one whichcosts 60,000 vnd Even if the discrepancy is large, the person may not pursuefurther into information search because they perceive the problem to be small

He wouldn’t really go into the information search of it as he is bound by hisother priorities of feeding his newborn milk, rent cost, and food，

Relative importance is a critical concept because all consumers have budget constraints, time constraints, or both Only the relatively more important

problems are likely to be solved In general, importance is determined by howcritical the problem is to the maintenance of the consumer’s desired lifestyle

1.2 Factors affecting the Desired State and Actual State

1.2.1 Factors affecting the Desired State

- Culture: people are always influenced by cultural factors and national

identity before buying products and that affects their decisions

- Social status: Regarding the upper or middle class, they have a stable and

abundant income, which has influenced their behavior of buying high-endproducts to satisfy their personal needs as well as their own preferences Butthe lower middle class will care more about food or household items thanexpensive clothes and furniture

- Reference group: People will rely on reference groups to understand socialnorms, which then shape their own values, ideas, behavior, and appearance Forinstance, when choosing clothes to buy and wear, we often refer to the styles ofKOLs, KOCs or trending fashion and try to dress like them

- Household characteristics: Households are the social group that has the

strongest influence on individual consumption behavior Family members tell

us how to choose and buy products Specifically, when we buy a motorbike,our family will give us advice on which motorbike we should buy thatconsumes less fuel and is more durable than other brands

- Financial status: When being unemployed, a person will have a greater need

to buy food than to travel or entertain themselves

- Individual development: As we get older our needs and wants will change,

and this causes services or products to change as well

- Emotions: Some people always want to find new feelings by trying many

dishes at many different restaurants But some people just want to eat familiardishes from a restaurant they often visit

1.2.2 Factors affecting the Actual State

- Normal depletion: A normal shortage is a customer's daily shortage of

products and they will solve it by shopping for products that need to be

replenished.When food is missing in the house, people will automatically goshopping to solve this situation.

- Product/brand performance: when we have purchased a product but the

advertisement shows it does not match the content, this reduces consumersatisfaction with the product

- Past decisions: affect consumers' current purchasing status, stemming from

good or bad impressions of previously used products or services

- Government/consumer groups: Government regulations can enhance the

actual state by ensuring product safety, quality, and fair business practices->issuing policies on consumer behavior。

- Consumer groups or reference groups often influence a person's opinions,behavior, lifestyle and consumption behavior, and sometimes the group canpressure members to conform

- Availability of product: the actual state of consumers can be influenced by

factors such as the scarcity of products in the market, making themunaffordable, or the absence of sales on available products

Figure 5 Problem Recognition: Shifts In Actual Or Ideal States

Figure 5 shows that a problem arises in one of two ways For example: The personwho runs out of gas experiences a decline in the quality of his actual state (needrecognition) In contrast, the person who craves a newer, flashier car moves his ideal

state (opportunity recognition) upward Either way, there is a gulf between the actualstate and the ideal state

2 Marketing application of need recognition

2.1 Discovering Consumer Problems

A wide variety of approaches are used to determine the problems consumers face a) Activity analysis

Through surveys or focus groups, marketers conduct activity analysis focused on aparticular activity, such as learning a foreign language or swimming to determine whatproblems consumers encounter during the performance of the activity

Then they develop products solving problems associated with the activities analyzed

b) Product analysis

Product analysis is quite similar to activity analysis but it is used to determine whatproblems consumers encounter during the communications, purchase, usage ordisposition of a particular product or brand

Consumers may be asked about problems associated with using a product or brand

c) Problem analysis

Problem analysis is different in that it starts with a problem and asks respondents toindicate which activities, products, or brands are associated with/solve those problems.For example, a study dealing with packaging problems could include questions such as

these: “hard to open” “hard to reseal” “doesn’t pour well, , ”, “don’t fit on the shelf”, “waste too many resources’’.

Based on the answers, they can collect the issues that need to be analyzed

d) Human Factors Research

Human factors research determines human capabilities in areas such as vision,strength, response time, flexibility, and fatigue and the effect on these capabilities oflighting, temperature, and sound The purpose of this research is to identify functional

problems that consumers are unaware of and manufacturers and marketers canminimize user fatigue

For example, designing a convenient, airy coffee shop with a quiet landscape can helpconsumers reduce stress after a long day of work and increase coffee salesperformance and revenue for the shop

e) Emotion Research Marketers

Marketers are increasingly conducting research on the role of emotions in problemrecognition and resolution In other words, marketers examine how consumers copewith negative emotions associated with product or service failures

This type of research is critical to marketers in helping them anticipate consumerreactions to problems and train their customer service personnel to respondappropriately For example, Apple might train its customer service representatives torespond empathetically to frustrated customers

2.2 Responding to Consumer Problems

Once a consumer problem is identified, the marketers structure the marketing mix to solve the problem

This can involve:

- Responding to consumer problems

- Developing a new product or altering an existing one

- Modifying channels of distribution

- Changing pricing policy

- Revising advertising strategy

For example: Many people want to remain healthy but want to enjoy sweets Sugar free is the solution

Each firm must be aware of the consumer problems it can solve, which consumers have these problems, and the situations in which the problems arise