Evaluation of the Five-step Consumer Decision-making Model

Introduction 

Consumer behaviour and decision-making model have been a popular topic when it comes to marketing, due to it gives insights into the consumer’s minds leading to a purchase decision or more importantly refraining from buying a product. These pertain to all good and services and are heavily influenced by internal as well as external factors (Erasmus, Boshoff, & Rousseau, 2001).

This traditional five-step consumer decision-making model is widely used, however, over the years, there have been several studies suggesting gaps in the traditional model (Engel, Kollat, and Blackwell, 1968).

McKechnie (1992) suggested the lack of any frameworks in general concepts in service industry on how consumers make a decision.

In this digital age social media is a very powerful tool and with the evolving need to adapt marketing to the digital front. One of the most common tools used is Facebook to marketing products to consumers, Facebook is primarily utilised by companies to grow awareness and increase fanbase to the targeted market (Simon, Brexendorf, & Fassnacht, 2016). It becomes vital to evaluate the traditional model consumer buying behaviour and gaps which based on previous findings to evolve with the changing environment in marketing and identify the paradigm of shortcomings within the model.

A literature review is done in the field of consumer behaviour of internal and external factors to identify theories. Over the years the consumer behaviour trends have changed, the customer expectation has changed from marketers. The consumer has now the power to stop advertisement and expect an engagement platform involving interaction with other consumers as well as the company only at their discretion. Consumers no longer intend to be simply passive observers, the desire to participate and suggest what they are indeed interested in and expect from a service or a product. Consumers of today are more informed and are efficiency inclined and want the experience of individual/ personalized experience and don’t enjoy the idea of being sold to (Bonchek, 2014).

In continuation Hazel Barkworth (2014) talks about six new trends in consumer behaviour in the age of digitalization, these six trends are:

1. Multiplicity is about providing a completely new experience to customer,
2. Hyper-efficiency is about smarter and efficient ways to do things in lesser time,
3. New industrial revolution is about digital progression and creativity,
4. Escape is about joy and convenience,
5. Mindfulness is different to every individual about self,
6. Super-personalisation to make it a unique experience for each individual customer.

This paper will be discussing the following:

1. five-step consumer decision-making model,
2. followed by the analysis of the five-step model identifying the gaps,
3. elaborating on the internal (perception, motivation, learning, personality, emotions and attitudes) and external (demographics, lifestyles, groups, social and cultural) influences in the process.

A qualitative research was conducted from 21 Sep – 1 Oct 2018 for articles publishes in the past five years. The sources searched were ProQuest and EBSCO database on the Whitireia library. This search was further extended to google scholar and Harvard business review.

The keywords used were: (“consumer behaviour” AND Model, “consumer behaviour” AND Internal, “consumer behaviour” AND Internal, “consumer behaviour” AND factors, “consumer behaviour” AND Perception, “consumer behaviour” AND motivation, “consumer behaviour” AND learning, “consumer behaviour” AND personality, “consumer behaviour” AND emotions, “consumer behaviour” AND attitudes, “consumer behaviour” AND demographic, “consumer behaviour” AND lifestyle, “consumer behaviour” AND group, “consumer behaviour” AND social, “consumer behaviour” AND culture. “consumer behaviour” AND Model, Consumer AND Model, “consumer behaviour” AND criticism, “consumer behaviour” AND gap, “consumer behaviour” AND issue, “consumer behaviour model”, “consumer behaviour” AND model AND negative, “consumer behaviour” AND model AND contradiction).

A total of 54 articles were found to be relevant which were reduced through reading the abstract and skim reading to 12 articles to be selected for this report.

The five-step model will be covered in the following section through a literature review, followed by opposing findings on the five-step consumer decision model, Also the other models on consumer behaviour such as Simons model, Nicosia model, Engel, Kollat & Blackwell model, Rassuli & Harrell model, Sheth, Newman & Gross model, Smith & Rupp’s model, The Marketing Spiral, McKinsey’s dynamic model of the consumer decision journey have been discussed briefly. The last section will be the conclusion of the article, limitations and suggestion.

Discussion

The traditional five-step model was introduced in 1968 by Engel, Kollat and Blackwell, describing how consumers make a purchase decision.

Figure 1 (Quester, Pettigrew, Hill, Kopanidis, & Hawkins, 2014).

In this model the first step in consumer decision is problem recognition, a problem has to identify by the consumer at this stage or a need that needs to be satisfied, the consumer at this stage is unable to get work done or move forward (Milner & Rosenstreich, 2013).

Companies need to build brand awareness at this stage as consumers think of recognized companies as the first point of purchase (Prakash, 2016).

The second stage is information search, customers gather available information from various sources to search for a possible solution to their problem, consumers are thorough in this stage to find all available information of the various criteria which is important to them (Mohamed, 2011).

In this digital age consumers rely heavily on the internet to gather information hence a accompany has to be active with their SEO (Search engine optimization) and be displayed on the various mediums such as Google where consumers search (Stankevich, 2017).

Evaluation and selection is the third step of the model, this is a critical stage for consumers where consumers compare based on set criteria and a marketer should be aware of the needs and the set parameters of the customer for the evaluation process (Erasmus et al., 2001).

The purchase is the next step where consumers have decided what product or service solves their need and have spent the money on it. This step is important for marketers to identify and replicate what worked with the respective customer to repeat the success with other customers (Dudovskiy, 2015).

The last step of the model is the post-purchase activities, this involves a long-term relationship with the customer by providing the service and ensuring a brand value and loyalty is created (Mohamed, 2011).

Though the five-step consumer behaviour model is widely accepted there have been several criticisms of the model over the years. Olshavsky & Granbois (1979) suggested that customers do not follow the model from start to end, there are phases which all customers may not follow and it was very complicated to apply on a daily purchased article, furthermore, the consumers decision process if faster than what is depicted in the model (Erasmus et al., 2001).

It was also suggested that simple linear approach followed in the model was sequential, which is not necessary that each purchase made by a consumer the same pattern will be followed, it could be interchanged or skip certain stages of the purchase process (1, 1993).

It was noted the complexities of decision-making model (Bray, 2008). A fundamental limitation is identifying motivation of a consumer Tuan-Pham and Higgins (2005), humans have complex emotions and it is very hard to identify to view it in one dimension as multiple factors influence motivation and go deeper into psychology (Murillo, Kang, & Yoon, 2016).

However, this has triggered interest in research in the field of psychology of consumers for emotions relating to desire and triggers for decision ability.

One of the main criticisms is that consumers are considered to be rational following a logical, calculated step by step approach and spend extensive time to do research to evaluate the most suited product for their needs, the impulse buying is the main factor which is no existent in the consumer decision-making model (Bozinoff, 1982).

Stankevich (2017) has highlighted the various models in the consumer decision making.

Rassuli & Harrell model states that a consumer doe not conclude at in decision making, it is an ongoing process where purchase can be considered to be an input for the process and not the end of the purchase cycle.

Sheth, Newman & Gross model states that any of the five value or all  this model states can influence a consumer to make a purchase, these values are social, conditional, functional, emotional, knowledge and validation (Stankevich, 2017).

Smith & Rupp’s model takes internet as the basis of consumer behaviour focusing on external influences such as website marketing, phycology, social and cultural that influence the consumers behaviour at purchase and post purchase (Stankevich, 2017).

The Marketing Spiral states that a consumer’s behaviour is similar to that of a spiral which is driven by interaction instead of communication and the effect strengthens as the consumer engagement increases (Stankevich, 2017).

McKinsey’s dynamic model of the consumer decision journey has four phases which are interconnected without a sequence initial consideration, research, potential purchases, purchase and the consumer experience post purchase (Stankevich, 2017).

The consumers are affected by other factors which can be categorized into internal and external influences which impact the decision-making process (Steinhauser & Hamm, 2018). Internal factors comprise of perception, motivation, learning, personality, emotions and attitudes.

Perception has many stages starting from exposure such as visual through advertising, attention is the next stage where the customer recognises the marketing to gain their attention, in the next stage awareness where there is meaning provided in the advertisement to the customer, retention is the last stage where the product or service engages a customers through connecting with them (Stankevich, 2017).

Motivation is driven by the desire to attain a certain end result, though every individual has different motivational factors, this can best be represented through Maslow’s pyramid starting with physiological needs such as food, water to name a few, then safety needs of feeling secure from threats, next is need for love, affection and sense of belonging, followed by need for esteem which is high-level of respect and finally is the need for self-actualization this is to contribute to a higher purpose than just self (Jerome, 2009).

Learning is a process where consumers learn through exposure to the various products and services through various mediums and process this information leading to the interpretation of information they have received to the respective product and services (Ribeiro, Duarte, & Miguel, 2017).

Personality is another internal factor which impacts the decision making process, there can be many kinds of personalities introverts, extroverts assertive, aggressive to name some and these impacts how a consumer behaves towards a certain product or service (Ribeiro et al., 2017).

Emotion plays a very important role in decision making, however, it is very complex and hard to make a predictive pattern of emotion (Murillo et al., 2016).

Attitudes is a consumers perspective which is closely related to a personality and motivation of a consumer if they are experimental (Milner & Rosenstreich, 2013).

External factors also play an important role in consumer decision making and these factors are demographics and lifestyles, groups, social and cultural (Blackwell, Miniard, & Engel, 2006).

Demographics is a study of people based on factors such as age, sex, education, occupation to name a few. Consumers can be categorized based on these attributes, which play an important role in decision making.

Lifestyle is how an individual chose to do certain things and has a mindset towards spending money and time, for example, people now are extremely health conscious and tend to spend more time and money in fitness and healthy food options (Steinhauser & Hamm, 2018).

Groups is another external factor which influences consumers decision, it is the collection of people who like to stay in each other company due to various factors such as similar interests (Murillo et al., 2016).

Social class would refer to the status of an individual in a society based on factors such as position they hold and how influential they are, this varies from lower class to upper class impacting the decision making of a consumer (Murillo et al., 2016).

Cultural is embedded through family and society defining the value system a certain individual has based on beliefs, habits that they have learnt through life experiences and brought up with (Stankevich, 2017).

All research papers found in the topic utilize qualitative methodology, the medium was through a literature review of past researches on the topic (Erasmus et al., 2001).

Phillips & Bradshaw (1993), suggested the consumers do not always follow the flow of the consumer decision-making model, certain steps may be skipped or interchanged by consumers.

Yilmaz & Hunt (2001) used mail survey as the medium to reach out to new car dealership sales managers and sales staff. A total of 165 dealership participated with a total of 1,975 sales people. The response rate was at 27% for the questionnaire at this level. From a dealership prospective the response rate was at 50%. The data collected was run through two different tests, the covariance matrix was utilized for individual and dealership level responses. 

Conclusion 

This research paper conducted a literature review of the consumer decision model, the five-step approach was presented with its shortcomings found over the years. The five-step consumer decision model was the go-to guide for many years for the marketers from the start stage of information search to the end stage of post-purchase. Though this is the closest model that closely describes the consumer approach. Consumer behaviour is evolving with the new trends of digitisation and the availability of resources on the internet.

Several researchers in academics have focused on the topic of the consumer behaviour model evaluating the existing model and formulate theories supporting. However, there have been several criticisms of the model over the years the traditional model’s importance (Milner & Rosenstreich, 2013).

There have been several opposing views on the consumer decision model. Consumers do not follow the entire model approach from end to end also, for a daily purchase product or service it is extremely complicated to arrive at a decision, the consumers are usually faster to arrive at a decision

With the new digital trend, personalization is the key and for this, a study with a larger sample size should be conducted refining and confirming the models working, also there is need to do further research in the factors impacting the motivation of the consumers. Furthermore, there is limited research has been conducted in the service industry such as the financial services to name a few  (Milner & Rosenstreich, 2013). The service industry is growing rapidly with online revolution where customers have easy access to information hence, it becomes critical to conduct further research.

It was also found there was very limited research conducted in New Zealand on the consumer decision model, it would be beneficial if research is conducted on the topic in the respective country to contribute further, New Zealand is growing with the inflow of migrants and businesses wanting to invest in the country it plays a vital role. Emotions are very complex to understand due to the multitude of variables impacting which is the factor behind the motivation of a consumer to buy (Murillo et al., 2016).

The main criticism over the years was by Bozinoff (1982), stating that in the consumer decision-making model the consumers are considered to be rational, who always follow a logical pattern and a calculated approach to evaluate a product or service which serve their need. Furthermore, the model does not address the impulse buying behaviour of consumers.

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