Question

1. How the Internet has affected the buying process for many products?

2. McKinsey used funnel analogy. Explain it in your word

3. McKinsey described “consumer decision journey” . Explain it in your words.

4. The McKinsey research examined how many consumers in how many industries, and in how many

continents.

5. What were the four critical stages of the decision buying process? _

6. McKinsey study found that the decision process is more circular than linear. What does this mean? _

7. Describe the first step in the buying decision.

8. How web has affected the second step in the buying decision?

9. Explain how internet has made the consumer empowered than before in decision process.

 

Answer 1

Ans.1 The internet has changed so much about our lives, it’s hard to imagine a time without it.

Of course, one of the main things the internet has altered is the way we buy. How we discover, research, and ultimately purchase products is completely different than it was even a decade ago.

Now, with the rise of subscription boxes, grocery delivery services, and two-day Amazon shipping, it’s completely plausible to never leave your house and still have all the necessities you need.

However, despite the wide availability of products you can buy from the comfort of your own home, there are still some products that consumers choose to consistently buy in-store.

Likewise, there are products that the average consumer doesn’t deem worth traveling out to purchase.

As marketers, it’s important to make this distinction so can effectively drive the right kind of behavior from advertising campaigns.

For example, if you know a particular product is preferred to buy-in store, you may want to create ads designed to drive and measure in-store purchases instead of driving to an online checkout page, and vice-versa for paid ads.

Ans.2

Every day, people form impressions of brands from touch points such as advertisements, news reports, conversations with family and friends, and product experiences. Unless consumers are actively shopping, much of that exposure appears wasted. But what happens when something triggers the impulse to buy? Those accumulated impressions then become crucial because they shape the initial-consideration set: the small number of brands consumers regard at the outset as potential purchasing options.

The funnel analogy suggests that consumers systematically narrow the initial-consideration set as they weigh options, make decisions, and buy products. Then, the postsale phase becomes a trial period determining consumer loyalty to brands and the likelihood of buying their products again. Marketers have been taught to “push” marketing toward consumers at each stage of the funnel process to influence their behavior. But our qualitative and quantitative research in the automobile, skin care, insurance, consumer electronics, and mobile-telecom industries shows that something quite different now occurs.

Ans.3

November 17, 2017In the age of digital shopping—where the competitor is a click, swipe, or tap away—how consumers make purchase decisions has radically changed. Marketers have, therefore, become laser-focused on understanding what drives consumer decisions and influencing that journey.

McKinsey experts saw this growing need to better understand shifting consumer behavior nearly ten years ago, when we proposed a new approach called the consumer decision journey. It was a significant change in thinking that challenged the long-held concept of the sales funnel, where the decision path narrows in a linear way, from starting with awareness to ending with loyalty. The journey, instead, reflects a more complex reality of shifting choices, decision criteria, and triggers.

Today, after almost a decade, we have a database that covers more than 125,000 consumer decision journeys—used to help marketers influence consumers and drive growth—across 350 brands in 30 different industries. So, stepping back, the next big question our experts wanted to answer was how consumer behavior had changed over this time.

Ans.5 The Six Stages of the Consumer Buying Process

1.Problem Recognition

Put simply, before a purchase can ever take place, the customer must have a reason to believe that what they want, where they want to be or how they perceive themselves or a situation is different from where they actually are. The desire is different from the reality – this presents a problem for the customer.

However, for the marketer, this creates an opportunity. By taking the time to “create a problem” for the customer, whether they recognize that it exists already or not, you’re starting the buying process. To do this, start with content marketing. Share facts and testimonials of what your product or service can provide. Ask questions to pull the potential customer into the buying process. Doing this helps a potential customer realize that they have a need that should be solved.

2. Information Search

Once a problem is recognized, the customer search process begins. They know there is an issue and they’re looking for a solution. If it’s a new makeup foundation, they look for foundation; if it’s a new refrigerator with all the newest technology thrown in, they start looking at refrigerators – it’s fairly straight forward.

As a marketer, the best way to market to this need is to establish your brand or the brand of your clients as an industry leader or expert in a specific field. Methods to consider include becoming a Google Trusted Store or by advertising partnerships and sponsors prominently on all web materials and collaterals.

Becoming a Google Trusted Store, like CJ Pony Parts – a leading dealer of Ford Mustang parts – allows you to increase search rankings and to provide a sense of customer security by displaying your status on your website.

Increasing your credibility markets to the information search process by keeps you in front of the customer and ahead of the competition.

3. Evaluation of Alternatives

Just because you stand out among the competition doesn’t mean a customer will absolutely purchase your product or service. In fact, now more than ever, customers want to be sure they’ve done thorough research prior to making a purchase. Because of this, even though they may be sure of what they want, they’ll still want to compare other options to ensure their decision is the right one.

Marketing to this couldn’t be easier. Keep them on your site for the evaluation of alternatives stage. Leading insurance provider Geico allows customers to compare rates with other insurance providers all under their own website – even if the competition can offer a cheaper price. This not only simplifies the process, it establishes a trusting customer relationship, especially during the evaluation of alternatives stage.

4. Purchase Decision

Somewhat surprisingly, the purchase decision falls near the middle of the six stages of the consumer buying process. At this point, the customer has explored multiple options, they understand pricing and payment options and they are deciding whether to move forward with the purchase or not. That’s right, at this point they could still decide to walk away.

This means it’s time to step up the game in the marketing process by providing a sense of security while reminding customers of why they wanted to make the purchase in the first time. At this stage, giving as much information relating to the need that was created in step one along with why your brand, is the best provider to fulfill this need is essential.

If a customer walks away from the purchase, this is the time to bring them back. Retargeting or simple email reminders that speak to the need for the product in question can enforce the purchase decision, even if the opportunity seems lost. Step four is by far the most important one in the consumer buying process. This is where profits are either made or lost.

5. Purchase

A need has been created, research has been completed and the customer has decided to make a purchase. All the stages that lead to a conversion have been finished. However, this doesn’t mean it’s a sure thing. A consumer could still be lost. Marketing is just as important during this stage as during the previous.

Marketing to this stage is straightforward: keep it simple. Test your brand’s purchase process online. Is it complicated? Are there too many steps? Is the load time too slow? Can a purchase be completed just as simply on a mobile device as on a desktop computer? Ask these critical questions and make adjustments. If the purchase process is too difficult, customers, and therefore revenue, can be easily lost.

6. Post-Purchase Evaluation

Just because a purchase has been made, the process has not ended. In fact, revenues and customer loyalty can be easily lost. After a purchase is made, it’s inevitable that the customer must decide whether they are satisfied with the decision that was made or not. They evaluate.

If a customer feels as though an incorrect decision was made, a return could take place. This can be mitigated by identifying the source of dissonance, and offering an exchange that is simple and straightforward. However, even if the customer is satisfied with his or her decision to make the purchase, whether a future purchase is made from your brand is still in question. Because of this,sending follow-up surveys and emails that thank the customer for making a purchase are critical.

Ans.7 Buyer Decision Process: 5 Stages of Consumer Buying Decision Process

The buyer decision process (or customer buying process) helps markets to identify how consumers complete the journey from knowing about a product to making the purchase decision.

1. Problem or Need Recognition

Need recognition of Problem Recognition is the first stage of the buyer decision process. During need or problem recognition, the consumer recognizes a problem or need satisfied by a product or service in the market.

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 of the person’s normal needs, such as hunger, thirst, sex, rises to a level high enough to become a driver. External stimuli can also trigger a need.

At this stage, the marketer should study the consumers 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 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).

2. Information Search

The second stage of the purchasing process is searching for information. Once the need is recognized, the consumer is aroused to seek more information and moves into the information search stage.

The consumer may have heightened attention or may undertake an active search for information. The amount of searching a consumer will depend on the strength of his drive, the amount of information he starts with, the ease of obtaining more information, the value he places on additional information, and the satisfaction he gets from searching.

Consumers can get information about goods from different sources.

• Personal sources: This includes family, friends, neighbors, acquaintance, etc.
• Commercial source: This includes advertising, salespeople, dealers, packaging, display, etc.
• Public sources: This includes mass media, consumer rating organizations, etc. they also become confidential to provide information.
• Experimental sources: This includes handling, examining, using, etc. Such information becomes decisive and confidential.

The relative influence of these information sources varies with the product and the buyer. Generally, the consumer receives the most information about a product from commercial sources-those controlled by the marketer.

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The most effective sources, however, tend to be personal. Personal sources appear to be even more important in influencing the purchase of services. Commercial sources normally inform the buyer, but personal sources legitimize or evaluate products for the buyer.

For example, doctors normally learn new drugs from commercial sources but turn to other doctors for evaluative information.

The consumer’s awareness and knowledge of the available brands and features increase as they get more information. In designing the marketing mix, a company should make the target customers aware of its brand. Consumers’ sources of information should be carefully identified, and the importance of each source should also be assessed.

3. Evaluation of Alternatives

With the information in hand, the consumer proceeds to alternative evaluation, during which the information is used to evaluate” brands in the choice set.

Evaluation of alternatives is the third stage of the buying process. Various points of information collected from different sources are used in evaluating different alternatives and their attractiveness.

While evaluating goods and services, different consumers use different bases.

Generally, the consumers evaluate the alternatives based on attributes of the product, the degree of importance, belief in the brand, satisfaction, etc. to choose correctly.

A marketer must know how the consumer processes information to arrive at brand choices. Consumers do not always follow a simple and single evaluation process. Rather several evaluation processes are in practice.

Consumer evaluation processes can be explained with the help of some basic concepts.

1. First, it is assumed that each consumer sees a product as a bundle of product attributes. For refrigerators, product attributes might include cooling capacity, size, space, price, and other features. Consumers will pay more attention to those attributes relevant to their needs.
2. Second, the importance of depending upon their needs and wants.
3. Third, the consumer will develop a set of brand beliefs about where each brand stands on each attribute. The set of beliefs consumers hold about a particular brand is called brand image. Based on the consumers’ experience and the effects of selective perception, distortion, and retention, the consumers’ beliefs may differ from actual attributes.
4. Fourth, the consumer’s expected total product satisfaction will vary with the changes at the levels of different attributes.
5. Fifth, the consumer develops attitudes toward the different brands through some evaluation procedure. Consumers use one or more of several evaluation procedures, depending on the consumer and the buying decision.

The mode of evaluating purchase alternatives depends on the individual consumer and the specific buying situation. In some instances, consumers apply meticulous calculations and logical thinking.

In other situations. The same consumers may not make any evaluation. Rather they buy on impulse and use intuition.

Sometimes consumers themselves make buying decisions. At other times they rely on friends, consumer guides, or salespeople for buying advice. Marketers should study buyers to know how they evaluate brand alternatives.

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Marketers can take appropriate steps to influence the buyer’s decision to know what the buyers follow evaluative processes.

4. Purchase decision

At this stage of the buyer decision process, the consumer buys the product. After the alternatives have been evaluated, consumers decide to purchase products and services. They decide to buy the best brand. But their decision is influenced by others’ attitudes and situational factors.

Usually, the consumer will buy the most preferred brand.

But two factors might influence the purchase intention and the purchase decision. The first factor is the attitudes of other people related to the consumer.

The second factor is unexpected situational factors. The consumer may form a purchase intention based on factors such as expected price and expected product benefits.

However, unexpected events may alter the purchase intention. Thus, preferences and even purchase intentions do not always lead to actual purchase choice.

5. Post-Purchase Evaluation

In the final stage of the buyer decision process, post-purchase-purchase behavior, the consumer takes action based on satisfaction or dissatisfaction.

In this stage, the consumer determines if they are satisfied or dissatisfied with the purchasing outcome. Here is where cognitive dissonance occurs, “Did I make the right decision.”

At this stage of the buyer decision process, consumers take further action after purchase based on their satisfaction or dissatisfaction.

What determines whether the buyer is satisfied or dissatisfied with a purchase?

The answer lies in the relationship between the consumer’s expectations and the product’s perceived performance.

If the product falls short of expectations, the consumer is disappointed; if it meets expectations, the consumer is satisfied; if it exceeds expectations, the consumer is delighted.

Ans.8 How web has affected the second step in the buying decision?

Does Digital Marketing Impact The Consumer Decision Making Process?

At one time, there was a fairly universal business model which applied to virtually every company. The customer would become aware of their product through a printed advert or billboard. They would then speak with the company selling the product to obtain a quote. After mulling over their potential purchase for several days, they would finally (hopefully) decide to go ahead and buy the product in question. The process could be a long one, with a decreasing chance of making a sale as each step of the path progressed.

Recognizing A Need

The first step of the traditional business model involved the consumer recognizing that they had a need for a product or service. Today, there is a wealth of options that companies can choose from to facilitate this stage of the process. Social media can have a powerful impact, reaching a targeted audience base within the brand’s most relevant demographic, with around 3 million advertisers now using Facebook to reach consumers. Email newsletters can reach out to interested parties and previous customers to highlight the latest products and promotional offers, encouraging them to find out more. Banner adverts can attract the attention of web surfers… in short, the options are extensive and effective.

The Information-Gathering Phase

Once the consumer has recognised their need, they begin gathering information about the product or service that they require. This is, arguably, the stage at which digital marketing can be most powerful. Around 89% of all consumers now begin their search for product information on the internet. That means that when companies harness the power of a strong SEO strategy paired with sponsored and PPC advertising they can rise up the search engine rankings to get their brand in front of the widest possible audience.

Evaluation Of Options

Next, we reach the evaluation stage. At one time, businesses could be fairly confident that as long as they were the first to reach the customer they could make a sale however this is no longer the case. Thanks to the internet, price comparison is the work of minutes. Companies can harness this power themselves, however, by featuring live price comparisons on their own website so that consumers need to look no further. By keeping the customer on the site, the chances of a sale increase.

Assessing The Evidence

Online reviews also have a key role to play at this stage of the consumer decision-making process. Evidence has shown that around two-thirds of all shoppers reference reviews before making most kinds of purchases. By taking a proactive response to consumer reviews, it’s possible to create a positive brand impression for outstanding customer service and so to sway the consumer in the company’s direction even if there are negative reviews.

Ans.9 Needless to say, over the past 10 years, the Internet has changed drastically. In the recent years, traditional media has waned since the growing use of social media such as blogs, Twitter, Facebook, and other Web 2.0 platforms. On these social media platforms, consumers are now able to contribute, share and access information extensively on the World Wide Web. Given these characteristics, the new Internet not only shapes consumers’ perceptions but also empowers consumers in Internet marketing, heralding a perceptible change in consumer behavior over the years. With this power at hand, many marketers are beginning to understand the importance of readjusting their marketing strategies to reap commercial gains, specifically through incorporating the online social network to influence consumers’ perceptions and behavior.

Evolution in Information Technology

The Web was first introduced by Tim Bruners-Lee in 1989 and is by far the largest transformable-information construct. Since 1989, there have been remarkable improvements in the Web and related technologies (Getting, 2007; Boulos and Wheeler, 2007). More specifically, the advent of Web 2.0 has redefined marketing roles to those that were more customer-centric. According to Berners-Lee, Web 1.0 was a read-only web and a system of cognition (Getting, 2007). At that point, the main goal of websites was to make information readily accessibly for anyone and establish an online presence (Aghaei, Nematbakhsh and Farsani, 2012).

User Generated Content

In the Web 2.0 realm, online brand communities including social-networking sites have mushroomed and sustained the development of user-generated content (Gangadharbatla, 2008). User-generated content (UGC) has also been a key driver for not only brand conversations but consumer insights as well. With the continued growth of online participation in content creation and sharing, consumer empowerment in internet marketing comes into play as consumers are now able to exert greater influence over products and brands (Jevons and Gabbott, 2000; Riegner, 2007).