Question

Describe the framework that consumer normally follows in making decisions regarding the purchase of products or services. Discuss the difficulties that consumer encounter with the application of that framework when purchasing financial services. Explain what heuristics are, and using any three of the heuristics discuss how they utilized in the decision making process for a consumer.

Answer 1

Decisions Making Regarding the Purchase of Product or services?

in the current scenario people are confused about decision making while purchasing product. The choice of consumer decision making is based on congnitive psychology. Most of the decisions are made from their family circle, friends, also taking greed factor from previously used customers. several factors are influenced by the decision making process including, previous experience, age, individuals, cognitive biasis, and personal belief.

Difficulties that consumer encounter with the application of that framework when purchasing financial services?

The attitude and behaviour of customers differ from the financial product ranges.Now customers have wide range of choices of financial services, in tradtional structure of financial product and services are little choices. The decision making of purchasing financial product or services is very difficult for now. Because the structure of this industry, opertaions, price and form of financial products and channel delivery. The main aspect is the emergence and deregulation of new forms of technology changes the situation by produce high competitive market and financial services. it changes the attitudes of the customers while making the purchaisng decision. Decision styles for wide range of financial services including insurance product, credit product, current account and investment product.

Explain what heuristics are, and using any three of the heuristics discuss how they utilized in the decision making process for a consumer?

Heuristics are mental or simple stragegies processes that human, animal, machines and organizations used to make decisions from judgement, and find out the solutions from the complex problems. It happens an individual focuses on the relevant aspects of situation or a problem to create solution. There are many kinds of heuristics models to solve various problems.

1.Elimination by aspects: It derives number of alternatives are available, the decision maker reduces the alternatives are not meet the level of aspects.

2.Simon's satisficing strategy: It choose one aspect from a set of aspects in uncertain situation.

3.Recognition heuristic: it exploits the capacity of psychological recognition in order to make the conclusions about the unknown quantities.