Psychological Orientations of Purchasing Decisions
It is important to underpin marketing activities with an understanding of buyer behavior so that marketing strategies and communication plans are more effective. Therefore, a basic understanding of the context in which buyers process information, the way they behave, their decision making processes and the ways in which such knowledge can be used in promotion plans is important. In fact, there are a number of approaches that have been developed to assist our understanding of human behavior, but the majority have their roots in one of three psychological orientations.
Psychoanalytical Theory: First developed by Freud, this approach is based on the way an individual develops over time within the context of a family and their interactions with mother and father and later with their siblings. Freud was the first to think in this way and to consider the unconscious as an important influence on behavior. These are now referred to as psychodynamic theories, and they hold that human behavior is primarily the function of reactions to internal (thus mostly unconscious) stimuli: instincts, urges, and thoughts.
Instincts, urges, and thoughts are the things that a sales promotion looks to capitalize on. Instinct based purchases form a considerable portion of the consumer’s purchases. When an individual is out shopping there is this continuous urge to buy and when he sees a product being offered at a price lower than the actual price or there is some other benefit like "buy one get one free" associated with the purchase of that product, it encourages the consumer to buy that product. As a result of the response to the urge to buy something, the consumer goes ahead and purchases the product.
Reinforcement Theory: People behave with the knowledge of what will happen as a result of their behavior. Therefore, behavior is dependent upon the expected outcomes or consequences. The three rules of consequences describe the logical outcomes that typically occur:
- Consequences that lead to rewards increase a behavior.
- Consequences that lead to punishments decrease a behavior.
- Consequences that lead to neither rewards nor punishments extinguish a behavior.
Most organizations use sales promotion to try to reward the consumer or provide some incentive to encourage them to make a purchase. Therefore, if we relate this to the first rule above which states that consequences that lead to rewards increase a behavior, then sales promotion is bound to increase a behavior – that is, a consumer may purchase more.
Cognitive Theory: Assumes individuals use and process information derived from external and internal sources to solve problems and make informed decisions.
Psychological Characteristics of Purchasing Decisions
Much of what people do can be traced to their needs. An unsatisfied need causes an inner state of tension, feeling of disequilibrium, or dissatisfaction. A motive is an inner drive or pressure to take action in order to eliminate tension, to satisfy a need or solve a problem, or to restore a sense of equilibrium (Burnett 1993).
Probably the classification most closely associated with promotion divides motives into rational and emotional motives (Burnett 1993).
Rational Motives are supported by a systematic reasoning process that people perceive as being acceptable to their peers (Burnett 1993). He further adds that rational motives for buying a product include lower price, greater endurance, higher quality, convenience, and better performance.
So, by using sales promotion, i.e. lowering the price of a product (price-offs, discount coupons) or offering more for the same price (bonus packs), the organization tries to capitalize on the rational motives which are used by an individual to make a purchase.
Emotional motives are characterized by feelings that may emerge without careful thought or consideration of social consequences.
Learning starts with motivation, which is based on needs and goals. Motivation thus acts as a spur to learning, with needs and goals serving as stimuli (Burnett 1993).
Some forms of learning called cognitive learning involve thought and conscious awareness – problem solving is an example. Behavior is changed through behavioral learning, which is learning that does not require awareness or conscious effort but depends instead on an association between events (Burnett 1993).
Motivation and learning both play an important part in determining a third key component of the psychological background for consumer behavior: attitudes. An attitude is an enduring disposition, favorable or unfavorable, toward some object – an idea, a person, a thing, a situation. Thus, attitudes towards brands are tendencies to evaluate brands in a consistently favorable or unfavorable way (Burnett 1993).
Each attitude has three components:
Cognitive component: This includes beliefs and knowledge about the object of the attitude (Burnett 1993).
Affective component: Feelings about objects make up an affective component of an attitude. People typically evaluate separately each attribute of the object of the attitude; the combination of these reactions determines the overall reaction (Burnett 1993).
Behavioral component: Actions taken towards the object of an attitude constitute the behavioral component of attitude. Buying a product, recommending a company to friends, or requesting information are examples of behavioral components (Burnett 1993).
Which promotion tools are generally most effective for achieving particular behavioral changes is not fully understood. One American study compared four consumer promotion tools – coupons, rebates, sweepstakes, and premiums – for their impact on various consumer purchase behaviors. These behaviors include purchasing a product they said they didn’t need, purchasing a product they had never tried before, purchasing a different brand than they regularly used, purchasing more than usual, purchasing sooner than usual, and purchasing later than usual.
In general, it was found that coupons were the most effective promotions at changing these various behaviors. Over 70 percent of the consumers reported that they purchased a product they had never tried before because of a coupon, and more than 75 percent said that they purchased a different brand than they regularly use because of a coupon. Rebates and premiums were both shown to be effective in changing consumer behavior in this study, but less so than coupons. The study found that the greater the rebate, the greater effort consumers would expend to obtain it. Finally, while some consumers also reported that sweepstakes influenced them, such promotions were the least effective overall. The study also found that changes in behavior varied by the type of product and characteristics of the consumers (Peter et al, 2002).
The first step in the consumer decision-making process is the recognition of a problem. A problem is present when a consumer’s desired state is different than his or her actual state. In other words, it is the recognition of a need or a want (Clow and Baack, 2002).
Once a need or want is recognized, the consumer conducts a search for information. This begins with an internal search; the consumer mentally recalls images of products that might fulfill or meet the need (Clow and Baack, 2002).
Evaluation of Alternatives
Potential solutions need to be evaluated in order that the optimum choice is made. Products considered feasible constitute the preference set, and it is from these seven or eight products that a smaller group of products is normally assembled. This is referred to as the evoked set and it is from this that consumers make a choice (Fill 2005).
When the consumer is in this stage of the decision making process, a sales promotion (like mail-in coupons) can help influence the consumer and make the promoted brand a better choice as compared to the other alternatives.
More Psychological Characteristics
Most of the times, a consumer purchases the brand chosen during the evaluation stage. It should be kept in mind that evaluations often occur at a retail store, and the purchase decision immediately follows the evaluation. Occasionally, however, the consumer makes a different purchase decision (Clow and Baack, 2002).
One of the reasons for this might be influence of advertising or consumer promotions. So it is important that the consumers are targeted using well-planned promotions in this stage of the decision making process, as this is when the actual purchase decision takes place. The consumer has a few options in mind when they go to shop for something, but at the point of purchase if there is some attractive sales promotion on a brand it will play an important role in the consumer’s final decision about which brand to purchase. Also according to Schultz et al (1998), most sales promotions mainly hit directly at the decision making and purchasing stage of the buying process.
Post Purchase Evaluation
Direct experience of the product is an important part of the decision process. Feedback from use helps learning and attitude development and is the main contributor to long run behavior. Marketing communications at this stage should be aimed at reinforcing past decisions (Fill 2005).
There are two main approaches to consumer decision making processes (Fill 2005):
- High involvement decision making: When high involvement decision making is present, individuals perceive a high level of risk or are concerned about the intended purchase. The essential element in this sequence is that a great deal of information is sought and an attitude is developed before a commitment or intention to trial is determined (Fill 2005).
Products that evoke high-involvement decisions tend to be high cost, to be bought relatively infrequently and individuals perceive a high level of risk and are concerned about the intended purchase. The essential element in this sequence is that a great deal of information is sought initially and an attitude is developed before a commitment or intention is determined. Sales promotions can be used in high-involvement decision making at the stage when the attitude is developed as it may have an impact on the final purchase.
Low involvement decision making: In low involvement decision making, information is processed cognitively but in a passive, involuntary way. As individuals assume a passive problem solving role, messages need to be shorter than in the high-involvement process and should contain less information (Fill 2005). He further states that where low involvement is present, each individual relies upon internal, rather than external, search mechanisms, often prompted by point-of-purchase displays and also in low involvement purchases price, packaging and point-of-purchase displays, and promotions, work together to cue and stimulate an individual into trying a product.
Therefore using sales promotions (like price-off deals) at the point-of-purchase or a discount offer printed on the packaging can greatly help to influence the consumer in choosing a particular product over the other when there is a low involvement decision making.
Theories of How Marketing Communications Work
There are various models to explain how marketing communications work. Sales promotion is a part of marketing communications and therefore the theories can be related to how sales promotions work as well. The following are three hierarchical models that apply to marketing communications.
AIDA developed by Strong (1925): This model was designed to represent the stages that a salesperson must take a prospect through in the personal selling process. The prospect passes through successive stages of attention, interest, desire and action. This process was later loosely adopted as the basic framework to explain the working of marketing communication (Fill 2005). Sales promotion acts as a medium to attract the consumer’s attention to the product. If the offer is attractive, then it creates an interest in the consumer’s mind which further leads to a desire to buy that product. Finally. if the consumer feels that the offer is good enough, then he may take action to fulfill the desire and purchase the product.
Hierarchy of effects model: Developed most notably by Lavidge and Steiner (1961), this model represents the process by which marketing communication was thought to work and assumes that there is a series of steps a prospect must pass through, in succession, from unawareness to actual purchase (Fill 2005). Awareness about the sales promotion can be created by integrating it with other marketing communication tools. Once the consumer is aware about the promotion, then he tries to gather more knowledge about the promotion, and then develops a liking for it which makes him prefer a particular product over other competing ones. This establishes confidence and leads to the final purchase.
Information processing model: McGuire (1978) contends that the appropriate view of the receiver of persuasive marketing communication is that of an information processor or cognitive problem solver. McGuire includes a retention stage which refers to the ability of the receiver to retain and understand information that is valid and relevant. This is important as marketing communication messages are designed to provide information for use by a prospective buyer when a purchase decision is to be made sometime in the future (Fill 2005).
- Burnett J. J (1993), Promotion Management, Houghton Mifflin Company.
- Chris Fill (2005), Marketing Communications: Engagement, Strategies and Practice, 4th Edition, FT Prentice Hall.
- Don E. Schultz, William A. Robinson, Lisa A. Petrison (1998), Sales Promotion Essentials: The 10 Basic Sales Promotion Techniques…and how to use them, 3rd Edition, McGraw-Hill.
- J Paul Peter and Jerry C. Olson (2002), Consumer Behavior and Marketing Strategy, 6th Edition, McGraw Hill Higher Education.
- Kenneth E Clow, Donald Baack (2002), Integrated Advertising, Promotion and Marketing Communication, Prentice Hall.
- Saunders, M., Lewis, P. & Thornhill, A. (2007) Research Methods for Business Students, 4th edn. Essex: Prentice Hill.
This post is part of the series: Sales Promotion and Customer Minds
- E-Commerce Basics and Definitions
- Benefits and Drawbacks of E-Commerce: Case Study of HMV
- Sales Promotion for Influencing Customer Minds
- Theories of Consumer Purchase Decisions and Working of Marketing Communications