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Understanding the 3 Types of Consumer Buying Decisions

Understanding the 3 Types of Consumer Buying Decisions

7 mins Read
Understanding the 3 Types of Consumer Buying Decisions

To successfully reach their target market, and improve interactions with customers, marketers need to understand just how much effort and time consumers put into decision-making. Decision-making is both an art, and a science, which has been studied by experts across generations. Most of the time, the secret of marketing lies in learning exactly what the customer wants, and how their decisions can be influenced to purchase one product over its competition.

Behind apparently simple decisions, there are a range of thought processes which impact decision-making. For instance, a buyer may decide at the “spur of the moment”, based on emotion, or he may make a researched, and well-thought out decisions. Based on this observation, we can see that different processes exist for decision-making.

There are three types of consumer decisions to consider:

  1. Nominal
  2. Limited
  3. Extended

Understanding the way that your consumers make decisions, is what informed marketing is all about.

Let’s examine it in more detail.

1. Nominal Decision-Making

Nominal decisions are often made about low-cost products. They include frequent purchases, purchases from a familiar brand or product, buying that requires low involvement, or little search efforts.

If you’ve been using the same laundry detergent for twelve years, you’re unlikely to spend much time researching different brands unless you notice a problem with your existing purchase. In other words, you’ll keep picking up the same bottle without thinking about it.

Nominal decision-making doesn’t always start off as nominal. Initially, you may have spent weeks searching for a laundry detergent that was within your budget, smelled great, and kept your clothes soft. However, your purchase becomes nominal over time because of your loyalty to the brand you ended up choosing.

The important thing to remember about nominal decision-making, is that too much marketing effort can have a negative impact on your customers. If someone is already happy to buy an item on impulse, or because of brand loyalty, they don’t need constant interaction with the brand asking them what they like about the substance, or whether they want to change anything. Too much marketing is not only debilitating to your budget, but it can get on your customer’s nerves – which is a dangerous thing for brands in this highly competitive era.

When purchasing your product is a nominal decision, marketers simply need to perform brand maintenance. In other words:

  • Make sure the product is available where your customers are shopping
  • Maintain the right pricing structure and introduce new concepts when interest drops
  • Create advertisements that ensure memorability for your brand.

2. Limited Decision-Making

Limited decision-making is a little more involved than nominal decision-making, but it’s still not a process that requires in-depth research. Limited decisions are made about mid-cost products, semi-frequent purchases, or purchases from a somewhat familiar brand. They require a little involvement, and perhaps some searching.

When customers make limited decisions, they take a small amount of time to ponder over their purchase, but they might not go online to look for testimonials and reviews. Instead, they could consider their memory of their product, and make decisions based on logical inferences.

For instance, you might go to a store with every intention to pick up a particular brand of juice, but when you arrive you notice that another juice is on offer. Your memory tells you that you enjoyed this juice before, but found it too expensive for your regular shopping habits, so you decide to make a change for a limited time, and purchase the alternative juice instead. While the argument could be made that limited decisions come from a lack of brand loyalty, the truth is that they can be attributed to anything from the novelty of a new product, to a feeling of boredom with an existing shopping habit.

When it comes to addressing limited decision-making, it’s important for marketers and brands to examine their customer data, and understand the factors that influenced decision-making, such as:

  • Product quality
  • Product availability
  • Price
  • Packaging style

After carefully examining this information, brands can change their promotional activities and product development that will accentuate the benefits of the product, and make it less likely that people will choose something else.

3. Extended Decision-Making

Finally, extended decisions are made about higher-cost products, and infrequent purchases. They require a lot of involvement, often center around unfamiliar brands or products, and need extended thought and search efforts to ensure buyer confidence.

For instance, we don’t buy a huge flat-screen television every day, so when the time comes to make this kind of investment, we want to know for sure that we’re making the right choice in everything from brand to picture quality.

Major purchases come with more risk for the customer, and that means that there’s more cause to consider things from a deeper perspective. Rather than grabbing the first television you see, or buying one just because it’s on sale, you’d generally ask for advice from friends and family, find out as much as you can about different specifications, and spend a substantial amount of time looking up product reviews and testimonials.

When it comes to influencing extended decision-making, the best thing that any brand can do is work on building their positive online presence:

  • Make sure that you have a social presence where people can share their opinions and thoughts about your products, and ensure that you reply and respond positively to negative comments
  • Give people plenty of spaces to review your product and post testimonials so that people can find opinions online in a hurry
  • Provide extensive product details on listing pages, and make sure that your staff members are well-equipped to answer any questions customers might have.
  • Offer interactive guides and other tools that will help them through the decision-making process

Digital advice and Guided Selling are particularly useful with extended decision-making. It helps to inform the customer at the point of decision and makes it easier for them to make a confident purchase decision. In other words, it helps to provide instant access to guidance that simplifies the complexity of the decision by either explaining the product, outlining the reliability of the brand, or reducing the need to search for reviews and information. Digital advice reduces the apparent risk that customers encounter when making extended decisions, so that those choices appear more like “limited decisions” instead.

Influencing Buyer Decisions

Influencing buyer decisions as a marketer or business can be an extremely difficult process, but it’s one that’s crucial to enhancing your bottom line. The important thing to remember is that the more you understand about who your customers are, and what prompts them to purchase your products, the more of an impact you can have on their buying journey, reducing the friction between product discovery, and purchase.

Customer Journey

The customer journey maps the complete lifecycle of a customer’s interactions with a brand, from initial awareness through to loyalty and advocacy. Understanding and optimizing this journey is crucial for delivering a seamless customer experience:

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Interactive shopping experience

  • Awareness: The stage where potential customers first come into contact with a brand or product. Effective SEO and content marketing, as highlighted in ecommerce strategies, play key roles here.
  • Consideration: Customers gather information and evaluate alternatives. Tools like Zoovu can streamline this phase by offering interactive guides and digital advice, simplifying the decision-making process.
  • Purchase: The decision-making stage culminates in the purchase action. Here, ensuring detailed product information and positive customer reviews can significantly influence the final decision.
  • Retention: After purchasing, the focus shifts to keeping the customer satisfied and engaged. Managing customer reviews effectively and using feedback for continuous improvement are critical.
  • Advocacy: Satisfied customers become brand advocates. Encouraging customers to share their positive experiences online can lead to more organic growth and brand loyalty.

Integrating Zoovu’s functionalities can enhance each stage of the customer journey:

  • Interactive Product Finders: At the consideration stage, Zoovu’s product finders help narrow down choices based on user preferences, making it easier for customers to find products that meet their needs without extensive research.
  • AI-Driven Digital Assistants: These tools engage customers by providing personalized advice and recommendations, enhancing the user experience during the information search and evaluation stages.
  • Analytics Tools: By analyzing user interactions and behavior, Zoovu can help businesses understand pain points and preferences, which is vital for optimizing the customer journey and improving targeted marketing campaigns.

This comprehensive view of the customer journey, enriched with digital tools, underscores the importance of each interaction point and the role of technology in enhancing customer engagement and satisfaction. Integrating these insights helps businesses create a more effective and cohesive strategy that aligns with consumer behavior and decision-making processes.

Consumer Decision-making Process

The consumer decision-making process is critical for marketers to understand as it defines how consumers choose products and services. This process can be broken down into several key stages:

  • Need Recognition: Identifying a need or problem that requires a solution.
  • Information Search: Gathering information about products or services that can meet the need.
  • Evaluation of Alternatives: Comparing different products or services to find the best fit.
  • Purchase Decision: Deciding on and buying a product or service.
  • Post-purchase Evaluation: Reflecting on the purchase decision and the satisfaction derived from the product.

Understanding these steps helps marketers design effective strategies to influence consumers at each point, with adjustments made based on the level of involvement required and the type of decision-making involved (nominal, limited, or extended).

Consumer Behavior

Consumer behavior studies how individuals make decisions to use and dispose of various products and services. This includes:

  • Internal Stimuli: Psychological factors that drive behavior.
  • External Stimuli: Social and environmental cues that influence decisions.
  • Buying Behaviors: Includes habitual buying behavior, variety-seeking behavior, and more.

Insights into consumer behavior enable marketers to effectively segment their market, position their products, and cultivate customer loyalty through targeted marketing campaigns.

Ecommerce Marketing Strategies

Effective ecommerce marketing strategies are essential for digital market success and include:

  • SEO and Content Marketing: Improving visibility and engaging customers.
  • Social Media and Email Campaigns: Building relationships and maintaining communication.
  • Product Availability and Information: Ensuring detailed product descriptions are available to aid decision-making.
  • Customer Reviews and Testimonials: Using feedback to build trust and influence future buyers.
  • Digital Advice Tools: Providing interactive guides and tools to assist in the decision-making process, especially for high-involvement purchases.

These strategies help reduce purchase anxiety and guide consumers through their buying journey, enhancing the overall customer experience.

Customer Reviews

Customer reviews play a vital role in the consumer decision-making process, especially during the post-purchase evaluation phase:

  • Feedback Mechanism: Reviews provide insights for both potential customers and businesses.
  • Influence on Buying Behavior: Reviews can significantly impact future buying decisions by offering reassurance and reducing post-purchase dissonance.
  • Enhancement of Brand Loyalty: Effective management of customer reviews can lead to repeat purchases and improved customer loyalty.

By addressing customer reviews positively and constructively, companies can improve their product offerings, customer service, and overall customer satisfaction.