Consumer Behavior and Decision-Making

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Background on Consumer Behaviors and Consumer Decision-Making Process
Rational Consumer Theory
The Hierarchy of Effects
Generalizing the Consumer Decision-Making Process
Decision-Making Strategies
Conclusion
References

Background on Consumer Behaviors and Consumer Decision-Making Process

The hospitality industry is one of the leading economical sectors of the world. This can be attributed to the fact that this industry has a viable environment for career building and development of individuals, women included. The estimated value of the hospitality industry is $4 trillion in the world distributed to over fifteen different sectors that include hotels, tours and travel, bars and restaurants, casinos and cruise ships (Raymond, 2009). This accounts for around 10.7% of the worlds GDP.

The industry has also created employment opportunities to around 225 million people in the world. As a result of the viability of this industry, several scholars have undertaken massive research in this sector. Notably, quite a good number of these scholars have focused on the consumer decision-making process as a key topic of research. In their studies, they have tried to explain the factors that influence the decision making process of a consumer while he/she is trying to gain maximum satisfaction from the industry.

To gain relevant information with regards to this topic, several consumer decision-making models have been used in these studies. These models have not only ensured that the results from these studies are valid but they have also acted as guidelines to these studies.

The focus on the process of decision-making in consumers has gained a lot of recognition in several studies that have been carried out in the recent past. Most studies in the field of consumer science have undertaken research in either consumer behavior or consumer decision-making process (Erasmus et al, 2001).

Consumer decision-making has been defined as a set of pattern in behavior exhibited by individual consumers just before they make a decision to acquire either goods or services that would satisfy their own wants and needs (Du Plessis et al, 1991). Early economists developed theories that were used to determine how consumers made decisions and the factors that would influence these decisions.

Through their evolution, these theories developed to what we currently refer as consumer decision-making models. These models are currently being used by researchers to specify the variables that are interrelated in decision-making process of an individual. Models are also defined as systematic flow charts used to interpret behavioral processes of an economic agent when making decisions (Du Plessis et al, 1991).

Consumer behavior in the hotel and hospitality industry mainly focuses on behaviors exhibited by their consumers. Due to the diversity of this industry, the nature and characteristics of consumers are varied. The tastes and preferences of a consumer who is visiting a restaurant is completely different from that of another consumer who wants to enjoy his/her vacation in a tourist resort.

Models have been used by marketers in this industry to provide an easier method of understanding different consumer needs and the factors that influence their decision-making process. These models have also been used by researchers in coming up with various theories in hospitality management. Through use of consumer decision-making models, hotel managers have been able to predict the number of customers expected during different periods of the year.

The idea of the peak season and low season in the hospitality industry originated from observation of consumer behavior over a given period of time. As a result of this observation, hotel managers came to realize that consumers had a tendency to flock into their hotels during certain times of the year.

This time was identified as the peak season. It was only by studying consumer behaviors that the hospitality industry was able to identify between the peak and low season of activity. On the same note, restaurant managers have also understood the flow of their clients during the different times of the day and days of the week.

They normally expect high numbers of customers during breakfast, lunch and dinner times. Families are also expected to flock during dinner and in the weekends (Middleton, 2004). As a result of understanding this flow, these managers are able to provide high quality services to satisfy the needs of their customers. This is one of the leading ways to retain customers and attract new ones (Middleton, 2004).

The discipline of consumer behavior and consumer decision-making process mainly developed in the 1960s (Du Plessis et al, 1991). Some of the models used today in the hospitality industry and other disciplines were developed as early as 1963 (Du Plessis et al, 1991). In his paper, Consumer Decision-Making Models, Strategies and Theories, Richarme (2005) asserted that the earliest decision-making model was developed by an economist named Nicholas Bernoulli.

This model was later advanced by Neumann and Morgenstern who gave it the name, The Utility Theory (Richarme, 2005). The utility theory has widely been used in the hospitality industry. Most managers and personnel in the hospitality industry assume that the consumer is rational individual.

They therefore want to maximize their satisfaction given the available alternatives that they have. Assuming a rational consumer, a hotel manager for example expects most consumers to visit their hotels during the peak season. Despite its use, the utility theory has weaknesses. These weaknesses will be expounded in details in this paper.

Herbert Simon advanced a simpler model that explained consumer behaviors in mid 1950s (Richarme, 2005). The theory was known as satisfying theory. In this model, Hebert proposed that once a consumer got what he wanted then the decision-making process came to an end. For example, a tourist looking for a hotel or a resort to spend his or her vacation would undertake a research on all available resorts or hotels at his preferred destination.

Once he finds the hotel or resort that pleases him, he stops the process of decision-making. According to Herberts model, such a consumer has obtained a service with the highest score since it satisfies his/her needs (Richarme, 2005). With regards to these models, this paper will discuss the process of decision-making in consumers with a focus on the hospitality industry. It will expound on two decision-making models and their application in the hospitality industry.

Rational Consumer Theory

The utility theory assumes a rational consumer is making the decisions. To predict human behavior, economists have to assume that a consumer is rational. A rational consumer has a set of characteristics that distinguished him/her from other consumers.

When faced with a decision between two similar commodities, a rational consumer will always choose the commodity that yields maximum satisfaction to him. A rational consumer therefore adheres to the axiom of selection where he/she will select a combination of goods that reflect his tastes and prefer. Using the hospitality industry as an example, if a consumer prefers resort A to resort B and incidentally he prefers resort B to resort C then by transitivity, he prefers resort A over C (Mudida, 2003).

Another assumption to this theory is that a consumer has a hierarchy of needs. For instance, when faced with a decision between two hotels or bars, a consumer will have a set of rules in most cases that he/she uses to rank variables. Imagine a case where a customer is has three variables used to rank a restaurant; the cost of the hotel, quality of the service, and the size of the rooms. Different consumers would rank these variables differently.

This ranking will be according to their hierarchy of needs. A consumer might decide that it is the cost that matters first while another consumer might decide that it is the quality of the service that matters first. In simple terms, these consumers are ranking the variables according to their preferences. The utility theory proposed stages involved in decision-making process undertaken by a consumer. These stages include:

Problem Recognition:

In this stage, the purchasing process is beginning. It was proposed that the purchasing process started when the buyer recognized the need or encountered a problem (Matsuno, 1997). It is common sense that the need to acquire something may arise due desire or a problem. For example, when a consumer needs to use services in the hospitality industry, he/she has to first identify the services they need. The process of identifying services needed is called problem recognition.

Information Search:

After recognizing a problem, there is need to look for information pertaining to the problem at hand. For example, in our case, once the consumer has identified the service he requires he starts the search. Assuming the consumer needed a vacation destination, he would start to seek information about the available destinations in the United Kingdom. This process of looking for information is what has been defined as information search.

Evaluation and Selection:

This stage analyzes how the consumer processes decisions between competitive brands. After gaining information on various destinations available, a consumer has the task of deciding which destination would best suit his or her needs. The consumer has to evaluate his options in a manner that will lead to him o satisfying his needs.

This process is highly variable among consumers since each consumer has personal preference and tastes. The process is also based on personal judgment, the degree of importance attached to the need of a consumer, benefits to be derived from the package and attributes of the different packages offered.

Decision Implementation:

Once the consumer has evaluated his or her options, he/she has to implement the evaluation process by making a decision. After evaluating the destination options, the consumer finally has to choose. The process involved in choosing a suitable destination by a consumer is what is called decision implementation.

Post Purchase Evaluation:

This is the evaluation that precedes decision-making involved in purchasing a commodity. What is relevant in this stage is the degree of purchase involvement. It determines how widely a consumer searches for information. From our example, the degree of time and resources used when the consumer was researching about the destination.

Purchase involvement is useful in comparison of extreme cases in consumer decision-making process (Matsuno, 1997). Here, the consumer evaluates the price he spent on the commodity versus satisfaction that he is gaining from it. He also investigates the market to see the current price of the commodity and its alternatives.

By early 1930s, scholars and economists had been raising questions on the rational consumer behavior theory. Theorists began to question the viability of this model. These criticisms came after it was observed that consumers spend very little time when engaging in some activities that involved purchasing.

Consumers are usually involved in some unconscious behavior during decision-making process (Bozinoff, 1982). Some of the behaviors exhibited by consumers are also seen as opportunistic behaviors despite them appearing to be highly disorderly when observed. A perfect example of such a behavior can be observed when a tourist decides to go on holiday during the low season to enjoy the low costs. Such a behavior is opportunistic and does not conform to the rationality theory.

Usually, opportunistic behaviors drive the impulse decision-making processes and do not necessarily coincide with the traditional model of decision-making mentioned above. It became obvious that consumers implement decision-making strategies based on availability of goods and services (Erasmus et al, 2001).

Some researchers even went to the extent of suggesting that consumers did not as a rule apply the analytical decision strategies to optimize the process of decisions making (Erasmus et al, 2001). The assumption that consumers engage in rational decision-making while having a detached emotional state also accounts for the reason for criticism against the theory of rational decision-making.

Researchers subjected consumers to various tests that revealed that the consumers were aware of their decisions and to some extend had a degree emotional attachment to the process of purchasing commodities (Erasmus et al, 2001). For example, a consumer can choose use to certain services provided by a given resort or hotel just because he/she likes the people providing the service and not because they were the best.

This shows that to some extend the consumer is emotionally attached to the consumers were also involved in cognitive information prior to making a purchase. Cognitive information processing was defined as an active planning method and objective oriented consumer behavior that encompassed use of intellectual creativity, while processing the decision (Erasmus et al, 2001).

A good example such a model is the one that was advanced by Middleton. This model is known as the stimulus-response model of buyer behavior (Middleton, 2004). It explains the consumer behavior in the tourism industry. This model is based on four interactive variables. These variables included the stimulus input, communication channels, buyer’s characteristic and decision-making process and purchase output response. This model has been used extensively in the hospitality industry to determine and predict consumer behavior.

The Hierarchy of Effects

This is another model used in economics to explain the consumer decision-making process. This model has different sequences according to different authors. The idea behind this model is usually simple; people usually experience different psychological stages before purchasing product.

This model was coined for the purposes of explaining how advertising affected consumers decision-making process when purchasing a product (Matsuno, 1997). The model generally looks at the consumer’s learning processes as he digests information obtained from the external environment. An example of such model is that adopted from Delozier in 1976 (Matsuno, 1997). According to DeLozier (1976), this model has seven stages. They include:

Unawareness:

In this stage, the consumer is not aware of the existence of a given brand that is in the market. The consumer is very oblivious of the existence of the brand. This has been attributed to the lack of knowledge and research on the part of the consumer. This situation may also be attributed to the newness of a product in the market or lack of proper advertising on the part of the manufacturer

Awareness:

In the awareness stage, the consumers’ attention is brought to the existence of the brand in the market. This process maybe triggered by the existence of an external stimulus such as advertising, information from a friend or even a message (Matsuno, 1997).

Knowledge:

Once the consumer is aware of existence of a commodity, he/she has to process this information. By processing the information, he is able to gain knowledge about the product. This enables the consumer to develop an opinion about the product

Liking:

Once the consumer has gained knowledge, he/she develops an opinion. This opinion may be in the form of him or her liking a product or disliking it altogether.

Preference:

If a consumer likes a product then he/she may develop preference towards it. This is usually not the case since other brands exist therefore preference is considered a relative variable that has to related to other brands in the market. A consumer might be able to like a product but in the same instance, he/she does not prefer it.

Conviction:

Once it has been determined that a consumer prefers a given commodity, other factors come into play. Preference is a psychological state of mind and does not amount to purchasing. A consumer needs conviction before he/she can actually buy the brand.

Purchase:

This is the last stage in this model. Once a consumer has undergone all the above mentioned stages, he/she completes the decision process by purchasing the brand.

Usually it is not necessary for all the consumers to on the same stage since information does not disperse in a uniform manner. Therefore, different consumers will be at different stages depending on when they became aware of the product.

It is also reasonable to assume that not everybody in a given stage will necessarily advance to next stage (Matsuno, 1997). For example, if consumer A and consumer B have developed a preference for given services offered by a resort or hotel, it is not a guarantee that they will form a conviction to that product.

This model is found to be similar to the consumer information-processing model for consumer decision-making. It also has the assumption that consumers are cognitively driven, thinking information processors (Matsuno, 1997). Critics have argued that knowledge and information are gained simultaneously (Matsuno, 1997). Others have argued that liking and preference develop before cognitive judgment (Farris et al., 1987).

Generalizing the Consumer Decision-Making Process

Generalization of this process normally requires a number of rules and guidelines that can be used to examine the decision making process of a consumer from different angles and perspectives. They are not consumer specific and encompass a variety of platforms that may be used to investigate consumer behaviors. These models are often used to formulate, evaluate and interpret consumer behavior research.

They may also be used for commodity specific research. This means that when approaching research from this point of view and when choosing a specific consumer decision-making model, certain assumptions have to be taken into account. (Erasmus et al, 2001).Generalization of decision-making process can imply a bias in the view of consumer decision-making process (Burns and Gentry, 1990).

Consumer decision-making regarding purchase should take into consideration factors that purchases are based on. For example, the frequency of purchasing and how important that purchase is to the consumer (Erasmus et al, 2001). The higher the importance of a commodity the more complex the decision-making is required. An argument has been that a consumer’s tastes and preferences are usually based upon historical experiences.

These experiences are usually not known by a researcher while carrying out a research. These attitudes, tastes and preferences are however exhibited during the consumer’s decision-making. A consumer usually has no precise objectives or goals especially in situations where they purchase a commodity less frequently.

The assumption taken into account in hierarchical of effort models of consumer decision-making like the decision of choice is independent of which alternative to commodity or that the decision-making is usually a multi-staged process. These have been found to be in valid.

Decision-Making Strategies

Consumer decision-making strategies have been used by marketers in the hospitality industry to capture the ever-growing customer base in the United Kingdom. The ability to understand consumer strategies is a key component in marketing. It enables marketers to form strategies that they would use while marketing their products and introducing new products in the market.

In the real market situation, consumers are usually faced with the problem of incompleteness of information about a brand. Equally in the hospitality industry, consumers are usually not faced by ideal conditions (Sirgy et al, 2000). This means that the consumer does not posses all the required knowledge about the hospitality industry to make an informed decision.

Under such conditions, consumers have resorted to using decision shortcuts to attain the commodity they want. A lot of studies that have been undertaking to determine the process of decision-making in consumers especially in the hospitality industry have mainly concentrated on non-ideal conditions that affect this process (Erasmus et al, 2001).

Consumers consider the losses experienced due to poor decision-making are more painful than the gains obtained when a good decision was made. There are various strategies used by consumers in decision-making. These strategies include:

Compensatory Strategies:

There are two strategies that employ this method. These are the equal weight strategy and weighted additive strategy. In these strategies, consumers allow a commodity of a higher value of one attribute to compensate for a commodity with a lesser value of another attribute (Richarme, 2005). For example, a consumer in a hotel or resort would allow the value obtained from good services to compensate for the smaller accommodation space being offered in the resort.

Non-Compensatory:

Attribute in this, a product is analyzed on its own. The consumer does not consider the attributes of any other product (Richarme, 2005). Even if the product has a high value but fails in another, it is eliminated altogether. A good example is where a consumer needs good food from a hotel and quality services.

In such a case, any hotel that provides less than the desires of the consumer is eliminated as a destination. This strategy of consumer decision making has put the hospitality industry on its toes. It has ensured that the industry provides the best services it can to avoid being excluded from decision making

Lexigraphic:

This strategy involves observing the most desirable attribute of a product. Incase the product is clearly superior to all the other commodities of similar stature, the consumer is expected to stop the decision-making process and selects the product (Richarme, 2005).

In the hotel industry this strategy is applicable when a consumer has clearly identified a given destination as superior to all he others. In such a case the consumers will choose such a destination and stop the decision making process. This strategy has led to marketers in the hospitality industry trying to portray their product as the best to attract more customers

Partially Compensatory:

According to this strategy, the products are compared against each other in serial fashion. The higher value attributes in a commodity are considered first. This general strategy is composed of two strategies. The first strategy is known as the Majority of Conforming Dimensions.

Here, the consumer chooses two competing products and analyses them with regards to attributes they posses. After analyzing them, the product that has the higher values from the comparison is retained. The retained product is then compared against the next best competing product. The product with the higher value between the two is retained. This process continues until the consumer finds the most suitable product then the decision-making process stops (Richarme, 2005).

The second method of partially compensating strategy is known as Frequency of Good and Bad Features. In this method, all the products that a consumer wants to purchase are compared simultaneously according to their attributes and value. The product that supersedes the others in terms of attributes and value is selected. This represents the end of a consumer decision-making process (Richarme, 2005).

There are various decision-making theories strategies advanced by various authors in different academic materials. However, the arguments of these scholars are usually based on the strategies mentioned above. In the field of marketing and consumer behavior, there has been a tendency to investigate the behavior of a buyer rather than the consumption patterns of the buyer.

The behavior of the consumer is usually of importance to the marketing discipline. This will assist marketers in determining methods they can employ to sell their products and sell the required amount of product. It can be seen by that understanding consumer decision-making process is important to the hospitality industry.

Therefore, most resorts and hotels have formulated short questionnaires for their clients to answer and provide them with information. This information is analyzed and used to predict consumer decision making. It also assists players in the hospitality industry to improve their service and commodities offered to their clients.

Conclusion

From this paper, we are able to realize that the study of consumers’ decision-making process is still gaining momentum in research fields and the marketing discipline. Most research fields of consumer studies are undertaking research in either consumer behavior or consumer decision-making process to boost the existing knowledge.

The hospitality industry is also undertaking extensive research on these decision-making processes. This paper has also identified the heavy criticisms that have been advanced against the rational theory. Despite these criticisms, the rational model has identified as a simple model that can easily be understood. It has also been a viable model in predicting consumer behavior in the hospitality industry.

All arguments advanced against the rational consumer theory are based on the fact that the model operates in a non-standard world and therefore not all of the consumers’ decision-making can conform to the stages. However, its viability in some disciplines and situations has made it difficult to completely dismiss it. With these discussions and the use of the available models, it is thus possible to describe the consumer behavior and determine his/her decision making process in the field of hospitality.

References

Bozinoff, L. (1982) A Script Theoretic Approach to Information Processing: An Energy Conservation Application. Advances in Consumer Research IX. Missouri: Association for Consumer Research.

Burns, S. and Gentry, C. (1990) Consumer Research. Miami: Longhorn.

DeLozier, M. (1976) The Marketing Communications Process. New York: McGraw-Hill, Inc.

Du Plessis, P. (1991) Consumer behaviour: A South African perspective. Pretoria: Sigma.

Erasmus A., Boshoff E. and Rousseau, G. (2001) Consumer Decision-Making Models Within the Discipline of Consumer Science: A Critical Approach. Journal of Family Ecology and Consumer Sciences , 29, 83-90.

Farris, W., John, A. and Quelch, C. (1987) Advertising and Promotion Management: A Manager’s Guide to Theory & Practice. Malabar, Florida: R. E. Krueger Publishing Co.

Green, S.L. (2002) Rational Choice Theory. London: Sage.

Harrel, G.D. (1990) A New Perspective on Choice. Advances in Consumer Research XVII:. New Orleans. Association for Consumer Research.

Matsuno, K. (1997) Notes on Consumer Decision-Making Processes: Consumers As Problem Solvers. New York: Thousand Oaks.

Michael, R. (1996). Consumer Behavior: Buying, Having, and Being, Englewood Cliffs, New Jersey: Prentice Hall.

Middleton, V. (2004) Marketing for Travel and Tourism. Butterworth- Heinemann: London.

Mudida, R. (2003). Modern Economics. Chicago: Focus.

Raymond, A (2009) Dimensions of the Glass Ceiling in the Hospitality Industry. Cornell Hotel & Restaurant Administration Quarterly, 2 (3), 1-11.

Richarme, M. (2005) Consumer Decision-Making Models, Strategies, and Theories, Oh My! Arlington: Decision Analyst.

Schiffman, L. G.and Kanuk, L. (2000). Consumer behavior. 7th ed. London. Prentice.

Hall.William L. (1990), Consumer Behavior, 2^nd ed., New York, New York: John Wiley & Sons.

Sirgy, M. Joseph, T. and Chenting, S. (2000) The Ethics of Consumer Sovereignty Journal of Business Ethics, 44 (1) 22-30.

Click Here To Order Now!