Speaker 1: Hello, everyone. Welcome to Business School 101. The consumer decision-making process, also called the buyer decision process, helps companies identify how consumers complete the journey from knowing about a product to making the purchase decision. Understanding consumers' buying process is critical for marketing and sales. Normally, the consumer decision-making process includes five stages. In this video, I will discuss the five-stage consumer decision-making process with you. Stage 1. Recognition of Need In the first stage, a consumer acknowledges that they need a product or service. The acknowledgment of need can arise from either an internal or an external stimulus. An example of an internal stimulus might be hunger informing a consumer's pursuit of something to eat, while an external stimulus could be an advertisement that appeals directly to a particular consumer. The need, in turn, motivates a want, which leads to curiosity about how to fulfill it. For example, a young girl named Jenny wants to work out with her friends and achieve a healthier lifestyle. All her friends have a fitness tracking watch that allows them to challenge each other to accomplish a certain number of steps each day. Therefore, she decides to purchase a fitness tracking watch. Stage 2. Information Search After having acknowledged their need for a product or service, consumers now research the offerings available on the market. Research here encompasses a broad range of activities. It often entails an active pursuit of information, such as by searching online for reviews, speaking with representatives and current users, or testing products at retail establishments. In other instances, it may be more passive, such as by viewing advertisements. For example, Jenny speaks with her friends who have fitness tracking watches, asking them for their opinion about the product. Specifically, she asks what they like and dislike about the watch and inquires about its features. She then visits the retailer's website to understand the different options available to her, and she reads various reviews about the product online. Stage 3. Evaluation of Alternatives Once a consumer learns more about a product or service that meets their needs, they compare it with similar offerings from different retailers, brands, or models. The consumer's initial research often serves as a baseline for the criteria they want. As they search through the alternatives on the market, they might look for points of contrast that differentiate one offering from another, such as price, quality, features, customizability, brand awareness, industry trends, availability, etc., for example. To make sure that she's making the best decision for her needs, Jenny goes online to look up alternatives to the fitness tracking watch that her friends have. She finds three well-reviewed alternatives and measures their qualities against those of the initial product. One of the products is cheaper but doesn't provide the features she wants. The other two are similar to the initial product but aren't available in the style or color she wants. Stage 4. Purchasing Decision In the fourth stage of the consumer decision-making process, the consumer determines which product or service they want. After all of their research and comparative shopping, they've decided that a specific choice is the best one for them. Having done so, they visit an online or in-store retailer and pay for their purchase. For example, based on her criteria, Jenny decides that the initial fitness tracking watch best suits her needs. She returns to the retailer's website and chooses her preferred color and style options. At checkout, she inputs her shipping information and credit card number. Stage 5. Post-Purchase Evaluation The consumer has received and used the product or service they've bought. Thus, they're now able to evaluate the product, producer, and retailer. They may ask themselves questions such as, did the product or service satisfy my needs? Am I happy with the product or service I've purchased? What would I change in the product or service I've chosen? How do I feel about the retailer who provided the product or service? If the consumer feels that their purchase was worthwhile, they may engage further, such as by leaving a review on social media, recommending the product or service to others, or making repeat purchases with the retailer. For example, one year later, Jenny still uses her fitness tracking watch. She likes how it keeps her accountable for her health and motivates her to engage in healthy activities with her friends. She gives a 5-star rating and leaves a detailed user review on the online store's website. She also decides that she wants to purchase from the same retailer in the future. Now we understand the five-stage consumer decision-making process. Please keep in mind that, for companies, it's important to understand the consumer decision-making process. The benefits of understanding the consumer decision-making process include the following. 1. Leverage against a competition. By understanding consumer buying habits in your industry, you have the opportunity to develop unique sales and marketing initiatives that attract more consumers to purchase your products over a competitor's. 2. Knowledge about your customer base. Reflecting on the consumer decision-making process encourages you to consider key characteristics of your customer base, which include their initial needs, the communication channels they use to find products, and what they value in terms of budget, product design, or quality. You can use this knowledge to guide future marketing campaigns, advertisements, or product launches. 3. Increased sales and customer base. When you understand how a customer perceives a need, you can provide more relevant marketing materials and distribution methods. These can lead to a broader market reach and, therefore, more revenue. Alright, that's all for today's topic. If you have any questions regarding this video, please leave your thoughts in a comment below. I hope you guys have enjoyed this video, and if you did, make sure you give it a thumbs up and subscribe to my channel. Thanks for watching, and I will see you next time.