Abstract
This paper will look at the process that a consumer goes through before making a decision. Special emphasis will be in the hotel and service industry. The paper will begin by giving a critical analysis and differences between the process a consumer takes to make a decision and the behavior a customer exhibits the in the decision making process. The paper will proceed to outline two distinct forms of the processes a consumer follows to make a decision. Special focus will be towards hotel and service industry. The paper will mainly concentrate on the forms or models used by a Consumer to process information and how different consumers will categorize their needs. The paper will finally give other earlier developed theories that involve the process used by consumers to make decision.
Introduction
According to Lyke (2010), several factors are involved before a consumer makes a decision and this is what is considered as the process a consumer goes through before they make a decision. For instance, when a single brand is available, the consumer will make a decision without considering any other stage in the decision-making process. Expensive purchases which have a larger risk attached to them need a more serious decision making process and therefore the customer needs to give careful consideration before purchasing.
Lyke also gives some insight on the complexity of the hotel and service industry. This is because the hotel industry business involves two stages:
- The package holiday that involves different products that are sold as one, for example accommodation and food. This can also involve visitor attractions and transport to various destinations.
- There are also products that can be sold as a single package for example air tickets or entry charges to parks.
Consumer Conduct and the Choice Process of a Consumer
Consumer behavior research focuses on how individuals are involved in choosing how they spend their resources, for example time and money, on different products that they wish to purchase (Schiffman and Kanuk, 1997). Consumer behaviour can be studied in many different ways. According to Solomon,.et al (2002), how a consumer behaves determines the kind of decisions they will make when they want to purchase or dispose a good or a service.
The American Association of Marketers states that consumer behaviour is the intersection of change, behavior and the surroundings by which consumers conduct the manner in which they go about their trading.
Richarme (2010) simply describes consumer decision making process as how a consumer makes decisions. Depending on how he/she perceives a product and the value it will add to them. This will in turn influence their decision making.
Perner (2011) states that it is important for firms and organizations to investigate how consumers behave or react to different situations since this will assist them when they are required to make decisions. They will get insight on areas such as:
- How the consumers select different products or brands and why they would prefer a certain product or service as opposed to another
- How the surroundings in which they live in affect their decisions
- The way consumers behave when doing their shopping or making decisions regarding marketing
- How marketers can improve their ways of creating awareness and reaching the customer, etc.
Consumer decision making models observed in the hotel industry
Consumer information processing model
According to Matsuno (1997), research shows that a consumer is one that likes solving problems and not just being emotional about the whole process that leads to purchase a product or service. This school of thought is also supported by Kotler (1997), Schiffman and Kanuk (2004), and Solomon (2002) and is known as the information processing model of a consumer.
Problem identification
At this stage, the buying process begins as soon as the consumer recognizes that there is a need to buy or purchase. Richarme (2010) argues that a problem can be recognized in several different ways. For example, if someone passes down a certain street and they start feeling hungry, they will begin looking for a place to eat so that they can satisfy their hunger. Another instance is where a tourist who may want full value for his money when visiting a foreign country, will look for the best hotel where they feel they can get what they really need. This need may be for a single individual but can also include a group of individuals who want to have their dinner outdoors. Hotels and the service industry should look for ways to satisfy the needs of such group by getting enough information on what their expectations are and try as much as possible to meet the expectations. This is the only way they will stay ahead of the rest in the industry.
Information Gathering
A consumer will start by gathering information about a problem, when they identify that problem. This information gathering process can be from close friends, their family members or from the general public. Bojanic and Reid (2009) state that basic needs like hunger do not require such a long decision making process and the decision may therefore be based on convenience.
In other situations, the number of sources consulted could be much larger. An events planner who is looking at hosting a major event at a hotel will want the best for his/her clients and would more often than not depend on the media to give such information. It is therefore the duty of those involved in marketing in the hotel and service industry to consider the quality of information that is held by the media about them as this could either make or break them. Richarme (2010) continues to say that a consumer who is more involved in the research process, in a bid to get the best possible alternative would look for much more information. Consumers tend to be more involved when there is a greater perceived danger of making the wrong choice, which is normally associated with products or services with higher prices, more visibility, or are complex. Consumers will always do a cost benefit analysis to determine the level of risk that such a decision can have. Other factors can also affect the level of information that a consumer gathers. These are for example product awareness, demographics (e.g., income and education), and the market environment. The following diagram, As Cited from Bojanic & Reid (2009) illustrates this reasoning:
Assessment and Choice of alternatives
How a customer looks at competitive brand data and assesses the worth of the brands is very important. Matsuno states that the buying process is complex and no one method can be used in making a buying decision, either by a consumer or a group of consumers. One central view is that the assessment process is seen as being balanced.
Consumers who ask questions like, “At which restaurant or hotel should I dine tonight?” go through a cognitive process in answering this question, whereby they evaluate the good and bad side of different aspects of each alternative. Matsuno also goes further to point out that consumers also examine the attributes of the product-service mix of each restaurant. Therefore a customer is considered to be taking care of his need by solving the problem. The customer will therefore look for benefits that will solve his/her problem.
Choice Execution
Stage four of this model is the decision to buy. This is the point where a buyer makes his choice after carefully considering different alternatives. Perner states that various factors come into play for a customer to make a decision. These factors are both internal and external. This decision is reached upon after various alternatives have been considered and the alternative the buyer feels is less risky is the one that he/she settles for. When consumers step through the front door of Steers, Pizza inn, Java, Dormans, or any other nationally recognized chain, they are taking a much smaller risk than if they entered an independent restaurant which they knew very little about.
Independent hospitality operations must work very hard to establish themselves and thereby reduce some of the risks consumers’ associate with patronizing a restaurant where the product-service mix is not well known. Consumers should have the best experience from the on-set for there to be repeat business for these hotels or restaurants.
To execute the buying decision, a customer needs to make a decision on what product to buy and where to buy it. The decision could be to buy at a specific outlet and in this case the place to buy the product would be the main determinant of the decision making process. The specific brand could also be the main determinant and the customer would therefore purchase at any outlet which has that specific brand. In other instances both the brand and outlet are important to a buyer and therefore a buyer would choose a specific outlet which has the specific product or service they are looking for. Matsuno (1997) goes on to say that in most instances the customer would make a simultaneous choice and therefore both the outlet and the product are considered in the decision making process.
Post-purchase Assessment
This is considered the final stage as far as the consumer processing model is concerned. Here the actual experience after purchase is compared to the pre-purchase expectation to find out if these expectations were met, and if not, what were the reasons for this. Post-consumption way of thinking is anchored on two factors: what the consumer was expecting and the actual product or service they received from the service providers. It is therefore of paramount importance that the customer gets what they had been promised by the service providers when they were conducting their marketing activities. If what they expected is not what they get then they will not be satisfied and this could lead to very negative feedback and could affect repeat business in the long-run.
Post-purchase assessment processes are affected by the process a customer goes through prior to buying. It involves a buyer asking himself or herself questions such as “Did I pick the best option?, Should I have gone to a different hotel?” It is these questions that determine whether the consumer will go to the same hotel, next time around.
Conclusion
The consumer information processing model is the most direct model of addressing consumer decision making process. It provides a rational analysis of a consumer’s cognitive approach to purchasing a particular product or service. However, the model does not give a proper breakdown of the emotional perspective that might lead to a particular individual purchasing a respective product or service. For example, a consumer may decide to spend his holiday in a particular hotel out of just liking the hotel and not because it offers good services.
Hierachy of Cause Model
According to Matsuno (1997), the hierarchy model is another form of explaining the process that leads to a buyer making a purchase decision. Different analysts have developed a number of models but the underlying concepts are the same. The bottom line is that buyers make the decision to buy after they go through a process of sampling different alternatives.
Heuvel (2010) states that most of the people involved in marketing have an idea on the hierarchy of effects but they give the whole process different names. Others call it AIDA, some others call it the sales channel or the demand channel. The name it goes by does not matter, what matters is that the end result is the same The different levels of effects is whereby a marketer starts from an initial stage of identifying the needs of customers, to creating awareness about the product, and finally ensuring that they meet the customers’ expectations by satisfying these needs. Unfortunately most marketers never go through this process systematically and therefore they never experience the brilliant results that such a model can offer. The process might take some time but the value of going through the whole process can never be under estimated.
This model emphasizes the fact that the consumer needs to be taken through a series of stages and that it is not enough for a salesman to close a sale without taking the consumer through the series of stages. A consumer should be delighted about the good or service they have bought and the necessary information needed to make the decision should be supplied to them.
The initial focus of this model was considered to be the impact external processes like advertising influenced a person’s decision to purchase. The consumer digests the information they receive externally and make a decision on what they have learnt about a product or service.
Review of Similar Models
Models of effects assist those that market to set objectives and follow through a series of stages known as the Hierarchy of Cause. One of the other most commonly used models known as AIDA, states that buying process starts with the customer being aware of the product or service, then they get interested in it, then the interest leads to desire and the whole process ends with action which is the actual buying.
According to Heuvel, there is also another model known as DAGMAR (Defining Advertising Goals for Measured Advertising Results). The process in this model starts by one being aware of a product, then they proceed to understanding, then they are reassured, and finally the purchase action takes place.
This model presumes that a consumer goes through an elaborate process before they make a decision to purchase. It identifies three levels, which involve the mental effect, the emotional effect and finally the action that is taken which involves the behaviour of the consumer.
The effects model starts with a customer not being aware of a product or service but through advertising and recommendations from friends or relatives the buyer gets more information about a specific brand and this is the stage where a buyer starts talking of preferring one brand over another. It is therefore up to the service providers to move the customer from the stage where they just prefer a certain brand to a place where they actually make a decision to purchase that specific brand. This could be done by not only creating awareness but also by ensuring a customer gets what they expect. This could especially be important in ensuring repeat business.
Thus from the above discussion it is clear that consumers are usually at different levels of the decision making process. These consumers move from one stage to the next categorically especially where expensive purchases are concerned. It is therefore easier to convince a buyer who is at a preference stage to make a decision than one who is not even aware of the product or service.
There are other arguments that suggest that a person can be at the awareness stage and preference stage at the same time. Whatever the case is, the underlying fact is that there is a process involved which begins with awareness and ends up with purchasing as the action the buyer takes.
Using the two models to plot the way forward
These two models seek to understand the consumer decision making process that leads to certain questions that managers in the hotel and service industry need to critically analyze. These questions, according to Matsuno, are:
Internal and external influence
The model that is involved with information processing seems very logical. However the process is not as straightforward as it seems as a buyer’s decision could be affected by other factors other than just the information they gather about a certain product. These factors could be for example psychological needs and they are all very important in aiding a consumer in making a decision about a product.
Potential tourists can be torn between which country to visit, say between Kenya and Tanzania. External factors such as family or friends may influence an individual’s decision to choose Tanzania over Kenya. But, maybe the security situation in Kenya could be better and the person would therefore decide to visit Kenya.
One model vs. another model
The models used in processing information are very useful to marketing managers in the service industry for example. If they are aware of the different models discussed above they would market their product/service differently. In developing the services that the camping site will offer, its advertising strategies on mass media, its staff and consequent customer care, the marketing manager would decide on how best to go about the whole process so that the consumer buys, and the model used would play a very significant role.
Cognitive vs. Emotion
This deals with the circumstances under which a consumer makes a decision. It might be rational or driven by feelings. What would make a consumer choose one restaurant over another is a factor that any marketer should note. The products or services that fall under this category should also be studied. A customer might decide to choose a restaurant simply because it is conveniently located and not necessarily because it offers the best service.
Other Models Used By Consumers to Make Purchase Decisions
Utility Theory
According to Richarme (2010), this model was first developed by Nicholas Bernoulli, and later improved by von Neumann and Morgenstern. The model assumes that consumers can actually predict the best possible outcome.
For example, a Swedish man is choosing which hotel to spend his Easter vacation with his family in Kenya. Having gone through a variety of hotel catalogues, he is finally torn between The Hilton Hotel and The Tribe Hotel. The man finally comes to the conclusion that he and his family will spend their Easter at the Hilton Hotel due to the prestigious name the hotel has. He reasons that without a doubt the quality of service is likely to be much better than that of The Tribe Hotel.
Richarme continues to state that consumers might not necessarily be completely rational in the process of making decisions and may at times not follow through the whole series of steps. The Utility model has been viewed as a dominant model in matters concerning the decision making process, but it also has its disadvantages. The Swedish consumer may have been completely wrong as maybe The Tribe Hotel offers better service than The Hilton Hotel (Richarme 2010).
Satisficing Model
This is a simpler model that was developed in the mid-1950s by Nobel Laureate Herbert Simon. Using the example mentioned earlier, the Swedish man came to a conclusion of which hotel he wanted to spend his Easter in based on pre-conceived ideologies. Most consumers would get information or sample a few hotels and decide on the one that will give them the greatest utility. Under the satisfying model however, consumers might just make a decision to buy when they think the option is good enough and not necessarily the best option. For example, the Swedish man would have selected a hotel that he felt measured up to a five star hotel.
The newer model, however solid as it may have sounded whereby it dealt with many of the shortcomings of the utility model, left a lot of room in the area of prediction. It would be virtually impossible for example for an executive to put together a package if he could not predict consumers’ behaviour.
Prospect Theory
In this new model, two elements were added by Kahneman and Tversky. These elements were replacing other elements like Utility that is discussed in the Utility Theory. Value of a product was one of the elements and this is that which replaced utility. The other one was endowment. The value of a product was of paramount importance.
Conclusion
The hotel and service industry in a similar manner to all other businesses is consumer dependent. When the customer is satisfied and happy with the variety of products/services that a hotel, tourism resort, restaurant, e.t.c offers, the more he or she is likely to not only come back, but also attract other potential customers. This will in return ensure repeat business for an organization and therefore a firm will not need to work so hard to bring in customers.
In this respect, it is important for top-line and middle level managers in all these organizations to understand the consumer from the standpoint of how he/she chooses to purchase a service and later on keep coming back. Once this information is acquired, the next step involves developing ‘content’ that the business will offer with the consumer in mind. If a business ignores the needs of a consumer and the various stages that this consumer goes through to make the decision then they will fail. Any business that sets to fulfill consumers needs will eventually stand out from the rest because they will not only have repeat business but will grow at a faster rate. These businesses should not only attract these consumers but should seek to keep them by offering quality service. Whatever the business advertises or markets the business to be, should be what the consumer gets when they finally buy the product or service.
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