Saturday, January 31, 2009

Process of Decision Making-1

Making a decision is a rational and conscious process in which the consumer evaluates each of the available alternatives to select the best amongst them. Each decision you make involves an elaborate mental thought process, a degree of active reasoning, though on the surface it may not always seem to be so.

There are three factors which influence the degree of active reasoning that is undertaken by the consumer in his process of decision-making. There are:
1. involvement,
2. alternative differentiation, and
3. time pressure.

Involvement: When a product is perceived to be of great personal importance to the customer, such as personal clothing, or its purchase involves a great deal of money or risk such as jewellery, car, house, company shares, the level of involvement in making the decision is likely to be very high. The consumer is likely to spend a great deal of time before arriving at the final decision. In contrast, when buying items which do not reflect much on the consumer’s personality or their purchase involves small amounts of money or the risk associated with them is not high, the degree of involvement of the consumer is likely to be low. Product such as shoes, polish, toilet soap, toothpaste, biscuits etc. would fall in this category.

Tuesday, January 27, 2009

PROCESS OF DECISION-MAKING

This may be because over a period of time you have taken certain decisions so many times that they now seem to be made almost automatically but that is not true at all. Even your daily decision of buying o loaf of bread involves the element of active reasoning as buying a new sofa set for your drawing room. However, in the former case, the extent and intensity of active reasoning may be much less as compared to the latter case. Decision making is more important part when it comes to online business. Owner of online blinds store who are selling vertical blinds and roman shades online, says that for them decision making is more important than anything else.

In the case of bread, the only decision variables may be which brand, quantity and retail outlet. But in case of buying a sofa set the decision variables are far more in number.
These may be:
· ready-made or made to order
· from a furniture shop or to be built at home
· type of material for frame: blinds, vertical blinds, roman shades
· type of material for cushion: cloth, rexine, leather,
· design: with or without arm-rests, height, depth of seat, seating capacity, loose or fixed cushion.

Thus, depending on the type of decision being made, the degree and strength of active reasoning will vary.