The Consumer Decision Journey

I wrote a few weeks back on why awareness is necessary but not sufficient in marketing, and why it’s a pretty poor measure of marketing success. Lots of people are aware of Nortel right now, but I don’t see queues of telcos waiting to buy the latest LTE offering from the to-be-dismantled vendor. In other words, perception matters more than awareness.

It’s now suggested by consultants at McKinsey that awareness isn’t even a prerequisite in consumer decision making. In its recent paper on the Consumer Decision Journey*, it challenges the traditional linear progression of consumers from awareness through familiarity and consideration to purchase and subsequent loyalty (= repeat purchases). The chart below shows this well-accepted process.

McKinsey now says that consumers no longer buy in this way. Instead, they start with a trigger event that spurs them into action: they decide they need/want a new car/phone/handbag. Importantly, this trigger event is not necessarily the outcome of awareness of various products, but externally driven.

Such trigger events could be the launch of a new product, such as the iPhone. But more typically they are driven by a change in needs or perceptions by consumers. I don’t decide to buy a new car because of the launch of a new model, but because my old car is too costly to maintain, or too inefficient on fuel consumption. I’m prompted to buy a new phone because my existing contract expires, not because Apple or BlackBerry launch a new product. My wife decides she needs a new handbag to match the new shoes to match the new dress that she bought for a friend’s wedding.

The trigger forces the consumer to compile an Initial Consideration Set. This is a small set of products or brands that the consumer may be aware of. Importantly, this Initial Consideration Set may be empty. My awareness of wood floor varnish was, until recently, zero.

Consumers then and only then make themselves aware of a range of products, tuning into marketing messages they previously ignored. In a phase termed Active Evaluation, they increase the number of products and brands they consider. They read web site reviews, consume marketing literature, talk to friends and family. In short, they go shopping. (McKinsey says that many consumers have not decided what to buy before they enter a shop.) This frenzy of focused activity culminates in a decision to buy (or not to buy, presumably followed by a wait for a further trigger event).

Purchase is followed by post-purchase experience. Does the product live up to the consumers’ expectations? If so, it may trigger further related purchases. If not, it may trigger purchase of a competitor’s product.

The final phase is called the Loyalty Loop. There are, according to McKinsey, two types of loyalty. It can be active, where you remain loyal to the particular brand you initially purchased. Or it can be passive, where you may consider other brands but have preference ‘all other things being equal’ for your current brand. The complete process is shown below:

I think this non-linear concept has much more value in understanding how people buy stuff nowadays. People don’t start with a large number of options and narrow them down through a funnel approach to their ultimate choice. They’re not that systematic.

I also believe that businesses buy in pretty much the same way. They start with a decision to buy something, drive by competitive pressures, cost pressures, regulatory pressures or whatever. They then compile an Initial Consideration Set, expand this through Active Evaluation (possibly a formal procurement process), before decision time.

Interestingly, McKinsey’s model also caters for those impulse buys, where awareness plays no part: I see, I buy. Probably not as applicable to B2B markets. Unless you know differently…

*Subscription is required. There’s an interesting interactive summary available for free.