Week 4.1 Purchase Decision and Hierarchy of Needs

Purchase Decision

We are interested in understanding how consumers make purchase decisions. If we understand the decision making process, we can influence the final purchase decision.

There are five stages that a buyer passes through in making the decision on which products/services to purchase.

These stages form the purchase decision process.

Woman comparing products. Numbered steps 1 to 5 connected by arrows, explained by caption

Purchase Decision Process. The purchase decision process consists of five stages that include Problem Recognition, Information Search, Alternative Evaluation, Purchase Decision, and Post-purchase Behaviour.

circle-01 Problem Recognition 

Man writing with ballpoint pen on paper.

Problem recognition is the first stage of the purchase decision process. In this stage, the consumer perceives that there is a need. When there is a difference between a person's ideal and actual situations, it leads to the realization that there is a need.

Example: Your pen runs out of ink, and you realize you need to purchase pens.   






Stop and Think Question:  What would be the implications of the problem recognition stage in marketing? 

Woman looking at smartphone.

Marketers can activate consumer's problem recognition by advertisements or personal selling. When a consumer sees the advertisement for a new generation smartphone, it can trigger the need for the product by demonstrating the new features that older devices do not have.


circle-02 Information Search

Man viewing computer screen.

Information search is the second stage of the purchase decision process. It follows the problem recognition stage. The consumer realized there is a need in the problem recognition stage. In the information search stage, the consumer seeks value. The search for information is done in two ways:

Internal search: You may scan your memory for previous experiences.
If you used a similar product or service in the past, you remember your pleasant or unpleasant experience. This is especially helpful for frequently purchased products such as paper towels, hand soaps, etc.

External search: If the internal search is not sufficient, consumers undertake an external search. This is especially needed when the purchase is sizable and the consumer is worried about making the wrong decision. There are many sources of external information:

  • personal sources, such as relatives and friends whom the consumer trusts;
  • public sources, including various product-rating organizations, such as Consumer Reports; and
  • marketer-dominated sources, such as information from sellers that includes advertising, company websites, salespeople, and point-of-purchase displays in stores.

circle-03 Alternative Evaluation

Woman in a store, viewing televisions on display.
Alternative evaluation is the third stage of the purchase decision process. In this stage, consumers assess the value they would get from different brands. The information consumers collect in the information search stage allows consumers to form their awareness set in which they collect all the brands they  have learned about. Consumers apply some evaluative criteria to the brands in their awareness set in order to select the brands that they consider to purchase. Evaluative criteria contain the factors that represent two types of attributes:
  • objective attributes of a brand (such as display screen), and
  • subjective ones (such as brand prestige). 

Consumers use these attributes to compare different products and brands in their awareness set. The brands that meet evaluation criteria become part of a new set called the consideration set: the group of brands that a consumer would consider acceptable from among all the brands of which he or she is aware. 

Critical Thinking Activity:  Think about a purchase for which you have completed the problem recognition stage. First, complete the information search stage and form your awareness set. Make a list of the brands in your awareness set. Second, apply your evaluative criteria to your awareness set and form your consideration set. Which brands do you have in your consideration set?

4 arrow shapes labelled as: 1 Information Search, 2 Awareness Set, 3 Evaluation Criteria, 4 Consideration Set.

circle-04 Purchase Decision

Woman in shop, holding up clothing on a hangar, with 70% sale sign in background.

Purchase decision is the fourth stage of the purchase decision process. It follows the alternative evaluation stage. The consumer is ready to make the decision on which brand to buy. Other than from whom to buy the product, the consumer also thinks about when to buy. Consumers consider sellers’ characteristics in this stage, and return policy might have an impact on the final decision.  For example, you might choose the second-most preferred brand from your consideration set with a good refund and return policy versus the most preferred brand with more conservative policies. Deciding when to buy is frequently determined by a number of factors:

  • sales promotions:
    • consumers might buy sooner if one of the preferred brands from the consideration set is on sale or its manufacturer offers a rebate,
  • store atmosphere,
  • pleasantness of the shopping experience,
  • salesperson persuasiveness, time pressure, and financial circumstances.

circle-05 Post-purchase Behaviour


Post-purchase behavior is the fifth stage of the purchase decision process. It follows the purchase decision stage. Post purchase stage is as important as the other stages. After purchase, the consumer compares the performance of the product with his/her expectations. There are two outcomes: the consumer is either satisfied or dissatisfied. Dissatisfaction is an issue, and marketers must decide the reasons for dissatisfaction in order to improve the product/service. It is possible that the product was deficient. On the other hand, it is also possible that consumer’s expectations were too high.

Satisfaction or dissatisfaction does affect the consumers' value perceptions. Research indicates that satisfied buyers tell three other people about their experiences. On the other hand,dissatisfied buyers complain to nine people. Marketers focus on post-purchase behaviour to maximize customer satisfaction and retention.





Stop and Think Question: What type of marketing activities would be helpful to increase consumer satisfaction and retention? Think about your answer before you click reveal.

  • provide toll-free telephone numbers,
  • offer liberalized return and refund policies,
  • engage in staff training to handle complaints,
  • answer questions, and record suggestions, and
  • monitor what is being said about the brands on social media sites in order to successfully manage customer satisfaction. 

Concept Check Questions:

1. What is the first stage in the consumer purchase decision process?


2. Primary sources of external information do NOT include

It is likely that consumers might have highly attractive alternative brands in their consideration set. After the consumer makes the purchase, he/she might question if their choice was the right choice. The feeling of post-purchase psychological tension or anxiety is called cognitive dissonance.  Consumers feel the need to alleviate the tension. Some consumers turn to their friends to approve their choice. They ask if their friends like the new purchase. Some consumers watch the ads for alternative brands and look at the negative features to feel some relief. Firms often use ads or follow-up calls in post-purchase stage to assure buyers that they made the right decision.

Hierarchy of Needs

We have seen that the first task of marketing is to discover consumers’ needs. Individuals have physiological needs as well as learned needs.

Physiological needs are basic to survival and must be satisfied first; for example, the need for food and water. The needs are hierarchical. Once physiological needs are met, people seek to satisfy their other needs. Other needs are learned needs which include esteem, achievement, and affection. The figure at right shows the hierarchy of needs. Physiological needs are at the bottom of the pyramid since these need to be satisfied first. 

Safety needs involve self-preservation and physical well-being. For example smoke detectors are satisfying a safety need.

Social needs are concerned with love and friendship. For example, dating services and fragrance companies are satisfying social needs.

Personal needs are represented by the need for achievement, status, prestige, and self-respect. For example, American Express Gold Card and Harry Rosen men’s wear appeal to these needs.

Self-actualization needs involve personal fulfillment, such as completing your degree.

Pyramid divided into 5 horizontal layers, each is a level of need listed in the caption below.
The Hierarchy of Needs. Hierarchy of needs from low to high include physiological, safety, social, personal, and self-actualization.