Stage 1: Problem Recognition
This stage is basically noticing a gap between a specific individual’s actual and ideal situations. In other words, whenever an individual recognizes he or she is in need of something, a purchase decision may be made. This is usually triggered by two main factors, i.e. there is simply a recognition of a need (situational cause) or this need is artificially created by marketing efforts (marketing induced). This last point could be illustrated by a simple situation in a grocery store. The popular "buy one, get the other for half price" promotions are one of the possible marketing tricks that may artificially create a need for a consumer to buy the product, as he or she may perceive the value of the "half price" good creating tremendous value for money, even though this good might not be his or her buying priority at that exact moment and may eventually end up unconsumed, as there is no genuine need to buy it. Let us now consider the examples given in the brief:
- Getting a haircut – unless a service is very basic, the service industry has a much lower potential than the product industry to use marketing tricks to create the need to buy. In this case, getting a haircut is simply caused by a genuine need of a person perceiving his or her hair is simply too long or not neat enough. However, a very crucial factor in this situation is also the popular consumer tastes and beliefs, as a change in fashion can trigger a sudden need for a lot of consumers to get the new fashionable haircut;
- Buying a loaf of bread – a need for basic products is highly likely to be created by both a genuine need and marketing tactics (remember the "buy one, get the other half price" example).
- Buying a textbook on the internet – as e-commerce is still a growing phenomenon (especially in developing countries), electronic retailers have very little disposition to use marketing efforts to emulate a need to buy. In Eastern Europe especially, unless there is a strong need to get a specific product for a lower price and where delivery time is not that crucial, a buyer will choose a traditional retailer, making an e-business extremely vulnerable to the external factor of creating a need to buy.
Stage 2: Information Search
This stage is vital for firms that do not have a fast growing customer base, but instead focus on retaining a loyal customer circle that will buy the company’s products/service time and time again. This could also be referred to as the internal information search by the consumers. Using memory of past transactions, a consumer, provided he or she was satisfied with the quality when buying the first time, is very likely to buy again.
This may prove difficult for new entrants in the market, as ensuring a proper reputation will require some time. In fact, buyers are unlikely to make a random purchase of a certain product without sufficient information, as the risk of receiving low quality or bad value for money from an unknown firm is quite high. The cost of searching for relevant information, on the contrary, is generally quite low. Even though internal sources might not suffice all the time, external information search is regarded as reliable and relatively cheap. This may include asking friends and family, reading the firm’s website, professional reviews etc.
Let us have a look at how information search affects the three classical examples:
- Getting a haircut – most of the traditional services, including getting a haircut, are continuous, meaning customers are likely to return time and time again, provided the overall service quality was satisfactory. Therefore, it is very important for service business facing fierce competition to ensure a loyal customer base is retained. On the other hand, external sources for such competitive business have almost a negligible effect, unless they are recommendations from family and friends.
- Buying a loaf of bread – traditional homogenous products again are very dependent on internal information sources and can be affected by references from friends or family. A more thorough research of this simple product is highly unlikely.
- Buying a textbook from an internet retailer – this process is a bit more complicated and is likely to attract a much more thorough research from a potential buyer. Of course, an established customer base that already has some experience with e-retailers is important, but not as important, as in the first two cases, as a purchase might not be very regular. Therefore, it is an e-retailer’s priority to have as much information on the reliability of products as possible, which is one of the main reasons why the most successful electronic retailers, such as E-bay or Amazon, place such a strong emphasis on customer reviews and evaluation systems.
Stage 3: Evaluation and Alternatives
After the information search stage, information screening and a more thorough research is conducted to evaluate and choose between the alternatives. This very much depends on what kind of product/service is considered and how carefully the customers evaluate the alternatives. Under high involvement, a consumer will consider many different alternatives, investing quite a lot of time in research and benchmarking. Low involvement, on the other hand, will prompt a much lower level research and not many alternatives are likely to be considered.
Factors of evaluation and screening can then be divided into attitudes and attributes. Under attribute screening, a consumer is objective and uses direct criteria (such as processor speed, capacity of RAM when buying a PC). Attitudes influence customers’ decisions in a completely different way, mainly subjectively by certain beliefs and preconceptions about a certain brand. More often than not, a mixture of both attitudes and attributes are used as an evaluation tool in this stage, as we shall see from the examples.
- Getting a haircut – since this is a fairly homogenous service (unless very specific requirements and needs are held by the customer), a customer is unlikely to screen and do a lot of benchmarking and high involvement before choosing a service provider.
- Buying a loaf of bread – this product is again not likely to be subject to a lot of screening and is rather going to be chosen based on past experiences and certain customer tastes. the latter fact ensures that some attributes are going to be considered in the evaluation stage and better perceived quality brands are going to get an upper hand because of certain customer attitudes.
- Buying a textbook from an e-retailer – both the nature of the product and the nature of the transaction are likely to play a strong part in the evaluation and benchmarking stage. A customer is likely to have done quite a lot of research on the topic and therefore very aware of certain attributes of a textbook and having certain attitudes about the e-retailer. Both these factors illustrate how important it is to consider a mixture of both attributes and attitudes.
As it can be easily implied, stages 2 and 3 in the CDP model are very closely interrelated. In fact, it can be noted that, provided a strong external research is conducted in the second stage, a strong further examination and evaluation is likely in the third stage and vice versa.
Stage 4: Purchase Decision
After both the initial and a more thorough research, comes the decision whether or not to purchase the product/service. This, again is influenced by many different factors. Interestingly enough, it is highly likely, that unless the buyer is convinced all of those factors are fully satisfied, he or she is not going to make a positive decision. On the other hand, even a single condition not fulfilled can lead to a negative decision. Some of the main factors to be considered include terms of sale, previous exposure to the seller, return policies, warranty conditions and so on.
Building on these major factors, however, are some of the smaller factors that, given the product/service is homogenous and readily available from several providers, can be crucial to the when to buy and from whom to buy decisions. These include the shop atmosphere, pleasantness of the shopping experience, professional customer service, time pressure to buy and so on.
- Buying a loaf of bread – this being a fairly perishable good, it is unlikely a lot of the mentioned factors are going to be relevant in influencing the consumer’s buying decision, so not much has to be considered.
- Buying a textbook from an e-retailer – both major and minor factors will play a strong role in this situation. The e-retailer will have to ensure the trust of the customer by providing superior service and offering some very attractive returns or insurance policies for consumers to choose this method of purchasing which is both less reliable and slower than the traditional one. Ensuring fast delivery is also going to be one of the priorities to beat the competition.
Stage 5: Consumption
This stage, again, emerges directly after the purchasing decision is made. I must emphasize one more time, that getting new customers is usually way more difficult than retaining a stable base of loyal clients. For a sound marketing strategy, it is crucial to ensure that both the consumption process and the post-consumption for the consumer is pleasant. Otherwise, they may simply not buy again, thus making the company search for new customers, dedicating way more time and money for that than simply keeping its old clients. Some of the main factors influencing the consumption process are the following:
- Expectations gap – what is the customer perceived and actual quality of the product/service consumed?;
- Facilitating products/services – how does, for example, service in the restaurant facilitate the main product (food)?;
- Deal "sweeteners" – what extra do the customers get for buying the product/service?
These are only some of the factors likely to enhance or demote the entire experience, yet, especially the first two, are the most common and might be destructive for the brand if not decently satisfied.
- Getting a haircut – facilitating service (sociable, kind and polite hairdresser) is likely to play an important role here. Also, this is a very delicate service, with expectations of customers usually highly varying from the actual outcome, which stresses the importance of good and sensible communication.
- Buying a loaf of bread – the expectations gap is not likely to be very high in this instance. Nevertheless, inferior quality can demolish the brand value perception by the customer and therefore ensuring high quality must still be a priority for a baker.
- Buying a textbook from an e-retailer – all three factors mentioned above are likely to be of utmost importance here. Ensuring the delivery is swift and the communication is pleasant are some of the factors that will make the customer buy again in the future. In addition, deal "sweeteners" can be a strong incentive as well, emphasizing the advantage for the customers of buying more goods of the internet.
Stage 6: Evaluation
As well as stage 5, this level plays the often underestimated role of keeping the customers happy and making them buy from the same firm again. If successful, evaluation and recognition by the customer may eventually lead to brand loyalty and brand commitment by the same customer.
The evaluation stage again places a strong emphasis on the expectations gap (i.e. perceived and actual quality of the product/service). Provided the customer value expectations and consumer communications are adequate, the repeat-purchase behavior is very likely. This is good news for both the company and the consumer, as brand loyalty eliminates the need to go through all the previous stages once again.
It can also be facilitated by the company trying to get firm ties with its customers by, for example, making customer feedback calls.
- Getting a haircut – the fact that this is a homogenous service makes it very subject to customer criticism in an event of a severe expectations gap, as people can simply choose a different service provider. Therefore, the salon should make sure it uses only the best materials (so that the hair dye, for example, doesn’t go away in a few days) and conducts adequate communication with the customers, thus ensuring they are going to use the service again.
- Buying a loaf of bread – brand loyalty can build up by simply offering premium quality that is on par with the customers’ expectations and offering a good value for money.
- Buying a textbook from an e-retailer – strong communication is absolutely crucial. Unless the consumer is satisfied with the communication, he or she may choose to abandon this rather impersonal way to buy goods/services.
Stage 7: Disposal
This stage is often omitted from the model for the simple reason of it often being not necessary or not possible to conduct. The meaning of disposal in this instance is selling it for acquiring an economic profit from the sale of the good. This stage is arguably the least controlled one by the firms selling products (services are not possible to dispose of after consumption) and is unlikely to have a big impact on the company’s marketing strategy.
- Getting a haircut – impossible to dispose of because it is a service.
- Buying a loaf of bread – impossible to dispose of because it is a perishable good.
- Buying a textbook from an e-retailer – possible to sell it, possibly even using the same platform (selling it using an online auction)
As it can obviously be seen, the seventh and final stage simply depends on the nature of the product itself and is not going to be relevant for every firm, yet might be a point of consideration for some manufacturers of more complex goods.
Using CDP as a Part of Marketing Strategy
As mentioned above, traditionally firms consider the mainstream marketing mix of four P’s to evaluate and choose a proper marketing strategy. However, the detailed analysis of the CDP model above clearly shows this is a very strategic method, especially focusing on the "why" decision of the consumers, which is usually deemed as the least obvious one for a market researcher and has been notorious for making or breaking businesses. Following this are the main strategic points emerging from the model, which, if correctly used, can be an invaluable addition to the firm’s marketing strategy:
- Situational or marketing induced need – customers’ needs can easily be manipulated by employing some clever marketing tactics, such as the already mentioned "buy one, get the other half price" promotions or "buy it until midnight for only $x" deals. By smartly manipulating the psychology of consumers, this tactic can be employed even on homogenous products/services to emulate an instant need to consume;
- Internal and external information search for high and low involvement clients – internal search, as already mentioned, rests almost solely on the perceptions and expectations of the customers only, so this simply encourages to provide a superior quality product/service, so that customers would want to buy again. On the other hand, making information readily available on external sources can be even more important, as customers are often going to invest time for a high involvement search.
- Highlighting the attributes – besides making as much information as possible widely available in various sources, it can also be invaluable to ensure the quality of that information is sufficient. Additional emphasis should be placed upon highlighting the main product/service attributes, especially focusing on some "killer" attributes that the competitors are not likely to have, thus making the evaluating and searching for alternatives stage easier.
- Building on the strength of attitudes – making a certain brand recognizable and standing out of its competitor brands can sometimes be even more important than having all the right attributes.
- Offering robust and convenient return/warranty/delivery policies – might influence a decision of whether or not to buy.
- Ensuring the pleasant atmosphere and purchasing conditions – might make up the consumers’ mind, especially in case of a homogenous product/service.
- Ensuring the consumption process is pleasant and the customer perceives the consumed product/service as satisfactory – might lead up to the repeat-purchase behavior.
- Noting what the quality expectations of the customers are and trying to minimize the expectations gap.
- Ensuring the quality of facilitating products/services is sufficient.
- If the product is likely to be of a long life cycle, make it of good enough quality so that the primary client could then dispose of it to a secondary client.
These main factors can dramatically shape the marketing strategy of the firm and make it competitively advantageous in the long run. A point to be noted though, is, as implied from the examples I have used to illustrate the CDP model, is that the exact marketing strategy will very much depend on the nature of a specific good or service.
Stage Skipping
Stage skipping is known as the process of omitting certain levels in the model by the customers. What this usually means, is that clients stop at a certain stage and do not render their decision furthermore. Generally, the earlier stage is skipped, the worse it is for the company. In other words, if a stage before purchasing is skipped, a product is actually never even bought. On the other hand, if post-purchasing behavior is skipped, the same customers may never return to purchase again, which is bad for the business in the long run. I have already mentioned above how the disposal stage can be omitted if services or perishable goods are purchased. Following it are some other possible stage skipping examples:
- Skipping information search and evaluation – this might arise because of several reasons, the most important of which is brand loyalty. Sometimes marketers are smart enough as to persuade the consumers to skip these stages, especially when influencing them to buy on "the spur of the moment", without conducting any research. These stages are also irrelevant in monopolies, when no competition is present, or when enough information is retrieved from internal sources, making the external information search obsolete;
- Skipping purchasing – this refers to a sudden change of circumstances, which prompt the buyer to cancel the transaction. This should not be confused with a "no" decision or shifting a decision to another vendor, but should rather be imagined as an eliminated need to purchase the item. This can arise from either the failure to find decent alternatives, inadequate information received in the previous stages, personal situation changes (no need to purchase anymore) or a sudden realization of previous brand disappointment;
- Skipping consumption or post-purchase evaluation – this happens due to a failure by the business to leave a long-lasting impression of the product, which then eliminates the possibility of repeat purchases;
- Skipping problem recognition – this is the worst possible situation that could occur to a business. If this stage is skipped, the entire model collapses, meaning customers never even get close to purchasing. This might occur because either a need is never recognized by the customer or because of mindless behavior by the client. This is destructive for the business, as it literally means its products/services become obsolete and not popular in the market, ensuring a business failure unless it is able to adapt to the situation quickly.
Critical Evaluation of CDP and Alternatives
While the CDP method is definitely a strong tool in rendering an appropriate marketing strategy, it is not without its criticisms. It has been most criticized for its fairly systematic approach. In reality, consumers are not always as rational and as systematic as the model predicts they are.
Firstly, situational influences are known to be playing an important part as well. These include the purchase task, social surroundings, physical surroundings, temporal effects (time of the day, for example) and antecedent state(customer’s mood, for example).
Other important factors leading to buying decisions are personal motivation, personality, values, beliefs, attitudes etc.
All of the factors mentioned above can have a huge impact on the customer’s buying decision and actually sever an otherwise rational decision to buy, according to the stage model. The relative irrationality of buyers is exactly the variable that is omitted from the CDP model.
Some alternatives exist to the CDP model as well, but are mostly the same in their essence. The most noteworthy of them is the AIUAPR model (awareness, interest, understanding, attitudes, purchase and repeat purchase). It is very similar to CDP and simply builds upon some of its findings and again fails to take the irrationality of customer behavior to account.
Nevertheless, CDP still proves a superior tool for marketing strategy derivation, especially because not only the traditional "what", "where", "when" and "who" questions of marketing are answered, but because the "why" question is touched upon, albeit not fully, as well.