Internal Factors Affecting Consumer Decision Making - Coursework Example

Consumer Decision Making - Internal Factors Name: Institution Introduction Service providers, goods manufactures of the same have availed numerous versions and alternatives of either of these in the market for the target consumer. The availability of these with variance in content, quality, size and price makes it mandatory for the subject consumer to make a decision of choice. Perhaps for purposes of clarity, a consumer is a person who purchases a good or a service from the respective market for their own personal use. The decision making involves choosing to purchase or buy one particular good or service out a number of choices of the same. Putting mobile banking service at the center of this discussion makes it possible to outline the main processes of decision making, the internal factors influencing it and the relevant theories. Trends of consumer decision making are important for the service and goods providers but more important to the consumer themselves as it gives them more for less. The choices made by consumers may at times be wrong choices depending on the effect of the factors that influence the process. However, the end result of decision making and making a choice is driven of innovation, productivity and competition. As indicated by Senecal, Kalczynski and Nantel (2003), a decision making process by a consumer undergoes sequential stages that give the consumer skills of making relatively satisfying choice. It is important to review the steps of the decision-making process in order to establish the probable factors that can affect it and, in relevance to this discussion, the internal factors. This paper adopts the approach of summarizing the steps into five major ones which are all inclusive. These are basically problem recognition, information research, alternative evaluation, decision and post-decision evaluation. Problem recognition The first step in the consumer decision-making process is the need to recognize the problem to be addressed or the desire to that one wants to satisfy. This problem or desire that is with the customer establishes the difference between the actual state and that ideal relative to the consumer. Need is the basic factor that leads a consumer into buying a service or product. In this case, a mobile banking service consumer has the need of managing their funds easily and appropriately irrespective of their location. Managing herein refers to having access to banked money, transferring amounts and even checking balances. Information Research This is the second step and is a research since in most cases the information is already available. This involves using appropriate methods to gather information about the need that is to be met. Information research can be divided into internal and external search. Internal search involves a scan of information from past experiences or knowledge regarding purchase alternatives. External search involves external sources, which could be public sources, to acquire information about the same (Senecal, Kalczynski & Nantel 2003). For the financial banking services, the consumer of this service would want to know how to personalize the system of banking, operation of a mobile banking service, its advantages and costs, amongst others. Alternative Evaluation Equipped with the necessary information about their wants and desires, the consumer is able to decipher the services available and understand the most probable choice. Consequently, the consumer moves to the next stage and evaluates the other alternatives available in the market. By now the consumer understands his or her problem of banking and so he or she compares the various brands of services identified as being capable of solving their problem. There may be numerous banking services but, relative to their problem and desires, the consumer will a set of probable options. Purchasing Decision This is the fourth step and evidently the stage at which the consumer makes the actual decision to buy a product. After recognizing a necessity or problem, acquiring necessary information and looking at alternatives, the consumer decides on one of them. As an outcome, the consumer may develop a purchase intention or predisposition to buy a certain brand of the service. With respect to the mobile banking service choosing it over, say the manual banking option satisfies the consumer’s needs and addresses their problems. The decision on the particular service is made formal by implementing the actual purchase. The basis under which decisions are made are affected by a number of factors including internal factors, whose insight has been now set herein (Marketing 101, 2008). Post-purchase Evaluation An evaluation of the service or product purchased completes the consumer decision making process. The evaluation basically compares the performance of that service and the expectation of the consumer. Satisfaction occurs when the expectations of the consumer are either met or exceeded. On the other hand, dissatisfaction is when performance is below expectations. Mobile Banking Service A mobile banking system is a way by which a customer performs banking operations on their mobile phone or other mobile devices. As mentioned earlier, the operations the customer can perform with the mobile banking system include cash withdrawal, airtime credit purchase, funds transfer amongst others depending on the banking institution one is using. This therefore shows that one has to belong to a banking institution for them to access the mobile banking services of that institution. In simple systems, most banking institutions only provide alerting messages about the activities that go on one’s account. In more sophisticated systems, most of the activities that would require one to be present at the bank are made possible on the phone. Such allow the user to log on to their account through the mobile phone and make transactions. This type of banking is meant to be more convenient for the consumer than having to physically go into a bank, log on from their home computer, or make a phone call. While all of this is true, some are concerned about the security of mobile banking (Dillen, 2009). Nevertheless, mobile banking system is a popular method of banking that fits in well with a busy, technology and business oriented engagements. Mobile banking is appreciated widely and well accepted in most of the areas that it has been introduced. However, the factors affecting the decision of a consumer to apply for and buy this service explain the constraints, consumer’s uncertainties and other alternatives. The other forms of banking that can be compared to mobile banking are keeping one’s money by self, entrusting a banking institution like a bank to secure the money for you or to keep it with an informal organization. The main concern here is the security of one’s funds, though other aspects like the accessibility of these funds and their management is also a concern. Every banking institution wants to take the banking services to the next level, the reason for which a number has adopted the mobile banking system, alongside other developments. As they take up these bold steps, they expect their customers to embrace it and decide to buy into the services. Objectively, the internal factors affecting the consumer’s decision making process are discussed here below. Internal Factors Affecting Consumer Decision Making As postulated by McGuire (1976), the internal factors that influence the consumer decision making process are mostly psychological and so may also be referred to as psychological influences. These factors have much to do with the consumer’s personality and way of thinking. Internal factors, therefore, have an almost direct relation to Utility Theory of decision making as explained by Richarme (2010). According to the Utility Theory, consumers make decisions with basis on their expectations of both the outcomes of their decisions and of the performance of the service. This model is perfect since it recognizes the power of choice that the consumer has. It therefore positions this consumer as a rational character (Richarme, 2010) with ability to make right decisions relative to themselves. Such influential internal factors are; perception, education, motivation and values, the self, personality & lifestyles, attitudes, attitude change and interactive communication Perception Perception is an aspect of the mind and of knowhow. It is the manner in which a consumer processes information consciously or subconsciously about the service. The amount of knowledge that they have is effectively shaped at the stage information search in the decision making process. The degree of information search varies from one service to another. For the banking service, one has to acquire sufficient knowledge since the security of one’s funds is a vital issue. This factor requires that some background knowledge sets the base for forming a perception so that while choosing one service over others, it is compared to the consumer’s values that define utility. Education The education a consumer has together with past experiences have an impact on the decision making process. As it is expected, an educated person has some knowledge about mobile phone advancements in the technological industry. Introduction of banking services in the mobile cell phones would therefore come with not much surprise. It becomes easier for them to embrace it and probably adopt the mobile banking service. In this case, the Satisficing theory (Richarme, 2010) may not hold since it does not depend much on pre-acquired knowledge to decide on a service. Rather, the moment a better satisfying service is accessed then the decision making process stops. Motivation In a general sense, motivation is the driving force that influences a person to achieve their set objective or goal. The motivation to mobilize banking service comes from the attractive advantages that it has over other forms. Mobile banking almost makes it feel like one is walking with their bank account around since they can access it anywhere with network coverage. Self-construction The self-construction of a person, consumer in this case, is the composition of their personality, lifestyle, habits, skills and talents. Research indicates that most people base their decision making process of their self-perception (Lejniece, 2011). Everyone is entitled to their conceptions and therefore, opinions as well. These definitely affect their conception of the mobile banking service and the adoption of the same. In other cases, even gender, as a matter of self-construction influences decision making. Probably a male would easily get intrigued by technological advancements and buy the mobile banking service faster than a lady would. Conclusion Making a choice to purchase a product or a service rests solely with the consumer of that service or product. Appreciably, a proper decision making involves a number of sequential steps or stages through which the process goes. First, the paper achieves the goal of outlining the steps of decision making which in themselves spell out the importance of the process. Decision making skills are thus vital in achieving satisfaction of one’s needs. For the purposes of this paper, the discussion realizes the objective of identifying the major internal factors that influence a consumer’s decision making on the mobile banking service. So then conclusively, the theories of decision making engaged herein, appreciably enhance the important knowledge of the factors affecting decision making and choices. References Dillen, K. (2009). Mobile banking overview (NA). Mobile Marketing Association. Lejniece, I. (2011). Factors affecting consumer behavior assuming and fulfilling credit liabilities in Latvia. Latvia: University of Latvia. Marketing 101, (2008, May 27). Stages in the consumer decision making process. Retrieved March 29, 2013 from http://atlskillzmarket101.blogspot.com/2008/01/stages-in-consumer-decision-making.html McGuire, W. J. (1976). Some internal psychological factors influencing consumer choice. Journal of Consumer Research, 2 (4), 302-319 Richarme, K. (2010). Consumer Decision-Making Models, Strategies, and Theories. Arlington: Decision Analyst. Senecal, S., Kalczynski, P. J., & Nantel, J. (2003). The influence of consumer’s decision-making process on their online shopping behavior: A Clickstream Analysis. College of Business Administration. Read More