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UNIVERSITY OF WATERLOO Faculty of Applied Health Sciences

Understanding the Consumer Purchase Decision

Staples Business Advantage Sales and Marketing

550 Pendant Dr, L5T 2W6 Mississauga, Ontario

Prepared by Colin Dunn

Work Report #5 4A Recreation and Sport Business

ID 20467393 May 3, 2016

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596 Bridlewood Burlington, Ontario L7L 4C7 May 3, 2016 University of Waterloo 200 University Avenue West Waterloo, Ontario N2L 3G1 Dear Dean Ronald McCarville, This report, entitled “ Understanding the Consumer Purchase Decision” was prepared as my 4A Work Report. This is my fourth work term report. The purpose of this report is to assess the importance of understanding the consumer purchase decision, and to connect the work done throughout the work term to the field of study. During the 2016-winter term the Sales Associate department, at Staples Business Advantage, as a sales and marketing assistant, employed me. My supervisor was Brian Harris, Regional Sales Director. Tasks included internal and external communications; qualify new business, account maintenance, and marketing and business development. The purpose of this report is connecting my project done throughout the work term to my program of study. This report was written entirely by me and has not received any previous academic credit at this or any other institution. I would like to thank Mrs. Pamela Dunn for proofreading my report. I have received no other assistance. I have prepared and written this report; it has not received any previous academic credit at this or any other institution. Sincerely, Colin Dunn 2046739

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Abstract

The title of my non-empirical report is Understanding the Consumer Purchase

Decision. This term, I was employed with Staples Business Advantage as a Sales and

Marketing Associate. During my work term at Staples Business Advantage, I was able to

apply many sales and marketing skills within the office depot business and the eRetailer

society. The focus of this report is to accentuate the importance of understanding the

consumer purchase decision and using that knowledge to help close a sale on a particular

prospect. The methods describe the five steps taken during a consumer purchase decision. In

turn, the findings report the connection between the steps and relate them to an example in

the Staples Business Advantage area.

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Table of Contents

1.0Introduction.....................................................................................................1

2.0NeedorProblemRecognition....................................................................3

3.0InformationSearch.......................................................................................4

4.0 Alternative Evaluation .............................................................................. 5

5.0 Purchase Decision ...................................................................................... 6

6.0Post-PurchaseDecision...............................................................................7

7.0StaplesBusinessAdvantage.......................................................................7

8.0Conclusions......................................................................................................9

9.0 Recommendations.…………………………………………………..….10

10.0 Confidentiality of Data……………………………..…………………12

References…………………………………………………...….…….….….13

Appendix…………………………………………………….………………15

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1.0 Introduction

My fourth cooperative education term took place at Staples Business Advantage in

Mississauga, Ontario. As an employee of Staples Business Advantage, I worked as a Sales

and Marketing associate. Staples Business Advantage is categorized as the business-to-

business division of Staples, working with companies to create programs customized with

account management, special pricing, and a wide variety of products and services sold at the

lowest possible cost (Staples Business Advantage, n.d, para.1). As a member of the sales

team, I was to complete a couple of projects. One example is that, I was given the

opportunity to review the present state of the business development managers’ geographical

postal code territories on a national level. Along with these projects, my role was to qualify

new business, while effectively demonstrating the value of the company to potential new

clients. In order to effectively achieve this, a sales associate must understand the different

stages or phases a consumer goes through when making a purchase decision. This non-

empirical report will highlight and explain in detail the five consumer purchase decision

stages associated with the consumer’s mind.

Understanding the consumer purchase decision process provides the sales associate

with the necessary information in order to market and sell their products or services more

effectively to the particular consumer. There has been research on the consumer purchase

decision process, with the majority of the research “focused on the cognitive process that

occurs immediately prior to the act of purchase” (Hoyer, 1984, para.4).

The consumer purchase decision involves five stages with numerous aspects involved

within each stage. A purchase decision begins with the consumer identifying a need or

problem based on either internal stimuli or external stimuli. From there, there are several

types of needs the consumer will observe, including: functional needs, social needs, and the

need for change (Perreau, n.d, para.13). The next stage is the information search. Here,

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consumers will search for answers to their specific questions regarding the product or service

being purchased. Thirdly, a consumer will search for any alternatives, within the market, to

the product or service. Consumers will evaluate each alternative based on different attributes.

Once all alternatives are evaluated, a consumer will go through the purchase decision stage

based on information gathered in the previous two steps. Finally, after a purchase has been

made, a consumer will proceed to the post-purchase decision stage, evaluating whether or not

the product or service fulfilled their perceived need (Perreau, n.d, para. 33). While we may

not physically see a consumer complete each stage, they will subconsciously be influenced

by something in each stage during the whole process. Although, there are five stages, “in

more routine purchases, customers often skip or reverse some of the stages” (Essays, 2015,

para.4). This is evident at Staples Business Advantage when consumers are continually

making purchases through the programs. They have evolved through each stage during the

initial sales pitch and once the brand loyalty has been established, the consumer purchase

decision is effectively shortened.

2.0 Need or Problem Recognition

The identification of a need or a problem plays a major role in the consumer purchase

decision process. This step drives the whole process and ultimately provides the base for the

consumer to carry out the remaining steps. Depending on either external or internal stimuli, a

need can be defined as “desires and wants as internal forces which lead us to do something”

(Roozmand et al., 2011, p.3). First, an internal recognition of a need can be from internal

such as the need for water, in order to quench one’s thirst; whereas, an external recognition

may be commercial advertisement or the interaction with a sales associate. Once a consumer

has established a need or problem, they will begin to look for information and ways to satisfy

this issue (Essays, 2015, para.6). Based on the consumer, there are many different types of

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needs; for example, there are functional needs, social needs, needs for change as well as the

categorization concept of Maslow’s Hierarchy of Needs.

A functional need can be defined as “a feature or specific functions of the products to

be the answer to a functional problem” (Perreau, n.d, para.11). For example, one might

identify a functional need for industrial cleaner for a warehouse cleanup, a product in which

Staples Business Advantage sells.. More commonly, a social need relates to the “desire for

integration and belongingness in the social environment or for social recognition” (Perreau,

n.d, para.12). Examples of social needs are present in everyday life, as consumers look to

purchase certain services or products to conform to the social norm. Specifically, a consumer

might purchase the latest Iphone, based on the perceived need to feel integrated within the

group who have already purchased the phone. A need for change “has its origin in a desire

from the consumer to change” (Perreau, n.d, para.13). The consumer may see the need to

change something within their lives, which then creates that need to purchase a specific

product or service. This might include the purchase of a new painting to display in one’s

house to change the look of a room or a new wardrobe to update their fashion look. Finally,

there is Maslow’s Hierarchy of Needs, depicting five levels of needs a consumer is perceived

to feel during a lifetime seen Appendix A. These include the following; physiological needs

(food,shelter), safety needs (security, order), need of love and belonging (love and affection),

need of esteem (respect from self and others), and need of self-actualization (personal

growth). Once the consumer has identified a need or problem, they will move on to

information search, the next step in the consumer purchase decision process.

3.0 Information Search

Now that the consumer has established a need for a product or service, they need to

find the necessary information to generate an informed decision. They will search through

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various channels to find that specific solution. This stage is not as complex as others; for

example, if the consumer has established the need for an ergonomic safe desk in their office,

they will simply start searching for ergonomic desks. Information generally falls under two

categories: internal and external information. Internal information “is already present in the

consumer’s memory” (Perreau, n.d, para. 16), meaning any information acquired previously,

about a product or service, has been used to develop an opinion a consumer may have.

External information is “received from and obtained by friends and family, by reviews from

other consumers or from the press” (Perreau, n.d, para. 18). This information search can be

obtained from many sources, such as internal sources which are those developed from one’s

memory, group sources originating from friends, and family or marketing sources such as

advertisements or sales associates (Essays, 2015, para.8). Now that the consumer has

obtained the necessary information to satisfy their need or problem, many alternatives will be

observed, all of which will need to be taken into account.

4.0 Alternative Evaluation Once all the information has been collected, a consumer will come to see that there

are many alternatives to the particular product or service being acquired. This stage in the

consumer purchase decision is often referred to as “the “‘black box”’ of consumer behaviour

because it is typically the hardest for marketers to understand, measure or, influence”

(Essays, 2015, para.9). Based on this notion, the ability for a sales associate to sell every

aspect of the product or service becomes very important. At this stage, “product image

influences consumers’ perception of quality and expectation of future performance” (Jessie

Chen-Yu & Kincade, 2001, p.31). Consumers will evaluate based on functionality of the

product in addition to any features that may be associated. Along with the physical attributes

of a product, service-based sales may be evaluated more on the value of the brand built by the

consumer reputation. Once a consumer has evaluated all alternatives, the brands that have a

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higher probability of being purchased by said consumer can become part of the evoked set.

The evoked set is “the set of brands or products with a probability of being purchased by the

consumer” (Perreau, n.d, para.21). Knowing this stage, companies must try and understand

the most specific and important criteria and target those aspects during their advertising

efforts. From the evoked set, consumers will now have the decision from whom and when to

buy the product or service.

5.0 Purchase Decision

Finally, after evaluating all possible alternatives and taking into consideration any

influential criteria, the consumer is able to make the decision to purchase the product or

service that will satisfy the perceived need. Here, the consumer must “look for a product that

he/she can afford and that reduces the gap between the desired and actual states to the

smallest” (Roozmand et al., 2011, p. 6). In other words, the product or service purchased will

fill the void between the initial recognized need and the covet feeling after the need is

fulfilled. Often, aspects such as the consumer experience can affect the purchase decision

with the particular company, any promotional opportunities, and the terms and conditions of

a solid return policy (for products). Once a purchase decision is made, the consumer will now

complete the process through the evaluation of the product or service.

6.0 Post-Purchase Decision

The final stage of the consumer purchase decision process involves a reflection by the

consumer, based on whether or not they are satisfied with their experience. The consumer

must decide if the product or service purchased satisfied their recognized need. At this stage,

if the need of the consumer is not satisfied, “marketers must decide whether the product was

deficient or consumer expectations were too high” (Crane, Kerin, Hartley, & Rudelius, 2011,

p.155). Here, many consumers will go through a notion called cognitive dissonance. This

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feeling is defined as “a psychological discomfort, a psychologically uncomfortable state,

being linked with anxiety, uncertainty, or doubt” (Sweeny, Hausknecht, & Soutar, 2000.

p.5). To combat this psychological concept, consumers will look to commend their own

purchase by possibly seeking different information, simply by asking friends if they like the

new purchase.

7.0 Staples Business Advantage

Being a sales associate without understanding the basics of the consumer purchase

decision can be very detrimental to success. Many existing accounts with Staples are in the

post-purchase stage and will skip a range of the stages. If a customer is unhappy with the

service or products provided by Staples Business Advantage, they will start the information

search stage over again, as they need to seek out a new product or service to satisfy their

need.

Both inside and outside business development managers will utilize their knowledge

of the consumer purchase decision in order to persuade the customer to purchase products

from Staples. For example, if a sales associate is aware that the customer is immersed in the

alternative evaluation stage, they may be able to create a better pricing program than the

competitors. This will speed up this fourth stage and potentially assist in making the decision

much quicker and easier.

After working through numerous accounts and qualifying customers, the importance

of the consumer purchase decision process was evident. The sought after consumer might

identify the need for a large office printer. At this time, I would provide any necessary

information to the consumer, such as pricing, make, and any other features involved with the

purchase of the product. Once the consumer has amassed enough information to make a

decision, they will search for competitive prices from other companies. In the example of

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Staples, competitors include Office Depot, Essendant, and Amazon.com. Staples Business

Advantage prides themselves in offering the best pricing programs for their clients, ultimately

persuading the purchase decision to be in their favour. Using this example, once the printer is

purchased, the consumer will then evaluate every aspect during the purchase decision

process. They may ask questions such as the following; Is the product of good quality? Was

delivery on time? How did the sales associate provide the customer service? This is where

account managers play a major role in the retention of customers and continue to provide the

best pricing for all products as well as provide the highest quality of customer service.

There are only a few limitations that could occur during the process of a sale. Sales

associates could misunderstand which stage the consumer is currently in and give them too

much information, which could then have negative effects of turning the consumer the

opposite way, to competitors. Another clear limitation can occur if Staples Business

Advantage does not offer the appropriate product or service the consumer is seeking in order

to fulfill the need. This would direct the consumer to any of the competitors, which can then

possibly lead them to continue to give any or all of their business to the competitor.

8.0 Conclusions

The consumer purchase decision process is a vital part of every sales associates

repertoire. Staples Business Advantage clients enter the first step by observing a need for

their business and actively searching for a way to satisfy that need. Information on the

product or service provided is then searched via different sources, which can include the

website, other businesses, or catalogues. Sales associates will then try to shorten the

alternative evaluation stage by offering better programs and service than competitors, in the

effort to win a purchase by the consumer, before they have time to convince themselves

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otherwise. Once the purchase is made, consumers will evaluate the product or service-based

on whether it, indeed, satisfied the initial need.

Every consumer will go through the five stages when purchasing a product or

service, for the first time. However, a consumer may go through an abbreviated version of the

process, due to the already perceived reputation of the product or service in purchase. The

consumer purchase stages can give the sales associate the necessary information in order to

effectively communicate with the consumer, and often, both the information and

communication changes based on which stage the consumer is in. Staples Business

Advantage has developed a solid reputation among the industry, which aid in retaining their

consumer base and is vital to securing new consumer each and every day. In conclusion,

honing the ability to understand how a consumer will act and what will occur during each

stage is a major skill all sales associates should adapt in order to be the most successful.

9.0 Recommendations

Companies similar to Staples Business Advantage thrive on the ability to close a sale

in a quick and serviceable manner. Studying and understanding the consumer purchase

decision process clearly is a critical aspect in the success of a sales associate. This can have

many benefits when trying to close a new or existing sale. If the new client is in the

information search stage, then the sales associate must provide all of the necessary

information, to the consumer, which will help persuade their decision to purchase from

Staples. The ability to utilize the consumer purchase decision can allow a sales associate to

reach the consumer on a different level than those who may not understand how complex a

purchase decision really is.

Working at Staples Business Advantage and having the opportunity to qualify new

customers and sell them on the programs offered demonstrated the importance of applying

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the aspects in each stage of the consumer purchase decision. One main recommendation I

have, in regards to understanding the consumer purchase decision, would be to have the

training in place to make sure all sales associates have knowledge of the entire discussed

consumer purchase decision process. Obtaining the knowledge of the consumer purchase

decision can give a sales associate the necessary skills in order to close sales in a very

efficient manner. For business development managers, this can be useful in terms of

approaching businesses and understanding the importance establishing a need. Account

managers can interpret the purchase and post-purchase decision phase to evaluating the

consumers in the effort to retain their business in the future. Having the necessary training

system in place can provide all employees, who work directly with the consumers; with an

added skill to better the customer service provided and ultimately improve the overall

efficiency of their work. In conclusion, I recommend companies, such as Staples Business

Advantage, create an effective training program to educate all sales associates on the

consumer purchase decision and utilize this information in every aspect of a sale.

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10.0 Confidentiality of Data

I, Colin Dunn, accept and understand the importance of the process in terms of

confidentiality of data. All information within Staples Business Advantage has been assessed

and collected with ethics in mind. Staples Business Advantage protects to information

presented in the non-empirical report and permission to any insights, into the business, was

received.

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References About Staples Business Advantage - Our Structure, Staples Soul, Awards, News. (n.d.).

Retrieved April 08, 2016, from http://www.staplesadvantage.com/learn/about-us/overview.html

Crane, F. G., Kerin, R. A., Hartley, S. W., & Rudelius, W. (2011). Marketing Ninth

Canadian Edition (9th ed.). Toronto, Ontario: McGraw-Hill Ryerson. Essays, UK. (November 2013). Importance Of Understanding Customer Decision Making

Process Marketing Essay. Retrieved from https://www.ukessays.com/essays/marketing/importance-of-understanding-customer-decision-making-process-marketing-essay.php?cref=1

Jaideep, S. (2015). Top 5 Stages of Consumer Buying Process. Retrieved March 11, 2016,

from http://www.yourarticlelibrary.com/consumers/top-5-stages-of-consumer-buying-process/48596/

H. Jessie Chen‐Yu, Doris H. Kincade, (2001) "Effects of product image at three stages of the

consumer decision process for apparel products: alternative evaluation, purchase and post‐purchase", Journal of Fashion Marketing and Management: An International Journal, Vol. 5 Iss: 1, pp.29 - 43

Jones, S. (2014, March 18). The Six Stages of the Consumer Buying Process and How to

Market to Them. Retrieved March 11, 2016, from http://www.business2community.com/consumer-marketing/six-stages-consumer-buying-process-market-0811565#mp0eC3LCcaVHqBA1.97

McLeod, S. (2014, July 24). Maslow’s Hierarchy. Retrieved March 11, 2016, from

http://scannedretina.com/2014/07/24/maslows-hierarchy-2/ Perreau, F. (October 25). The Consumer FactorConsumer Insights, Market Research,

Consumer Behavior & Neuromarketing. Retrieved March 11, 2016, from http://theconsumerfactor.com/en/5-stages-consumer-buying-decision-process/

Rao, T. R. (1969). Consumer's Purchase Decision Process: Stochastic Models. Journal of Marketing Research, 6(6.3), 321-331. Retrieved March 11, 2016, from http://search.proquest.com.proxy.lib.uwaterloo.ca/docview/1297355475?rfr_id=info:xri/sid:primo&institute=OCUL.waterloo

Sweeney, J. C., Hausknecht, D., & Soutar, G. N. (2000). Cognitive dissonance after

purchase: A multidimensional scale. Psychology and Marketing Psychol. Mark., 17(5), 369-385. doi:10.1002/(sici)1520-6793(200005)17:53.0.co;2-g

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Jillian, S. C., Hausknecht, D., & Soutar, G. N. (2000). Cognitive Dissonance after Purchase: A Multidimensional Scale. Psychology and Marketing, 17(5), 369-385. Retrieved April 14, 2016, from https://www.researchgate.net/profile/J_Sweeney/publication/200772678_Cognitive_dissonance_after_purchase_A_multidimensional_scale/links/54d8782d0cf2970e4e77c627.pdf.

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Appendix A- Maslow’s Hierarchy of Needs