BUS3DIG Digital Business: Amazon is Disrupting Major Supermarkets

Digital Consumer Behaviour

The new Consumer Decision-Making Process

The traditional consumer decision-making process incorporated five major steps:

• Step 1 – Need recognition: Identifying a problem/need (e.g. I need a suit for a wedding).
• Step 2 – Information search: Conducting search using internal (past experiences) and external sources (go to mall or browse the internet).
• Step 3 – Evaluations of alternatives: Evaluate options according to criteria (price, quality, etc.).
• Step 4 – Purchase: Exchange money for goods/services (i.e. buy the suit)
• Step 5 – Post-purchase behavior: Match performance against expectations (e.g. suit looks amazing meaning the consumer is satisfied with their purchase decision)

The loyalty loop

Whilst the above model still holds theoretical value, a new model has emerged due to the proficient use of digital channels by consumers, called the loyalty loop. The loyalty loop acknowledges the impact that technology and social media have had on most consumers.

Differences between the old and the new

Some of the key differences between the original consumer decision-making process and the loyalty loop are:

• An extended evaluation phase: Consumers now spend more time evaluating options given the information available. For businesses, this means the opportunity for more detailed or personalized communication.
• Post-purchase behavior more intense: Following a purchase, new media has enabled consumers to advocate the brand (e.g e-WOM). For marketers, this means forming relationships with consumers post-purchase through digital channels to encourage advocacy to eventually creating that bond that inspires loyalty.

Overall, the loyalty loop manages the ongoing customer experience better. The old model fails to capture all the touchpoints (moments when consumers are open to influence) and key buying factors resulting from the explosion of product choices and digital channels, coupled with the emergence of an increasingly well-informed consumer.