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Making critical decisions is always nerve-wracking, whether you’re the CEO of a company approving a new marketing strategy, or a consumer deciding on a new car.  Decisions come with multiple variables and therefore multiple potential outcomes. Sometimes there are several stakeholders in the decision-making process that further complicate the matter. But thanks to Thomas L. Saaty, who developed the Analytical Hierarchy Process, decision-making has become a science that can help both businesses and consumers make decisions.

The Analytical Hierarchy Process works by choosing an objective, defining criteria, and picking alternatives. For example, if your objective is determining the direction for new product development, you would choose criteria essential to the decision-making process such as market viability, cost to develop, and competitor considerations. Next, decide on what your alternatives will be. If you’re a company that provides home kitchen products, your alternatives could be a set of steak knives, a collection of trendy dish ware, or a new food processor.

To take the decision-making process a step further, you would rank the criteria once you have determined them. For example, if market viability is more essential to the direction in which new product development goes, and cost to develop is more important than competitor considerations, you might rank market viability 2x more important than cost to develop, and 4x more important than competitor considerations, while cost to develop is ranked 3x more important than competitor considerations.

Analytical Hierarchy Process

This is where the math starts getting a little tricky. Once you have your rankings and your alternatives, you can create a pairwise comparison that compares alternatives and their relative criteria rankings. For more information about how to create a pairwise comparison table, click here.

Keep in mind that the decision-making process is a two-way street. Marketers may go into depth using the AHP when choosing the next product release or the generation and evaluation of marketing mix strategies, but consumers also perform a AHP of sorts when they’re considering purchasing an item.

While the process consumers use may not be as intensive or thorough as an Analytical Hierarchy Process, it does not mean that their decision-making process is any less systematic. When making purchasing decisions, consumers go through a funnel in which they are presented with multiple brands and product options (alternatives). Customers already have a mental checklist of criteria they’re looking for when choosing a product, and with a combination of marketing efforts and effective branding, consumers narrow down those alternatives until they reach a decision.

According to Hubspot, there are 10 criteria that most heavily effect why and what consumers buy:

  • Product quality: 56%
  • Free shipping: 49%
  • Easy return: 35%
  • Customer reviews: 33%
  • Visual search: 30%
  • Great navigation: 26%
  • Checkout ease: 24%
  • Multiple options: 24%
  • Special size: 12%
  • New product: 10%

As you can see, the most important factor in purchasing decisions is good product quality. We previously wrote a post about whether or not loyalty rewards and promotions are effective in regards to completing the sales funnel. In that scenario as well, it turns out that promotions matter very little if the quality of the product is poor.

Further data seems to prove the importance that consumers place on quality. For example, 62% of shoppers do research in-store for big ticket items before purchasing online. We can ask ourselves, ‘Why would consumers go through the hassle of driving to a store if they were planning on buying online?’ We can assume that, while purchasing online may be simpler, there’s no better way to test for quality than by interacting with a product in person.

Moreover, nine out of ten consumers tend to watch videos about products they’re considering for purchase. We can further assume that if a consumer cannot or is unwilling to interact with a product in person, viewing someone else test for quality is the next best thing.

However, it’s not only product quality that matters. Customers like to buy good quality products that come at competitive pricing. Hubspot also reports that 80% of consumers say that the most important store feature that influences buying decisions is competitive pricing, and consumers are very aware of the competition. For instance, 76% of smartphone owners use their devices while shopping in-store. Smartphones make it easier for shoppers to do their research while they’re shopping, including checking similar products at competitive prices.

These are generally the criteria that customers are ranking mentally as they go through the purchase funnel, so knowing how and why customers choose to buy can help marketers create effective Analytical Hierarchy Processes, resulting in better decision-making and more successful marketing campaigns.

If you’re looking to better understand how consumers make decisions, consider contacting Eye Faster using the box below for a consultation.

 



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