ConsumerConsumerDecision MakingDecision Making

Chapter 9

Consumer Decision Making

Snapshot from the Marketplace

One culprit in our economy’s recent downturn was the subprime mortgage crisis.

View vary regarding precisely who was responsible for the collapse of the market.

Many observers blame faulty decision making on the part of consumers to take out such loans just as much as faulty decision making on the part of the banks that issued these loans.

Consumers and Decisions

The U.S. consumer is one of the most cared for and pampered in the world.

Consumers in our society are faced with a wide product selection, vast product information, and myriads of places at which to shop.

The process of buying is almost always preceded by some sort of decision process.

The Decision Process

A decision is an act that occurs only if we are faced with two or more alternative courses of action, all of which have high probabilities of bringing about a desired end result.

Are Consumers Rational?

Unlike the rational decision maker picture painted by classical economic theory, we as consumers are unlikely to act as computing entities that mathematically gauge the outcomes of each alternative considered.

We engage in a variety of shortcuts to make choices by weighing shopping effort against task importance, a tendency known as constructive processing.

Effort Variation in Decision Making

Effort consumers expend when buying is largely

a function of involvement. Involvement: Degree of personal

relevance a product or service holds for the consumer

Two degrees of involvement: Low involvement High involvement

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Marketing Implications of Different Levels of Involvement

High-Involvement Purchase and Consumption Complex purchase process by highly involved

consumers Attention is increased and more importance is

attached to the stimulus object.

Low-Involvement Purchase and Consumption Minimal decision making for low-involvement

products Attention is low and less importance is attached to

the stimulus object

Classification of Decision-Making

Decisions fall somewhere between the two extremes of:

Nonprogrammed Decisions: Novel or infrequently encountered decisions requiring a tailored approach

These include: Extended problem solving Limited problem solving Impulse purchases

Programmed Decisions: Habitual routines requiring no special thought

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Consumer Involvement

Cognitive involvement involvement that includes heightened thinking and

processing of information about the goal object. Affective involvement

involvement that includes heightened feelings and emotional energy.

Enduring involvement represents the long-term interest that a consumer has in

a product class. Situational involvement

temporary interest in a purchase or consumption process.

Stages in Problem Solving

1. Problem recognition

2. Search activity

3. Identifying and evaluating alternative solutions

4. Purchase or commitment

5. Postpurchase considerations

Problem Recognition

External

Internal

Search

Identifying and Evaluating Alternative

PurchasePostpurchase Considerations

1. Problem Recognition

To get consumers to act, it is

necessary for marketers to arouse in consumers a state of tension or incongruity between an actual and a desired state of affairs.

Problem recognition & its associated tension state trigger behavior

Sources of Problem Recognition

Assortment depletionsAssortment inadequacies due to changing

life circumstancesOther product acquisitionsProduct obsolescenceExpanded or contracted meansExpanded awareness via marketing stimuli

2. Search Activity

Familiarizing oneself with courses of action available to solve the problem

Types of search Internal Search: Retrieving relevant

information from memorySharpeningLeveling

External Search: Seeking information from exogenous (outside) sources

3. Identifying & Evaluating Alternative Solutions

Two activities are involved in the evaluation process: A. To narrow down product alternatives to a

manageable number B. To evaluate attributes of each alternative in

order to select the best option

3. Identifying & Evaluating Alternative Solutions (cont’d)

A. Narrowing down product alternatives calls to mind our evoked set An evoked set is a small number of brands that we

recall when we contemplate buying a particular product

Consumers often seek to simplify purchase decisions by seeking shortcuts to reduce both mental and physical shopping effort—a practice known as employing heuristics

3. Identifying & Evaluating Alternative Solutions (cont’d)

B. Evaluating attributes of the contemplated choices can be either effort-laden (in the case of systematic information search) or effortless (in the case of heuristic processing).

3. Identifying & Evaluating Alternative Solutions (cont’d)

Assessing the positiveness or negativeness of alternatives can be explained by Prospect theory. This theory suggests that a consumer’s perceptual

apparatus is attuned to the evaluation of relative rather than absolute magnitude of value.

According to this theory, as a consumer psychologically evaluates the positiveness or negativeness of prospects (options), the evaluation of the impact of these possible outcomes does not always align with their actual value.

4. Purchase or Commitment

The purchase decision is the outcome of the search process.

Consumers use a number of decision rules (analytical procedures) to reach a choice among alternatives.

Types of decision rules: Compensatory: simultaneous evaluation of alternatives

on various product attributes—a high score on one attribute of a brand can offset a low score on another

Noncompensatory: alternatives are evaluated singly, eliminating options that fail to meet a specific important attribute

5. Postpurchase Considerations

Feelings of satisfaction or dissatisfaction due to product performance are natural outcomes of the purchase process

Distinguish between: Instrumental performance: utilitarian

performance of the product as a means to a set of ends

Expressive performance: the social or psychological aspects of the product that consumers regard as ends in themselves

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Involvement as a Segmentation Variable

Brand loyalists those who are highly involved both with the product

category and with particular brands. Information seekers

those who are highly involved with a product category but who do not have a preferred brand.

Routine brand buyersthose who are not highly involved with the product

category but are involved with a particular brand in that category.

Brand switchers those who are not involved with the product category or

with particular brands.

Consumer Satisfaction/Dissatisfaction

Consumer dissatisfaction is an attitude formed toward a product, place, or action.

This attitude is influenced by both the level of expended effort and by the level of expectations of the outcome. Effort is equated with financial, physical, and/or

mental sacrifice. Satisfaction is equated with feelings of being

adequately or inadequately rewarded for the sacrifice made.

Marketing Implications of Consumer Satisfaction or Dissatisfaction

Satisfaction or dissatisfaction is a function of the discrepancy between obtained versus expected outcomes.

If expectations are high, but product performance falls below expectations, dissatisfaction arises.

Since overstated product claims can unrealistically raise consumers’ expectation levels, use of such strategy may be counterproductive in promotional efforts.

Consumer Complaints

Consumer dissatisfaction is of great concern to marketers.

It is more cost-effective to keep existing customers than to win new ones.

A typical dissatisfied customer informs a number of others about the incident.

It is vital that companies immediately redress consumer dissatisfaction.

To Whom Do Consumers Complain?

Consumers direct their complaints to a variety of places including: The firm’s customer service department State agencies The Federal Trade Commission The mass media Credit card companies The Better Business Bureau (BBB)

Methods of Redressing Consumer Complaints

Establishing web-based service centers (or web-enabled customer contact centers) to facilitate communication with consumers

Establishing a customer service department to collect, analyze, and diligently respond to consumer complaints

Providing consumers with factual and objective information from credible sources including blogs, testimonials, and experts