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The Consumer Decision The Consumer Decision ProcessProcess
Customer DecisionsCustomer Decisions
Decisions customers make in the marketplace as buyers, payers, and users, include:– Whether to purchase– What to purchase– When to purchase– From whom to purchase– How to pay for it
Consumer Decision Process Model
Purchase
Problem Recognition
Search for Information
Consumption
Post-consumption Evaluation
Divestment
Pre-purchase Evaluation of Alternatives
Consumer Decision Process Continuum
Midrange Problem Solving
Habitual Problem Solving
Extended Problem Solving
High Low
Degree of ComplexityDegree of Complexity
Limited Problem Solving
Consumer Decision Process Model
Problem Recognition
Step 1. Problem RecognitionStep 1. Problem Recognition
Similarities with motivation…not always a problem
Marketers Impact
Consumer Decision Process ModelNeed Recognition
Search for Information
Search For Information
Internal search: retrieving know-ledge from memoryExternal search: collecting informa-tion from peers, family, and the marketplace
Search may be passive as consumers become more receptive to information around them, or consumers can engage in active search behavior
Internal Search: Searching for Internal Search: Searching for Information from MemoryInformation from Memory
What Kind of Information Is Retrieved from Internal Search?– Recall of Brands
Consideration or Evoked Set
– Recall of Attributes– Recall of Evaluations– Recall of Experiences
Awareness, Evoked, and Awareness, Evoked, and Consideration SetsConsideration Sets
Awareness Set (All the brands in the
Awareness)
Brands NOT recalled
Brands NOT considered
Consideration Set(Brands considered)
Evoked Set(Brands recalled)
External Search: Searching for External Search: Searching for Information from Information from the Environmentthe Environment
External Search– Prepurchase Search– Ongoing Search
Sources of Information for Sources of Information for CustomersCustomers
• Advertising• Salespersons• Product/service brochures• Store displays• Company web sites
PERSONAL• Friends and other acquaintances• Past experience
INDEPENDENT SOURCES• Public information (e.g., Consumer
Reports, Better Business Bureau, news reports in media, government publications, such as The Census of Manufacturers)
• Product or service experts: (e.g., auto critic, home appraiser, pharmacist, and so on)
• Internet (bulletin boards)
MARKETER SOURCES NONMARKETER SOURCES
Determinants of the Amount of Determinants of the Amount of SearchSearch
Perceived riskInvolvementFamiliarityExpertiseTime pressure
Brand
Price
Number of CDs
Remote
Audio tape
Weight (kilos)
Panasonic
Venturer
RCA
Sharp
JVC
Sony
375 $
250 $
300 $
325 $
350 $
400 $
3
1
1
1
3
1
Y
N
Y
Y
N
Y
SIMPLE
SIMPLE
DOUBLE
DOUBLE
SIMPLE
DOUBLE
5,0
3,0
5,0
6,0
6,0
4,0
How do we classify information?How do we classify information?
• More infos than presented.
• Not as organized.
• subjective (ex.: design) and/or objective criteria
• accessibility
• biases
• missing infos
Type of InformationType of Information
Type of biasesType of biases
Biases due to the source (salesperson versus family)
Own Biases (mental accounting: challenge to rational evaluation)– Snowstorm and football…– Framing issues
Information Overload (Customers are exposed to so much information that they are unable to process it to make a decision)
Consumer Decision Process ModelNeed Recognition
Search for Information
Pre-purchase Evaluation of Alternatives
Pre-purchase Evaluation of Alternatives
The process of evaluating alter-natives identified from search, which leads to product or brand most likely to satisfy the consumer
Can use new or preexisting evalu-ations stored in memory
Evaluative criteria: standards and specifications used to compare different products and brands
How to Categorize?
Levels of categorization
Strategic Implications for marketers Positioning Identification of competitors
Identification of AlternativesIdentification of Alternatives
What do you think about this What do you think about this ad?ad?
Heuristics
“Simple rules of thumb used to aid judgments or decisions.”
Heuristics: What types of mental shortcuts? Product signal Market beliefs Country of origin Brand Loyalty
Choices: How to make the Choices: How to make the decision?decision?
Alternatives EvaluationAlternatives Evaluation
Other Heuristics– Compensatory – Noncompensatory
The rule :
where
ST = total score;
Ii = importance of attribute i;
Pi = performance of brand i on attribute i;
k = number of attribute.
Multi-Attribute ModelMulti-Attribute Model
k
iiiPIST
1
Brand
Price
Number of CD’s
Remote
Audio Tape
Weight
Panasonic
Venturer
RCA
Sharp
JVC
Sony
2
5
4
3
3
1
5 1 1 1 5 1
5
1
5
5
1
5
1
1
5
5
1
5
2
4
2
1
1
3
Importance 5 2 4 1 3
Multi-Attribute Model Multi-Attribute Model ApplicationApplication
From 1 very bad to 5 very good
474453453341
Use of the multi-attribute rule by Use of the multi-attribute rule by a Customera Customer
Poor (1)4 Average (2) Excellent (4)
Brand 3WEIGHT Brand 1 Brand 2
Excellent (4)1 Poor (1) Good (3)
Good (3)3 Good (3) Poor (1)
4(1) + 3(3) + 1(4) + 2(1) = 19
4(2) + 3(3) + 1(1) + 2(3) = 24
4(4) + 3(1) + 1(3) + 2(2) = 26
Poor (1)2 Good (3) Average (2)
Quality
ATTRIBUTE
Customer support
Fit with desired performance standards
Total
Price
Brand RATINGS
Compensatory Attribute Compensatory Attribute Processing ModelsProcessing Models
Additive Difference Model– Brands Compared by Attribute, Two at a Time– Differences Added Up as Decision Maker Proceeds by
Attribute; e.g.:
Epson Canon DiffPrice 5 3 2Weight 3 4 -1Processor 5 5 0Battery Life 1 3 -2After Sale Support 3 3 0Display Quality 3 3 0 -----------------------------TOTAL -1 (Canon is marginally
better)
Noncompensatory Brand Noncompensatory Brand Processing ModelsProcessing Models
Conjunctive Models– Minimum Cutoffs Set for Each Attribute (Reject if Below Cutoff)– Need Additional Rule to Rule Out Remaining Alternatives (If More
Than One)
Disjunctive Model– Acceptable Levels for Attributes Decided (Reject if Below Cutoff) – Decision Based on Several, but Not All, Important Attributes
Brand
Price
Number of Cd’s
Remote
Audio Tape
Weight (kilos)
Panasonic
Venturer
RCA
Sharp
JVC
Sony
375 $
250 $
300 $
325 $
350 $
400 $
3
1
1
1
3
1
Y
N
Y
N
N
Y
SIMPLE
SIMPLE
DOUBLE
DOUBLE
SIMPLE
DOUBLE
5,0
3,0
5,0
6,0
6,0
4,0
Attribute Threshold
Price :
Number of CD’s :
Remote :
Audio tape :
weight :
No more than 325 $ One is enough Yes, mandatory double no more than 5 kilos
Conjonctive RuleConjonctive Rule
Disjonctive RuleDisjonctive Rule
Brand
Price
Number of Cd’s
Remote
Audio Tape
Weight (kilos)
Panasonic
Venturer
RCA
Sharp
JVC
Sony
375 $
250 $
300 $
325 $
350 $
400 $
3
1
1
1
3
1
Y
N
Y
Y
N
Y
SIMPLE
SIMPLE
DOUBLE
DOUBLE
SIMPLE
DOUBLE
5,0
3,0
5,0
6,0
6,0
4,0
Attribute Threshold
Price :
Number of CD’s :
Remote :
Audio tape :
weight :
No more than 300 $ At least Yes, mandatory double no more than 4 kilos
Noncompensatory Attribute Noncompensatory Attribute Processing ModelsProcessing Models
Lexicographic Model– Attributes ordered by importance– If one alternative dominates on that attribute, it is
chosen; otherwise, proceed to next most important attribute
– I want to get the brand that does best on the attribute(s) most important to me.
Elimination by Aspects– Attributes ordered by importance; alternatives
acceptable on first attribute proceed to evaluation on further attributes
– I will eliminate any brands that have a value of 3 or below, beginning with the most important attribute.
Elimination by AspectsElimination by Aspects
Brand
Price
Number of Cd’s
Remote
Audio Tape
Weight (kilos)
Panasonic
Venturer
RCA
Sharp
JVC
Sony
375 $
250 $
300 $
325 $
350 $
400 $
3
1
1
1
3
1
Y
N
Y
Y
N
Y
SIMPLE
SIMPLE
DOUBLE
DOUBLE
SIMPLE
DOUBLE
5,0
3,0
5,0
6,0
6,0
4,0
Attribute Importance order Threshold
Price :
Number of CD’s :
Remote :
Audio tape :
weight :
1 5 2 4 3
No more than 375 $ One is enough Yes, mandatory double no more than 5 kilos
Lexicographic RuleLexicographic Rule
Brand
Price
Number of Cd’s
Remote
Audio Tape
Weight (kilos)
Panasonic
Venturer
RCA
Sharp
JVC
Sony
375 $
250 $
300 $
325 $
350 $
400 $
3
1
1
1
3
1
Y
N
Y
Y
N
Y
SIMPLE
SIMPLE
DOUBLE
DOUBLE
SIMPLE
DOUBLE
5,0
3,0
5,0
6,0
6,0
4,0
Attribute Importance Order
Price :
Number of CD’s :
Remote :
Audio tape :
weight :
3 5 1 4 2
What did you learn ?What did you learn ?
CASE ANALYSISCASE ANALYSIS
Reality of Consumer Decision Reality of Consumer Decision MakingMaking
Consumers may use multiple decision-making strategies Emotions and imagery often accompany rational, cognitive
analysis
ALL ALTERNATIVES
NON-COMPENSATORY
EVALUATION
COMPENSATORYEVALUATION
SURVIVINGALTERNATIVES
Consumer Decision Process Model
Purchase
Need Recognition
Search for Information
Pre-purchase Evaluation of Alternatives
Purchase
Purchase decisions involve choosing a form of retailing, a specific retailer, and a particular product and brand
Purchase intention can change during the purchase stage--it can be influenced by factors such as in-store promotions, discounts, or stock-outs
Deviation From the Identified Deviation From the Identified ChoiceChoice
The preferred brand may be out of stockNew in-store information may reopen the
evaluation processFinancing terms may render a purchase
infeasible
Consumer Decision Process Model
Purchase
Need Recognition
Search for Information
Consumption
Prepurchase Evaluation of Alternatives
Consumer Decision Process Model
Purchase
Need Recognition
Search for Information
Consumption
Post-consumption Evaluation
Pre-purchase Evaluation of Alternatives
Post-consumption Evaluation Satisfaction: when expectations are met or exceeded by perceived performance
Dissatisfaction: when performance falls short of expectations
Consumption is an important determinant of satisfaction
Cognitive dissonance: questioning decision (post-purchase regret)
Emotion affects evaluation
Importance of Customer Importance of Customer SatisfactionSatisfaction
Satisfied customers come backLeads to profitability
– Example: Consumer in supermarket spends over $50,000 in a life time
– Satisfied customer can provide $150,000 of business for a car dealer over a life time
Exhibit 12.8: The Disconfirmation Paradigm
Measuring Satisfaction in TermsMeasuring Satisfaction in Termsof Expectationsof Expectations
How did we do? How was our:
Fell Below Expectations
Met Expectations
Exceeded Expectations
Room appearance
Room cleanliness
Registration speed
Friendliness of staff
Room service promptness
Customer DissatisfactionCustomer Dissatisfaction
Dissatisfied customers stop purchasing, complain, and spread negative WOM.
The average business does not hear from 96% of its unhappy customers.
The average person with problems tells 9 or 10 people.
95% of complainers will do business with you if complaint is resolved quickly.
Responses to DissatisfactionResponses to Dissatisfaction
Complaints– Consumer Complaints– When Complaints Are Likely to Occur– Complainer Types
Satisfaction Is Not EnoughSatisfaction Is Not Enough
65% to 85% of customers who defect to competitors say they were “satisfied” or “very satisfied.”
Customer retention is key--develop long-term relationships.
Customer Retention TacticsCustomer Retention Tactics Care about your customers. (2/3 of customers defect
because they feel the company doesn’t care about them.) Remember customers between sales. (Contact on
birthdays, etc.) Build trusting relationships (expertise, reliability, concern). Monitor the service delivery process. Be there when you are needed (service and repair). Provide extra effort (beyond the call of duty).
Irrevocability of the decision
Choice
Difficulty of choice
DoubtsCognitive
Dissonance
Stress
Strategies Reduce Importance
of the decision
Reduceperceived value
of rejected options
Importanceof the decision
Anxiety of the consumer
IncreasePerceived value
Of chosen option
Cognitive DissonanceCognitive Dissonance
Consumer Decision Process Model
Purchase
Need Recognition
Search for Information
Consumption
Post-consumption Evaluation
Divestment
Pre-purchase Evaluation of Alternatives
Divestment
How consumers dispose of the packaging or product after use
Options include:DisposalRemarketing or resellingRecycling
Consumers’ environmental concerns about divestment may affect product choice
Variables Shaping the Decision Process
Environmental Differences:
Culture: values, ideas, artifacts, and symbols that help individuals interpret, communicate, and evaluate as members of society
Social Class
Family
Personal Influence
Situation
Happy Halloween!!!Commercial Time
This is a car advertisement from Germany.
When they finished filming the ad the people who made it noticed something moving along the side of the car, like a ghostly white mist.
The ad was never put on TV because the unexplained ghostly phenomenon frightened the production team out of their wits. Watch it carefully and about halfway look and you will see the white mist crossing in front of the car then following it along the road......Spooky!
Case StudyCase Study
1. Watching the purchase decision of some of the people in the video, would you say this pattern is typical of a product in a low-involving category? Describe the purchase process of one of these persons or your own purchase decision?
2. What are the key attributes of the product? How does the company position itself relatively to these attributes?
3. How important are other people in the decision making process regarding the purchase of this product? How does the company use this aspect? What do you think of that?