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9-1 Chapter 9 Individual Decision Making. 9-2 Stages in Consumer Decision Making Problem Recognition Information Search Evaluation of Alternatives Product.

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Presentation on theme: "9-1 Chapter 9 Individual Decision Making. 9-2 Stages in Consumer Decision Making Problem Recognition Information Search Evaluation of Alternatives Product."— Presentation transcript:

1 9-1 Chapter 9 Individual Decision Making

2 9-2 Stages in Consumer Decision Making Problem Recognition Information Search Evaluation of Alternatives Product Choice Outcomes

3 9-3 Perspectives on Decision Making Rational PerspectiveConsumer researchers have approached decision makers from a Rational Perspective. –People integrate information about a product, weigh pluses and minuses of each alternative, and arrive at a satisfactory decision. –This approach does not describe all forms of decision making. Behavioral Influence PerspectiveBehavioral Influence Perspective explores decisions made under conditions of low involvement. Experiential PerspectiveConsumers may be highly involved in a decision, but still the decisions can not wholly be explained rationally. Experiential Perspective stresses the Gestalt, or totality, of the product or service.

4 9-4 A Continuum of Buying Decision Behavior Habitual Decision Making Habitual Decision Making Limited Problem Solving Limited Problem Solving Extensive Problem Solving Extensive Problem Solving Low-Cost Products Frequent Purchasing Low Consumer Involvement Low Consumer Involvement Familiar Product Class and Brands Familiar Product Class and Brands More Expensive Products Infrequent Purchasing High Consumer Involvement Unfamiliar Product Class and Brands Unfamiliar Product Class and Brands Little Thought, Search, or Time Given to Purchase Extensive Thought, Search, and Time Given to Purchase

5 9-5 Problem Recognition Problem Recognition Problem Recognition Occurs Whenever the Consumer Sees a Significant Difference Between His or Her Current State and Some Desired or Ideal State. Consumer’s Ideal State Consumer’s Actual State Opportunity Recognition Occurs By: Exposure to Different or Better-Quality Products Need Recognition Occurs By: Running Out of a Product Inadequate Product Creating New Needs

6 9-6 Information Search Information Search Information Search is the Process in Which the Consumer Surveys His or Her Environment for Appropriate Data to Make a Reasonable Decision. Types of Search > Prepurchase - an Explicit Search for Information. >Ongoing Search - Browsing Used by Veteran Shoppers for Up-to-Date Information. Information Searches > Deliberate Search is the Result of Directed Learning. >Accidental Search is the Result of Incidental Learning. Information Sources >Internal Search - Memory Scan to Assemble Information. >External Search - Information Obtained from Advertisements, Friends, or People Watching.

7 9-7 The Economics of Information Economics-of-InformationEconomics-of-Information approach assumes that consumers will gather as much data as is needed to make an informed decision. –Implies consumers will continue the search until the rewards of doing so (utility) exceed the costs. Consumers, however, do not always search rationally. –Amount of external search for most products is surprisingly small, even when it would benefit the consumer. Exception: Symbolic products such as clothing. Brand Switch –Consumers often Brand Switch as they seek variety in their product experiences.

8 9-8 Biases in the Decision-Making Process Loss Aversion People Place More Emphasis on Loss Than They Do Gain. Loss Aversion People Place More Emphasis on Loss Than They Do Gain. Mental Accounting Decisions are Influenced by the Way the Problem is Posed (Framing) Mental Accounting Decisions are Influenced by the Way the Problem is Posed (Framing) Sunk-Cost Fallacy Having Paid for Something Makes Us Reluctant to Waste It. Sunk-Cost Fallacy Having Paid for Something Makes Us Reluctant to Waste It.

9 9-9 Framing - Version X You’ve decided to see a Broadway play and have bought a $60 ticket. As you enter the theater, you realize you’ve lost your ticket. You can’t remember the seat number, so you can’t prove to the management that you bought a ticket. Would you spend $60 for a new ticket?

10 9-10 Framing - Version Y You’ve reserved a seat for a Broadway play for which the ticket price is $60. As you enter the theater to buy your ticket, you discover you’ve lost $60 from your pocket. Would you still buy the ticket? (Assume you have enough cash left to do so).

11 9-11 The Consumer’s Prior Expertise Product knowledge Amount of Search Search Tends to Be Greatest Among Those Consumers Who Are Moderately Knowledgeable About the Product.

12 9-12 Types of Perceived Risk

13 9-13 Evaluation of Alternatives Evoked Set Actively Considered Evoked Set Actively Considered Inert Set Aware of, But Would Not Buy Inert Set Aware of, But Would Not Buy Inept Set Not Entering Consideration Inept Set Not Entering Consideration All Alternatives All Alternatives Retrieval Set Retrieval Set Prominent Products in Environment Prominent Products in Environment

14 9-14 Basic Levels Basic Levels Have Much More in Common, But a Number of Alternatives Exist. Levels of Product Categorization Dessert Fattening Dessert Fattening Dessert Nonfattening Dessert Nonfattening Dessert Ice Cream Superordinate Level Superordinate Level Includes Abstract Concepts. Pie Cake Diet Ice Fruit Yogurt Subordinate Levels Subordinate Levels Includes Individual Brands.

15 9-15 Strategic Implications of Product Categorization Identifying Competitors Are Different Products Substitutes? Identifying Competitors Are Different Products Substitutes? Locating Products Consumers’ Expectations Regarding the Places to Locate a Desired Product. Locating Products Consumers’ Expectations Regarding the Places to Locate a Desired Product. Product Positioning Conception of the Product Relative to Other Products in the Consumer’s Mind Product Positioning Conception of the Product Relative to Other Products in the Consumer’s Mind Exemplar Products Most Known, Accepted Product or Brand Exemplar Products Most Known, Accepted Product or Brand

16 9-16 Product Choice: Selecting Among Alternatives Evaluative CriteriaEvaluative Criteria are the dimensions used to judge the merits of competing options. Determinant AttributesThe attributes actually used to differentiate among choices are Determinant Attributes. Marketers can educate consumers about a new decision criterion if they communicate to buyers: –There are significant differences among brands on the attribute. –Supply the consumer with a decision-making rule. –Should convey a rule that can be easily integrated with how the person has made this decision in the past.

17 9-17 Heuristics Common Heuristics Price/ Quality Relationship Price/ Quality Relationship Brand Loyalty Brand Loyalty Product Signal Product Signal Country of Origin Country of Origin Market Beliefs Market Beliefs Brand Names Brand Names Retail Outlets Retail Outlets Heuristics Heuristics are Mental Rules-of-Thumb That Lead to a Speedy Decision.

18 9-18 Heuristics Used By Large Hotel Rule of thumb at Washington hotel Seven days prior to date accept up to 50 rooms overbooking (on top of 724 rooms available); One day prior to date, accept up to 20 rooms being oversold.

19 9-19 Heuristics by Individuals Dump stock if it falls 15% below your purchase price. “If it sounds too good to be true, it is.”

20 9-20 Choosing Familiar Brand Names: Loyalty or Habit? InertiaMany people buy the same brand every time due to Inertia, where a brand is bought out of habit merely because less effort is required. Brand LoyaltyBrand Loyalty is a form of repeat purchasing behavior reflecting a conscious decision to continue buying the same brand. –A brand-loyal customer is actively involved with the product for either emotional or objective reasons. Brand ParityMarketers struggle with Brand Parity, which refers to consumers’ beliefs that there are no significant differences among brands.

21 9-21 Decision Rules Decision Rules Consumers Consider Sets of Product Attributes by Using Different Decision Rules, Depending on the Complexity of the Decision and the Importance of the Decision to Them. Lexicographic Elimination-By-Aspects Conjunctive Noncompensatory Decision Rules Noncompensatory Decision Rules Compensatory Decision Rules Compensatory Decision Rules Simple Additive Weighted Additive


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