Presentation on theme: "Individual Decision Making"— Presentation transcript:
1 Individual Decision Making Chapter 9IndividualDecision Making
2 Stages in Consumer Decision Making Problem RecognitionInformation SearchStages in Consumer Decision MakingEvaluation of AlternativesProduct ChoiceOutcomes
3 Perspectives on Decision Making Consumer 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 Perspective explores decisions made under conditions of low involvement.Consumers 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 A Continuum of Buying Decision Behavior Habitual DecisionMakingLimited ProblemSolvingExtensive ProblemLow-Cost ProductsMore Expensive ProductsFrequent PurchasingInfrequent PurchasingLow ConsumerInvolvementHigh Consumer InvolvementFamiliar Product Classand BrandsUnfamiliar Product Class and BrandsLittle Thought, Search, or Time Given to PurchaseExtensive Thought, Search, and Time Given to Purchase
5 Problem RecognitionProblem Recognition Occurs Whenever the Consumer Sees a Significant Difference Between His or Her Current State and Some Desired or Ideal State.Consumer’s Ideal StateNeed RecognitionOccurs By:Running Out of a ProductInadequate ProductCreating NewNeedsOpportunity Recognition Occurs By: Exposure to Different or Better-Quality ProductsConsumer’s Actual State
6 Information SearchInformation Search is the Process in Which the Consumer Surveys His or Her Environment for Appropriate Data to Make a Reasonable Decision.Types of SearchPrepurchase - an Explicit Search for Information.Ongoing Search - Browsing Used by Veteran Shoppers for Up-to-Date Information.Information SourcesInternal Search - Memory Scan to Assemble Information.External Search - Information Obtained from Advertisements, Friends, or People Watching.Information SearchesDeliberate Search is the Result of Directed Learning.Accidental Search is the Result of Incidental Learning.
7 The Economics of Information Economics-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.Consumers often Brand Switch as they seek variety in their product experiences.
8 Biases in the Decision-Making Process Mental AccountingDecisions are Influenced by the Waythe Problem is Posed (Framing)Sunk-Cost FallacyHaving Paid for Something MakesUs Reluctant to Waste It.Loss AversionPeople Place More Emphasis onLoss Than They Do Gain.
9 Framing - Version XYou’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 Framing - Version YYou’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 The Consumer’s Prior Expertise Search Tends to Be Greatest Among Those Consumers Who Are Moderately Knowledgeable About the Product.Product knowledgeAmount of Search
13 Evaluation of Alternatives AllAlternativesEvaluation of AlternativesEvoked SetActivelyConsideredInert SetAware of, ButWould Not BuyInept SetNot EnteringConsiderationRetrievalSetProminentProducts inEnvironment
14 Levels of Product Categorization Superordinate Level Includes Abstract Concepts.DessertNonfatteningDessertFatteningDessertBasic Levels Have Much More in Common, But a Number of Alternatives Exist.Ice CreamCakeFruitDiet IcePieSubordinate Levels Includes Individual Brands.Yogurt
15 Strategic Implications of Product Categorization Product PositioningConception of the Product Relative to Other Products in the Consumer’s MindIdentifying CompetitorsAre Different Products Substitutes?Exemplar ProductsMost Known, Accepted Product or BrandLocating ProductsConsumers’ Expectations Regarding thePlaces to Locate a Desired Product.
16 Product Choice: Selecting Among Alternatives Evaluative Criteria are the dimensions used to judge the merits of competing options.The 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 Heuristics are Mental Rules-of-Thumb That Lead to a Speedy Decision. Countryof OriginProductSignalBrandLoyaltyMarketBeliefsCommonHeuristicsRetailOutletsPrice/ QualityRelationshipBrandNames
18 Heuristics Used By Large Hotel Rule of thumb at Washington hotelSeven 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 Heuristics by Individuals Dump stock if it falls 15% below your purchase price.“If it sounds too good to be true, it is.”
20 Choosing Familiar Brand Names: Loyalty or Habit? Many 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 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.Marketers struggle with Brand Parity, which refers to consumers’ beliefs that there are no significant differences among brands.
21 Elimination-By-Aspects Decision RulesConsumers 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.LexicographicSimple AdditiveNoncompensatoryDecision RulesCompensatoryDecision RulesElimination-By-AspectsWeighted AdditiveConjunctive