1. 14-1 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

2. 14-2 PART IV: CONSUMER DECISION PROCESS

3. 14-3 CHAPTER 14 CONSUMER DECISION PROCESS AND PROBLEM RECOGNITION © M. Hruby

4. 14-4 Consumer Behavior In The News… One person’s problem is another person’s…  Many people would pay to NOT have snow.  Indeed snow REMOVAL is a major industry in colder climates.  But would people pay to HAVE snow? Source: A. Warren, “Winter Wonderland at 72˚,” The Wall Street Journal, December 23, 2003, p. B1/4.

5. 14-5 Consumer Behavior In The News… One person’s problem is another person’s…  Would people pay to HAVE snow?  Turns out – yes!  People in warmer climates such as Texas, Arizona, Florida, Georgia.  Often want snow for Christmas season but rarely get it naturally.  So, they buy it! Source: A. Warren, “Winter Wonderland at 72˚,” The Wall Street Journal, December 23, 2003, p. B1/4.

6. 14-6 Types of Consumer Decisions Purchase involvement Purchase involvement is the level of concern for, or interest in, the purchase process. Triggered by need to consider a particular purchase. A temporary state influenced by the interaction of individual, product, and situational characteristics.

7. 14-7 Types of Consumer Decisions

8. 14-8 Types of Consumer Decisions A consumer may be very involved with a brand (e.g., Starbucks) or a product category, BUT… have low purchase involvement due to brand loyalty, time pressures, etc. Product involvementenduring involvement Product involvement or enduring involvement is very different from purchase involvement.

9. 14-9 Types of Decision Making 1.Nominal Decision Making Brand Loyal Purchases Repeat Purchases 2.Limited Decision Making 3.Extended Decision Making

10. 14-10 Types of Decision Making Nominal decisions occur when there is very low involvement with the purchase. A completely nominal decision does not even include consideration of the “do not purchase” alternative. Consumer buys Campbell’s without considering other brands, its price, etc. Nominal decision making habitual decision making Nominal decision making, a.k.a., habitual decision making, in effect involves no decision per se. Nominal Decision Making

11. 14-11 Nominal Decision Making Nominal decision can be broken into two categories: 1.Brand Loyal Purchases  High commitment to brand 2.Repeat Purchases  Low commitment to brand

12. 14-12 Types of Decision Making Middle ground between nominal and extended decision making. Involves recognizing a problem for which there are several possible solutions. Decision based only on buying the cheapest rolls. Limited decision making Limited decision making involves internal and limited external search, few alternatives, simple decision rules on a few attributes, and little postpurchase evaluation. Limited Decision Making

13. 14-13 Types of Decision Making It is a response to the high level of purchase involvement. During post-purchase evaluation, doubts are likely and a thorough evaluation takes place. Emotional decisions may involve substantial cognitive effort. Extended decision making Extended decision making involves extensive internal and external search followed by a complex evaluation of multiple alternatives. Extended Decision Making

14. 14-14 The Process of Problem Recognition Problem recognition Problem recognition is the result of a gap between a desired state and an actual state sufficient to arouse and activate the decision process.  actual state  An actual state is the way an individual perceives his/her feelings and situation to be at the present time.  desired state  A desired state is the way an individual wants to feel or be at the present time. The Nature of Problem Recognition

15. 14-15 The Process of Problem Recognition

16. 14-16 The Process of Problem Recognition 1. 1.The magnitude of the discrepancy between the desired and actual states, and 2. 2.The relative importance of the problem Desire to resolve a particular problem depends on: The Nature of Problem Recognition In general, importance is determined by how critical the problem is to maintenance of desired lifestyle.

17. 14-17 The Process of Problem Recognition Types of Consumer Problems Active Problem active problem An active problem is one the consumer is aware of or will become aware of in normal course of events. Marketing strategy Marketing strategy: Only require marketer to convince consumers that its brand is the superior solution. Inactive Problem inactive problem An inactive problem is one of which the consumer is not aware. Marketing strategy Marketing strategy: Marketer must convince consumers that they have the problem AND that their brand is a superior solution.

18. 14-18 Uncontrollable Determinants of Problem Recognition Nonmarketing Factors Affecting Problem Recognition

19. 14-19 Uncontrollable Determinants of Problem Recognition Variety-seeking Variety-seeking is a challenge to marketers because it means that consumers switch brands for reasons beyond a company’s control. Sensory-specific satiety Sensory-specific satiety – consumers get bored (satiated) with sensory attributes more than on non-sensory attributes. Offering variety on key sensory attributes can increase loyalty to the brand even if consumers engage in variety seeking. Variety WITHIN brand can drive loyalty in the face of variety seeking.

20. 14-20 Marketing Strategy and Problem Recognition 1.Discovering Consumer Problems 2.Responding to Consumer Problems 3.Helping Consumers Recognize Problems 4.Suppressing Problem Recognition

21. 14-21 Marketing Strategy and Problem Recognition A wide variety of approaches are used to determine the problems consumers face. Discovering Consumer Problems 1.Intuition 1.Intuition - the most common, however, the problem identified may be of low importance to most consumers 2.Survey 2.Survey – asks relatively large numbers of individuals about the problems they are facing 3.Focus Groups 3.Focus Groups – composed of 8 to 12 similar individuals brought together to discuss a particular topic; a moderator is present to keep the discussion moving and focused on the topic but otherwise free flowing

22. 14-22 Marketing Strategy and Problem Recognition Surveys and focus groups use one of the following approaches to problem identification: Discovering Consumer Problems 1. Activity Analysis Focuses on a particular activity to determine what problems consumers encounter during the performance of the activity. 2. Product Analysis Examines the purchase or use of a particular product or brand. Consumers may be asked about problems associated with using a product or brand. 3. Problem Analysis Starts with a problem and asks which activities, products, or brand are associated with (or perhaps could eliminate) those problems

23. 14-23 Marketing Strategy and Problem Recognition Human Factors Research Human factors research attempts to determine human capabilities in areas such as vision, strength, response time, flexibility, and fatigue and the effect on these capabilities of lighting, temperature, and sound.   Observational techniques such as slow-motion and time- lapse photography, video recording, and event recorders are particularly useful methods.   This type of research can sometimes identify functional problems that consumers are unaware of. Discovering Consumer Problems

24. 14-24 Marketing Strategy and Problem Recognition Emotion Research Marketers are increasingly conducting research on the role of emotions in problem recognition and resolution.  focus group researchpersonal interviews  Common approaches are focus group research and personal interviews that examine the emotions associate with certain problems.   Critical in helping marketers anticipate consumer reaction to problems and train customer service personnel to respond appropriately. Discovering Consumer Problems

25. 14-25 Marketing Strategy and Problem Recognition Once a consumer problem is identified, the manager may structure the marketing mix to solve the problem. This can involve: Responding to Consumer Problems Developing a new product or altering an existing one Modifying channels of distribution Changing pricing policy, or Revising advertising strategy

26. 14-26 Marketing Strategy and Problem Recognition Generic versus Selective Problem Recognition Helping Consumers Recognize Problems Generic Problem Recognition Involves a discrepancy that a variety of brands within a product category can reduce Increasing generic problem recognition generally results in an expansion of the total market Selective Problem Recognition Involves a discrepancy only one brand can solve Firms attempt to cause selective problem recognition to gain or maintain market share

27. 14-27 Marketing Strategy and Problem Recognition Approaches to Activating Problem Recognition How can a firm influence problem recognition? problem recognition Recall that problem recognition is a function of (1) (1)the importance, and (2) (2)the magnitude desired state of a discrepancy between the desired state and an existing state Helping Consumers Recognize Problems

28. 14-28 Marketing Strategy and Problem Recognition Approaches to Activating Problem Recognition Helping Consumers Recognize Problems Many marketing efforts attempt to influence the desired state, often advertising the benefits their products will provide and hoping that these benefits will become desired by consumers. It is also possible to influence perceptions of the existing state through advertisements. Critics frequently question the ethics of activating problem recognition, especially for problems related to status or social acceptance.

29. 14-29 Applications in Consumer Behavior With permission by GlaxoSmithKline. The Nicoderm CQ ad shows how marketers often attempt to cause consumers to recognize potential problems for which the product provides a solution.

30. 14-30 Marketing Strategy and Problem Recognition The Timing of Problem Recognition Helping Consumers Recognize Problems Consumers often recognize problems at times when purchasing a solution is difficult or impossible, such as deciding to purchase a generator during a hurricane becoming aware of the need for health insurance after being hospitalized A common marketing strategy is to trigger problem recognition in advance of the actual problem

31. 14-31 Marketing Strategy and Problem Recognition Suppressing Problem Recognition Helping Consumers Recognize Problems Occasionally information is introduced in the market place that triggers problem recognition that some marketers prefer to avoid.   Obviously marketers do not want their current customers to recognize problems with their brands.   Effective quality control and distribution (limited out-of-stock situations) are important in this effort.   Packages and package inserts that assure the consumer of the wisdom of their purchase are also common.