Alternative Evaluation and Choice Chapter 3 Alternative Evaluation and Choice

Chapter Spotlights Alternative evaluation Consumer benefits and evaluative criteria Consumer decision rules and heuristics Planned versus unplanned purchasing Outlet selection Outlet image Consumer choice and shopping behavior

Consumer Evaluation Sets Universal set: all product classes and/or all brand alternatives (and outlets) with reasonable marketplace access whether the consumer is aware of them or not Retrieval set: subset of universal set that consumers can bring up from memory Consideration set: subset of retrieval set from which the consumer intends to make a selection

Evaluative Criteria Evaluative criteria: the means by which consumers compare product classes, brands, vendors, etc. Tangible: benefits based on such things as price, color, size, shape, performance Intangible: benefits based on such things as brand image, ownership feelings

Alternative Evaluation The process through which we compare and contrast different solutions to the same marketplace problem. It is the third step in the consumer decision-making process: Problem recognition Information Search Alternative evaluation Choice Outcomes

Evaluative Criteria Typically, consumers use from four to six criteria. The more important the purchase and/or the greater experience a consumer has with the product class, the greater the number of criteria used. Criteria may be used in combination. The more important the decision, the fewer are the acceptable alternatives.

What Is the Relative Importance of Each Criterion? Importance = salience Evaluative criteria salience varies by product, situation, and person Determining relative importance – the “100 points” rule; ask consumers to distribute 100 “importance points” among criteria based on relative importance (see Exhibit 3-1)

Country of Origin, Price, and Brand, as Evaluative Criteria Country of origin is used to signal product quality Use of price as criterion varies across product categories: Acceptable price range is determined by past purchases; perception of benefits vs. costs indicates value; and the buying situation. Brand reputation Brand may be viewed as an indicator of quality and/or consistency of satisfaction - lessening risk.

Consumer Decision Rules How consumers evaluate and choose products and services in different buying situations. Rules are used consciously or unconsciously Three types of rules Noncompensatory rule: one in which the weaknesses of an alternative are not offset by its strengths (not designed to find “winners”) Compensatory rule: allowing for trade-offs among strengths and weaknesses (find “winners”) Decision heuristics: these are rules of thumb or short cuts that allow quick decision-making

Noncompensatory Rules Disjunctive: decide which criteria are determinant (or not) and then establish a minimum score for each one. Meet minimum “in” do not “out” Conjunctive: consider all criteria as determinant and then establish a minimum acceptable score for each one. Meet all minima “in” otherwise “out” Lexicographic: rank each of the evaluative criteria in order of importance; compare alternatives on most important with highest score winning; if tie for high score those tied evaluated on second most important criterion, etc., until “winner” is found

Compensatory Rules Simple additive: total scores on all evaluative criteria for each alternative and the highest score wins (assumes all criteria of equal importance) Weighted additive: assign relative weight to each criterion based on perceived importance and then multiply the score by the relative weight to arrive at a weighted score, sum scores, highest weighted score wins

Decision Heuristics Mental rules of thumb or shortcuts that help consumers reach decisions quickly and efficiently. Examples: Price: “the higher the price the better the quality” Brand reputation: if it’s brand X, it must be good (or bad) Key product features: if a used car has a clean interior, a buyer may also infer a mechanically sound vehicle. Market beliefs

Choice – Purchase Situations Four types of purchase situation: Specifically planned Generally planned Substitute Unplanned

Planned Purchasing Behavior Understanding “buying intention” is key to predicting and potentially influencing planned behavior Measuring purchasing intention can be done: Measures of intention may not provide accurate results since situational influences change The method of questioning may be flawed itself. (A solution: “Yes” or “No” about doing something; then determine probability of doing this)

Intervention of Planned Purchases Intervening variables: changes that may have an impact on the actual purchase behavior Financial status, employment situation, family or household size, weather, etc. Deliberation: the longer we put off a purchase the higher the likelihood that either the purchase will not be made or the choice will change.

Unplanned Purchasing Behavior Four types of unplanned purchases Pure impulse: those that are bought for the sake of novelty Reminder impulse: are routine purchases, albeit unanticipated. Suggestion impulse: when a product (not previously seen) stimulates immediate need recognition Planned impulse: responding to a special incentive to buy an item considered in the past but not selected

How do Marketers Encourage Unplanned Purchases? Point-of-purchase displays Reduced prices In-store coupons or specials (Kmart’s Blue Light specials) Multiple-item discounts Packaging In-store demonstrations Store atmosphere Salespeople

Choice Outlet selection or brand choice, which comes first? Brand choice first Brand loyalty No outlet loyalty or preference No need for the expertise of salespeople (knowledgeable consumers) Outlet choice first High store loyalty or preference Low brand loyalty Need for helpful sales staff Brand and outlet working together Find the best fit for the consumer’s self image

Outlet Image and Choice Image: the sum total of various functional and psychological outlet attributes Functional attributes: merchandise, prices, credit policies, store layout, etc. Psychological attributes: sense of belonging, feeling of warmth or excitement, etc.

Outlet Image (continued) Retailers (stores, catalogs, Web sites, etc.) use attributes that imply certain benefits to attempt to create an image that appeals to their target market(s) Influences on outlet choice include the level of involvement, perceived risk, advertising, prices, and outlet size.

Consumer Choice and Shopping Behavior Why do people shop? Personal and social motives How do people shop? Shopping orientation: their style or way of shopping Choice decision during the shopping process: Which product to buy, how many, which brands to buy, which outlet to use, when to buy, how to pay, and other (should we buy extended warranty)?