Pre-Purchase Processes: Need Recognition, Search, and Evaluation Week 3 CHAPTER 4 Pre-Purchase Processes: Need Recognition, Search, and Evaluation

A) Need Recognition Process @ level @ differences

Need Recognition Process Ex: hungry (actual) versus eliminate hungry (desire)

Need Recognition Understanding need recognition may identify a segment with unsatisfied desires Unsatisfied needs help identify new business and product opportunities for the future. Change consumers’ desired state with new products or innovations E.g. Prudential insurance offer comprehensive coverage, up to 100 years with reward.

How Companies Can Activate Need Recognition Change consumers’ desired state with new products or innovations Influence how consumers perceive their current state Remind consumers of a need. E.g. send e-mail about sales promotion

How Companies Can Activate Need Recognition Generic need recognition: companies seek to grow the size of the total market for a product category

How Companies Can Activate Need Recognition Selective need recognition is the result of stimulating the need for a specific brand within a category

B) Search Pre-purchase search is defined as the motivated attainment of knowledge stored in memory or getting hold of information from the environment 1) Internal search involves scanning and retrieving decision-relevant knowledge stored in memory

2) External search involves collecting information from the environment Sources: - Advertisements - Magazines - Internet - Friends and family members When motivated by an upcoming purchase decision, external search is known as pre-purchase search When information acquisition takes place on a relatively regular basis, regardless of sporadic purchase needs, it is known as ongoing search Reason to make better consumption choices to create a knowledge base for future decisions simply for enjoyment

What to Search? Courses? Schools? Cost? Which choice alternatives should the consumer search? Those choice alternatives that consumers gather information about during pre-purchase search are referred to as the external search set Depending on the consumer’s experience and the importance of the decision, a considerable amount of effort may be invested into identifying search set members Courses? Schools? Cost?

Where to Search? Different informational sources are available to the consumer

Where to Search? Consumers are more likely to rely upon the opinions of other individuals than information sources with vested interests in their decisions Other consumers respected for their expertise in a particular product category are referred to as opinion leaders or influentials

Consumer Search on the Internet Particular search words or phrases used by consumers fall into three categories 70% Generic terms; representing product categories 20% Specific retailers; e.g., Best Buy, Gateway.com 10% Specific products; e.g., Canon digital camcorder, HP notebook Internet help to search easily + efficient

How Much Do Consumers Search? Cost versus benefit perspective: people search for decision-relevant information when the perceived benefits of the new information are greater than perceived costs of acquiring the information Benefit: making better decisions Cost: time/effort spent searching

Consumers’ Knowledge and the Amount of Search Due to lack of knowledge to search

How Companies Benefit from Understanding Search Adjusting the breadth of a product line based on consumers’ willingness to search Monitoring consumers’ price comparison activities to gauge their price sensitivity Focus promotions on sources that consumers search most, including individuals that provide information (e.g. mum) Monitor search activities to identify new ways to reach and gain customers (e.g. family, nutritionist)

C) Pre-purchase Evaluation The evaluation of choice alternatives

How Companies Can Get Into Consumers’ Consideration Sets Ask to be in the set (e.g.: would customer like some fries to go with hamburger) Offer incentives (e.g. a coupon is offer for taking a look at what marketer sell) Modify the product offering to attract consumer to consider it

Constructing the Consideration Set E.g.: Eating out Consideration set Internal search External search Talk to others or consider all brands in the store Retrieval set= consideration set that depends on recall of alternatives from memory Recognition of brands or products at point of sale is important Consumers limit their consideration to those alternatives toward which they are favorably liable

Evaluating Alternatives B A Constructing New Evaluations The Piecemeal Process = constructing an evaluation of a choice alternative using bits and pieces

The Piecemeal Process Cutoff: restriction or requirement for acceptable performance. E.g. limit of $ willing to pay Signals: product attributes used to conclude other product attributes (e.g., using high price to conclude higher quality) Performance of the alternative : noncompensatory versus compensatory evaluation strategy

“Consumer won’t sacrifice taste for health in snacks” Noncompensatory Evaluation Strategies: a product’s weakness on one attribute cannot be offset by strong performance on another attribute Lexicographic strategy brands are compared initially on the most important attribute, and the winner is chosen. If more than one is evaluated similarly on that attribute, the second most important is considered, and so on, until a winner is identified. Elimination by aspects similar to the lexicographic strategy; however, the consumer imposes cutoffs Conjunctive strategy each brand is compared, one at a time, against a set of attributes which is established for each salient attribute. If a brand meets the cutoffs for all attributes, it is chosen. “Consumer won’t sacrifice taste for health in snacks”

Compensatory Evaluation Strategies: a perceived weakness of one attribute may be offset or compensated for by the perceived strength of another attribute Simple additive: the consumer counts or adds the number of times each alternative is judged favorably in terms of the set of salient evaluative criteria. The alternative with the largest number of positive attributes is chosen. Weighted additive: judgments about an alternative’s attribute performance are weighted by the attribute’s importance. The alternative with the best overall performance is chosen.

How Good Are Consumer at Evaluating Alternatives? Consumers are often not very good at figuring out which alternative is best for them - Tend to rely on certain signals (e.g., price, brand name, warranty, package) to make assumption about a product quality; however, such signals may be inaccurate Often possess limited abilities to accurately evaluate choice alternatives -marketers play important role to influence consumer evaluation Done