BUYER BEHAVIOUR INDIVIDUAL DECISION MAKING Chp. 9 With Duane Weaver

OUTLINE Consumers as Problem Solvers Perspectives on Individual Decision Making Stages in Consumer Decision Making Types of Consumer Decisions Problem Recognition Marketer’s Role in Problem Creation Information Search Types of Perceived Risk Strategic Implications of Product Categorization Heuristics Decision Rules Video

Consumers as Problem Solvers Purchase decisions steps: Problem Recognition Information Search Evaluate Alternatives Product/Service Selection

Perspectives on Individual Decision Making Rational Decision Making Approach Calmly and carefully integrate knowledge Behavioural Influence Perspective low involvement, learned response to environmental cues (promotions) Experiential High involvement, affective responses vs. rational Gestalt-totality of the product (Music,art)

Stages in Consumer Decision Making Problem Recognition Information Search Evaluation of Alternatives Product Choice Consumption and Learning

Types of Consumer Decisions

Opportunity Recognition Problem Recognition Problem Recognition occurs when the consumer realizes that their actual state is significantly different than their ideal state NO PROBLEM Opportunity Recognition Need Recognition Ideal State Actual State

Marketer’s Role in Problem Creation Creating Primary Demand Focus on getting consumers to try a new product Brand is not the focus Secondary demand Prompting consumers to choose a specific brand Create a problem-scenario & show the solution Head & Shoulders

Information Search Information Search Internal vs. External Amount of Deliberate vs. Accidental Information Search Biases Economics of Information Non-Rational

Types of Perceived Risk Information Search This CTR corresponds to Figures 9-4 on p. 297 and 9-5 on p. 298 and relates to the discussion on pp. 296-298. Types of Perceived Risk Psychological Monetary Social Functional Determinants of Information Search Information Search is the process in which consumers survey their environment for appropriate data to make a reasonable decision. Consumer search may take one or more of the following characteristics: External Versus Internal Search. Search may be of the external environment or of internal knowledge and experience. Deliberate Versus Accidental. Existing product knowledge may motivate consumers in directed learning or mere exposure over time may lead to incidental learning for product preference. Five Forms of Buyer Risk Monetary. This deals with the risk capital of money and property. The most poor and the most wealthy feel the greatest threat to decisions related to income and property. Functional. This deals with the risk capital of alternative means for performing specific tasks or meeting needs. Practical consumers, who often follow traditional models of rational decision making, are the most sensitive to functional risk. Physical. This deals with the risk capital of physical vigor, health, and vitality. Those worried about their health, either because they are frail, old, or ill are the most sensitive to this form of risk. Social. This deals with the risk capital of self-esteem and self-confidence. Those who are insecure and uncertain are the most sensitive social risk. Psychological. This deals with the risk capital of affiliations and status. Those lacking respect or attractiveness to peers are the most sensitive. Physical Get to together in groups of three and briefly (5 minutes) discuss and define an example for each of three out of five of the above areas of perceived risk. Present these ideas to the class. 5

Strategic Implications of Product Categorization Product Positioning Identifying Competitors Exemplar Products Locating Products

Heuristics Product Signals Market Beliefs Country of Origin Heuristics: The mental rules of thumb that lead to a speedy decision Product Signals Market Beliefs Country of Origin

Decision Rules Compensatory Non-compensatory Lexicographic Best Brand for most important attribute Elimination by Aspects Specific attribute cut-offs imposed Simple Additive Weighted Additive Conjunctive Rule Choose by brand based on meeting all cutoffs Disjunctive Rule Standard of an attribute is higher than minimal cut-off One attribute can compensate In groups of three take 5 minutes to provide one example of a Non-compensatory decision rule One attribute alone cannot compensate 7

Thank You for your time Always be prepared for quizzes, you never know when…