Rationality vs. Emotions: Insights into Consumer Decision Making Professor West

Means-End Chain Analysis:  Consumer behavior is both:  Purposeful  We strive to achieve short-term, and long- term goals  Revealing  Our behavior reflects our values  Trade-offs

Understanding Consumer Motives  Motivations are the underlying reasons for behavior PreservationGrowth Cognitive  Consistency  Attribution  Categorize  Objectification  Autonomy  Stimulation  Teleological needs  Utilitarian needs Affective  Tension reduction  Expression  Ego defense  Reinforcement  Assertion  Affiliation  Identification  Modeling

Laddering Technique Values Attributes Consequences I: “Why is it important to you to use a camcorder that allows for five hours on one tape and one battery?” R: “Because I can take it to outside events, like baseball games.” I: “Why is that important to you?” R: “It assures me that I will capture important moments in my kids lives without worrying.” I: “Why is that important to you?” R: “Being a good parent requires that kids are left with visual images of their childhood to enjoy as adults..”

Hierarchical Value Map Values Attributes Consequences

Motivational Conflict  Approach-Approach  Choosing between two attractive alternatives (e.g., two great job offers)  Approach-Avoidance  A choice situation that entails both positive and negative consequences (e.g., the desire to stay healthy but an aversion to exercise)  Avoidance-Avoidance  A choice between undesirable outcomes (e.g. breast self-exams, colonoscopy, seeing your dentist)

Understanding Motives  Effective communication requires understanding what consumers are looking for, and why.

Consumer Involvement  Involvement is the “perceived relevance” based on inherent needs, values, and interests  From “inertia to passion”  Involvement determines the degree of effort or energy expended toward the object or activity  Many faces  Product, Message-related, Situational, Purchase

 Consumer-side Traditional Model of Decision Making Choice Alternative Evaluation Search Need Recognition Post-Purchase Evaluation

Consumer Decision Making  Consumer-side  Marketer-side Action Desire Interest Awareness Choice Alternative Evaluation Search Need Recognition Post-Purchase Evaluation

Consumer Decision Making  Consumers make a wide variety of choices that range from life-altering (the decision to go to graduate school, getting married) to mundane (filling your car with gasoline).

Nature of Processing Midrange Problem Solving Habitual Problem Solving Extended Problem Solving PassionInertia Limited Problem Solving Simple Elaboration From Inertia to Passion

Nature of the Decision:  First time vs Repeat purchase  Purchase for Self versus Another  Functional products (e.g. washing machine, car)  Experiential products (e.g. perfume, clothing)

Consumers are “cognitive misers”  Heuristics are used as shortcuts to decision making  What might some of these be?  Ask a friend or family member  By what my mother always buys  Find the cheapest  Pick the compromise alternative …

Choice Alternative Evaluation Search Need Recognition Post-Purchase Evaluation Rational Decision Making:

Need Recognition Ideal StateIdeal StateActual State Actual State Status Opportunity Problem QuoRecognitionRecognition

How are Needs Activated?  Changed circumstances  Graduation, new job, marriage, first baby …  Product acquisition  DVD player, Xbox  Product consumption  Toothpaste, milk, gasoline…  Product innovation  Jump Drives  Marketing influence

The Role of Self-Concept Alter the buyer’s perception of “ideal self” Ideal Self Actual Self Extended Self Products that enhance “self-concept” reduce the dissonance between the ideal and actual self.

Information Search

 Types of Information  Search Information -- observable prior to purchase  Credence Information – product claims that are not readily observed even post purchase  Experience Information -- can be obtained from direct experience with the product or service

Information Search

 Search is usually limited  Surveys indicate that 50% of consumers shop at a single store for a durable good, only 30% look at more than one brand of appliance  Highlights why top-of-mind awareness, and product differentiation are crucial

What Determines Extent of Search?  Cost  Effort, time, delay, immediacy of need, money  The internet can lower search costs  Benefits  Savings, performance, satisfaction, avoidance of regret, ease of justification

Evaluation & Choice

 Determine criteria to be used for evaluation of products  Assess the relative importance of the each criteria  Evaluate each alternative based on the identified criteria

Rationality versus Emotions  Buying a new car  Finding the perfect prom dress

 Criteria for the purchase of a car:  Handling  Longevity  Reliability  Safety  Space  Styling Evaluating Alternatives

 Assessing Importance: e i  Space5  Reliability4  Safety4  Longevity3  Handling3 * Importance: 5=Most Important, 1=Least Important Evaluating Alternatives

 Beliefs Regarding Product Performance: b i ’s Importance e i Toyota Sienna Subaru Outback Volvo Cross Country  Space5424  Reliability4343  Safety4334  Longevity3244  Handling3142 Evaluating Alternatives Product Evaluation: 4=Excellent, 3=Very Good, 2=Good, 1=Fair

Decision Rules  Compensatory Rule: a perceived weakness of one attribute may be offset or compensated for by the perceived strength of another attribute  Economic models of rational behavior whereby consumers maximize utility  Noncompensatory Rule: a product’s weakness on one attribute cannot be offset by strong performance on another attribute.  Descriptive models of behavior that capture how consumers simplify their decision making

 Simple additive (Equal Weight):  b i The consumer adds the product evaluations across the set of salient evaluative criteria. The product with the largest score is chosen.  Weighted additive:  b i e i Judgments of product evaluations are weighted according to importance Compensatory Decision Rules

bibi Toyota Sienna Subaru Outback Volvo X-Country  Space424  Reliability343  Safety334  Longevity244  Handling Simple Additive (Equal Weight)

bieibiei Importance Toyota Sienna Subaru Outback Volvo X-Country  Space54 (20)2 (10)4 (20)  Reliability43 (12)4 (16)3 (12)  Safety43 (12) 4 (16)  Longevity32 (6)4 (12)  Handling31 (3)4 (12)2 (6) Weighted Additive

Noncompensatory Decision Rules  Cutoffs/Thresholds: restriction or requirements for acceptable performance  Signals (surrogate indicators) are product attributes used to infer other product attributes (e.g. high price often infers higher quality)

Noncompensatory Decision Rules  Lexicographic strategy:  Brands are compared on their most important attribute, and the winner is chosen.  If there is a tie the second most-important is considered, and so on, until a choice is identified

Importance Toyota Sienna Subaru Outback Volvo X-Country  Space 5424  Reliability 4343  Safety 4334  Longevity 3244  Handling 3142 Lexicographic Rule

Importance Toyota Sienna Subaru Outback Volvo X-Country  Space 5424  Reliability 4343  Safety 4334  Longevity 3244  Handling 3142 Lexicographic Rule

Importance Toyota Sienna Subaru Outback Volvo X-Country  Space 5424  Reliability 4343  Safety 4334  Longevity 3244  Handling 3142 Lexicographic Rule

 Elimination by aspects (EBA):  Brands are compared on an attribute by attribute basis.  Alternatives are eliminated that fall below the consumer imposed cutoffs.  Process continues until a single alternative remains. Noncompensatory Decision Rules

Cutoff = 3Importance Toyota Sienna Subaru Outback Volvo X-Country  Space 5424  Reliability 4343  Safety 4334  Longevity 3244  Handling 3142 Elimination by Aspects Rule

 Conjunctive strategy (Satisficing):  Brand are evaluated, one at a time, against a set of thresholds established for each attribute.  The first brand that meets or exceeds the threshold for each attribute is chosen. Noncompensatory Decision Rules

Cutoff = 2 Toyota Sienna Subaru Outback Volvo Cross Country  Space 324  Reliability 343  Safety 334  Longevity 244  Handling 142 Conjunctive Rule

Buying A New Car

Marketing Insights  What can an auto manufacturer learn from this?  What can a dealer learn from this?

Emotional Decision Making  Planning for prom…  Depends on if you’re a girl or guy

Marketing Insights  What can a marketing learn from this?  How is the process different than buying a car?

Marketer’s Job  To understand the process  Anticipate where consumers will look for information and make it easily accessible  Be aware of what matters, (the head or the heart)  Search for opportunities to delight your customers

Assignment  Read  Chapters 10, 14 – 16, 18 (pp 362 – 367, , , , , 570 – 578, , )  Exam Essay -- Examine one of your own or another person’s recent purchase. Detail the steps involved and provide insights to a marketer or another consumer.