Consumer Decision Making & Beyond

Levels of Consumer Decision Making Extensive Problem Solving Limited Problem Solving Routine Response Behavior

Extensive Problem Solving When consumers have no established criteria for evaluating a product category for specific brands in that category or have not narrowed the number of brands they will consider to a small, manageable subset, their decision making efforts can be classified as extensive problem solving It occurs when a consumer is pruchasing an expensive, important, or technically complicated product or service for the first time.

Limited problem solving At this level of problem solving, consumers already have established the basic criteria for evaluating the product category and the various brands in the category. They have not fully established preferences concerning a select group of brands. Their search for additional information is more like “fine-tuning” They must gather additional brand information to discriminate among various brands. This occurs when the consumer is purchasing a new, updated version of something that he has purchased before

Routinized Response Behavior At this level, consumers have experience with the product category and a well-established set of criteria with which to evaluate the brands they are considering. They may search for a small amount of information or simply review what they already know

Models of Consumers : Views of consumer decision making An economic view A passive view A cognitive view An emotional view

An economic View In the field of theoretical economics, which portrays a world perfect competition, the consumer has often been characterized as making rational decision This model is called the economic view To behave rationally in economic sense, a consumer would have be aware of all available product alternatives Be capable of correctly ranking each alternatives in terms of its benefits and disadvantages Be able to identify the one best alternative ARGUMENT: consumers do not maximize their decisions in terms of economic consideration

A Passive View Quite opposite to the rational economic view of consumers is the passive view It depicts the consumer as basically submissive to the self-serving interest and promotional efforts of marketers. Consumers are perceived as impulsive and irrational purchasers The principal limitation of the passive model is that it fails to recognize that the consumer plays and equal, if not dominant, role in many buying situations.

A Cognitive view It portrays the consumer as a thinking problem Solver Consumers are pictured as Actively searching for products and services that fulfill their needs and enrich their lives The cognitive view focuses on the processes by which consumer seek and evaluate information about selected brands. Consumers are viewed as information processers Information processing leads to the formation of preferences and purchase decision

An Emotional View Consumers associate deep feelings or emotions with certain purchases These feelings or emotions are likely to be highly involving When a consumer makes what is basically an emotional purchase decision, less emphasis is placed on the search for prepurchase information. Instead, more emphasis is placed on current mood and feelings. Mood can be defined as “ feeling state” or “state of mind” Mood impacts on when to shop, where to shop, to shop with someone or alone Some retailers attempt to create moods for shoppers

A Simple Model of Consumer Decision Making External Influences Firm’s Marketing Efforts 1. Product 2. Promotion 3. Price 4. Channels of distribution Sociocultural Environment 1. Family 2. Informal sources 3. Other noncommercial sources 4. Social class 5. Subculture and culture Input Consumer Decision Making Need Recognition Prepurchase Search Evaluation of Alternatives Psychological Field 1. Motivation 2. Perception 3. Learning 4. Personality 5. Attitudes Process Experience Postdecision Behavior Purchase 1. Trial 2. Repeat purchase Postpurchase Evaluation Output

A Model of consumer decision making The model represents the cognitive consumer and to some degree the emotional consumer

Input External influences that serves as sources of information about a particular product and influence a consumers product-related values, attitudes and behavior. Chief among the input factors are marketing mix activities of organizations that attempt to communicate the benefits of their products and services to potential consumers and the nonmarketing sociocultural influences.

Marketing Inputs The firms marketing activities are a direct attempt to reach, inform and persuade consumers to buy and use its products. These inputs to the consumers decision-making process take the form of specific marketing mix strategies that consists of product itself, mass-media advertising, direct marketing, personal selling and other promotional efforts, pricing policy and the selection of distribution channels.

Socio-cultural Inputs It consists of a wide range of non-commerical influences Comments of friend, editorial in newspaper, family, consumer reports etc The cumulative impact of each firm’s marketing efforts, the influence of family, friends, and neighbors and society’s existing behavior are all inputs that are likely to affect what consumers purchase and how they use what they buy.

Process The process component is concerned with how consumers make decisions. The psychological field represents the internal influences like motivation, perception, learning and attitudes that affect consumers’ decision making process need recognition Prepurhcase search Evaluation of alternatives

Need Recognition: The recognition of a need is likely to occur when a consumer is faced with a problem

Prepurchase search It begins when a consumer perceives a need that might be satisfied by purchase and consumption of product. The recollection of past experiences drawn from storage in long-term memory might provide the consumer with adequate information to take the present choice. When consumer have no prior experience, he may have to engage in an extensive search of the outside environment for useful information on which to base a choice.

Evaluation of alternatives Evoked set: it refers to specific brands a consumer considers in making purchase within a particular product category. It is also know as consideration set Inept set: it consists of brands the consumer excludes from purchase consideration because they are felt to be unacceptable Inert set: it consists of brands the consumer is indifferent toward because they are perceived not having any particular advantage

The Evoked Set as a Subset of All Brands in a Product Class Known Brands Unknown Brands (1) Evoked Set Inept Set Inert Set Acceptable Brands Unacceptable Brands Indifferent Brands Overlooked Brands (2) (3) (4) Not Purchased Brands Purchased Brands (5)

Brands may be unknown because of the consumers selective exposure to advertising media and selective perception of advertising stimuli Brands may be unacceptable because of poor qualities or attributes Brands may be perceived as not having any special benefits and regarded indifferently by a consumer Brands may be overlooked because they have not have been clearly positioned or targeted

Consumer Decision Rules Compensatory Decision Rule Non-compensatory Decision Rule Conjunctive Decision Rule Disjunctive Decision Rule Lexicographic Rule

Compensatory Decision Rules A type of decision rule in which a consumer evaluates each brand in terms of each relevant attribute and then selects the brand with the highest weighted score.

A unique feature of a compensatory decision rule is that it allows a positive evaluation of a brand on one attribute to balance out a negative evaluation on some other attribute. In contrast, non compensatory decision rules do not allow consumers to balance positive evaluations of a brand on one attribute against a negative evaluation on some other attribute.

Non-compensatory Decision Rules A type of consumer decision rule by which positive evaluation of a brand attribute does not compensate for a negative evaluation of the same brand on some other attribute.

Conjunctive Decision Rule A non-compensatory decision rule in which consumers establish a minimally acceptable cutoff point for each attribute evaluated. Brands that fall below the cutoff point on any one attribute are eliminated from further consideration.

Disjunctive Rule A non-compensatory decision rule in which consumers establish a separate, minimally acceptable cutoff point for each attribute. If an option meets or exceeds the cutoff established for any one attribute, it is accepted

Lexicographic Rule A non-compensatory decision rule - consumers first rank product attributes in terms of importance, then compare brands in terms of the attribute considered most important.

Lexicographic Rule Consumer first ranks the attributes in terms of perceived relevance or importance Then he compares the various alternatives in terms of top-ranked attribute. If one option scores sufficiently high on this top-ranked attribute, it is selected and process ends When there are two or more surviving alternatives, the process is repeated with the second highest ranked attribute, until reaching the point that one of the options is selected.

Affect Referral Decision Rule A simplified decision rule by which consumers make a product choice on the basis of their previously established overall ratings of the brands considered, rather than on specific attributes.

Hypothetical Use of Popular Decision Rules in Making a Decision to Purchase an Ultralight Laptop MENTAL STATEMENT Compensatory rule “I selected the computer that came out best when I balanced the good ratings against the bad ratings.” Conjunctive rule “I selected the computer that had no bad features.” Disjunctive rule “I picked the computer that excelled in at least one attribute.” Lexicographic rule “I looked at the feature that was most important to me and chose the computer that ranked highest on that attribute.” Affect referral rule “I bought the brand with the highest overall rating.”

OUTPUT The output portion of the consumer decision-making model concerns two activities Purchase behavior Postpurchase evaluation

Purchase Behavior Trial purchases Repeat purchases Long-term commitment purchases