1. Consumer Behavior Week #2
Consumer decision processes:
Need recognition and information search

2. Consumer Decision Processes and Types of Decision
The decision involves:
What to buy
How many (much) to buy
Where to buy
When to buy
How to buy

3. CDP Model MEMORY Need Recognition Internal Search Search
Environ- mental Influences
Pre-purchase
Evaluation of Alternatives
Exposure
Attention
MEMORY
Stimuli
Purchase
Individual Differences
Comprehension
Consumption
Acceptance
Retention
Post-consumption Evaluation
External Search
Dissatisfaction
Satisfaction
Divestment

4. Consumer Decision Process Model
Need Recognition
Search for Information
Pre-purchase Evaluation of Alternatives
Purchase
Consumption
Post-consumption Evaluation
Divestment

5. Variables Shaping the Decision Process: Environmental Differences
Culture--values, ideas, artifacts, and symbols that help individuals interpret, communicate, and evaluate as members of society
Social Class--division within society composed of individuals sharing similar values, interests, and behaviors

6. Variables Shaping the Decision Process: Environmental Differences
Family--often the primary decision making unit with a complex and varying pattern or roles and functions.
Personal Influence--our behaviors are often affected by those with whom we closely associate
Situation behaviors--as situations change, so does the individual’s behavior

7. Variables Shaping the Decision Process: Psychological Processes Influencing Consumer Behavior
Information processing
Learning
Attitude and behavior change

8. Factors Influencing Problem Solving Extent
Time Availability
How much time is available to devote to solving the problem?
How quickly does the decision need to be made?
Consumers’ Mood State
How people feel at a particular moment
Mood can reduce or increase length and complexity of decision process

9. Consumer Decision Process Continuum
Extended Problem Solving (EPS)
Midrange Problem Solving
Limited Problem Solving (LPS)
Low
High
Degree of Complexity

10. Consumer Decision Process Continuum: Repeat Purchases
Extended Problem Solving
Midrange Problem Solving
Limited Problem Solving
Habitual Problem Solving
Low
High
Degree of Complexity

11. Types of Consumer Decisions
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12. Types of Decision Making
Nominal Decision Making
Nominal decision making, a.k.a., habitual decision making, in effect involves no decision per se.
Nominal decisions occur when there is very low involvement with the purchase.
A completely nominal decision does not even include consideration of the “do not purchase” alternative.
Consumer buys Campbell’s without considering other brands, its price, etc.
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13. Types of Decision Processes
Initial Purchase
Extended Problem Solving (EPS):
Often occurs with expensive items or can be fueled by doubts and fears
Importance in making the “right choice”
All seven consumer decision making stages are often activated
Dissatisfaction is often vocal

14. Types of Decision Making
Extended Decision Making
Extended decision making involves extensive internal and external search followed by a complex evaluation of multiple alternatives.
It is a response to the high level of purchase involvement.
During post-purchase evaluation, doubts are likely and a thorough evaluation takes place.
Emotional decisions may involve substantial cognitive effort.
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15. Types of Decision Processes
Initial Purchase
Limited Problem Solving (LPS):
Consumers don’t have motivation, time, or resources to engage in EPS
Little search and evaluation before purchase
Need recognition leads to buying action; extensive search and evaluation often avoided as the purchase is not of great importance

16. Types of Decision Making
Limited Decision Making
Limited decision making involves internal and limited external search, few alternatives, simple decision rules on a few attributes, and little post-purchase evaluation.
Middle ground between nominal and extended decision making.
Involves recognizing a problem for which there are several possible solutions.
Decision based only on buying the cheapest rolls.
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17. Types of Decision Processes
Initial Purchase
Midrange Problem Solving:
Many decisions occur along the middle of the continuum
Decisions are made with a minimal amount of time and only moderate deliberation

18. Types of Decision Processes:
Repeat Purchases
Repeated Problem Solving
Factors that influence repeated problem solving include dissatisfaction with a previous purchase .
Habitual Decision Making
Brand or company loyalty involves consumers’ expectations about the products they buy and the retailers from whom they purchase.
Inertia involves products where there is limited brand loyalty .

19. impulse Buying
Unplanned, spur-of-the-moment action triggered by product display or point of sale promotion (least complex form of LPS)
Special features:
1.a sudden and spontaneous desire to act accompanied by urgency
2.a state of psychological disequilibrium in which a person -can feel temporarily out of control
3.the onset of conflict and struggle that is resolved by an immediate action
4.minimal objective evaluation, with emotional considerations dominating
5.a lack of regard for consequences

20. Variety Seeking
Consumers may be satisfied with the present brand but still engage in brand switching
Can be triggered because bored with current brand or because of special offer
Switching can occur due to a coupon, stock-outs, and/or being bored with the current choice.

21. Consumer Decision Process Model
Need Recognition
Search for Information
Pre-purchase Evaluation of Alternatives
Purchase
Consumption
Post-consumption Evaluation
Divestment

22. The Process of Problem Recognition
Types of Consumer Problems
Active Problem
An active problem is one the consumer is aware of or will become aware of in normal course of events.
Marketing strategy:
Only require marketer to convince consumers that its brand is the superior solution.
Inactive Problem
An inactive problem is one of which the consumer is not aware.
Marketing strategy:
Marketer must convince consumers that they have the problem AND that their brand is a superior solution.
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23. Need Recognition
Consumers recognize needs and seek to fulfill them, or seek a product to solve their problems
Knowing consumers’ needs helps firms develop products and marketing programs to reach them more effectively

24. Need Recognition Process

25. Need Recognition
The difference between consumers’ actual and desired states
The need recognition process centers on the degree of discrepancy between the actual state and desired state
Understanding need recognition may identify a segment with unsatisfied desires
Unsatisfied needs help identify new business and product opportunities for the future
Analyzing need recognition can reveal existing barriers

26. Need Recognition MEMORY Environmental Influences - Culture
- Social Class
- Personal Influence
- Family
- Situation
MEMORY
Need Recognition
Individual Differences
- Consumer Resources
- Motivation
- Knowledge
- Attitudes
- Personality, Values,
and Lifestyle

27. 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

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

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

30. Environ- mental Influences Individual Differences
CDP Model
Need Recognition
Internal Search
Search
Environ- mental Influences
Exposure
Attention
MEMORY
Stimuli
Individual Differences
Comprehension
Acceptance
Retention

31. Environmental Influences Individual Differences
Search for Information
Need Recognition
Environmental Influences
Internal Search
Search
Individual Differences
MEMORY
External Search

32. Internal Search

33. The Nature of Information Search
Consumers continually recognize problems and opportunities, so internal and external searches for information to solve these problems are ongoing processes.
Internal Search
Search of long-term memory to determine if
a satisfactory solution is known
what are types of potential solutions, and
ways to compare the possible solutions.
External Search
If a resolution is not reached through internal search, then the search process is focused on relevant external information.
Ongoing search is done to acquire information and because the process is pleasurable.
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34. Search for Information
Search: The motivated acquisition of knowledge stored in memory or acquisition of information from the environment
Internal search: retrieving know-ledge from memory or genetic tendencies, involves scanning and retrieving decision-relevant knowledge stored in memory

35. Internal Sources of Information
Memory of past searches, personal experiences, and low-involvement learning
Personal sources, such as friends, family, and others.
Independent sources, such as magazines, consumer groups, and government agencies
Marketing sources, such as sales personnel, websites, and advertising
Experiential sources, such as inspection or product trial
Five primary sources of information available to consumers:
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36. Search for Information
External search: collecting information
From the involvement--peers, family, and the marketplace.
Search may be passive as consumers become more receptive to information around them, or active if they engage in search behavior.
Search refers to a receptivity of information that solves problems or needs rather than a search for specific products

37. Search for Information
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
During external search, consumers may gather information from a variety of sources including:
- Advertisements
- Magazines
- Internet
- Friends and family members

38. External Search External search can occur:
to make better consumption choices
to create a knowledge base for future decisions
simply for enjoyment

39. Sources of Information
Internet Search Activities
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40. Information Search on the Internet
Three major strategic issues marketers face regarding the Internet’s role in information search and decision making:
How can they drive their information to consumers?
How can they drive consumers to their information?
How (if at all) can online selling be utilized or integrated with existing channels?
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41. What to Search? 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
Consumers must also decide what they wish to learn about each of the set members

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

43. Search: Sources of Information
Marketer Dominated
- Advertising
- Salespeople
- Infomercials
- Websites
- Point-of-sales materials
Non-Marketer Dominated Stimuli
- Friends
- Family
- Opinion leaders
- Media

44. 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.

45. Consumer Search on the Internet
Consumers are increasingly turning to the Internet for their search needs

46. 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

47. Individual factors and the amount of search
1. Demographics— gender, age, education.
2. knowledge– consumer’s knowledge about product, purchase, usage, previous experiences.
3. Abilities of information processing.
4.Life-style and psychological factors —perceived risks, fashion-conscious, sensation seeking, need for cognition, etc.

48. 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
While making better purchase decisions is the primary benefit of pre-purchase search, this benefit depends on the perceived risk involved
Perceived risk represents consumers’ uncertainty about the potential positive and negative consequences of the purchase decision.

49. Consumers’ Knowledge and the Amount of Search

50. Situational factors and the amount of search
the crowdedness in the store, distances between stores, similarities of stores, loyalty and favorable attitudes toward a store.
time pressure, social pressure, financial pressure, physical and psychological states, and access to information sources.

51. Perceived risks and search
High level of perceived the risk leads to greater amount of search.
1) monetary risk
2)performance risk (eg., product performance is unsatisfactory)
3)physical risk (eg., damage on health)
4)social risk (eg., influences on self-concept, and image)
5)psychological risk (eg., sense of guilt)

52. Case Study: IKEA: Human Coupons
Country: Australia
Industry: Furniture and furnishings
Media budget (USD): $1 - $3 million
Channels used: Direct marketing, Internet - general, Outdoor, out-of-home, Print - general, unspecified, Product placement,
Radio, Television