1. Consumer Decision Making I: The Process

2. What Would a Pet Owner Need to Know in Order to Make a Decision About Buying Pet Insurance? 2 Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Will depend on: What they know already How important the decision is The attributes being sought in pet insurance The basics a pet owner would question: Do I need it? How do I get more information? What kind of coverage am I seeking?

3. Copyright © 2006 Pearson Education Canada Inc. 14-3 Levels of Consumer Decision Making Extensive Problem Solving Limited Problem Solving Routine Response Behaviour Factors that Affect the Type of Decision Making Process Importance of the decision Previous experience Existence of well-established decision criteria Amount of information at hand about each alternative The number of alternatives available Model of consumption being followed

4. Consumer Decision Making Figure 3 4 Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

5. Copyright © 2006 Pearson Education Canada Inc. 14-5 Types of Problems ActiveInactive Immediate Sol’nProblem Type 1 Problem Type 2 No immediate Sol’nProblem Type 3 Problem Type 4

6. Copyright © 2006 Pearson Education Canada Inc. 14-6 Problem Recognition and Marketing Strategy Identify existing consumer problems and find solutions for these Lower the actual state Increase the desired state Increase the importance of the gap between actual and desired states Convert inactive problems to active problems Convert problems into ones requiring an immediate solution

7. 14-7 Pre-Purchase Search Types of Information Sources –Personal and Impersonal Types of Information Sought –Brands or alternatives available –Evaluative criteria to be used Generally, product features –Ratings of brands on evaluative criteria Factors Affecting Extent of Information Search –Product factors –Situational factors –Social acceptability –Consumer factors

8. Copyright © 2006 Pearson Education Canada Inc. 14-8 Amount of search when… High price? Frequent purchase? Previous experience was unsatisfactory? Buying a gift? Purchase is not socially visible? Conflicting information is available? Users agree on evaluation?

9. Copyright © 2006 Pearson Education Canada Inc. 14-9

10. Copyright © 2006 Pearson Education Canada Inc. 14-10 Evaluation of Alternatives – Types of Consumer Choice Processes Affective choices –More holistic; an overall evaluation –based on how one feels about a purchase Attribute-based choices –Have pre-determined evaluative criteria –May require both external and internal search –Complicated decision rules may be used

11. Copyright © 2006 Pearson Education Canada Inc. 14-11 Nature of Evaluative Criteria Can be tangible or intangible Include surrogate indicators –Attributes that are used as indicators of another attribute Are often ranked in order of importance

12. Copyright © 2006 Pearson Education Canada Inc. 14-12 Consumer Decision Rules Procedures used by consumers to facilitate brand or other consumption-related choices Compensatory –Brands evaluated in terms of each relevant criteria and the best brand (or one with the highest score) is chosen Non-compensatory –Positive evaluations do not compensate for negative evaluations

13. Copyright © 2006 Pearson Education Canada Inc. 14-13 Non-Compensatory Decision Rules Conjunctive Decision Rule Conjunctive Decision Rule –Product attributes are identified –a minimally acceptable cutoff point is established for each attribute –brands that fall below the cutoff point on any one attribute are eliminated from further consideration Disjunctive Decision Rule Disjunctive Decision Rule –consumers identify product attributes –establish a minimally acceptable cutoff point for each attribute – accept the brand that meets or exceeds the cutoff for any one attribute Lexicographic Decision Rule –Product attributes are identified –Product attributes are ranked in terms of importance –brands are compared in terms of the attribute considered most important –Brand that scores highest on the first attribute is chosen –If there is a tie, the scores on the next attribute are considered

14. Hypothetical Use of Decision Rules Table 7 Decision RuleMental Statement Compensatory ruleI selected the netbook that came out best when I balanced the good ratings against the bad ratings Conjunctive ruleI selected the netbook that had no bad features Disjunctive ruleI picked the netbook that excelled in at least one attribute Lexicographic ruleI looked at the feature that was most important to me and chose the netbook that ranked highest on that attribute Affect referral ruleI bought the brand with the highest overall rating 14 Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Fifteen Slide

15. Copyright © 2006 Pearson Education Canada Inc. 14-15 In 2006, Tom was shopping for a laptop. In his information search he discovered consumer ratings of the following three brands in his evoked set. The most important criteria to him in choosing his laptop was display. Consider which laptop he would choose using the various compensatory and non-compensatory decision rules discussed in your text. (Assume his cut- off for an unacceptable attribute is below 6.)

16. 14-16 Issues in Alternative Evaluation Lifestyles as a Consumer Decision Strategy Incomplete Information Non-comparable Alternatives Going online Decisions by functionally illiterate consumers Series of Decisions Consumption Vision –Mental picture of the consequences of using a particular product

17. Copyright © 2006 Pearson Education Canada Inc. 14-17 Coping with Missing Information Delay decision until missing information is obtained Ignore missing information and use available information Change the decision strategy to one that better accommodates for the missing information Infer the missing information

18. Copyright © 2006 Pearson Education Canada Inc. 14-18 Information Search and Marketing Strategy Get products into consumers’ evoked set Limit information search if your brand is the preferred brand Increase information search if your alternative is not the preferred brand Use point-of-purchase advertising effectively

19. Copyright © 2006 Pearson Education Canada Inc. 14-19 Alternative Evaluation and Marketing Strategy Identify decision rule used by target market and use suitable promotional messages Influence the choice of evaluative criteria Influence the rating of your product on evaluative criteria used Use surrogate indicators effectively Use ‘consumption vision’