Consumer Decision Making

1
Consumer Decision Making

2
Types of Buying Decision Behavior
Low-Cost Products
More Expensive Products
Frequent Purchasing
Infrequent Purchasing
Low Consumer Involvement
High Consumer Involvement
Unfamiliar Product Class and Brands
Familiar Product Class and Brands
Little Thought, Search, or Time Given to Purchase
Extensive Thought, Search, and Time Given to
Purchase
3
Consumer Decision Making Process
Problem Recognition
Information Search
Evaluation of Alternatives
Product Choice
Outcomes
4
Problem Recognition
Occurs when significant difference between
Current State and Some Desired or Ideal State of
a consumer

• Consumers Desired State

Need Recognition
Opportunity Recognition

• Consumers Actual State

5
Gap between Ideal and Actual states
IDEAL
Need Recognition (consumer)
ACTUAL
IDEAL
Opportunity Recognition (marketer)
ACTUAL
6
Strategic Implications

• Influence of marketers
• Discover consumer problems
• Respond
• Create awareness of problems
• Influence desired state
• Influence actual state

7
Information Search

• Types of Search
• Prepurchase - an explicit search for information
• Ongoing Search - browsing used by consumers for
  up-to-date information
• Information Sources
• Internal Search - memory scan to assemble
  information.
• External Search - information obtained from ads,
  friends, experts etc.

8
Information Search

• Do consumers always search rationally?
• Costs and benefits
• What do consumers search for?
• How much do consumers search?
• Market characteristics/type of product
• Perceived risk
• Individual characteristics
• Prior Knowledge
• Locus of control
• Confidence

9
Marketing implications of understanding search
behavior

• Integrate critical role of the Internet
• Types of strategies
• Maintenance
• Disrupt
• Capture
• Intercept
• Preference
• Acceptance

10
Types of Perceived Risk

• Performance risk
• Psychological risk
• Social risk
• Financial risk
• Physiological risk

11
Alternatives
Aware Alternatives
Evoked Set Actively Considered
Inert Set Not Entering Consideration
Inept Set Aware of, But Would Not Buy
12
Evaluation of Alternatives

• Rational consumers
• Bounded rationality
• Affective choice
• Attribute-based vs. attitude-based choice

13
Evaluation of Alternatives

• Setting Evaluative Criteria
• Determinant attributes
• Which criteria are relevant or used
• Relative importance of these criteria
• Evaluating alternatives against these criteria
  using some decision rule
• Performance of the alternatives on the above
  criteria

14
Evaluation process

• Often a Phased Decision Strategy
• Alternative elimination stage
• Alternative selection stage
• Decision Rules
• Decision Heuristics
• Rule-of-thumbs or short cuts
• Affective choice

15
Decision Rules
Conjunctive
Noncompensatory Decision Rules
Compensatory Decision Rules
Simple Additive
Disjunctive
Weighted Additive
Elimination-By-Aspects
Lexicographic
16
Compensatory Rules

• Simple additive
• All criteria (features) are considered
• All criteria are given equal importance
• Weighted additive
• All criteria (features) are considered
• criteria are given differential weights according
  to importance

17
Conjunctive

• Minimum cutoffs set on relevant attributes
• Any alternative (brand) that does not meet the
  cutoff on even one attribute is dropped from
  further consideration
• What happens when there is more than one
  alternative that meets these cutoffs?

18
Disjunctive

• Entails trade-offs between aspects of different
  brands (alternatives)
• Minimum cutoffs are set
• Brands that meet the cutoff on any attribute are
  selected for further consideration

19
Elimination-By-Aspects (EBA)

• Rank the evaluative criteria in terms of their
  importance
• Establish a cutoff point for each criterion
• Brands that do not meet the cutoff on the most
  important criterion are dropped
• Then, repeat the process for the next important
  criterion

20
Lexicographic

• Rank the evaluative criteria in terms of their
  importance
• Select the brand that does best on the most
  important criterion
• If there is a tie, compare these brands on the
  second most important criterion

21
Decision Heuristics

• Price
• Brand reputation
• Market beliefs
• Product cues