Consumer Decision Making I

MKT 750Dr. West

Agenda

Shopping insights diary assignmentStages of Decision MakingThree Routes to Decision MakingThe Role of Involvement

Shopping Insights Diary

Shopping Insights Diary

Introspective Approach vs Depth-Interview

Think through the purchase process involved in three recent purchases. You will need to provide a description of how and why you decided to purchase the product, as well as offer insights to other consumers like yourself, and marketers.

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

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..”

Consumer Decision Making

ChoiceAlternativeEvaluation

SearchNeed

RecognitionPost-Purchase

Evaluation

Consumer-side

Consumer Decision Making

ChoiceAlternativeEvaluation

SearchNeed

RecognitionPost-Purchase

Evaluation

Consumer-side

Marketer-side

Action Desire Interest Awareness

Consumer Decision Making

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

From Inertia to Passion

Nature of Processing

Midrange Problem Solving

Habitual Problem Solving

Extended Problem Solving

PassionInertia

Limited Problem Solving

Simple Elaboration

Nature of the Decision:

First time vs Repeat purchase

Purchase for Self versus Another

Functional products (e.g. washing

machine)

Experiential products (e.g. perfume,

clothing)

12

Consumers are “cognitive misers”

Heuristics are used as shortcuts to decision making What might some of these be?

13

Rational Decision Making:

ChoiceAlternativeEvaluation

SearchNeed

RecognitionPost-Purchase

Evaluation

Need Recognition

Ideal State

Ideal State Ideal State

Actual State Actual State

Actual State

No Problem Opportunity ProblemRecognition Recognition

How are Needs Activated?

Changed circumstancesGraduation, new job, marriage, first baby …

Product acquisitionDVD player, Xbox

Product consumptionToothpaste, milk, gasoline…

Product innovationSoftware

Marketing influence

The Role of Self-Concept

Alter the buyer’s perception of “ideal self”

IdealSelf

ActualSelf

ExtendedSelf

Products that enhance “self-concept” reduce the dissonance between the ideal and actual self.

Possessions and the Extended Self

JamesBond

ActualSelf

BMW Z3

How Companies Can Activate Need Recognition

Instill fear Gets attention Memorable Need to provide

a solution

19

Rational Decision Making:

ChoiceAlternativeEvaluation

SearchNeed

RecognitionPost-Purchase

Evaluation

Information Search

Information Search

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

Information Search

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 is crucial

What determines 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

What determines search?

26

Rational Decision Making:

ChoiceAlternativeEvaluation

SearchNeed

RecognitionPost-Purchase

Evaluation

Evaluation & Choice

Evaluating Alternatives

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

Evaluating Alternatives

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

Evaluating Alternatives

Assessing Importance: ei

Space 5 Reliability 4 Safety 4 Longevity 3 Handling 3 Styling 2

* Importance: 5=Most Important, 1=Least Important

Evaluating Alternatives

Beliefs Regarding Product Performance:

Product Evaluation: 4=Excellent, 3=Very Good, 2=Good, 1=Fair

bi’s

Importance

ei

ToyotaSienna

SubaruOutback

Volvo Cross

Country

Space 5 4 2 4

Reliability

4 3 4 3

Safety 4 3 3 4

Longevity

3 2 4 4

Handling 3 1 4 2

Styling 2 2 4 3

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)

Decision Rules

Compensatory Rule: a perceived weakness of one attribute may be offset or compensated for by the perceived strength of another attribute

Noncompensatory Rule: a product’s weakness on one attribute cannot be offset by strong performance on another attribute

Compensatory Decision Rules

Simple additive (Equal Weight): bi The consumer adds the product

evaluations across the set of salient evaluative criteria. The product with the largest score is chosen.

Weighted additive: biei

Judgments of product evaluations are weighted according to importance

Simple Additive (Equal Weight)

biToyotaSienna

SubaruOutback

Volvo Cross

Country

Space 4 2 4

Reliability

3 4 3

Safety 3 3 4

Longevity

2 4 4

Handling 1 4 2

Styling 2 4 3

15 21 20

Weighted Additive

biei Importance

ToyotaSienna

SubaruOutback

Volvo Cross

Country

Space 5 4 (20) 2 (10) 4 (20)

Reliability

4 3 (12) 4 (16) 3 (12)

Safety 4 3 (12) 3 (12) 4 (16)

Longevity

3 2 (6) 4 (12) 4 (12)

Handling 3 1 (3) 4 (12) 2 (6)

Styling 2 2 (4) 4 (8) 3 (6)

57 70 72

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

Lexicographic Rule

Importance

ToyotaSienna

SubaruOutback

Volvo Cross

Country

Space 5 4 2 4

Reliability

4 3 4 3

Safety 4 3 3 4

Longevity

3 2 4 4

Handling 3 1 4 2

Styling 2 2 4 3

Lexicographic Rule

Importance

ToyotaSienna

SubaruOutback

Volvo Cross

Country

Space 5 4 2 4

Reliability

4 3 4 3

Safety 4 3 3 4

Longevity

3 2 4 4

Handling 3 1 4 2

Styling 2 2 4 3

Lexicographic Rule

Importance

ToyotaSienna

SubaruOutback

Volvo Cross

Country

Space 5 4 2 4

Reliability

4 3 4 3

Safety 4 3 3 4

Longevity

3 2 4 4

Handling 3 1 4 2

Styling 2 2 4 3

Noncompensatory Decision Rules:

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.

Elimination by Aspects Rule

Cutoff = 3

Importance

ToyotaSienna

SubaruOutback

Volvo Cross

Country

Space 5 4 2 4

Reliability

4 3 4 3

Safety 4 3 3 4

Longevity

3 2 4 4

Handling 3 1 4 2

Styling 2 2 4 3

Noncompensatory Decision Rules:

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.

Conjunctive Rule

Cutoff = 2

ToyotaSienna

SubaruOutback

Volvo Cross

Country

Space 3 2 4

Reliability

3 4 3

Safety 3 3 4

Longevity

2 4 4

Handling 1 4 2

Styling 2 4 3

Very sensitive to order

Assignment

Reading:Chapters 17 - 18 (pp 604 - 616, 626 - 629, 637 - 651)

Topic:Consumer Decision Making II

Assignment:Write-up your Shopping Insights for next Wednesday. Find a team of up to six class members