the consumer decision process. customer decisions decisions customers make in the marketplace as...

The Consumer Decision The Consumer Decision ProcessProcess

Customer DecisionsCustomer Decisions

Decisions customers make in the marketplace as buyers, payers, and users, include:– Whether to purchase– What to purchase– When to purchase– From whom to purchase– How to pay for it

Consumer Decision Process Model

Purchase

Problem Recognition

Search for Information

Consumption

Post-consumption Evaluation

Divestment

Pre-purchase Evaluation of Alternatives

Consumer Decision Process Continuum

Midrange Problem Solving

Habitual Problem Solving

Extended Problem Solving

High Low

Degree of ComplexityDegree of Complexity

Limited Problem Solving

Consumer Decision Process Model

Problem Recognition

Step 1. Problem RecognitionStep 1. Problem Recognition

Similarities with motivation…not always a problem

Marketers Impact

Consumer Decision Process ModelNeed Recognition

Search for Information

Search For Information

Internal search: retrieving know-ledge from memoryExternal search: collecting informa-tion from peers, family, and the marketplace

Search may be passive as consumers become more receptive to information around them, or consumers can engage in active search behavior

Internal Search: Searching for Internal Search: Searching for Information from MemoryInformation from Memory

What Kind of Information Is Retrieved from Internal Search?– Recall of Brands

Consideration or Evoked Set

– Recall of Attributes– Recall of Evaluations– Recall of Experiences

Awareness, Evoked, and Awareness, Evoked, and Consideration SetsConsideration Sets

Awareness Set (All the brands in the

Awareness)

Brands NOT recalled

Brands NOT considered

Consideration Set(Brands considered)

Evoked Set(Brands recalled)

External Search: Searching for External Search: Searching for Information from Information from the Environmentthe Environment

External Search– Prepurchase Search– Ongoing Search

Sources of Information for Sources of Information for CustomersCustomers

• Advertising• Salespersons• Product/service brochures• Store displays• Company web sites

PERSONAL• Friends and other acquaintances• Past experience

INDEPENDENT SOURCES• Public information (e.g., Consumer

Reports, Better Business Bureau, news reports in media, government publications, such as The Census of Manufacturers)

• Product or service experts: (e.g., auto critic, home appraiser, pharmacist, and so on)

• Internet (bulletin boards)

MARKETER SOURCES NONMARKETER SOURCES

Determinants of the Amount of Determinants of the Amount of SearchSearch

Perceived riskInvolvementFamiliarityExpertiseTime pressure

Brand

Price

Number of CDs

Remote

Audio tape

Weight (kilos)

Panasonic

Venturer

RCA

Sharp

JVC

Sony

375 $

250 $

300 $

325 $

350 $

400 $

3

1

1

1

3

1

Y

N

Y

Y

N

Y

SIMPLE

SIMPLE

DOUBLE

DOUBLE

SIMPLE

DOUBLE

5,0

3,0

5,0

6,0

6,0

4,0

How do we classify information?How do we classify information?

• More infos than presented.

• Not as organized.

• subjective (ex.: design) and/or objective criteria

• accessibility

• biases

• missing infos

Type of InformationType of Information

Type of biasesType of biases

Biases due to the source (salesperson versus family)

Own Biases (mental accounting: challenge to rational evaluation)– Snowstorm and football…– Framing issues

Information Overload (Customers are exposed to so much information that they are unable to process it to make a decision)

Consumer Decision Process ModelNeed Recognition

Search for Information

Pre-purchase Evaluation of Alternatives

Pre-purchase Evaluation of Alternatives

The process of evaluating alter-natives identified from search, which leads to product or brand most likely to satisfy the consumer

Can use new or preexisting evalu-ations stored in memory

Evaluative criteria: standards and specifications used to compare different products and brands

How to Categorize?

Levels of categorization

Strategic Implications for marketers Positioning Identification of competitors

Identification of AlternativesIdentification of Alternatives

What do you think about this What do you think about this ad?ad?

Heuristics

“Simple rules of thumb used to aid judgments or decisions.”

Heuristics: What types of mental shortcuts? Product signal Market beliefs Country of origin Brand Loyalty

Choices: How to make the Choices: How to make the decision?decision?

Alternatives EvaluationAlternatives Evaluation

Other Heuristics– Compensatory – Noncompensatory

The rule :

where

ST = total score;

Ii = importance of attribute i;

Pi = performance of brand i on attribute i;

k = number of attribute.

Multi-Attribute ModelMulti-Attribute Model

k

iiiPIST

1

Brand

Price

Number of CD’s

Remote

Audio Tape

Weight

Panasonic

Venturer

RCA

Sharp

JVC

Sony

2

5

4

3

3

1

5 1 1 1 5 1

5

1

5

5

1

5

1

1

5

5

1

5

2

4

2

1

1

3

Importance 5 2 4 1 3

Multi-Attribute Model Multi-Attribute Model ApplicationApplication

From 1 very bad to 5 very good

474453453341

Use of the multi-attribute rule by Use of the multi-attribute rule by a Customera Customer

Poor (1)4 Average (2) Excellent (4)

Brand 3WEIGHT Brand 1 Brand 2

Excellent (4)1 Poor (1) Good (3)

Good (3)3 Good (3) Poor (1)

4(1) + 3(3) + 1(4) + 2(1) = 19

4(2) + 3(3) + 1(1) + 2(3) = 24

4(4) + 3(1) + 1(3) + 2(2) = 26

Poor (1)2 Good (3) Average (2)

Quality

ATTRIBUTE

Customer support

Fit with desired performance standards

Total

Price

Brand RATINGS

Compensatory Attribute Compensatory Attribute Processing ModelsProcessing Models

Additive Difference Model– Brands Compared by Attribute, Two at a Time– Differences Added Up as Decision Maker Proceeds by

Attribute; e.g.:

Epson Canon DiffPrice 5 3 2Weight 3 4 -1Processor 5 5 0Battery Life 1 3 -2After Sale Support 3 3 0Display Quality 3 3 0 -----------------------------TOTAL -1 (Canon is marginally

better)

Noncompensatory Brand Noncompensatory Brand Processing ModelsProcessing Models

Conjunctive Models– Minimum Cutoffs Set for Each Attribute (Reject if Below Cutoff)– Need Additional Rule to Rule Out Remaining Alternatives (If More

Than One)

Disjunctive Model– Acceptable Levels for Attributes Decided (Reject if Below Cutoff) – Decision Based on Several, but Not All, Important Attributes

Brand

Price

Number of Cd’s

Remote

Audio Tape

Weight (kilos)

Panasonic

Venturer

RCA

Sharp

JVC

Sony

375 $

250 $

300 $

325 $

350 $

400 $

3

1

1

1

3

1

Y

N

Y

N

N

Y

SIMPLE

SIMPLE

DOUBLE

DOUBLE

SIMPLE

DOUBLE

5,0

3,0

5,0

6,0

6,0

4,0

Attribute Threshold

Price :

Number of CD’s :

Remote :

Audio tape :

weight :

No more than 325 $ One is enough Yes, mandatory double no more than 5 kilos

Conjonctive RuleConjonctive Rule

Disjonctive RuleDisjonctive Rule

Brand

Price

Number of Cd’s

Remote

Audio Tape

Weight (kilos)

Panasonic

Venturer

RCA

Sharp

JVC

Sony

375 $

250 $

300 $

325 $

350 $

400 $

3

1

1

1

3

1

Y

N

Y

Y

N

Y

SIMPLE

SIMPLE

DOUBLE

DOUBLE

SIMPLE

DOUBLE

5,0

3,0

5,0

6,0

6,0

4,0

Attribute Threshold

Price :

Number of CD’s :

Remote :

Audio tape :

weight :

No more than 300 $ At least Yes, mandatory double no more than 4 kilos

Noncompensatory Attribute Noncompensatory Attribute Processing ModelsProcessing Models

Lexicographic Model– Attributes ordered by importance– If one alternative dominates on that attribute, it is

chosen; otherwise, proceed to next most important attribute

– I want to get the brand that does best on the attribute(s) most important to me.

Elimination by Aspects– Attributes ordered by importance; alternatives

acceptable on first attribute proceed to evaluation on further attributes

– I will eliminate any brands that have a value of 3 or below, beginning with the most important attribute.

Elimination by AspectsElimination by Aspects

Brand

Price

Number of Cd’s

Remote

Audio Tape

Weight (kilos)

Panasonic

Venturer

RCA

Sharp

JVC

Sony

375 $

250 $

300 $

325 $

350 $

400 $

3

1

1

1

3

1

Y

N

Y

Y

N

Y

SIMPLE

SIMPLE

DOUBLE

DOUBLE

SIMPLE

DOUBLE

5,0

3,0

5,0

6,0

6,0

4,0

Attribute Importance order Threshold

Price :

Number of CD’s :

Remote :

Audio tape :

weight :

1 5 2 4 3

No more than 375 $ One is enough Yes, mandatory double no more than 5 kilos

Lexicographic RuleLexicographic Rule

Brand

Price

Number of Cd’s

Remote

Audio Tape

Weight (kilos)

Panasonic

Venturer

RCA

Sharp

JVC

Sony

375 $

250 $

300 $

325 $

350 $

400 $

3

1

1

1

3

1

Y

N

Y

Y

N

Y

SIMPLE

SIMPLE

DOUBLE

DOUBLE

SIMPLE

DOUBLE

5,0

3,0

5,0

6,0

6,0

4,0

Attribute Importance Order

Price :

Number of CD’s :

Remote :

Audio tape :

weight :

3 5 1 4 2

What did you learn ?What did you learn ?

CASE ANALYSISCASE ANALYSIS

Reality of Consumer Decision Reality of Consumer Decision MakingMaking

Consumers may use multiple decision-making strategies Emotions and imagery often accompany rational, cognitive

analysis

ALL ALTERNATIVES

NON-COMPENSATORY

EVALUATION

COMPENSATORYEVALUATION

SURVIVINGALTERNATIVES

Consumer Decision Process Model

Purchase

Need Recognition

Search for Information

Pre-purchase Evaluation of Alternatives

Purchase

Purchase decisions involve choosing a form of retailing, a specific retailer, and a particular product and brand

Purchase intention can change during the purchase stage--it can be influenced by factors such as in-store promotions, discounts, or stock-outs

Deviation From the Identified Deviation From the Identified ChoiceChoice

The preferred brand may be out of stockNew in-store information may reopen the

evaluation processFinancing terms may render a purchase

infeasible

Consumer Decision Process Model

Purchase

Need Recognition

Search for Information

Consumption

Prepurchase Evaluation of Alternatives

Consumer Decision Process Model

Purchase

Need Recognition

Search for Information

Consumption

Post-consumption Evaluation

Pre-purchase Evaluation of Alternatives

Post-consumption Evaluation Satisfaction: when expectations are met or exceeded by perceived performance

Dissatisfaction: when performance falls short of expectations

Consumption is an important determinant of satisfaction

Cognitive dissonance: questioning decision (post-purchase regret)

Emotion affects evaluation

Importance of Customer Importance of Customer SatisfactionSatisfaction

Satisfied customers come backLeads to profitability

– Example: Consumer in supermarket spends over $50,000 in a life time

– Satisfied customer can provide $150,000 of business for a car dealer over a life time

Exhibit 12.8: The Disconfirmation Paradigm

Measuring Satisfaction in TermsMeasuring Satisfaction in Termsof Expectationsof Expectations

How did we do? How was our:

Fell Below Expectations

Met Expectations

Exceeded Expectations

Room appearance

Room cleanliness

Registration speed

Friendliness of staff

Room service promptness

Customer DissatisfactionCustomer Dissatisfaction

Dissatisfied customers stop purchasing, complain, and spread negative WOM.

The average business does not hear from 96% of its unhappy customers.

The average person with problems tells 9 or 10 people.

95% of complainers will do business with you if complaint is resolved quickly.

Responses to DissatisfactionResponses to Dissatisfaction

Complaints– Consumer Complaints– When Complaints Are Likely to Occur– Complainer Types

Satisfaction Is Not EnoughSatisfaction Is Not Enough

65% to 85% of customers who defect to competitors say they were “satisfied” or “very satisfied.”

Customer retention is key--develop long-term relationships.

Customer Retention TacticsCustomer Retention Tactics Care about your customers. (2/3 of customers defect

because they feel the company doesn’t care about them.) Remember customers between sales. (Contact on

birthdays, etc.) Build trusting relationships (expertise, reliability, concern). Monitor the service delivery process. Be there when you are needed (service and repair). Provide extra effort (beyond the call of duty).

Irrevocability of the decision

Choice

Difficulty of choice

DoubtsCognitive

Dissonance

Stress

Strategies Reduce Importance

of the decision

Reduceperceived value

of rejected options

Importanceof the decision

Anxiety of the consumer

IncreasePerceived value

Of chosen option

Cognitive DissonanceCognitive Dissonance

Consumer Decision Process Model

Purchase

Need Recognition

Search for Information

Consumption

Post-consumption Evaluation

Divestment

Pre-purchase Evaluation of Alternatives

Divestment

How consumers dispose of the packaging or product after use

Options include:DisposalRemarketing or resellingRecycling

Consumers’ environmental concerns about divestment may affect product choice

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

Family

Personal Influence

Situation

Happy Halloween!!!Commercial Time

This is a car advertisement from Germany.

When they finished filming the ad the people who made it noticed something moving along the side of the car, like a ghostly white mist.

The ad was never put on TV because the unexplained ghostly phenomenon frightened the production team out of their wits. Watch it carefully and about halfway look and you will see the white mist crossing in front of the car then following it along the road......Spooky!

Case StudyCase Study

1. Watching the purchase decision of some of the people in the video, would you say this pattern is typical of a product in a low-involving category? Describe the purchase process of one of these persons or your own purchase decision?

2. What are the key attributes of the product? How does the company position itself relatively to these attributes?

3. How important are other people in the decision making process regarding the purchase of this product? How does the company use this aspect? What do you think of that?