BB Chapter Five : Evaluating and Selecting Alternatives

Chapter Five:Evaluating and Selecting

Alternatives

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Evaluating and selecting alternativesA further step in the consumer decision making

process

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Chapter 5: Evaluating and selecting alternatives

1. The nature of evaluative criteria2. Tools for the measurement of evaluative

criteria3. Consumers’ individual judgments are not

necessarily accurate

4. Role of surrogate indicators5. Types of decision rules consumers may

apply

6. Implications of evaluative criteria for marketing strategy

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Evaluation of alternatives

• Evaluation criteria– Price – Brand name– Country of origin

• Determinants of criteria• Measurement of evaluation criteria

– Identify important criteria– Perception of each product for these– Alternative performance of each product

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Evaluation of alternatives (cont.)

• Determining the alternatives

• Evaluating alternatives• Selecting a decision rule

– Non-compensatory– Compensatory– Constructive– Phased

• Marketing implications

How Consumers Make ChoicesHow Consumers Make Choices

Rational choice theoryRational choice theory assumes the consumer has sufficient skills to calculate which option will maximize his/her value, and will choose on this basis.

�The task is to identify or discover the one optimal choice.

�The decision maker collects information levels of attributes across alternatives, applies the appropriate choice rule, and the superior option is revealed.

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In reality, all consumers have bounded rationalitybounded rationality

�A limited capacity for processing information.

Consumers also often have goals that are different from, or in addition to, selecting the optimal alternative.

�A metagoalmetagoal refers to the general nature of the outcome being sought.

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Metagoals in Decision MakingMetagoals in Decision Making

•• Maximize the accuracy of the decisionMaximize the accuracy of the decision

•• Minimize the cognitive effort required for the decisionMinimize the cognitive effort required for the decision

•• Minimize the experience of negative emotionMinimize the experience of negative emotion

•• Maximize the ease of justifying the decisionMaximize the ease of justifying the decision

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1.1. Affective ChoiceAffective Choice

2.2. AttitudeAttitude--Based ChoiceBased Choice

3.3. AttributeAttribute--Based ChoiceBased Choice

Three types of consumer choice processes:Three types of consumer choice processes:

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Affective choices tend to be more holistic. Brand not decomposed into distinct components for separate evaluation.

Evaluations generally focus on how they will make the user feel as they are used.

Affective ChoiceAffective Choice

Choices are often based primarily on the immediate emotional response to the product or service.

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Affective choice most likely under consummatory motives.

��Consummatory motivesConsummatory motives underlie behaviors that are intrinsically rewarding to the individual involved.

��Instrumental motivesInstrumental motives activate behaviors designed to achieve a second goal.

Affective ChoiceAffective Choice

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AttributeAttribute-- versus Attitudeversus Attitude--Based Choice ProcessesBased Choice Processes

AttributeAttribute--Based Choice Based Choice

•Requires the knowledge of specific attributes at the time the choice is made, and it involves attribute-by-attribute comparisons across brands.

AttitudeAttitude--Based Choice Based Choice

•Involves the use of general attitudes, summary impressions, intuitions, or heuristics; no attribute-by-attribute comparisons are made at the time of choice.

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Motivation, information availability, and situational factors interact to determine which choice process will be used.

�Example: the easier it is to access complete attribute-by-brand information, the more likely attribute-based processing will be used.

�So, brands with attribute advantages but lacking strong reputations…

�Should provide attribute comparisons in an easy-to-process format in their marketing and packaging.

AttributeAttribute--Based versus AttitudeBased versus Attitude--Based Choice ProcessesBased Choice Processes

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Many decisions, even for important products, appear to be attitude-based.

Thus, marketers often have a dual task:

1. Provide promotions that resonate with consumers making attitude-based choices.

2. Provide performance and supporting information to create preference for consumers making attribute-based choices.

AttributeAttribute--Based versus AttitudeBased versus Attitude--Based Choice ProcessesBased Choice Processes

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Evaluative CriteriaEvaluative Criteria

Evaluative criteriaEvaluative criteria - various dimensions, features, or benefits sought in response to a specific problem.

Most decisions involve an assessment of one or more evaluative criteria.

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Evaluative criteria are typically product features or attributes associated with either benefits desired by customers or the costs they must incur.

Evaluative criteria can differ in

� type� number� importance

Nature of Evaluative CriteriaNature of Evaluative Criteria

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Alternative evaluation and selection process

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Perceived performance of six mobile phones in relation to six evaluative criteria

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Importance of evaluative criteria to three buyers

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The measurement of evaluative criteria

• To enable the marketing manager to develop a sound strategy they must determine:

– Which evaluative criteria are used by the consumer

– How the consumer perceives alternative products in terms of each criterion

– The relative importance of each criterion

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Determining evaluative criteria to use

• Direct methods– Asking consumers– Focus groups– Observation

• Indirect methods– Projective techniques– Perceptual mapping


1.1. DirectDirect methods include asking consumers what criteria they use in a particular purchase.

2.2. IndirectIndirect techniques assume consumers will not or cannot state their evaluative criteria.

•• Projective techniquesProjective techniques - allow the respondent to indicate the criteria someone else might use.

•• Perceptual mappingPerceptual mapping - researcher uses judgment to determine dimensions underlying consumer evaluations of brand similarity.

Determination of Which Evaluative Criteria Are UsedDetermination of Which Evaluative Criteria Are Used

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Perceptual mapping of soap brands

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Uses of perceptual mapping

• We use this method to help us understand consumers’ perceptions and the evaluative criteria they use

• We can use this information to determine:– How different brands are positioned according

to evaluative criteria– How the positions of brands change in

response to marketing efforts– How to position new products using evaluative

criteria

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Determining consumers’ judgments of brand performance in terms of

specific evaluative criteria

• Rank-ordering scales

• Semantic-differential scales (see table on page 130)

• Likert scales


The importance assigned to evaluative criteria can be measured either by directdirect or by indirectindirect methods.

�The constant sum scale is the most common direct method.

Determination of the Relative Importance of Determination of the Relative Importance of Evaluative CriteriaEvaluative Criteria

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Determining the relative importance of evaluative criteria - constant sum method

Evaluative criteria Importance (in points)

Price 20

Size 15

Warranty 15

Quality of digital camera 5

Compatibility with email system 10

Ease of use 35

Total 100

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Determining the relative importance of evaluative criteria (cont.)

• Indirect methods

– Conjoint analysis : a technique that provides data on the structure of consumers’ preferences for product features and their willingness to trade one feature for more of another.


Conjoint analysis is the most popular indirect method.

�Conjoint presents consumes with a set of product descriptions which they evaluate.

�Statistical analysis is used to derive attribute importance from these overall evaluations.

Determination of the Relative Importance of Determination of the Relative Importance of Evaluative CriteriaEvaluative Criteria

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One possible application of conjointanalysis

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Using conjoint analysis to determine the importance of evaluative criteria

Individual Judgment and Evaluative CriteriaIndividual Judgment and Evaluative Criteria

Consumers can have difficulty judging competing brands on complex evaluative criteria such as quality or durability.

�Consumers cancan and dodo make such judgments.

�But even seemingly simple judgments such as price comparisons can be complex!

�The inability of consumers to accurately evaluate many products can result in inappropriate purchases.

� This is a major concern of marketing regulators.

Accuracy Accuracy of Individual Judgmentsof Individual Judgments

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Factors influencing the importance of various criteria:

� Usage situation

� Competitive context

� Advertising effects

The Relative Importance and Influence of Evaluative The Relative Importance and Influence of Evaluative CriteriaCriteria

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Individual judgment and evaluative criteria

• The accuracy of individual judgments

1. Use of a surrogate indicator

2. Sensory discrimination

3. Just-noticeable difference

Sensory discrimination and JND

• Read details on pages 133-134

• We will touch on JND in a later lecture on Perception

• Important BB topic

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Use of surrogate indicators

Consumers frequently use an observable attribute of a product to indicate the performance of the product on a less observable attribute

Reliance depends on:� Predictive value

� Confidence value


A Surrogate indicatorSurrogate indicator is an attribute used to stand for or indicate another attribute.

For example, consumers often use the following factors as surrogate indicators of quality (a.k.a. quality signals):

�� priceprice

�� advertising intensityadvertising intensity

�� warrantieswarranties

�� brandbrand

�� country of origincountry of origin

Use of Use of Surrogate IndicatorsSurrogate Indicators

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Use of surrogate indicators (cont.)

• Price– Used to judge the perceived quality of a large rang

of goods

• Brand– Often used as a surrogate indicator of quality

� E.g. jeans

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Use of price to indicate the quality of jewellery


1. Marketers must understand the evaluative criteria consumers use and develop products that excel on these features.

2. Marketers must understand consumer use of surroga te indicators.

3. Marketers must understand the factors influencing consumer perceptions of the importance of evaluativ e criteria.

Evaluative Criteria, Individual Judgments, and Evaluative Criteria, Individual Judgments, and Marketing Marketing StrategyStrategy

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Evaluative criteria, individual judgments and marketing strategy

• Consumers use surrogate indicators

– Marketers can ensure that their products are superior for these criteria by:

� Making direct reference to them in ads

� Using brand names� Using celebrity endorsement� Using country-of-origin

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Use of celebrity endorsement

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Use of country of origin

Decision Rules for AttributeDecision Rules for Attribute--Based ChoicesBased Choices

Choice rules can be characterized as either compensatory and non-compensatory.

�A compensatory rule – high level of one attribute can offset a low level of another.

�Non-compensatory rules – high level of one attribute cannot offset a low level of another.

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Decision rules used by consumers

�Conjunctive�Disjunctive�Elimination-by-aspects�Lexicographic�Compensatory

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Decision rules used by consumers (cont.)


Choosing Between Six Notebook ComputersChoosing Between Six Notebook Computers

Final Choice Depends on Decision Rule Being UsedFinal Choice Depends on Decision Rule Being Used

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Note: here we use the example of choosing between brands of notebooks.


Conjunctive RuleConjunctive Rule:

Establishes minimum required performance for each evaluative criterion.

Selects the first (or all) brand(s) that meet or exceed these minimum standards.

If minimum performance was:

PricePrice 33

WeightWeight 44

ProcessorProcessor 33

Battery lifeBattery life 11

AfterAfter--sale supportsale support 22

Display qualityDisplay quality 33

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WinBook, Dell, IBM, and Toshiba are eliminated because they fail to meet all the minimum standards.

Conjunctive RuleConjunctive Rule

MinimumMinimum334433112233

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Disjunctive RuleDisjunctive Rule :

Establishes a minimum required performance for each important attribute (often a high level).

All brands that meet or exceed the performance level for any key attribute are acceptable.

If minimum performance was:

PricePrice 55

WeightWeight 55

ProcessorProcessor Not criticalNot critical

Battery lifeBattery life Not criticalNot critical

AfterAfter--sale supportsale support Not criticalNot critical


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WinBook, Compaq, and Dell meet minimum for at least one important criterion and thus are acceptable.

Disjunctive RuleDisjunctive Rule

MinimumMinimum5555------55

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EliminationElimination --byby --Aspects RuleAspects Rule

First, evaluative criteria ranked in terms of importance

Second, cutoff point for each criterion is established.

Finally (in order of attribute importance) brands are eliminated if they fail to meet or exceed the cutoff.

If rank and cutoff were:

RankRank CutoffCutoff

PricePrice 11 33

WeightWeight 22 44

Display qualityDisplay quality 33 44

ProcessorProcessor 44 33

AfterAfter--sale sale supportsupport

55 33

Battery lifeBattery life 66 33

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Step 1: Price eliminates IBM and Toshiba

Step 2: Weight eliminates WinBook

Step 3: Of remaining brands (HP, Compaq, Dell), only Dell meets or exceeds display quality minimum.

EliminationElimination --byby --Aspects RuleAspects Rule

MinimumMinimum334433333344

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Consumer ranks the criteria in order of importance.

Then selects brand that performs best on the most important attribute.

If two or more brands tie, they are evaluated on the second most important attribute. This continues through the attributesuntil one brand outperforms the others.

WinBook would be chosen because it performs best on Price, our consumer’s most important attribute.

Lexicographic Decision RuleLexicographic Decision Rule

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The compensatory decision rulecompensatory decision rule states that the brand that rates highest on the sum of the consumer’s judgments of the relevant evaluative criteria will be chosen.

Compensatory Decision RuleCompensatory Decision Rule

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Compensatory Decision RuleCompensatory Decision Rule

Importance ScoreImportance Score

PricePrice 3030

WeightWeight 2525

ProcessorProcessor 1010

Battery lifeBattery life 0505

AfterAfter--sale supportsale support 1010


TotalTotal 100100

Assume the following importance weights:

Using this rule, Dell has the highest preference and would be chosen.

The calculation for Dell is:

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Summary of Resulting Choices from Different Decision Summary of Resulting Choices from Different Decision RulesRules

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Note in your text

• They use the example of mobile phones instead of notebooks

• Go through pages 138-141• Understand the decision rules

• The rankings of the brands (depending on the decision rule) are as follows:

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Alternative decision rules and selection of a mobile phone

Decision rule Brand choice

Conjunctive Samsung, Nokia

Disjunctive Motorola, Samsung, Sony Erickson

Elimination-by-aspects Motorola

Lexicographic Sony Erickson

Compensatory Motorola

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Summary of the decision rules

1. Conjunctive– Brands that meet a minimum level on each evaluative criterion

2. Disjunctive– Brands that meet a satisfactory level on any relevant evaluative

criteria 3. Elimination-by-aspects

– Rank brands on evaluative criteria– Select highest ranking brands until only one is left

4. Lexicographic– Rank brands on evaluative criteria importance– Select the one that is highest on most important criteria

5. Compensatory– Select brand that has the highest score over all the relevant

evaluative criteria

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Understanding target buyers’ decision rules to achieve product positioning

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Summary of topics in this chapter

We have discussed:• The nature of evaluative criteria• Tools for the measurement of evaluative

criteria

• Consumers’ individual judgments are not necessarily accurate

• Role of surrogate indicators

• Types of decision rules consumers may apply• Implications of evaluative criteria for

marketing strategy

BB Chapter Five : Evaluating and Selecting Alternatives

Business

Transcript of BB Chapter Five : Evaluating and Selecting Alternatives