CB 2.1 consumer decision making short

8/7/2019 CB 2.1 consumer decision making short

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ConsumerDecision

Making Process

Ms. Vaishali Chaudhari


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Definition Processes the consumer uses to

make purchase decisions, as well as

the use and disposal of the purchasedgood or service.


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Consumer Decisiononsumer DecisionProcessesrocesses

Need Recognition

Information SearchExternalExternal

SearchSearch

Internal

Search

Pre-purchase Evaluation

Purchase

Consumption & Post-

consumption Evaluation

Individual

InfluenceEnvironmental

Influences


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Types of decisions

Nominal Limited

Extended

Purchase situations

In store purchase situation

Gift giving situation

Unanticipated purchase situations


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Need / Problem Recognition It is the perceived difference between

an ideal land an actual state Psychological model of need

recognition :

INPUT

VARIABLES

Consumers

Psychological setSTIMULUS

EXPOSURE

Need

Recognition


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Input Variables The consumers needs and attitudes at a given time

are a function of various input variables. These are (1) Consumers past experience, (2) Consumer characteristics, (3) Their motivations,

(4) Environment influences, and (5) Past marketing stimuli (product, price,

promotion, and in-store strategies directed to theconsumer.)

These input variables and the consumerspsychological set influence the types of stimuli theconsumer experiences (seeing advertising, noticingthe product on the shelf, hearing about it fromfriends). The result could be recognition of a need for

a product or brand.


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1. Consumers Past Experiences

Customer may emphasize economy, servicedependability, performance, and comfort, on the basis oftheir past experience.

2. Consumer Characteristics Demographics, life-style, and personality affect attitude

towards brand Income may affect the type of product purchased eg. In car :

compact, standard, or luxury Age, marital status, and number of children may affect the

class of car-sports car, family car Lifestyle may affect the make A socially oriented, outer-directed couple may want a car that

impresses others and may stress styling and size of car. A family that travels a lot may emphasize comfort at the

expense of styling. The power oriented, aggressive individual may want a car

with a great deal of acceleration. The compulsive individual may stress regular service needs

and better warranty terms.


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3. Consumer Motives:

Motives are general pre-dispositions that direct behaviortoward attaining certain desired objectives.

Common motives may include factors such as possession,economy, curiosity, dominance, pleasure, and imitation.

The five levels of motives from lowest to highest are: 1. physiological (food, water, shelter, sex); 2. safety (protection, security, stability);

3. social (affection, friendship, acceptance); 4. ego (prestige, success, self-esteem); 5. Self-actualization (self-fulfillment).

4. Environmental Influences Family members Neighbors and business associates Cultural norms and values

5. Past Marketing Stimuli

Advertising, in-store stimuli, and sales representatives.


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recognitionExpectancy of

problem

Immediacy of solution

Immediate

solution required

Imm. Solution

not required

Occurrence of

problem expected

Routine Planning

Occurrence

unexpected

Emergency Evolving


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Marketing Implications1. MEASURING PROBLEM RECOGNITION:

Best is scaling techniques, which measure purchase intentionsPredisposition Attitudes

1 Firm and immediate intent

to buy a specific brand.

I am going to buy some right away,

I am going to buy some soon.

2 Positive intention without

definite buying plans.

I am certain l will buy some sometime

I probably will buy some sometime,

3 Neutrality: Might buy,

might not buy.

I may buy some sometime.

I might buy some sometime, but I doubt it.

4 Inclined not to buy the

brand but not definiteabout it.

I dont think Im interested in buying any.

I probably will never buy any,

5 Firm intention not to buy

the brand.

I know Im not interested in buying any.

If somebody gave me some. I would give it

away, just to get rid of it.

6 Never considered buying. I have never heard of the brand.


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2. ACTIVATING PROBLEM RECOGNITION & INFLUENCING

THE DESIRED STATE Generic (increase product usage Eg. Ordinary

tap water is not safe, Nestle pure life mineral

water)

Selective (increase brand usage, Eg. You get a

job or money back, NIIT)

3. Research Approach

Activity analysis (cleaning house, preparing

means, travel by train)

Product analysis

Problem analysis

Human factor research (functional problem

consumers are not aware)

Emotion research (PI or projective tech)


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REFLECTIONS For our product or service situation * What types of problem-recognition situations typify our

customers: routine, emergency, planning, and/orevolving?

* What factors typically constrain further purchasingprocess activity by the consumer, and how may we help

the removal of such barriers? * What intentions to purchase do consumers express? * How may we help activate the consumers problem-

recognition process by emphasizing their desired state,actual state, or the level of discrepancy between the two?

* How is consumers predisposition to buy shifting over

time? To what extent are favorable intentions beingconverted to purchase?


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Information Search Information may be considered to be

knowledge obtained about some fact orcircumstance.

Search refers to mental as well as physicalinformation seeking and processing

activities, which one engages in to facilitatedecision making regarding some goal-objectin the marketplace (prices, stores) related tothe product.

Search may be categorized as

* Pre purchase or ongoing (based on thepurpose of search)

* Internal or external (based on its source).


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Internal SearchThree types of recalls are Retrieved from Internal

Search

(1) brand (2) attributes

(3) experiences1. Brand Recall

Research has found a strong relationship between

brand recall and choice. An interesting study found that consumers choices

could be altered simply by manipulating whichbrands consumers could recall, even though therewas no change in the preferences for these brands.

If consumers cannot recall brands from memory inorder to form a consideration set, the set will tend tobe determined by external factors such asavailability or salespeople.


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2. Recall of Attributes Consumers often cannot remember specific facts

about a product or service because memory for

details decreases over time & due to selectiveretention & attention. Hence consumers recall

attribute information, it tends to be in summary or

simplified form rather than in its original detail.3. Recall of Experiences

Marketers want consumers to recall positive

experiences in relation to their product or service.

Hence marketers often associate their products or

services with common positive experiences orimages in order to increase their recall from

memory.


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Is Internal SearchAlways Accurate?Confirmation Bias We are more likely to recall information that

reinforces rather than contradicts our overall beliefs Selective perception-we see what we want to see-

and occurs because we strive to maintainconsistency in our views

We are more likely to recall positive than negativeinformation about these favored brands (problemwhen customer do this with competitors brand)

Solution : draw attention to negative aspects ofcompetitive brands in comparative advertising. If

comparative information can be presented in aconvincing and credible way, marketers may beable to overcome this bias.


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Mood

Consumers engaged in internal search are

most likely to recall mood-congruent

information, feelings, and experiences. Marketing communications that put

consumers in a good mood (through the use

of humor, attractive visuals, etc.) can enhance

the recall of positive attribute information.


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External SearchKIND OF INFORMATION IS ACQUIRED IA ACQUIRED IN

EXTERNAL SEARCH :

Brand name Price

Other attributes

Evaluation criteria

Sources of information in external Search

(1) marketer-dominated sources (salespeople,

packaging, and other sources under the control of

the marketer )(2) consumer sources (all those interpersonal

communications not under the control of the

marketer)

(3) neutral sources (mass media)


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Some Research Findings on

external search Research suggests that consumers typically consult

few information sources finds, articles , advertisements,and so on before making a purchase. For example, onestudy showed that prior to purchase, 15 % of majorappliance and car buyers consulted no informationsources, while 30 % consulted only one, and 26 %

consulted two. In terms of outlets visited, various studies suggest that

approximately 40 to 60 percent of shoppers visit onlyone store before making a purchase. This appears tohold across both durable and non durable goods.

Shoppers also appear to acquire limited amounts ofinformation about the brands actually underconsideration. One study found that out of the 560 itemsof readily available information to consider whenchoosing among sixteen brands of cereal, mediannumber of items reviewed were only seven


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Some consumers own characteristics influence the degree of

external-search activity. Relevant findings:

1. Greatermarket experience with a product is

associated with a lower degree of external search. 2. Open-mindedness and self-confidence of consumers

have been found positively related to greater search

activity.

3. Socio-economic characteristics have been related to

search. Higher educational levels and income have beenassociated with greater search, while a reduction with

increasing age.

4. Consumers differ in theirability to process information,

and if their processing limits are reached, the effect may beto decrease the extent of external search.

5. Higher levels ofconsumer involvement with a product

appear to be associated with a great degree of external

search.


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Types of Risks leading to

External Information Search 1. Financial risk The consumer may lose money

if the brand doesnt work at all or costs more than itshould to keep it in good shape.

2. Performance risk The brand may not workproperly.

3. Physical risk The brand may be or becomeharmful or injurious to ones health.

4. Psychological risk The brand may not fit inwell with the consumers self-image or self-concept.

5. Social risk The brand may negatively affectthe way others think of the consumer.

6. Time-loss risk The brand may fail completely,thus wasting the consumers time, convenience, andeffort getting it adjusted, repaired, or replaced.


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How consumer deal with

risk ? 1. Buy a major. Well-known brand. 2. Buy the brand that has been tested and

approved by a private testing company. 3. Buy the brand offering a money-back guarantee

with the product.

4. Buy the brand whose advertising hasendorsements or testimonials from typical consumers.From a celebrity, or from an expert on the product.

5. Buy the brand that the consumer has used

before and has found satisfactory. 6. Buy the brand that has been tested andapproved by a branch of the government.

7. Buy the most expensive and elaborate model ofthe product.


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Marketing Implications make information readily available and easily

accessible (at the lowest cost and effort to theconsumer) to facilitate the decision process. Providing information on salient and diagnostic

attributes, particularly if the brand has a differentialadvantage.

Marketers should also segment the market for anyproduct or service according to search activity.(high searchers Vs low searchers)

Attempt to stimulate external search by providing

low searchers information in a highly accessiblemanner Provide consumers with incentives to search

(electronic points)

St 3 E l ti f Alt ti


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Consumer May Use Careful

Calculations & Logical Thinking

Consumer May Use Careful

Calculations & Logical Thinking

Consumers May Buy on Impulse andRely on Intuition

Consumers May Buy on Impulse andRely on Intuition

Consumers May Make Buying Decisionson Their Own.

Consumers May Make Buying Decisionson Their Own.

Consumers May Make Buying DecisionsOnly After Consulting Others

.

Consumers May Make Buying Decisions

Only After Consulting Others.

Marketers Must Study Buyers to FindOut How They Evaluate Brand

Alternatives

Step 3. Evaluation of Alternatives

E l ti f Alt ti


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Evaluation of Alternatives

During search, the brand alternatives to the buyers

product choice decision are identified. Among

brands of which the consumer is aware, he wouldnot consider purchasing some of them for several

reasons.

He may feel they are beyond his financial reach

They are not perceived as adequate for his motives He has insufficient information on which to evaluate

them

He has tried and rejected them

He is satisfied with his current brand

He has received negative feedback from advertising

or from word-of-mouth communication.


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It has been suggested, therefore, that there actuallyexist three subsets of brands within the awarenessset of alternatives: (1) evoked set, (2) inert set, (3)inept set

The evoked set consists of the few select brandsevaluated positively by the consumer for purchaseand consumption. These are the brands theconsumer would be willing to consider further.

The inert set consists of those brands that theconsumer has failed to perceive any advantage inbuying: that is, they are evaluated neither positivelynor negatively. Perhaps the consumer hasinsufficient information on which to evaluate them or

he simply may not perceive them as better than thebrands in his evoked set.

The inept set is made up of brands that have beenrejected from purchase consideration by theconsumer because of an unpleasant experience of

negative feedback from others.

H th i f ti


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How consumers process the information

on their evoked set of brands?

Two broad approaches* Choice by processing attributes (CPA)

# one attribute at a time

* Choice by processing brands (CPB)

# one brand at a time

Mostly CPA is followed by CPB for major

purchases

Consumers may either use compensatory

processes or non-compensatory processes

as decision rules.


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FACTORS INFLUENCING THEAMOUNT OF EVALUATION* Urgency of the need (More urgent, less evaluation)

* Significance the product is to the buyer (house, car,and boat, greater the amount of evaluation)

* Complexity of the alternatives (more complexity,

more evaluation)

M k ti I li ti f


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Marketing Implications of

Evaluation of Alternatives

1. DETERMINING WHICH CRITERIA ARE USED BY

CONSUMERSDifferent Approaches :

A] Directly asking consumers what factors theyconsider when they compare alternatives for

purchase through survey questionnaire or FGDsDrawbacks assumes that consumers know why they buy or

prefer one product to another assumes that they are willing to provide the

requested information(they may provide theresearcher with socially acceptable responsesrather than their true feelings)

They may have forgotten what the most important

criteria were in a recent purchase


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B] Indirect approach : Marketer ask the consumerwhat evaluative criteria she thinks someone elsewould use. This type of questioning allowsconsumers to acceptably project their own attitudesthrough another individual or ask someone else.

C] Perceptual mapping

Multidimensional scaling (MDS) : Consumers rate twobrand alternatives at a time along a scale

2. DETERMINING THE IMPORTANCE OF CRITERIAUSED BY CONSUMERS

Use of a rating scale ( unimportant to important) Semantic deferential (high price & low price)

Constant sum scale (allocate 100 points across theevaluative criteria according to their judgement ofeach ones importance).

Conjoint analysis

3. INFLUENCING CONSUMERS EVALUATION

Step 4 Purchase Decision


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Purchase Intention

Desire to buy the most preferred brand

Purchase Intention

Desire to buy the most preferred brand

Purchase DecisionPurchase Decision

Unexpected

SituationalFactors

Attitudes ofOthers

Step 4. Purchase Decision


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Types of PurchasesTrial

Purchases

Repeat

Purchases

Long-Term

CommitmentPurchases

Step 5 Postpurchase Behavior


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Step 5. Postpurchase Behavior

Consumers

Expectations of Products Performance.Products Perceived

Performance.

Dissatisfied Customer

Satisfied Customer!

Cogn

itive

Disso

na

nce

Cogn it

ive

Dissonan

ce


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Outcomes ofPostpurchase Evaluation Actual Performance Matches

Expectations Neutral Feeling

Actual Performance ExceedsExpectations Positive Disconfirmation of Expectations

Performance is Below Expectations Negative Disconfirmation of Expectations

CB 2.1 consumer decision making short

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