Consumer Decision Making II

MKT 750Dr. West

Agenda

Back to Stages of Decision MakingEvaluation of Alternative, Decision Rules, Choice and Post-purchase Evaluation

A Model of Customer Satisfaction

3

Rational Decision Making:

ChoiceAlternativeEvaluation

SearchNeed

RecognitionPost-Purchase

Evaluation

Evaluating Alternatives

Determine criteria to be used for evaluation of products

Assess the relative importance of the each criteria

Evaluate each product 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 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

Determinants of Satisfaction:

What happens when product performance doesn’t meet expectations?

Assimilation – a reluctance to acknowledge discrepancies via rationalization and attribution Contrast – the tendency to exaggerate differences, a phenomenon known as reactance

Assimilation & Contrast

Zon

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f Tole

ran

ce

AssimilationContrast

10

Favorable 9Performance 8

7

6 ExpectationUnfavorable 5 Performance 4

3 2

1

10 High ExpectationsFavorable 9Performance 8

7 6

Unfavorable 5 Performance 4

3 2

1

Expectancy Disconfirmation

Dis

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Z

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Negative Disconfirmation “Disappointment”

10 High ExpectationsFavorable 9Performance 8

7 6

Unfavorable 5 Performance 4

3 2

1

Expectancy Disconfirmation

Dis

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Z

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Negative Disconfirmation “Betrayal”

Expectancy Disconfirmation

Dis

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Z

on

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10

Favorable 9Performance 8

7 6

Unfavorable 5 Performance 4

3 2 1 Low Expectations

Positive Disconfirmation “Ambivalence”

Expectancy Disconfirmation

Dis

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sfa

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sfa

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Z

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10

Favorable 9Performance 8

7 6

Unfavorable 5 Performance 4

3 2 1 Low Expectations

Positive Disconfirmation “Elation”

Customer Satisfaction

Satisfaction influences repeat buying

Positive post-consumption evaluations are essential for retaining customers

The likelihood that customers will remain loyal depends on their level of satisfaction

Customer Satisfaction

Consumers often talk about their consumption experiences

A firm’s ability to satisfy customers will affect its success in retaining current customers as well as recruiting new ones

It Shapes Word-of-Mouth

Customer Satisfaction

Monitor satisfaction levels

Encourage dissatisfied customers to voice their concerns

Have a recovery system in place to address customer concerns

Implications for Competitive Strategy

Advertising claims

Brand names

Packaging

Price

Influencing Expectations

Assignment