Consumer Decision Making II MKT 750 Dr. West. Agenda Discuss Shopping Diary Insights Classical,...

Consumer Decision Making II

MKT 750Dr. West

Agenda

Discuss Shopping Diary InsightsClassical, Modified, and Extended Frameworks

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

A Model of Customer Satisfaction

3

Classical Framework:

Preferences & Beliefs

Need Recognition

Search

Evaluation

Purchase Decision

Post-Purchase Feelings

Modified Framework

Decision Sequence: Know Feel Do

Decision Stages

When Product Class is:

When Brand is:

Need

RecognitionInformation

SearchEvaluation Behavior

Purchase Decision

Post-purchase Evaluation

NEW NEW

FAMILIAR NEW

FAMILIAR FAMILIAR

Extended Framework

Low Involvement

High Involvement

RoutineUtilitarian/Functional

Hedonic/Ego-

Expressive

Decision Making

Usage

Primary Motivational Conditions

Contexts

Variations in Choice

Utilitarian/

Functional

Decision Sequence?Triggers?Problem solving?Search?Choice heuristic/rule?Role of Price?

Low Hedonic/Involvement Ego Expressive

Variations in Use

Utilitarian/

Functional

Source of satisfaction?

Brand Loyalty?

Low Hedonic/Involvement Ego Expressive

8

Classical Framework:

Preferences & Beliefs

Need Recognition

Search

Evaluation

Purchase Decision

Post-Purchase Feelings

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


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


Assessing Importance: ei

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

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


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 3 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 4 4

Longevity

2 4 4

Handling 1 4 2

Styling 2 4 2

15 22 19

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) 4 (16) 4 (16)

Longevity

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

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

Styling 2 2 (4) 4 (8) 2 (4)

57 74 70

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 4 4

Longevity

3 2 4 4

Handling 3 1 4 2

Styling 2 2 4 2


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 4 4

Longevity

3 2 4 4

Handling 3 1 4 2

Styling 2 2 4 2


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 4 4

Longevity

2 4 4

Handling 1 4 2

Styling 2 4 2

Very sensitive to order

Implications

Purchase decisions involve multiple parties

Initiator/Gatekeeper – Who starts the process and gathers information

Influencer – Whose opinions are sought concerning criteria to evaluate alternatives

Decider – The person(s) with authority to determine how money will be spent

Buyer – The purchasing agent

User – The person(s) who use the product

Implications

Products are not strictly functional or hedonic

Customer service is key Salespeople need to avoid offending the

customer

• Getting into the customer’s consideration set is essential.

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

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f Tole

ran

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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


3 2

1


Dis

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Z

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Negative Disconfirmation “Betrayal”


Dis

sati

sfa

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ati

sfa

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Z

on

e Z

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10


7 6


3 2 1 Low Expectations

Positive Disconfirmation “Ambivalence”


Dis

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sfa

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Z

on

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10


7 6


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


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


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

Summary of Decision Making

& Satisfaction

Means-to-an-end End-in-itself

Choice Process:

Low Involvement

Routine

High Involvement

Functional

Hedonic/

Ego Expressive

Decision Sequence

Process Trigger

Search

Evaluation

Decision Rule

Price

Means to an end End in itself

Usage

Experience:Low Involvement High Involvement

Hedonic/

Ego Expressive

Satisfaction Model

Brand Loyalty

Core Concepts to Consider

Define the market: What problem is the consumer trying to solve? What goals is the firm helping the consumer attain? What needs, latent or manifest, are being filled?


Decision-making unit: Users

Who uses the product or service?

Decider/ Buyer Who approves, and who makes the purchase?

Influencer Who influences the choice?

Initiator/Gatekeeper Who is responsible for initiating the process and gathering information?


Basis for segmentation: Benefit segments

Psychographics

Use FrequencyHeavy & Light users

Price Sensitivity Deal prone & Price insensitive

Relationship Strength Committed, Switcher


Market Diffusion Process: What were consumers doing before? What could make the product obsolete? What characteristics facilitate adoption?

Product versus Consumer

Who are early adopters? Laggards?


Decision-making process:Type of product or service

Utilitarian/Functional, Hedonic/Ego-expressive, Low Involvement/Routine

What triggered the event? Is there a search for information How are alternatives evaluated? How does post-purchase evaluation feed back?


Attributes influencing choice:Product-related

Similarities and differences between brands? Which determine attributes choice? What is the relative importance of attributes?

Situation-related Why are non-buyers not buying? What prevents need recognition? What obstacles prevent decision making?


How is the product used: How much, how often, when, where, with whom? What would increase the frequency? Who gets credit for success, and blamed for failure? How is the product stored, transported, dispensed? What services accompany product use?


Characterization of the Relationship:What kind of things have gone wrong?What kind of surprises were experienced?

Relationship Effects:How likely is the consumer to

Recommend the brand to others? Try an extension of the brand? Remain inoculated against competition?

How long is the relationship likely to persist?Does the brand command a price premium?


Relationship Effects:How likely is the consumer to

Recommend the brand to others?Try an extension of the brand?Remain inoculated against competition?

How long is the relationship likely to persist?How many other brands would the consumer consider?Does the brand command a price premium?

Assignment

Study, Study, Study!!

Consumer Decision Making II MKT 750 Dr. West. Agenda Discuss Shopping Diary Insights Classical,...

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