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60 Cards in this Set
- Front
- Back
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Consumer Decision Making
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-A response to a problem
-After realization that we want to make a purchase, we go through a series of steps in order to make it -Can seem automatic or like a full-time job ---Ex. When you run out of cereal you automatically go to the store to buy more of your favorite cereal (automatic) ---Ex. Deciding where you want to go to college involves a lot of thinking (full-time job) |
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5 Step Decision Making Process
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1.) Problem Recognition
2.) Information Search 3.) Evaluation of Alternatives 4.) Purchase Decision 5.) Post-Purchase Behavior *This is a typical process for a high involvement purchase *For low involvement purchases, individuals normally just go from problem recognition ot purchase decision (i.e. buying cereal) |
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5 Step Decision Making Process Example
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1.) Problem Recognition
---Richard realizes that he dislikes his old TV 2.) Information Search ---Richard surfs the web to learn about TVs 3.) Evaluation of Alternatives ---Richard compares models based on reputation and features (i.e. size, price, etc.) 4.) Purchase Decision ---Richard buys a TV he likes 5.) Post-Purchase Behavior ---Richard brings home and enjoys his TV |
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Post-Purchase Behavior
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-Satisfaction vs. dissatisfaction influences one's behavior and future purcahses
---Customer retention ---Word of mouth to other customers |
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Extended Problem Solving
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-Eventual purchase decision is perceived as a risk and/or highly involving/personally relevant situation
-Consumer collects extensive information by using internal and external sources -Careful evaluation of brand attributes when using a list of criterias and when comparing different brands -Consumer will most likely visit many different outlet stores -Motivation, Ability, and Opportunity is high -Ex. buying a TV, new car, life insurance, a new house, picking a college, etc. |
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Limited Problem Solving
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-More straightforward/simple
-Lower risk/involvement -Less searching -Limited number of brands considered -Limited number of attributes considered -Limited shopping time/venues -Might go through all 5 steps, but not as much effort is put into each one -Medium MAO -Ex. buying a toaster, new computer, clothes, plane ticket, etc. |
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Routine Problem Solving
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-Automaticity: Choices made with little to no conscious effort
-Efficient decisons: minimal time and energy spent on purchase decision ---little to no comparision of alternative brands and their attributes ---does not involve the 5-step decision making process (go from problem recognition straight to purchase decision) -Ex. buying out of habit: buying the same brand every time ---Grocery store type of decisions -Motivation, Ability, and Organization is low |
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A Challenge for Marketers
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-Consumers must be convinced to "unfreeze" their former habit & replace it with a new one
---Coupons help with this! -Point of purchase decisions become important |
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Extended Problem Solving Summary
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-High involvement
-Long time spent on decision -High cost of product -Internal and external sources used -Many alternatives considered |
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Limited Problem Solving Summary
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-Low to moderate involvement
-Minimal to moderate time spent on decision -Low to moderate cost of product -Mostly internal sources used -Few alternatives considered |
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Routine Problem Solving Summary
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-Low Involvement
-Minimal time spent on decision -Low cost of product -Internal sources used only -One alternative considered |
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Step 1: Problem Recognition
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-Occurs when consumer percieves a difference between their current state and ideal state
-Need recognition: actual state moves downward ---Ex. running out of a product, buying a deficient product, the product breaks, etc. -Opportunity recognition: ideal state moves upward ---Ex. exposed to different quality products (new standard of comparison), become aware of new products and innovations, etc. |
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Step 2: Information Search
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-Consumers need info. to solve problems
---We search our memories and survey our environment for appropriate data to make decisions -We search for information about: ---Brands (what brands will we consider purchasing?) ---Attributes (what will we compare these brands on?) ---Evaluations/Attitudes (what are our opinions about these brands/attributes?) ---Experiences (what do we remember about past experiences with this product?) |
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Internal vs. External Sources
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-Internal search: from memory
---Scanning your memory to assemble product alternative information -External search: info obtained from... ---Retailers (in-store info) ---Marrketer-dominated media (ads) ---Interpersonal sources (friends/family) ---Independent media (news reports) ---Experiential search (product samples/ trials/ test drives) |
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The Economics of Information
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-Consumers will gather as much data as need to make informed decisions
-We continue to search until costs exceed utility of information search, then stop ---Cost/Benefit analysis ---Utility of new information depends on importance of a decision ---We will collect most valuable info first |
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How Much and How Long We Search Depends On....
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-Importance of task
-Level of involvement -Perceived costs/benefits of more info -Discrepancy of information -Expertise (prior knowledge) -Availability of information -Time availble to search |
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Step 3: Identification and Evaluation of Alternatives
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-The amount of alternatives we consider depends on the decision-making process
-Extended and limited problem solving: evaluation of several brands ---Typical consideration set ranges from 2-8 which is due to the amount of information we are able to process -Routine problem solving: consider few to no brand alternatives |
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Consideration vs. Inert vs. Inept Sets
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Consideration Set: not enough information to be in evoked/awareness set
-Inert set: indifferent about a brand -Inept set: unacceptable brands (a brand that you will not buy and have a negative attitude towards) |
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Evaluative Criteria
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-Dimensions used to judge merits of competing options
-Forming your consideration set and determining which attribute mean the most -Determinant attributes: features we use to differentiate among our choices ---Criteria on which products differ by carrying more weight *Attributes you need to consider when buying a product, and those that are more important are called determinant attributes |
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Determinant Attributes
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-Marketer's Strategy: get consumers to evaluate alternatives using criteria on which your product is superior to competitors
---Inform consumers about determinant attributes that differentiate you from your competition -Ex. Budweiser--- includes the date to make it look like they are the most fresh -Ex. A bowl of Total cereal vs a bowl of Special K cereal |
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Step 4: Product Choice
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-Selecting among alternatives
---Once we assemble and evaluate relevant options from a category, we must choose among them ---Decision process for product choice can be simple or complicated (depends on MAO) *Note: base what overall decision-making process looks like (how many steps, how extensive) and what step 4 looks like (the process used to select an alternative from consideration set) determined by MAO |
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Compensatory Rules
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-Cost/Benefit analysis
-Excelling at one dimension can "make-up" for poor performance on other dimensions -A brand can compensate for one bad alternative with a lot of positive attributes ---Ex. A TV with a really high price might be ok if all of its other features are positive and the greatest in the market |
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Non-compensatory Rules
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-Simpler decision models (but still fairly high effort)
-Being bad on one dimension cannot be made up for -There is no compensation for a negative attribute (set a cut-off and you do not give-in if the attribute does not fall before the cut-off) ---Ex. if your cut-off for buying a TV is $1500, then you will not buy a TV for $1500 no matter how good its other features are |
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Heuristics Rules
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-Very simple decision short-cuts/rules of thumb
-Usually lead to reasonable decisions, can be bad in specific situations -Making quick and easy decisions ---Ex. picking out wine may not have a lot of motivation so you chose the wine bottle with the lowest price or the cooler looking label |
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Additive Compensatory Rule
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-Characterized by the customer taking an overall view of each brand.
-A brand's poor performance on one attribute may be offset, or compensated for, by high performance on another attribute. |
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Weighted Compensatory Rule
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-The consumer assigns a "weight" to each of the product attributes to reflect that attribute's importance to him/her.
-Then, for each brand, the consumer multiplies the attribute importance weight by that brand's rating on the attribute, thereby obtaining a weighted score on each attribute for that brand. -When all of these weighted scores are added together, the consumer has an overall score of that brand. -The brand with the highest overall score is chosen. |
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Conjunctive Rule
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-The consumer sets minimum cutoff socres for each evaluative attribute
-Brands that meet ALL of the different attribute cutoff points are kept in consideration |
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Lexicographic Rule
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-The consumer ranks evaluative attributes by importance
-He/she then looks at the most important attribute and chooses the brand that performs best on that attribute -If two or more brands tie for the highest performance on that attribute, these tying brands are then evaluated with regard to the next most important attribute, and the highest performance is chosen and so on. |
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Elimination-by-Aspects Rule
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-The consumer ranks evaluative attributes by importance and set minimum cutoff points for each attribute
-He/she starts with the most important attribute, and keeps those brands that meet the miniumum cutoff point. -The brands remaining are then evaluated on the next more important attribute, and again, those brands that meet the cutoff point on this attribute are kept for further consideration. -This continues until one brand remains. |
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Non-Compensatory Models
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-Conjunctive
---Set minimum levels on multiple dimensions ---Start with all items and keep those that meet the minimum cut-off points -Lexicographic ---Rank attributes by importance ---Compare one at a time, all those best on most important--> retain and then repeat -Elimination-by-Aspects ---Rank attributes by importance ---Set minimum cut-off level on most important attribute, then 2nd, 3rd, 4th, etc. |
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Important things to remember about specific decision rules
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-Different ruels can lead to vastly different decisions
-Consumers use a combination of decision models- they rarely use just one! -Consumers do not always have complete information about all options -Consumers tend to use beliefs (subjective) about attributes and their importance |
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Consumers Satisfice (vs optimism)
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-Don't search for the perfect solution
-Find a solution that is "good enough" |
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Low-Effort Thought-Based Decision Making
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-Performance-related tactics
-Brand loyalty -Habitual purchases -Variety-seeking -Price-related topics -Normative influences -Affect (emotion-related) tactics |
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Performance-related tactics
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*Subjective Arguments*
-"buy the one that works the best" -"buy the detergent that gets clothes cleaner" -"buy the cookies that taste the best" -"go to the hotel with the most comfortable bed" |
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Brand Loyalty
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-Buying the same brand repeatedly because of a strong preference
-Multi-brand loyalty: buying two or more brands repeatedly in the same product category ---Ex. Coke zero vs. Pepsei zero |
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Habitual Purchases
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-Buying the same brand every time
-Little to no information seeking -Little to no evaulation of alternatives -Different from brand loyalty- does not require a strong preference -Simply repetitive behavior/ repetitive purchase *Level of commitment to brand distinguishes brand loyalty from habit *Habit is simply repetitive behavior and has nothing to do with the actual product you buy |
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Variety Seeking
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-One tactic may be solely based on price
-"buy something different than what I bought last time" **Essentially the opposite of habit |
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Price-Related Tactics
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-"buy the cheapest"
-"buy the brand on sale" -"buy what I have a coupon for" -"buy the most expensive" ---Using the inference that high price means high quality |
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Normative Influences
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-When other individuals influence our choices
---Direct influence: others try ot manipulate us ("buy the brand of cereal the kids ask for") ---Vicarious observation: watch what others do to guide our behavior ("buy the brand of laundry detergent that my mom used") ---Indirect influence: when we are concerned about the opinion of others ("buy the brand that my friends are buying so that I'll fit in") |
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Affect (emotion-related) Tactics
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-Just choose the option that evokes positive feeilngs ("buy the brand that makes me feel good")
-"Heart and mind in conflict study" |
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Context Effects
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-Context in which information is encountered/decision takes place influences decisions
-"most people don't know what they want unless they see it in context"---Predictably Irrationaly by Dan Ariely (good book) |
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Compromise Effect
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-Tendency to choose the "middle" option in a choice set
-aka Extremeness Aversion ---We like to avoid extremes ---Makes justification easier |
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Anchoring
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-Anchor pricing: when we encounter a new product (and new business) we accept the first price we see and from then on that price becomes the anchor for what we are willing to pay for that product
-"once we buy a new product at a particular price, we become anchored to that price" -The first price we see becomes the context we use for all other products in that market -Ex. Starbucks set the anchor price for coffee with a $4 value instead of $1. ---They changed the market and people now think of coffee in a whole new "sweet" way |
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Framing Effects
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-Decisions are influenced by the way a set of choices is presented
-Two versions of a problem that are essentially the same can lead to different choices -Ex. Instead of saying the amount of lives saved in an accident, newsreporters state how many lives were lost because it makes the situation sound worse even though both statements were describing the same thing and had the same results (different description, same results) |
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Framing Effects in Behavioral Decision Theory
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-Descriptive (how people ACTUALLY make judgements/choices) vs. Economics (how people SHOULD make optimal choices)
---People are perfectly rational according to economists |
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Different Sensitivity to Losses vs. Gains
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-Humans sometimes prefer risky option over non-risky options and vice versa
-When the choices are perceived as losses (i.e. deaths), people tend ot be risk-seeking -When the choices are perceived as gains (lives saved), people tend to be risk-averse |
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Loss Aversion
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-People tend to be more sensitive to losses than to gains
-The loss of $10 is more significant than a gain of $10 -March Madness Example: Fouls called but not committed (loss) matter more than fouls committed but not called (gain) *A loss impacts us more than a gain! |
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Prospect Theory
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-People don't follow a traditionally "rational" theory of choice
-Prospect theory replaces expected utility (objective) with subjective utility (how we see things): incorporates human element of evaluation -First theory to say that people are not actually rational when making decisions (goes against economists) |
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Prospect Theory vs. Expected Utility Theory
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-Prospect Theory: psychological theory (s-shaped curve)
-Expected Utility Theory: economist's theory (straight, normal curve) -The prospect theory line curves because the amount of satisfaction levels are off with more added units ---Ex. Your 20th doughnut is far less satisfactory than your 1st doughnut |
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Implications of Prospect Theory
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-Segregate gains: car descriptions list out attributes separately
-Integrate losses: car dealers list prices in one lump sum ---Why we hate phone bills, itemized tuition bills, ticketmaster, etc. ---Why we like all inclusive vacations *You want to keep your gains separate from one another and your losses kept together because the more combined your losses are, the less significant they appear to be |
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Silver Lining Effect
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-Separate a small gain from a big loss (makes the loss not seem as bad)
---Ex. $500 cash back when you buy a Nissan, rebates, etc. ---Ex. Gifts that come with a purchase -Cancel losses against larger gains -Ex. Paycheck deductions for insurance or investments ---Most companies pay for perks like parking, which comes out of people's paychecks ---Does not seem as bad because you do not have to pay for parking every month (you don't see the actual cost) |
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Consumer Situations
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-Consist of temporary environmental factors that form the context within which a consumer activity occurs at a particular place and time
-Includes factors that: ---Involve the time and palce in which a consumer activity takes place ---Explains why the action takes place |
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5 Main Situational Elements
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1.) Physical Surroundings
---> crowding, store layout 2.) Social Surroundings ---> presence of other shoppers in the aisle 3.)Time ---> amount of time available, time of day 4.) Purchase Task definition ---> buying a gift for yourself or as a gift for someone else (the purpose of the purchase) 5.) Antecedent States ---> what do you bring into the buying situation in terms of your mood, your physical state, etc. *Different factors affect purchasing decisions |
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Physical Surroundings
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-The concrete physical and spatial aspects of the environment that encompass a consumer activity
-Density: how closely packed people are -Crowding: the unpleasant feeling that people experience when they perceive that densities are too high and that their control of the environment is low |
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Atmospherics
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-Refers to how managers manipulate the design of a building, interior space, layout of aisles, texture of carpets and walls, scents, colors, shapes, and sounds experienced by customers to achieve a certain effect
-Ex. McDonalds is rennovating their restaurants to make people feel more at home |
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Olfactory Cues
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-Shoppers perceive higher quality goods in scented stores
-Odors should be consistent with store offerings -These cues are expensive to maintain -Ex. Abercrombie & Fitch, Insomnia Cookies, White Barn Candle Co., etc. |
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Social Surroundings
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-Consumers can be influenced by the attitudes of others (i.e. friends, other customers, employees, etc.)
-Mere Presence Effect: people do not have to say anything to influence our behavior because the presence of other shoppers in the aisle changes the way we shop (we are more likely to buy "name brand" products) |
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Time as a Situational Factor
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-How much time a consumer has available to do a task influences the buying strategy used to select and purchase a product
-The time of day influences the type of product we buy because some products and services are only offered/available at certain times of day ---Ex. McDonald's breakfast sandwiches ---For coke, marketers are trying to increase the amount of coke somone drinks (i.e. one coke in the morning and one in the afternoon) |
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Purchase Task
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-How do your purchases differ when you are buying something for yourself vs. for someone else?
-Are you buying something to share with others or to use by yourself? -In other words, why are you making the purchase and who are you buying it for? -Ex. Buying clothes for a job interview vs. buying everyday clothes |
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Attecedent States
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-Mood/physiological condition influences what we buy and how we evaluate products
---Ex. Stress impairs info-processing and problem solving ---Ex. Physiological conditions can trigger need recognition (i.e. hunger) -Other Antecedent States: ---How much energy we have when we shop ---How much cash we have on hand ---Our attitude about shopping in general (a job or an adventure?) |
