Transcript Ch.8

Chapter 8
Decision Making
CONSUMER
BEHAVIOR, 10e
Michael R. Solomon
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Chapter Objectives
When you finish this chapter, you should
understand why:
1. Consumer decision making is a central
part of consumer behavior, but the way
we evaluate and choose products varies
widely.
2. A decision is actually composed of a
series of stages that results in the
selection of one product over competing
options.
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Chapter Objectives (continued)
• Decision making is not always rational.
• Our access to online sources is changing
the way we decide what to buy.
• We often fall back on well-learned “rulesof-thumb” to make decisions.
• Consumers rely upon different decision
rules when evaluating competing options.
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Learning Objective 1
• Consumer decision making is a central
part of consumer behavior, but the way we
evaluate and choose products varies
widely.
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Figure 8.1 Stages in
Consumer Decision Making
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Figure 8.2 Continuum of
Buying Decision Behavior
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For Reflection
• Is it a problem that consumers have too
many choices? Would it be better to have
less choices? How does it affect consumer
decision-making?
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Learning Objective 2
• A decision is actually composed of a
series of stages that results in the
selection of one product over competing
options.
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Figure 8.1: Steps in the Decision-Making Process
Problem recognition
Information search
Evaluation of alternatives
Product choice
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Figure 8.3 Problem Recognition
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Stage 1: Problem Recognition
• Occurs when consumer sees difference
between current state and ideal state
• Need recognition: actual state declines
• Opportunity recognition: ideal state
moves upward
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Stage 2: Information Search
• The process by which we survey the
environment for appropriate data to make
a reasonable decision
• Prepurchase or ongoing search
• Internal or external search
• Online search
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Table 8.2 A Framework for
Consumer Information Search
Prepurchase versus Ongoing Search
Prepurchase Search
Ongoing Search
Determinants
Involvement with
purchase
Involvement with product
Motives
Making better purchase
decisions
Building a bank of
information for future use
Outcomes
Better purchase decisions Increased impulse buying
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Search for Information
Internal search:
Retrieving knowledge from memory
or genetic tendencies
External search:
Collecting information from peers,
family, and the marketplace
CDP Model
Need Recognition
Internal
Search
Stimuli
Search
Exposure
Attention
Comprehension
Acceptance
Retention
M
E
M
O
R
Y
External
Search
Peers
Family
Marketplace
Internal Search
External Search
When motivated by an upcoming
purchase decision, external search
is known as pre-purchase search
When information acquisition takes
place on a relatively regular basis,
regardless of sporadic purchase
needs, it is known as ongoing search
Deliberate versus “Accidental” Search
• Directed learning: existing product
knowledge obtained from previous
information search or experience of
alternatives
• Incidental learning: mere exposure over
time to conditioned stimuli and
observations of others
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What to Search?
Which choice alternatives should the
consumer search?
Those choice alternatives that
consumers gather information about
during pre-purchase search are
referred to as the external search set
Where to Search?
Different informational sources are
available to the consumer
Where to Search?
Consumers are more likely to rely
upon the opinions of other individuals
than information sources with vested
interests in their decisions
Other consumers respected for their
expertise in a particular product
category are referred to as opinion
leaders or influentials
Consumer Search on the Internet
Consumers are increasingly turning
to the Internet for their search needs
Consumer Search on the Internet
Particular search words or phrases used by consumers
fall into three categories
70% Generic terms; representing product categories
20% Specific retailers; e.g., Best Buy, Gateway.com
10% Specific products; e.g., Canon digital camcorder,
HP notebook
How Much to Search?
Cost versus benefit perspective:
people search for decision-relevant
information when the perceived
benefits of the new information are
greater than perceived costs of
acquiring the information
Figure 8.5 Amount of Information Search
and Product Knowledge
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Learning Objective 3
• Decision making is not always rational.
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Do Consumers Always Search Rationally?
• Some consumers avoid external search,
especially with minimal time to do so and
with durable goods (e.g. autos)
• Symbolic items require more external search
• Brand switching: we select familiar brands
when decision situation is ambiguous
• Variety seeking: desire to choose new
alternatives over more familiar ones
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Biases in Decision-Making SEARCH Process
• Mental accounting: framing a problem in terms
of gains/losses influences our decisions
• Sunk-cost fallacy: We are reluctant to waste
something we have paid for
• Loss aversion: We emphasize losses more than
gains
• Prospect theory: risk differs when we face gains
versus losses
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Minolta Understands Perceived Risk
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Figure 8.6 Five Types of Perceived Risk
Monetary risk
Functional risk
Physical risk
Social risk
Psychological risk
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An Appeal to Social Risk
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Alternatives
Complete Market Set
(all available alternatives for problem/need)
Awareness Set
(all available alternatives aware of from internal/external search)
Evoked Set
(comes to mind for problem/need from internal & external search)
Consideration Set
(actually considered to solve problem/need)
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Constructing the Consideration Set
Primarily from Memory
Retrieval set: consideration set that
depends on recall of alternatives
from memory
Not all alternatives retrieved from
memory will be considered
Consumers limit their consideration
to those alternatives toward which
they are favorably predisposed
Pre-purchase Evaluation
“EVOKED SET”
Alternatives & Evaluation Criteria
from
Internal & External Search
Figure 8.7 Levels of Abstraction
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Strategic Implications
of Product Categorization
•
•
•
•
Position a product
Identify competitors
Create an exemplar product
Locate products in a store
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Product Choice: How Do We Decide?
• Once we assemble and evaluate relevant
options from a category, we must choose
among them
• Decision rules for product choice can be
very simple or very complicated
• Prior experience with (similar) product
• Present information at time of purchase
• Beliefs about brands (from advertising)
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Deciding How to Evaluate Choice Alternatives
Rely on preexisting product
evaluations stored in memory
Direct Experience: prior purchase or
consumption experiences with product
Indirect Experience: experiences or
impressions gained second-hand
Construct new evaluations based
on information acquired through
internal or external search
Information Necessary for
Recommending a New Decision Criterion
• It should point out that there are significant
differences among brands on the attribute
• It should supply the consumer with a
decision-making rule, such as if, then
• It should convey a rule that is consistent
with how the person made the decision on
prior occasions
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Constructing New Evaluations
The Categorization Process: the
evaluation of a choice alternative
based on the evaluation of the
category to which it is assigned
Categories may be general (drinks) or
specific (colas)
Evaluation of a category can be transferred
to a new product assigned to that category
Brand extensions allow firms to use
categorization to their advantage
Constructing New Evaluations
Noncompensatory Evaluation Strategies:
a product’s weakness on one attribute
cannot be offset by strong performance
on another attribute
Constructing New Evaluations
Noncompensatory Evaluation Strategies
Lexicographic strategy: brands are compared
initially on the one most important attribute, and the
winner is chosen. If more than one is evaluated
similarly on that attribute, the second most important
is considered, and so on, until a winner is identified.
Elimination by aspects: similar to the lexicographic
strategy; however, the consumer imposes cutoffs
Conjunctive strategy: each brand is compared, one
at a time, against a set of cutoffs which is
established for each salient attribute. If a brand
meets the cutoffs for all attributes, it is chosen.
Constructing New Evaluations
Noncompensatory Evaluation Strategies
Constructing New Evaluations
Compensatory Evaluation Strategies:
a perceived weakness of one attribute may be offset
or compensated for by the perceived strength of
another attribute
Simple additive: the consumer counts or adds the number
of times each alternative is judged favorably in terms of
the set of salient evaluative criteria. The alternative with
the largest number of positive attributes is chosen.
Weighted additive: judgments about an alternative’s
attribute performance are weighted by the attribute’s
importance. The alternative with the best overall
performance is chosen.
COMPENSATORY DECISION RULES
Simple Additive
BRANDS
PRICE
(1-5)
QUALITY
(1-5)
CONVENIENCE
(1-5)
TOTAL
A
4
2
5
11
B
2
5
2
9
Weighted Additive
BRANDS
PRICE (20%)
(1-5)
QUALITY (50%)
(1-5)
CONVENIENCE (30%)
(1-5)
TOTAL
(100%)
A
4 x .2 = 0.8
2 x .5 = 1
5 x .3 = 1.5
3.3
B
2 x .2 = 0.4
5 x .5 = 2.5
2 x .3 = 0.6
3.5
Neuromarketing
• Uses functional magnetic resonance
imaging, a brain-scanning device that
tracks blood flow as we perform mental
tasks
• Marketers measure consumers’ reactions
to movie trailers, choices about
automobiles, the appeal of a pretty face,
and loyalty to specific brands
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For Reflection
• What risky products have you considered
recently?
• Which forms of risk were involved?
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Learning Objective 4
• Our access to online sources changes the
way we decide what to buy.
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Cybermediaries
• The Web delivers enormous amounts of
product information in seconds
• Cybermediary: helps filter and organize
online market information
• Examples: Shopping.com, BizRate.com
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Learning Objective 5
• We often fall back on well-learned “rulesof-thumb” to make decisions.
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Heuristics
Product Signals
Market Beliefs
Country of Origin
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Choosing Familiar Brand Names
• Zipf’s Law: our tendency to prefer a
number one brand to the competition
• Consumer inertia: the tendency to buy a
brand out of habit merely because it
requires less effort
• Brand loyalty: repeat purchasing behavior
that reflects a conscious decision to
continue buying the same brand
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Chapter Summary
• Decision making is a central part of
consumer behavior and decisions are
made in stages
• Decision making is not always rational
• We use rules of thumb and decision rules
to make decisions more efficiently
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