Consumer Decision Making Process Analysis

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The impact of the marketing mix and sociocultural influences is the input that determines what consumers purchase and how they use what they buy. Because these influences may be directed to the individual or actively sought by the individual, a two-headed arrow is therefore used to link the input and process segments of the model (see Figure 14.3).

Decision-Making: Process The process component of the model is concerned with how consumers make decisions. To understand this process, we must consider the influence of the psychological concepts examined in Part Two of this book. The model’s psychological field consists of the internal influences (motivation, perception, learning, personality, and attitudes) that affect consumers’ decision-making processes (what they need or want, their awareness of various product choices, their information-gathering activities, and their evaluation of alternatives).

Need Recognition Need recognition occurs when a consumer is faced with a “problem.” For instance, take a young executive who decides to purchase a new cell phone with a high-quality digital camera. He imagines that he would benefit from having a high-quality digital camera built into his phone because it would make it easier and more convenient to take more vivid and realistic photos, without having to lug around a separate digital camera. This executive has recognized a need and identified a suitable response. There are two types of need recognition. Some consumers are actual state types, who perceive that they have a problem when a product fails to perform satisfactorily (e.g., a cordless telephone that develops constant static). In contrast, other consumers are desired state types, for whom the desire for something new may trigger the decision process.1

Pre-Purchase Search Pre-purchase search begins when a consumer perceives a need that might be satisfied by the purchase and consumption of a product. Sometimes, recalling past purchases provides the consumer with adequate information to make the present choice. However, when the consumer has had no prior experience, he or she may have to engage in an extensive search for useful information on which to base a choice. The consumer usually searches his or her memory (the psychological field) before seeking external sources of information regarding a given consumption-related need. Past experience is considered an internal source of information. The greater the relevant past experience, the less external information the consumer is likely to need to reach a decision. Many consumer decisions are based on a combination of previous experience (internal sources) and marketing and noncommercial information (external sources). The degree of perceived risk can also influence this stage of the decision process (see Chapter 4). In high-risk situations, consumers are likely to engage in complex and extensive information search and evaluation; in low-risk situations, they are likely to use very simple or limited search and evaluation. The act of shopping is an important form of external information. According to consumer research, there is a big difference between men and women in terms of their response to shopping. Whereas most men do not like to shop, most women claim to like the experience of shopping; and although the majority of women found shopping to be relaxing and enjoyable, the majority of men did not feel that way.2 An examination of the external search effort associated with the purchase of different product categories found that, as

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the amount of total search effort increased, consumer attitudes toward shopping became more positive, and more time was made available for shopping. Not surprisingly, the external search effort was greatest for consumers who had the least amount of product category knowledge.3 It follows that the less consumers know about a product category and the more important the purchase is to them, the more extensive their pre-purchase search is likely to be. Conversely, consumers high in subjective knowledge (a self-assessment of how much they feel that they know about the product category) will rely more on their own evaluations rather than on others’ recommendations. It is also important to point out that the Internet has had a great impact on pre-purchase search. Rather than visiting a store to find out about a product, or calling the manufacturer and asking for a brochure, consumers can go to manufacturers’ websites to find much of the information they need about the products and services they are considering. For example, many automobile websites provide product specifications, prices, and dealer cost information; reviews; and even comparisons with competing vehicles. Volvo’s website, for example, lets you “build” your own car, and see how it would look, for example, in different colors. Some auto company websites will even list a particular auto dealer’s new and used car inventory. There are also websites that allow women to customize a large number of cosmetic products. With respect to surfing the Internet for information, consider one consumer’s comments drawn from a research study: “I like to use the Web because it’s so easy to find information, and it’s really easy to use. The information is at my finger-tips and I don’t have to search books in libraries.”4 However, a Roper Starch Survey found that an individual searching the Internet gets frustrated in about 12 minutes, on average; other research suggested that although the Internet may reduce physical effort, there is nevertheless a “cognitive challenge” that limits consumers’ online information searches.5 What happens if a search is a failure? According to a study of “search regret,” consumers’ post-purchase dissonance results from an unsuccessful pre-purchase search.6 Furthermore, the same research revealed that failure can also have a damaging effect on retailers. However, retailers can help eliminate or reduce search regret by providing ample information, trying to reduce out-of-stock situations, and giving salespeople proper training.7 How much information a consumer will gather also depends on various situational factors. Table 14.1 lists several factors that increase consumers’ pre-purchase information search. For some products and services, the consumer may have ongoing experience on which to draw (such as a golfer purchasing a “better” set of golf clubs), or the purchase may essentially be discretionary in nature (rather than a necessity), so there is no rush to make a decision.

Online versus Traditional Information Search For a while now, researchers have been examining how the Internet has affected the way consumers make decisions. It is often thought that because consumers have limited information-processing capacity, they must develop a strategy for searching for information online. The strategy is based on both individual (e.g., knowledge, personality traits, demographics) and contextual factors (characteristics of the decision tasks). The three major contextual factors that have been researched are:8

1. Task Complexity –the number of alternatives and amount of information available for each alternative. 2. Information Organization–the presentation, format, and content. 3. Time Constraint–the amount of time the consumer has to decide.

TABLE 14.1 Factors That Increase Pre-Purchase Information Search

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PRODUCT FACTORS Long periods of time between successive purchases Frequent changes in product styling Frequent price changes Volume purchasing (large number of units) High price Many alternative brands Much variation in features

SITUATIONAL FACTORS Experience: First-time purchase; No past experience because the product is new; Unsatisfactory past experience within the product category. Social Acceptability: The purchase is for a gift; The product is socially visible. Value-Related Considerations: The purchase is discretionary rather than necessary; All alternatives have both desirable and undesirable consequences; Family members disagree on product requirements or evaluation of alternatives; Product usage deviates from important reference groups; The purchase involves ecological considerations; Many sources of conflicting information.

CONSUMER FACTORS Demographics: Education, income, occupation, age, wealth, and marital status. Personality Traits: One’s degree of dogmatism, willingness to accept risk, product involvement, and novelty seeking.

Brand-Sets and Attributes Considered During Evaluation Within the context of consumer decision-making, the evoked set (consideration set) refers to the specific brands (or models) a consumer considers in making a purchase within a particular product category. An inept set consists of brands (or models) that the consumer excludes from purchase consideration because they are unacceptable or seen as inferior. An inert set consists of brands (or models) the consumer is indifferent toward because they are perceived as not having any particular advantages. Regardless of the total number of brands (or models) in a product category, a consumer’s evoked set tends to be quite small on average, often consisting of only three to five brands or models.

FIGURE 14.4 Brand-Sets Considered During Evaluation

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The evoked set consists of the small number of brands the consumer is familiar with, remembers, and finds acceptable. Figure 14.4 shows the evoked set as a subset of all available brands in a product category. Marketers must ensure that their products become a part of a consumer’s evoked set if they are to be considered at all. Excluded products include:

1. Unknown brands or models because of the consumer’s selective exposure to advertising media and selective perception of advertising stimuli. 2. Unacceptable brands of poor quality or not having specific features or attributes or inappropriate positioning in either advertising or product characteristics. 3. Brands that are perceived as not having any special benefits. 4. Overlooked brands that have not been clearly positioned. 5. Brands that are not selected because they do not satisfy perceived needs.

In each of these instances, the implication for marketers is that promotional techniques should be designed to impart a more favorable and relevant, product image to the target consumer. This may also require a change in product features or attributes (more or better features). An alternative strategy is to get consumers in a particular target segment to consider a specific offering and possibly put it in their evoked set. Research also suggests that the use of white space and choice of typeface in advertisements may influence the consumer’s image of the product. For example, quality, prestige, trust, attitude toward the brand, and purchase intention have been shown to be positively conveyed by white space, and typefaces were perceived as being attractive, warm, and liked when they were simple, more natural, and included serifs.9 It has also been suggested that consumers may not, all at once, incorporate the entire number of possible choices into their evoked set, but instead may make

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several decisions within a single decision process. Consumers screen their options and eliminate unsuitable alternatives before they start the information search process, which makes reaching a final decision more manageable.10 In reality, the criteria consumers use to evaluate the products within their evoked sets are in the form of important product attributes. In addition to price, examples of product attributes that consumers have used while evaluating product are:

1. E-Book readers: Size, weight, touch screen, battery life, memory size, and the compatibility with a cell phone signal. 2. Orange juice: Amount of pulp, degree of sweetness, weakness or strength of flavor, color, and packaging. 3. Wristwatches: Alarm features, water resistance, quartz movement, and size of dial.

When a company knows that consumers will be evaluating alternatives, it sometimes advertises in a way that recommends the criteria consumers should use in assessing product or service options. We have probably all had the experience of comparing or evaluating different brands or models of a product and finding the one that just feels, looks, and/or performs “just right.” Interestingly, research shows that when consumers discuss such “right” products, there is little or no mention of price; items often reflect personality characteristics or childhood experiences; and it is often “love at first sight.” In one study, the products claimed to “just feel right” included Big Bertha golf clubs, old leather briefcases, Post-it notes, and the Honda Accord.11 Research has explored the influence of brand credibility (which consists of trustworthiness and expertise) on brand choice, and has found that it improves the chances that a brand will be included in the consumer’s evoked set. Three factors that affect a brand’s credibility are: The perceived quality of the brand, the perceived risk associated with the brand, and the information costs saved by deciding to buy the brand and end the search for information.12 Furthermore, the study indicated that trustworthiness is more important than expertise when it comes to making a choice.

Consumer Decision Rules Decision rules are procedures that consumers use to facilitate brands and other consumption-related choices. These rules reduce the burden of making complex decisions by providing guidelines or routines that make the process less taxing. There are two types of consumer decision rules. Compensatory decision rules come into play when a consumer evaluates brand or model options in terms of each relevant attribute and computes a weighted or summated score for each brand. The computed score reflects the brand’s relative merit as a potential purchase choice. The assumption is that the consumer will select the brand that scores highest among the alternatives evaluated. In contrast, noncompensatory decision rules do not allow consumers to balance positive evaluations of a brand on one attribute against a negative evaluation on some other attribute. There are three types of noncompensatory rules. In following a conjunctive decision rule, the consumer establishes a separate, minimally acceptable level as a cutoff point for each attribute. If any particular brand or model falls below the cutoff point on any one attribute, that option is eliminated from further consideration. Because the conjunctive rule can result in several acceptable alternatives, it becomes necessary in such cases for the consumer to apply an additional decision rule to arrive at a final selection (for example, accepting the first satisfactory brand). The conjunctive rule is particularly useful in quickly reducing the number of alternatives to be considered. The consumer can then apply another, more refined decision rule to arrive at a final choice. In following a lexicographic decision rule, the consumer first ranks the attributes in terms of perceived relevance or importance. The consumer then compares the various alternatives in terms of the single attribute that is considered

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most important. If one option scores sufficiently high on this top-ranked attribute (regardless of the score on any of other attributes), it is selected and the process ends. When there are two or more surviving alternatives, the process is repeated with the second highest-ranked attribute (and so on), until the consumer reaches the point that one of the options is selected because it exceeds the others on a particular attribute. With the lexicographic rule, the highest-ranked attribute (the one applied first) may reveal something about the individual’s basic consumer (or shopping) orientation. For instance, a “buy the best” rule might indicate that the consumer is quality oriented; a “buy the most prestigious brand” rule might indicate that the consumer is status oriented; a “buy the least expensive” rule might reveal that the consumer is economy minded. A variety of decision rules appear quite commonplace. According to a consumer survey, nine out of ten shoppers who go to the store for frequently purchased items possess a specific shopping strategy for saving money:13

1. Practical Loyalists—those who look for ways to save on the brands and products they would buy anyway. 2. Bottom-Line Price Shoppers—those who buy the lowest-priced item with little or no regard for brand. 3. Opportunistic Switchers—those who use coupons or sales to decide among brands and products that fall within their evoked set. 4. Deal Hunters—those who look for the best bargain and are not brand loyal.

TABLE 14.2 Applying the Decision Rules to Purchasing an E-Book Reader

DECISION RULE RATIONALE

Compensatory “I selected the e-book reader that came out as the best when I balanced the good ratings againstthe bad ratings.”

Conjunctive “I selected the e-book reader netbook that had no bad features.”

Disjunctive “I picked the e-book reader that excelled in at least one attribute.”

Lexicographic “I chose the e-book reader that scored the best on the attribute that I consider to be the mostimportant.”

Affect referral “I bought the brand with the highest overall rating.”

We have considered only the basic consumer decision rules. Most of the decision rules described here can be combined to form new variations, such as conjunctive-compensatory, conjunctive-disjunctive, and disjunctive-conjunctive rules. It is likely that, for many purchase decisions, consumers maintain in long-term memory overall evaluations of the brands in their evoked sets. This would make assessment by individual attributes unnecessary. Instead, using the affect referral decision rule, the consumer selects the brand with the highest perceived overall rating. This type of

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synthesized decision rule represents the simplest of all rules. Table 14.2 applies the decision rules to purchasing an e-book reader.

Decision Rules and Marketing Strategy An understanding of which decision rules consumers apply in selecting a particular product or service is useful for marketers in developing promotional programs. A marketer who is familiar with the prevailing decision rule can prepare a promotional message in a format that will facilitate consumer information processing. The promotional message might even suggest how potential consumers should make a decision. For instance, an advertisement for the latest cell phone might tell potential consumers “what to look for in a new feature-rich cell phone.” The ad might advise consumers to consider the attributes of long battery life, high-resolution screen, high-resolution video recording, and a particularly high-quality digital camera.

Incomplete Information and Noncomparable Alternatives In many decision-related situations, consumers have incomplete information on which to base decisions and must use alternative strategies to compensate for the missing elements. Missing information may result from advertisements or packaging that mention only certain attributes, the consumer’s own imperfect memory of attributes for no present alternatives, or because some attributes are experiential and can only be evaluated after product use. There are four ways in which consumers can cope with missing information:

1. Consumers may delay the decision until the missing information is obtained. 2. Consumers may ignore missing information and decide to continue with the decision process using only the available information. 3. Consumers may change the decision strategy to one that better accommodates missing information. 4. Consumers may infer (“construct”) the missing information.

In discussing consumer decision rules, we have assumed that a choice is made from among the brands (or models) evaluated. Of course, a consumer may also conclude that none of the alternatives offers sufficient benefits to warrant purchase. If this were to occur with a necessity, such as a home water heater, the consumer would probably either lower his or her expectations and settle for the best of the available alternatives or seek information about additional brands, hoping to find one that more closely met predetermined criteria. In contrast, if the purchase is more discretionary (e.g., a new pair of shoes), the consumer probably would postpone the purchase. In this case, information gained from the search up to that point would be transferred to long-term storage and retrieved and reintroduced as input when the consumer regained interest in making such a purchase (see Chapter 5).

Decision-Making: Output The output portion of the consumer decision-making model consists of purchase behaviors and post-purchase evaluation of the purchases. Consumers make three types of purchases. When a consumer purchases a product (or brand) for the first time and buys a smaller quantity than usual, the purchase is a trial. Thus, a trial is the exploratory phase of purchase behavior in which consumers attempt to evaluate a product through direct use. For instance, when consumers purchase a new brand of laundry detergent about which they may be uncertain, they are likely to purchase a smaller quantity than if it were a familiar brand. Consumers can also be encouraged to try a new product through such promotional tactics as free samples, coupons, and/or sale prices. When a new brand in an established product category (cookies, cold cereal, yogurt) is found by trial to be more

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satisfactory or better than other brands, consumers are likely to repeat the purchase. Repeat purchase behavior represents brand loyalty. Unlike a trial, in which the consumer uses the product on a small scale and without any commitment, a repeat purchase usually signifies that the product meets with the consumer’s approval and that he or she is willing to use it again and in larger quantities. Trial purchases are not always feasible. For example, with most durable goods (e.g., refrigerators, washing machines, electric ranges), a consumer usually moves directly from evaluation to a purchase and long-term commitment without an actual trial. While purchasers of a new Volkswagen Beetle were awaiting delivery of their just-purchased cars, they were kept “warm” by receiving a mailing that included a psychographic tool called “Total Visual Imagery” that was personalized to the point that it showed them the precise model and color they had ordered.14 Still further, post-purchase evaluation occurs after consumers have used the product, and in the context of their expectations. When a product’s performance matches expectations, consumers feel neutral. Positive disconfirmation of expectations occurs when the product’s performance exceeds expectations and the consumer is satisfied. Negative disconfirmation of expectations occurs when performance is below expectations and the consumer is dissatisfied. Cognitive dissonance (see Chapter 6) occurs when consumers try to reassure themselves that they made wise choices. In doing so, they may rationalize the decision as being wise; seek advertisements that support their choice and avoid those of competitive brands; attempt to persuade friends or neighbors to buy the same brand (and thereby confirm their own choice); or turn to other satisfied purchasers for reassurance. The degree of post-purchase analysis that consumers undertake depends on the importance of the product decision and the experience acquired in using the product. When the product lives up to expectations, the consumers probably will buy it again. When the product performance is disappointing or does not meet expectations, they will search for better alternatives. Thus, the consumer’s post-purchase evaluation “feeds back” to the consumer’s psychological field and influences similar decisions in the future. Studies show that customer retention is often an outcome of the brand’s reputation—especially for products that consumers find difficult to evaluate.15 Research also found that younger customers have more involvement and higher expectations of service offerings and often experience cognitive dissonance after purchasing services.16 Satisfied customers feel that they receive “value for their money.” As an outcome of an evaluative judgment (i.e., the consumer purchases one of the brands or models in his or her evoked set), value implies the notion of a trade-off of benefits—the features of the purchased item—versus the sacrifice necessary to purchase it (the price of the product).17 As early as 1911, researchers suggested that one should view consumption as “voting.” Just as a consumer influences a political election by the act of voting, that same consumer influences the environment and society by his or her purchases.18

Consumer Gifting Behavior Learning Objective

2 To understand the dynamics of buying gifts. Gifts are a particularly interesting part of consumer decision-making. Gifts represent more than ordinary, “everyday” purchases, because they are symbolic, and mostly associated with important events (e.g., Mother’s Day, births and birthdays, engagements, weddings, graduations, and many other accomplishments and milestones). Gifting behavior is a gift exchange that takes place between a giver and a recipient. The definition is broad in nature and embraces gifts given voluntarily (“Just to let you know I’m thinking of you”), as well as gifts that are an obligation (“I had to get

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