Consumer Decision Making

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Chapter 8
ConsumerDecision Making

• Consumer Decision Making

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Snapshot from the Marketplace

• One culprit in our economys recent downturn was
  the subprime mortgage crisis.
• View vary regarding precisely who was responsible
  for the collapse of the market.
• Many observers blame faulty decision making on
  the part of consumers to take out such loans just
  as much as faulty decision making on the part of
  the banks that issued these loans.

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Consumers and Decisions

• The U.S. consumer is one of the most cared for
  and pampered in the world.
• Consumers in our society are faced with a wide
  product selection, vast product information, and
  myriads of places at which to shop.
• The process of buying is almost always preceded
  by some sort of decision process.

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The Decision Process

• A decision is an act that occurs only if we are
  faced with two or more alternative courses of
  action, all of which have high probabilities of
  bringing about a desired end result.

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Are Consumers Rational?

• Unlike the rational decision maker picture
  painted by classical economic theory, we as
  consumers are unlikely to act as computing
  entities that mathematically gauge the outcomes
  of each alternative considered.
• We engage in a variety of shortcuts to make
  choices by weighing shopping effort against task
  importance, a tendency known as constructive
  processing.

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Q. 1. Define Involvement.
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Effort Variation in Decision Making

• Effort consumers expend when buying is largely a
  function of involvement.
• Involvement Degree of personal relevance a
  product or service holds for the consumer
• Two degrees of involvement
• Low involvement
• High involvement

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Marketing Implications of Different Levels of
Involvement

• High-Involvement Purchase and Consumption
• Complex purchase process by highly involved
  consumers
• Attention is increased and more importance is
  attached to the stimulus object.
• Low-Involvement Purchase and Consumption
• Minimal decision making for low-involvement
  products
• Attention is low and less importance is attached
  to the stimulus object

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Classification of Decision-Making

• Decisions fall somewhere between the two extremes
  of
• Nonprogrammed Decisions Novel or infrequently
  encountered decisions requiring a tailored
  approach
• These include
• Extended problem solving
• Limited problem solving
• Impulse purchases
• Programmed Decisions Habitual routines
  requiring no special thought

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Q. 2. What are types and characteristics of
consumer involvement?
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Consumer Involvement

• Cognitive involvement
• involvement that includes heightened thinking and
  processing of information about the goal object.
  
• Affective involvement
• involvement that includes heightened feelings and
  emotional energy.
• Enduring involvement
• represents the long-term interest that a consumer
  has in a product class.
• Situational involvement
• temporary interest in a purchase or consumption
  process.

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Q. 3. What is the nature of the consumer decision
process?
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Stages in Problem Solving

• 1. Problem recognition
• 2. Search activity
• 3. Identifying and evaluating alternative
  solutions
• 4. Purchase or commitment
• 5. Postpurchase considerations

Problem Recognition
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1. Problem Recognition

• To get consumers to act, it is necessary for
  marketers to arouse in consumers a state of
  tension or incongruity between an actual and a
  desired state of affairs.
• Problem recognition its associated tension
  state trigger behavior

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Sources of Problem Recognition

• Assortment depletions
• Assortment inadequacies due to changing life
  circumstances
• Other product acquisitions
• Product obsolescence
• Expanded or contracted means
• Expanded awareness via marketing stimuli

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2. Search Activity

• Familiarizing oneself with courses of action
  available to solve the problem
• Types of search
• Internal Search Retrieving relevantinformation
  from memory
• Sharpening
• Leveling
• External Search Seeking information from
  exogenous (outside) sources

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3. Identifying Evaluating Alternative Solutions

• Two activities are involved in the evaluation
  process
• A. To narrow down product alternatives to a
  manageable number
• B. To evaluate attributes of each alternative in
  order to select the best option

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3. Identifying Evaluating Alternative Solutions
(contd)

• A. Narrowing down product alternatives calls to
  mind our evoked set
• An evoked set is a small number of brands that we
  recall when we contemplate buying a particular
  product
• Consumers often seek to simplify purchase
  decisions by seeking shortcuts to reduce both
  mental and physical shopping efforta practice
  known as employing heuristics

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3. Identifying Evaluating Alternative Solutions
(contd)

• B. Evaluating attributes of the contemplated
  choices can be either effort-laden (in the case
  of systematic information search) or effortless
  (in the case of heuristic processing).

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3. Identifying Evaluating Alternative Solutions
(contd)

• Assessing the positiveness or negativeness of
  alternatives can be explained by Prospect theory.
• This theory suggests that a consumers perceptual
  apparatus is attuned to the evaluation of
  relative rather than absolute magnitude of value.
• According to this theory, as a consumer
  psychologically evaluates the positiveness or
  negativeness of prospects (options), the
  evaluation of the impact of these possible
  outcomes does not always align with their actual
  value.

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4. Purchase or Commitment

• The purchase decision is the outcome of the
  search process.
• Consumers use a number of decision rules
  (analytical procedures) to reach a choice among
  alternatives.
• Types of decision rules
• Compensatory simultaneous evaluation of
  alternatives on various product attributesa high
  score on one attribute of a brand can offset a
  low score on another
• Noncompensatory alternatives are evaluated
  singly, eliminating options that fail to meet a
  specific important attribute

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5. Postpurchase Considerations

• Feelings of satisfaction or dissatisfaction due
  to product performance are natural outcomes of
  the purchase process
• Distinguish between
• Instrumental performance utilitarian performance
  of the product as a means to a set of ends
• Expressive performance the social or
  psychological aspects of the product that
  consumers regard as ends in themselves

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Q. 4. How can involvement be used as a
segmentation variable?
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Involvement as a Segmentation Variable

• Brand loyalists
• those who are highly involved both with the
  product category and with particular
  brands.
• Information seekers
• those who are highly involved with a product
  category but who do not have a
  preferred brand.
• Routine brand buyers
• those who are not highly involved with the
  product category but are involved with a
  particular brand in that category.
• Brand switchers
• those who are not involved with the product
  category or with particular brands.

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Q. 5. Define Satisfaction.
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Satisfaction

• The mental state of feeling adequately rewarded
  in a buying situation.
• Judgment of a pleasurable level of
  consumption-related fulfillment, including levels
  of under fulfillment or over fulfillment.

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Consumer Satisfaction/Dissatisfaction

• Consumer dissatisfaction is an attitude formed
  toward a product, place, or action.
• This attitude is influenced by both the level of
  expended effort and by the level of expectations
  of the outcome.
• Effort is equated with financial, physical,
  and/or mental sacrifice.
• Satisfaction is equated with feelings of being
  adequately or inadequately rewarded for the
  sacrifice made.

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Marketing Implications of Consumer Satisfaction
or Dissatisfaction

• Satisfaction or dissatisfaction is a function of
  the discrepancy between obtained versus expected
  outcomes.
• If expectations are high, but product performance
  falls below expectations, dissatisfaction arises.
• Since overstated product claims can
  unrealistically raise consumers expectation
  levels, use of such strategy may be
  counterproductive in promotional efforts.

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Consumer Complaints

• Consumer dissatisfaction is of great concern to
  marketers.
• It is more cost-effective to keep existing
  customers than to win new ones.
• A typical dissatisfied customer informs a number
  of others about the incident.
• It is vital that companies immediately redress
  consumer dissatisfaction.

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To Whom Do Consumers Complain?

• Consumers direct their complaints to a variety of
  places including
• The firms customer service department
• State agencies
• The Federal Trade Commission
• The mass media
• Credit card companies
• The Better Business Bureau (BBB)

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Q. 6. What are the five emotional response modes?
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Response Modes

• Satisfaction as Contentment
• Satisfaction as Pleasure
• Satisfaction as Delight
• Satisfaction as Relief
• Satisfaction as Ambivalence

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Q. 7. What are the consequences of satisfaction
and dissatisfaction?
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Response Modes

• Exit
• Voice
• Continued Patronage
• Twist

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Methods of Redressing Consumer Complaints

• Establishing web-based service centers (or
  web-enabled customer contact centers) to
  facilitate communication with consumers
• Establishing a customer service department to
  collect, analyze, and diligently respond to
  consumer complaints
• Providing consumers with factual and objective
  information from credible sources including
  blogs, testimonials, and experts