Buyer Behavior Ch. 10 PDF

Ch.10 Consumer Decision Making Rational and Emotional The Consumer Decision Process 1.​ Problem recognition ​ The decision process begins when a consumer recognizes a problem to be solved or a need to be satisfied ○​ As consumers, you notice, for example...

Ch.10 Consumer Decision Making Rational and Emotional The Consumer Decision Process 1.​ Problem recognition ​ The decision process begins when a consumer recognizes a problem to be solved or a need to be satisfied ○​ As consumers, you notice, for example that you are hungry and need to get some food, or that you are running low on your Keurig K-Cup Pods and need to reorder them or that you are no longer able to read traffic signed from far away ​ A problem is not necessarily a physical problem, such as a hungry stomach or dark circles under the eyes ○​ A consumer problem is any state of deprivation ​ It is a state where the consumer feels discomfort physically or mentally ​ It is a gap between the current state and the desired state as felt by consumer ind ​ Problem Recognition: is the consumer’s realization of the gap between his/her current state and the desired state ​ 4 avenues of Problem Recognition ○​ Internal stimuli: are perceived states of discomfort arising from something inside us ​ This can be a physical condition of our bodies (hunger or thinning hair), or it can be a psychological condition, originating in our minds (boredom, anxiety about an exam) ○​ External Stimuli: are sources of information we see outside, in the marketplace and on the street ​ Seeing certain things makes us want those things ​ We have small coffee beans in a mall store, and our body begins to crave coffee (a current state of discomfort), and our minds say it is time to have some coffee ​ External stimuli comes into two forms  ➔​ Problem stimuli: is one in which the problem itself is the source of information, such as the sight of dirty laundry or a burnt out light bulb ➔​ Solution Stimuli: is the information emanating from a solution itself. Here exposure to potential solutions arouses the recognition of the need or problem. For example, exposure to new style of dress in a store might make us realize that the dress will come in handy for an upcoming party Some consumer researchers have called This opportunity recognition, problem Recognition aroused by an external, ​ Solution stimulus Solution stimuli, entices us even when We are not feeling any internal Deprivation or discomfort to begin with ○​ 1) Stock Depletion: some “problems” occur simply, and repeatedly due to stock depletion, such as when we empty a box of cereal ​ Some marketing communication helps consumers by reminding them of imminent stock depletion (ex. pharmacy) or even by arranging an automatic replenishment ○​ 2) Life Stage Changes: new problems arise with new life conditions, such as growing body, becoming a college student, leaving the parental home, becoming a parent,etc ​ Embarking on a professional career? Perhaps we will need to find a tattoo parlor to remove all those visible body tattoos ○​ 3) Developing New tastes: Often, we develop new tastes, like tastes fro fine arts and theater ​ We acquire new hobbies (digital designing), we get drawn into yoga, sushi, and organic food ​ Developing new states doesn't necessarily mean acquiring a more mature tastes or finer things in life, we rather a desire for anything new, anything not tried before ○​ 4) Encounter with New Technology/New Products: this type of problem is subtle, lurking just behind our level of consciousness  ​ These problems are brought to our consciousness when we see a solution stimulus, ex, a new technology, or someone of our own type using a product we never thought of using ​ Or someone telling us how cool some product would be for us ​ Sometimes marketers make us realize how a product that we never paid attention to has relevance for us, like peloton ○​ Helping consumer Problems Recognition ​ Invisible problems: marketers can also help consumers recognize the problems they otherwise may not. ​ Markets try to make these problem visible through educational communication, health education ​ Secondary Demand Creation: marketers usually are buddy fighting battles for more market share for their brand, by getting product users (who already have been aware of the problem) ​ Primary demand creation: non users are nonusers because they have not recognized the problem, by making them recognize it, we convert them into users -​ Market leaders create primary demand this bringing value to consumers who were previously unaware of the opportunity to avail of that product 2.​ Information Search ​ Here you seek out information, first about what alternatives are available in the marketplace and then about various features of these alternatives ​ When we are unfamiliar with the product ○​ If we are unfamiliar with the solution product for our problem, ​ We find out about one alternative, learn a little about it, then we come to know of a second alternative, learn more about it, and so on ​ Eventually there comes a time when we feel that we have explored enough ​ And when we are familiar ○​ Awareness set: this set comprises all brands of which we are aware as consumers ○​ Evoked set: this set is the subset of brands (in the awareness set) that we remember at time of decision making  ○​ Inert set: this set comprises the brands we don't remember at the time of decision making ○​ Inept set: this set compromises brands we do remember but considered unsuitable for our purposes ○​ Consideration set: this set compromises brands that we as consumers will consider buying. This is the most important set ​ It is the set that we will evaluate further ​ Sources of Information ○​ The first place we should look for information about products and brands is our memory ○​ Internal Search: We would simply try to recall whatever we knew about the product category, the brand we last bought, or the ad we saw recently ○​ External search: looking for information in market communications, media, and from other consumers ○​ Marketer sources: marketer sources are those associated with the marketers of the product or service ​ Ex. advertising, salespersons, product/service literature and brochures, ad in store display, corporate websites ​ The problem with marketers' sources is that can we trust them? ​ All marketer sources have a vested interest in providing biased information ○​ Also known as advocate sources: sources that have a vested pov to advocate or promote ​ Consumer views view these sources as less credible. Tha is why advertisers and salespersons should avoid hyping their product messages ​ Corporate website are a useful source of information for net savvy consumers ○​ Non Marketer sources: are those that are independent of the marketer’s control ​ Since these have no personal interest in providing biased information, they are viewed as non-advocate sources and are considered credible ​ 2 Types non advocate sources  -​ Personal Sources: are individuals we know personally. As consumers, we seek them out, and we surly value their advice -​ Independent Sources: Are those not controlled by marketers and also not known to us personally ○​ Search Styles ​ Search Styles: refers to the consumers’ preferences and practice relating to the extent of time and effort a consumer desires to invest in taking in and processing information, determined by related psychological concept called cognitive style ​ Cognitive stye: refers to the consumer mindset about the task of processing information ​ Extender: if we are an extender, for most decisions we conduct a systematic search, seeking information extensively, consulting a variety of sources, taking the requisite, time, and deliberating a lot ​ Simplifier: we tend not to search for information, are satisfied with simple information available without much effort, and are quick to make decisions with minimal information processing effort ​ Information overload: a condition in which the information being presented is too much for us to process as consumers -​ Although the sheer volume or complexity or the speed of information is the major cause, our own cognitive style also is responsible ○​ Problem Complexity ​ Routine problems: are those that we, as consumers, have solved many times in the past -​ In routine problem solving, generally no new information is considered and consumers usually solve these problem simply by repeating their previous choices ​ Extended problems: are purchase tasks for purchases never made before, long ago, or where risks of wrong choice are high -​ Extended problem solving, where the information search is extensive and deliberation is prolonged  ​ Limited problem: are nontrivial, but risks are moderate, and the product or service is not overly complex or technical in terms of its features -​ In the middle lies limited problem solving -​ Here consumers invests some limited amount of time and energy in searching and evaluating alternative solutions ○​ Determinants of Searching ​ Perceived risk: is the degree of loss (the amount at stake) in the event that a wrong choice is made -​ Two subfactors 1.​ The degree of uncertainty that a choice may be wrong 2.​ The severity of the consequences of a wrong choice ​ Types of perceived risk 1.​ Performance risk: the product or service may not perform well or at as well as some other alternatives. Also include here, physical risk (such as the risk of our SUVs rolling over) 2.​ Social risk: reference group members and significant others may not like it 3.​ Psychological risk: the product or service may not reflect us well 4.​ Financial risk: the product may be overpriced, there may exist a lower proceed option 5.​ Obsolescence risk: the product may be replaced by newer substitutes ​ The higher we precise the risk to be, the more extensive will be our information search  ​ Involvement: the interest the consumer takes in a product -​ High involvement means that we would be motivated to make as good a choice as possible -​ Consequently, we would search for more information before making our selection ​ Familiarity and expertise: when it comes to buying a product, sometimes we are familiar with the product already -​ We would not engage in elaborate information search -​ We would quickly know what to buy -​ Familiarity and prior experiences also imply that the purchases problem is solved in the routine problem solving mode -​ Expertise: the understanding of attributes of a product or service class ➔​ Includes knowledge about an object or a product’s composition, properties, and function, what is made of, what capabilities or qualities that composition gives it ​ Consumer Shopping style: some are extenders, others are simplifiers -​ Extenders tend to be avid in comparison shoppers who search extensively to get the best value -​ Others are brand loyal, sticking to known and tried brands, thus finding it unnecessary to search for new information ​ Time pressure: time pressed consumers are likely to cut short their information search , comparison shopping and decision making time ​ Step 3: alternative Evaluation ○​ Evaluation criteria: are standards against which consumers evaluate a critters ○​ Judgment models: are procedures and rules consumers use so as to consider various product attributes to arrive at their product choices ○​ Evaluation Criteria ​ Are simply what consumers want in a product ​ Comprise a subset of product attributes ​ We apply evaluation criteria to appraise alternatives ○​ Determinant attributes ​ The evaluative criteria on which the alternatives differ from one another become determinant evaluation criteria  ​ Markets should constantly monitor competing brands and consumer evaluative criteria so as to understand which brand features have become determinant attributes for their product categories ○​ Decision Models: Compensatory and Noncompensatory ​ Judgment models: your judgment model is a different from that of the event organizers, and in turn, your friends judgment model is different from your ​ Judgment Model: are procedures and rules for taking into account various qualities of an alternative ○​ Compensatory Model ​ Compensatory Model: The consumer arrives at a choice by considering all of the attributes of a product or service (or benefits from a product or service) and by mentally trading off the alternative’s perceived weaknesses on one or more attributes with its perceived strengths on other attributes -​ Ex. a consumer may go about thinking about his calculation in two ways. First, they might simply add the number of positive attributes, subtract the negative attributes each alternative has, and then choose the one that has the most positive and most fewest negative attributes ○​ NonCompensatory models (No Substitutes) ​ Conjunctive Model: “must have always this much of these” -​ The consumer uses certain minimum cutoffs on all salient attributes -​ Each alternative is then examined on each attribute, and any alternative that meets the minimum cutoffs on all attributes can potentially be chosen -​ If an alternative failed to reach the cutoff, even on one attribute, it would be dropped from further consideration -​ If all alternatives failed to reach the cutoff levels, then the consumer would revise their minimum cutoff levels or use another decision model ​ Disjunctive model: “okay I am flexible, must have either this or that” -​ Entails trade-offs between aspects of choice alternatives -​ Here the consumer is willing to trade off one feature for another  -​ Ex. a home buyer might say that the house should have either five bedrooms or if its has only 4 bedrooms, then it must have a finished basement -​ Although these tradeoffs are also made in the compensatory model, there are important differences -​ First, the disjunctive model considers the sheer presence of absence of attributes, rather than the degree or amount in which these attributes are present -​ Second, in the compensatory model, the attributes traded off need not serve the same purpose, whereas in the disjunctive model, they tend to do so -​ The finished basement and an extra bedroom imply more living space ​ Lexicographic Model: “I will take the best on the most” -​ The consumer rank-orders product attributes in terms of importance -​ The consumer examines all alternatives first on the most important criterion and identifies the alternative that ranks the highest on that criterion -​ If more then one alternative remained in the choice set, the consumer would consider the second most important criterions, examine the remaining alternatives with respect to that criterion, and select the best -​ The process would continue until only one alternative remained ​ Elimination by aspects: “At least this much on the most” -​ Is similar to the lexicographic model but with one major difference -​ The consumer rates the attributes in order of importance and in addition, defines the minimum required values -​ He or she then examines all alternatives first on the most important attribute, admitting for further consideration only those contenders that satisfy the minimum cutoff level on this most important attribute -​ If more than one alternative met this requirement, then the consumer would go to the next step, appraising the remaining alternatives on the second most important attribute and retaining only those that met the minimum cut-off level on this attribute ○​ Decision Heuristics  ​ Systematic decision approach, proceeds in an organized pattern, directed at answering specific questions -​ These questions pertain to problem solving -​ What features do various product alternatives have, and what are the relative merits and demerits of various brands of alternatives? ​ Heuristic: refers to ad hoc acquisitions of information to reach intuitive judgements -​ Heuristics are quick rules of thumb and shortcuts used to make decisions -​ Convenience based, quick and patchy ​ Quick Inferencing -​ Consumers use partial information to draw broad inference quickly -​ Most consumers infer products superiority from technical sounding terms even though they may not quite know that the feature meant ​ Brand name -​ Often consumers use brand names as a guide to make a choice ​ Past Experiences -​ Consumers also use past experiences to make their choices ​ Recommendation -​ Consumers seek others judgements and make their choices based on those recommendations ○​ Imperfections in Consumer Judgements ​ Framing effect -​ For which would you pay more: a glass of wine that is ⅔ full, or a glass of wine that is ⅓ empty? They are equal but consumers may perceive it as different -​ Brand names also act as a framing mechanism ➔​ In one study, the same pair of jeans was presented as an unbranded pair to one group of consumers and a branded pair to second consumer ➔​ The group of consumers who saw the pair of jeans with the brand name rated the item on higher quality compared to the unbranded jean ​ Inference marketing  -​ Inference marketing: refers to the consumer act of assuming the missing information to make judgment about a product 1.​ Inter-attribute inference: the value of one attribute is inferred based on another attribute -​ For example, the thickness of the fabric in an item of clothing might be used to infer crease resistance 2.​ Evaluation Consistency: the missing attribute is assumed to conform to the overall evaluation -​ Thus if a brand were positively evaluated in overall terms, then the brand would be assumed to be good on the missing attribute as well 3.​ Negative cue: the consumer may simply treat the missing information as a negative cue and then use of of the two sub-strategies -​ Avoid altogether the option with the missing information, or assume a low or poort value on this attribute ​ Satisficing -​ Refers to a consumers acceptance of an alternative that they find satisfying, even though there might be a better alternative ​ Emotional Decision making -​ Affective choice mode: affect for the brand insures based not on attribute information but on judgements that have 3 properties: -​ holistic (overall style, appearance, and total impression), -​ self implicative (the product or service is judged in relation to oneself) -​ non verbalized (cannot be verbalized, picture/ appearance) ​ Step 4: Purchases 1.​ Choice identification: when the consumer identifies the most preferred alternative, based on the evaluation process just described 2.​ Purchase intent: a determination that one should buy that product or service 3.​ Purchases implementation: arranging the terms of the transactions, seeking and obtaining credit, and likewise, obtaining the transfer of the title or ownership from the seller, paying for the product or service and taking possession of it ​ Step 5: Post Purchase ○​ The experience of buying and using the product provides information that we as consumers will use in the future decision making ​ Step 6: Involvement ○​ Problem Recognition ​ Low involvement purchases: ​ Frequently purchased items (cereal, milk, pencils) ​ First time purchases of small ticket items (new type of detergent or candy) ​ When things are out of stock ​ High involvement: when a consumer experiences a first time (no recurring) internal discomforting condition ​ First time realization of weakening eyesight, thinning hair ○​ Information Search ​ Low involvement: choice decisions, the information search is minimal, least effort ​ Most of our low involvement decisions are repeat purchases, so the brand choice is already made, most likely we have a couple of brand we are used to ​ High involvement: the information search os long and extensive and will definitely inclusive external search ​ Because the product entails risks, we compare multiple brands, and we all use the available resources ○​ Alternative Evaluation ​ Low involvement: minimal effort strategy adopted during the informations search phase also continues during alternative eval phase -​ The search is short and the search is limited to a single stimulus exposure episode, the evaluative judgment is also concluded in the same episode ​ High Involvement: the evaluation becomes effortful, prolonged, even agonizing -​ This is when our brains are operating full steam- fully engaged -​ The consideration is likely to be large, at least initially, and evaluation criteria are many -​ Phased decision strategy: 1.​ Alternative elimination stage: consumers narrow down the set of alternatives for closer comparisons 2.​ Alternative selection stage: the smaller set of alternatives is further examined