UNIT II: SITUATIONS AND

DECISION MAKING

Chapter III:
Consumers/Customers in Situations

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Chapter IV:
Decision Making
- Need Recognition
- Alternative Evaluation and Choice 1
 Consumer Perception and
Learning
Perception - refers to a consumer’s awareness
and interpretation of reality. It serves as a
foundation upon which consumer learning
takes place. Value involves learning & consumer

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perception plays a key role in learning because
consumer change behavior based on what they
perceived.
Learning - refers to a change in behavior
resulting from the interaction between a person 2
and a stimulus.
Consumer Perception Process

Sensing – is an immediate response to stimuli

that have come into contact with one of the
consumer’s five senses ( sight, smell, touch ,

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taste and hearing.)
Thus, when a consumer enters a store,
browses , read , taste food, tries clothes the
perceptual process goes into action.
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 Consumers in Situations

• Value in Situations
• Time and Consumer Behavior

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• Place Shapes Shopping Activities
• Impulsive Shopping and Consumption
• Places have Atmospheres
• Antecedent Conditions
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 Value in Situations
Enduring characteristics
of neither a particular
consumer nor a product
Situational
Influences

or brand

Ephemeral/ communication
Temporary Shopping
Brand preference
Contexts
Purchase
can affect:
Actual consumption
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Evaluation of that
consumption
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Value in Situations
• How much do you expect to pay for:
• A movie ticket for an Indie film?
• A movie ticket for the movie: “Hunger
Games”?

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• Convenience products?

• A concert ticket featuring Sara Geronimo?

• A concert ticket featuring K Brosas?
• A concert ticket featuring Pinoy Boy Band? 6
Value in Situations
• You go for a trip to Baguio City for a 3-day
seminar
• Are there other activities that you would

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like to do aside from the seminar?
• Are there things that you don’t want to
miss during your stay at the city?
• Would you go home after the seminar or
would you pass by some places before
going home? 7
Three Categories of Situational Influences
Time influence consumers by changing the way
information is processed.
• How do would you select your purchases if the
store is about to close?

Place can frame any purchases , consumption

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or information processing.
• Sushi is the best in an environment with an
Asian genre

Condition can influence consumption.

• Beverage choices are different when a 8
consumer is cold than when a consumer is hot.
Consumers in Situations

• Value in Situations
• Time and Consumer Behavior
• Place Shapes Shopping Activities

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• Impulsive Shopping and Consumption
• Places have Atmospheres
• Antecedent Conditions

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 Time & Consumer Behavior
Consumer’s most valuable resource
Scarce
It affect a consumer’s thoughts, feelings and

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behavior, all of which come together to
create different perceptions of value.

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Time & Consumer Behavior

Time Pressure Time of Year Time of Day

• urgency to • regularly • Rhythm that

act based on occurring varies with

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some real or conditions the time of
self-imposed that vary day
deadline with the time • i.e. Sleeping
• i.e. limited of the year and walking
time during • i.e. Hot times
lunch break drinks for
cold season 11
Time & Consumer Behavior
• Advertiming – ad buys
that include a schedule
that runs the
advertisement primarily

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at times when
consumers will be most
receptive to the
message.
• Example: An ad by
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nestle fit for the summer
Consumers in Situations

• Value in Situations
• Time and Consumer Behavior

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• Place Shapes Shopping Activities
• Impulsive Shopping and Consumption
• Places have Atmospheres
• Antecedent Conditions
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 Place Shapes Shopping Activities
SHOPPING is the set of value-producing
consumer activities that directly increase the
likelihood that something will be purchased
Examples:

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When a consumers surfs the net looking
for an Ipod
When a consumer visits a car dealer
after hours to peruse the options on new
cars 14
 SHOPPING ACTIVITIES
Experiential Impulsive
Shopping Shopping
Acquisitional
Shopping Recreationally Spontaneous
Epistemic oriented activities

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Activities Shopping activities characterized by
oriented toward Activities designed to a diminished
a specific, oriented toward provide interest, regard for
intended acquiring excitement, consequences,
purchase or knowledge relaxation, fun, spontaneity, and
purchases about a product social a desire for
. interaction, or immediate
some other 15
desired feeling self-fulfillment.
 Shopping Activities and Shopping Value
High Hedonic Value

• Experiential – outshopping at a
mall in a neighboring city

High Utilitarian Value

Low Utilitarian Value

• Impulsive – deciding to buy • Epistemic (ongoing) – visiting a

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four pairs of shoes at an wine store to taste new wines
unannounced sale
• Epistemic (situational) –
searching for warranty
information about air
conditioners
• Acquisitional – stopping
at a convenience store for
gas and a quart of milk
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Low Hedonic Value

Consumers in Situations

• Value in Situations
• Time and Consumer Behavior
• Place Shapes Shopping Activities

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• Impulsive Shopping and Consumption
• Places have Atmospheres
• Antecedent Conditions

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 Impulsive Shopping &
Consumption
Spontaneity

Impulsive

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Diminished regard for consequences
Consumption
Need for self-fulfillment

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Impulsive vs. Unplanned Consumer Behavior

Impulsive Behavior Unplanned Behavior

Diminished regard for

Situational Memory
consequences

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Impulse
Unplanned shopping behavior
Shopping/behavior

Spontaneous Spontaneous

Emotional-Hedonic Utilitarian 19
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 Retail Approaches at Encouraging Impulse Purchases
TOOL EXAMPLE
Merchandise Placing beer near the charcoal triggers memory
complementary for the consumer that beer goes with barbecue
products
Encourage “ add-on” Asking consumers to buy socks after buying a
purchases shoes
Create emotionally Positive emotions are associated with larger
charged atmosphere purchases. Giving free samples can be one way of
making consumers feel good
Make things easy to buy Consumers have less time to think about the
purchase & perhaps decide the product is not
worth the price. Ex.
A consumer who make used of credit cards.
Provide discount Buy one watch get a second for half price. The 21
consequences become more easier to diminish

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Consumers in Situations

• Value in Situations
• Time and Consumer Behavior
• Place Shapes Shopping Activities

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• Impulsive Shopping and Consumption
• Places have Atmospheres
• Antecedent Conditions

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Places have Atmospheres

• Atmospheric/s – refers to the emotional

nature of an environment or the feelings

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created by the total aura of physical
attributes that comprise a physical
environment.

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 Atmosphere
• Knowledgeable • Friendly
employees employees
• Low prices • Colors lights ,
• Wide selection music , odors
• Convenient • Prestigious

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• Shopping brands
• Parking • Other Shoppers
• Payment • Crowds
• Hours • Ease of
• Location movement

Functional Quality Affective Quality

[attributes that makes the function [emotional meaning of an 24
performed more efficient] environment]
 Atmosphere Elements
Virtual Shopping Odor
Situations [Olfactory]

Social Settings
[Crowding] Music

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[Source Attractiveness] [Foreground music]
[Social Comparison] Atmosphere [Background music]

Merchandising Color 25
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Psychological Impact of Color:

• Red – hottest color; conveys masculine appeal like shaving

cream and cigarettes. Appropriate for canned foods, frozen
foods, and meats.

• Brown – another masculine color associated with earth,

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woods, mellowness, age, warmth, comfort; it is used to sell
anything

• Yellow – high impact to consumer’s eyes, particularly when

used with black; psychologically used for corn, lemon, and sun
tan products.
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Psychological Impact of Color:
• Green – symbols of health and freshness; popular for
mentholated tobacco products.
• Blue – coldest color which conveys ice impression and
effective for frozen foods. If used for lighter tints become
sweet.

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• Black – conveys sophistication, high-end merchandise and
is used to stimulate expensive products; good as
background and foil for other colors.
• Orange – most edible color, especially in brown-tinged
shades, evokes autumn and good things to eat.

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Cultural Taboos
• Blue presents FEW cultural taboos
• Red, white, and black is associated with bad
omens and death in some cultures
• Red is a risky color in Japan, as is white in China

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and black in western culture

• It also affect price & quality perceptions

• A product with blue background is of higher quality
& consumers are willing to pay more.
• red & orange is perceived as low quality & low price 29
Answer the following questions
1. What image would a shop want to create if the shop smells
like leather and tobacco?

2. How many of you prefers floral scents?

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3. In what way does music affect your shopping activity? Your
dining activity?

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Consumers in Situations
• Value in Situations
• Time and Consumer Behavior
• Place Shapes Shopping Activities
• Impulsive Shopping and Consumption

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• Places have Atmospheres
• Antecedent Conditions

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 Antecedent Conditions
Refers to the situational characteristics that a consumer brings
to a particular information processing, purchase or
consumption environment.

They can shape the value in a situation by framing the events

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that take place.

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Antecedent Conditions
Buying Power
Economic
Resources
Consumer Budgeting
[Mental Budgeting – memory accounting
for recent spending]

Consumers enter each exchange

environment. They may have natural
Orientation tendencies toward one shopping
orientation or another

Each consumer brings his or her current

Mood mood to the particular consumption
situation

Security and Fearfulness can affect consumers. 33

A consumer who goes shopping in a fearful
Fearfulness mood will not go about his or her shopping
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Chapter IV:
Decision Making I: Need
Recognition and Search

• Consumer Decision Making

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• Decision-Making Perspectives
• Decision-Making Approaches
• Need Recognition, Internal Search, and the
Consideration Set
• External Search 34
 Value - Both utilitarian and hedonic
value are associated with consumer
decision making.

Motivation - Are inner reasons or

Consumer
driving forces behind human actions
Decision

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Making as consumers are driven to address
needs

Emotions - The decision – making

can be very emotional depending on
the type of product being considered
or the need that has arisen 35
Basic Consumption Process and Decision Making

Need Need Recognition

Want Search for information

Evaluation of Alternatives

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Exchange Choice

Cost and Benefits

Post-Choice Evaluation
Reaction
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Value
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Decision Making I: Need
Recognition and Search

• Consumer Decision Making

• Decision-Making Perspectives

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• Decision-Making Approaches
• Need Recognition, Internal Search, and the
Consideration Set
• External Search
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 Decision-Making Perspectives
PERSPECTIVE DESCRIPTION EXAMPLE
Rational Consumers are rational Aubrey carefully
Perspective and they carefully arrive considers the
at decisions attributes included
with various car

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stereos.
Experiential Decision making is often Devin goes rock
Perspective influenced by the climbing simply for the
feelings associated with fun of it.
consumption

Behavioral Decisions are responses The soothing music in

Influence to environmental the store encourages 39
perspective influences Shelby to browse
longer.
Decision Making I: Need
Recognition and Search

• Consumer Decision Making

• Decision-Making Perspectives

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• Decision-Making Approaches
• Need Recognition, Internal Search, and the
Consideration Set
• External Search
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Decision-Making Approaches
Consumers reach decisions in a number of
different ways. It depends heavily on the
amount of involvement a consumer has with a
product category or purchased and the

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amount of risk involved with the decision

Perceived risk – refers to the perception of the

negative consequences that are likely the
result from a course of action and the 41
uncertainty of action is best to take.
 Types of Risk
Financial risk – risk associated with the cost of the product

Social risk- associated with how other consumers will view the
purchase

Performance risk – associated with the likelihood of a product

performing as expected

Physical risk – associated with the safety of the product and the
likelihood that physical harm will result from its consumption
Time risk – associated with the time required to search for the 42
product and the time necessary for the product to be serviced or
maintain
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Decision-Making Approaches
EXTENDED LIMITED HABITUAL

Assumes Consumers search Consumers

consumers move very little generally do not
diligently information and seek information
through various often reach at all when a

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problem-solving decisions based problem is
activities in largely on prior recognized and
search of the beliefs about select a product
best information products and their based on habit.
that will help attributes
them reach a - Brand loyalty
decision - Brand inertia

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Decision Making I: Need
Recognition and Search
• Consumer Decision Making
• Decision-Making Perspectives
• Decision-Making Approaches

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• Need Recognition, Internal Search, and the
Consideration Set
• External Search

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Need Recognition, Internal Search, and
the Consideration Set

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 Search Behavior
Number of alternatives available

Information

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about Price of various alternatives
potential
solutions to relevant attributes that should be
needs considered & their importance

Performance of each alternative 47

on the attributes
 Consideration Set
Consideration Set
[alternatives that are considered
acceptable for further
consideration in decision making]

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Inert Set
Universal Awareness
[alternatives to which consumers
Set Set are indifferent or for which strong
feelings are not held]

Inept Set
[alternatives in the awareness set
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that are deemed to be
unacceptable for further
considerations]
Decision Making I: Need
Recognition and Search

• Consumer Decision Making

• Decision-Making Perspectives

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• Decision-Making Approaches
• Need Recognition, Internal Search, and the
Consideration Set
• External Search
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External Search
• Includes the gathering of information from
sources external to the consumer including:
• friends,

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• family ,
• sales people,
• advertising ,
• independent research reports such as
Consumer Reports or the internet.
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Role of Price and Quality in the
search Process
Price and Quality perceptions are related as
consumers generally assume that higher prices
mean higher quality.

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• Price – information that signals the amount
of potential value contained in a product.
• Quality - perceived overall goodness or
badness of some product.
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 External Search and the Internet
The internet improves consumer search activities in
several ways.
• It can lower the costs associated with search and
can also make the process more productive.

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• The search process itself can be enjoyable and
deliver hedonic value to the consumer.
• The consumers have the ability to control
information flow much more efficiently than if
they are viewing product information on a
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television commercial or hearing about a
product from radio ads.
Decision Making II: Alternative
Evaluation and Choice

• Evaluation of Alternatives: Criteria

• Value and Alternative Evaluation

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• Product Categorization and Criteria Selection
• Consumer Choice: Decision Rules

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 Evaluation of Alternatives: Criteria
Evaluative Criteria – attributes, features, or potential
benefits that consumers consider when reviewing
possible solutions to a problem.
Determinant Criteria – evaluative criteria that are
related to the actual choice that is made.

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Product Feature Benefits
Coffee Timer Button Hot coffee ready to
Maker go
HDTV LED Display Better picture quality
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Laptop Wireless Freedom to connect
Card from anywhere
Decision Making II: Alternative
Evaluation and Choice

• Evaluation of Alternatives: Criteria

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• Value and Alternative Evaluation
• Product Categorization and Criteria Selection
• Consumer Choice: Decision Rules

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VALUE AND ALTERNATIVE EVALUATION
Hedonic Emotional, symbolic,
Criteria subjective
Value
Utilitarian
Functional, economic aspect
Criteria

based on the overall feeling

Affect-based
that is evoked by the
Evaluation
alternative

Alternative
alternatives are evaluated
Attribute 56
across a set of attributes that
based
are considered relevant to the
Evaluation
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purchase situation.
Decision Making II: Alternative
Evaluation and Choice

• Evaluation of Alternatives: Criteria

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• Value and Alternative Evaluation
• Product Categorization and Criteria Selection
• Consumer Choice: Decision Rules

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Product Categories
Superordinate Beverages

Subordinate Cola Sports Drinks Juices

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Power
Gatorade Tang
Features ade

Calories 20 cal/8 oz.

Carbs 5 grams/8 oz. 58
Sodium 110 mg/ 8 oz.
 Criteria Selection
Is Situational influences
affected
by: Product knowledge

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Expert opinions
Social influences
Online sources
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Marketing Communications
Decision Making II: Alternative
Evaluation and Choice

• Evaluation of Alternatives: Criteria

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• Value and Alternative Evaluation
• Product Categorization and Criteria Selection
• Consumer Choice: Decision Rules

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CONSUMER CHOICE: DECISION
RULES
Types Compensatory
Rules
of
Rules

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Non- Conjunctive rule
compensatory
Disjunctive rule
Rules
Lexicographic rule
Elimination-by-aspects rule 61
 End of Chapter III and IV

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Aim HIGH BSBA Students

Prepared by: Mrs. Ghana Cahaol, MBA

Adopted/updated by: Mr. Timothy Joshua M. Ventayen, LPT 62