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Module 1

The document discusses consumer decision making and involvement. It begins by explaining that consumer involvement, which is a person's perceived relevance of an object based on their needs and interests, can impact the type of decision making approach. It then covers three types of decision making: nominal, limited, and extended decision making. The document also examines the concepts of perceived risk, information search types, categories of decision alternatives, decision rules, and the choice process. It provides examples and diagrams to illustrate these consumer behavior concepts.

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Subindu Halder
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© © All Rights Reserved
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Download as PPT, PDF, TXT or read online on Scribd
20 views

Module 1

The document discusses consumer decision making and involvement. It begins by explaining that consumer involvement, which is a person's perceived relevance of an object based on their needs and interests, can impact the type of decision making approach. It then covers three types of decision making: nominal, limited, and extended decision making. The document also examines the concepts of perceived risk, information search types, categories of decision alternatives, decision rules, and the choice process. It provides examples and diagrams to illustrate these consumer behavior concepts.

Uploaded by

Subindu Halder
Copyright
© © All Rights Reserved
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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CONSUMER DECISION MAKING

CONCEPTUALIZING INVOLVEMENT

Before we explore the three types of decision-making, we need to first ask why different
consumers may approach the same choice situation from very different perspectives. One
reason is the consumer’s level of involvement in the decision. Involvement is a person’s
perceived relevance of the object based on their inherent needs, values, and interests. We
use the term object in the generic sense to refer to a product, brand, ad, or purchase
situation. Figure 2.2 illustrates how we can conceptualize the construct of involvement in 2-2
terms of its antecedents and possible results.
TYPES OF INVOLVEMENT

Product

Message

Situational
FIGURE 2.4 FIVE TYPES OF PERCEIVED RISK

This figure illustrates the five types of risk along with purchases that are likely to be associated with
each form of risk. Monetary risk is associated with high-ticket items like a car purchase. Functional
risk is associated with products that must perform in order to satisfy. Pharmaceutical products are
an example of product choices associated with physical risk. Symbolic goods tend to be associated
with social risk. Personal luxuries can be associated with psychological risks.
INVOLVEMENT AND TYPES OF
14-1
DECISION MAKING
Low-purchase involvement High-purchase involvement

Nominal decision makingLimited decision makingExtended decision making


Problem recognition Problem recognition Problem recognition
Selective Generic Generic

Information search Information search


Information search
Internal Internal
Limited internal
Limited external External

Alternative evaluation Alternative evaluation


Few attributes Many attributes
Simple decision rules Complex decision rules
Few alternatives Many alternatives

Purchase Purchase Purchase

Postpurchase Postpurchase Postpurchase


No dissonance No dissonance Dissonance
Very limited evaluation Limited evaluation Complex evaluation
THE PROCESS OF PROBLEM RECOGNITION

Desired consumer lifestyle Current situation


The way the consumer would like Temporary factors affecting the
to live and feel consumer

Desired state Actual state


The condition the consumer The condition the consumer
would like to be in at this point in perceives himself or herself to be
time in at this point in time

NATURE OF DISCREPANCY
Difference between the consumer’s desired and perceived conditions

Desired state exceeds Actual state exceeds


No difference
actual state desired state

Problem recognized
Satisfaction
Search decision initiated
TYPES OF INFORMATION SEARCH
Prepurchase search:
 Directed searches: consumer searches for information that will help solve a specific
problem.
 Browsing: consumer has no immediate intent to buy.
 Accidental search: consumer is not actively looking for information, but take note of
information that is presented in an attractive, persuasive manner.
Post-purchase search: evaluating other options in the marketplace after the
purchase.
Ongoing search: staying current with marketplace developments.
INFORMATION SOURCES FOR A PURCHASE DECISION

Information
sources

Internal information External


information

Activity Passively Actively acquired


acquired acquired

Past Personal Low Independent Personal Marker Experiential


searches experience involvement group contacts information
learning
CATEGORIES OF DECISION ALTERNATIVES

ALL POTENTIAL ALTERNATIVES


(Brands, products)

Awareness set Unawareness set


Alternatives the consumer is aware Alternatives the consumer does
of not know about

Evoked set Inert set Inept Set


Alternatives given Backup Avoided
consideration alternatives alternatives

Specific Alternatives
alternative considered, but not
purchased purchased
HOW MANY CRITERIA DO CONSUMERS USE?

Typically, they use from four to six criteria


The more important the purchase, the greater the number of criteria used
Criteria may be used in combination
The more important the decision, the fewer the acceptable alternatives there
are
CONSUMER DECISION RULES

They indicate how consumers evaluate products


and services in different buying situations
They are used consciously or unconsciously
Three types of rules are:
 Noncompensatory rule: one in which the weaknesses of
an alternative are not offset by its strengths
 Compensatory rule: allowing for trade-offs among
strengths and weaknesses
 Decision heuristics: these are rules of thumb or short
cuts that allow quick decision making
NONCOMPENSATORY RULES

Disjunctive: decide which criteria are determinant (or not) and


then establish a minimum score for each one.
Conjunctive: consider all criteria as determinant and then
establish a minimum acceptable score for each one.
Lexicographic: rank each of the evaluative criteria in order of
importance and eliminate alternatives based on first, second,
third criterions, etc.
Elimination-by-aspects: rank the evaluative criteria and also
establish minimum scores that must be met on each of them.
COMPENSATORY RULES

Simple additive: total scores on all evaluative


criteria for each alternative and the highest
score wins.
Weighted additive: assign relative weight to each
criterion based on perceived importance and
then multiply the score by the relative weight to
arrive at a weighted score (highest weighted
score wins).
DECISION HEURISTICS

Mental rules of thumb that help consumers reach


decisions quickly and efficiently
Examples:
 Price: the higher the price the better the quality
 Brand reputation: if it’s brand X, it must be good (or
bad)
 Key product features: if a used car has a clean interior, a
buyer may also infer a mechanically sound vehicle.
 Market beliefs
CHOICE

Planned vs. unplanned purchase


Outlet selection or brand choice, which comes first?
 Brand choice first
 Brand loyalty
 No outlet loyalty or preference
 No need for the expertise of salespeople (knowledgeable consumers)
 No, outlet choice first
 High store loyalty or preference
 Low brand loyalty
 Need for helpful sales staff
 Brand and outlet working together
 Find the best fit for the consumer’s self image
OUTLET IMAGE AND CHOICE

Image: it is the result of


various functional and
psychological attributes.

 Functional attributes:
merchandise, prices, credit
policies, store layout, etc.

 Psychological attributes: sense of


belonging, feeling of warmth or
excitement, etc.
OUTLET IMAGE (CONTINUED)

Retailers use the attributes to design


an image that appeals to their
target market (s)

 Influences on outlet choice include the


level of involvement, perceived risk,
advertising, prices, and outlet size.
MARKETING STRATEGY

Store Layout and traffic patterns (Retail gravitation model)


Point of purchase media
Product Shelving
Pricing Strategies
Packaging
Brand Choice: National vs Private
 Impulse purchase
 Customer loyalty
 Customization
POST-PURCHASE EVALUATION
HI-INV/EDM
EXPECTATION

SATISFACTION

DISCONFIRMATION

DISSATISFACTION

PERFORMANCE

FEELINGS
Different ways to react to
dissatisfaction

Dissatisfaction
Ways to react to Dissatisfaction

Dissatisfaction

Take no action
Take Action

Give it one more


chance

Switch to
Complain to substitutes Warn
store or Stop buying friends
Alter Initiate legal
manufacturer that brand
lifestyle Action: Consumer
Courts
Effect on seller/manufacturer
Crib but continue to use : least harmful, occasional bad
mouthing. A case of a non reactive customer : case of lazy to
change or lack of options 1

Complain to manufacturer : more harmful than can be


anticipated. Although just losing an individual customer ,
benefits the company in knowing what is not working 2

Stop buying that brand, Switch, But keep opinions to


oneself: Harmful since the company doesn’t get to know
about the problems and further repercussions follow. 3
CONTD..

Stop buying the brand, Switch, Convince friends not to use: extremely harmful,
long term effect will lead to negative WOM publicity

Initiate legal action: Brings to the public notice instantaneously- Hence most
harmful 4

5
IMPLICATIONS FOR THE MARKETER

SHORT RUN LONG RUN


ACTION BY CONSUMER
IMPLICATIONS IMPLICATIONS INTENSITY OF
IMPLICATIONS

NO ACTION

LOW

WARN
PRIVATE
ACTION

BOYCOTT MEDIUM

SEEK REDRESS

PUBLIC
SEVERE
ACTION
LEGAL
ACTION

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