Consumer Decision Making I

1. Consumer Decision Making I MKT 750 Dr. West

2. Agenda • Finish topic of cultural influence • Present model of consumer decision making • Laddering Technique and HVMs • Factors impacting involvement in decision making • Need recognition & search • Discuss shopping diary

3. Means-End Chain Analysis: • Consumer behavior can be understood as: • Purposeful • We strive to achieve short-term, and long-term goals • Revealing • Our behavior reflects our values • Trade-offs

4. Consequences Attributes Laddering Technique Values

5. Hierarchical Value Map Values Consequences Attributes

6. Consumer Decision Making • Consumers make a wide variety of choices that range from life-altering (the decision to go to grad school, getting married) to mundane (filling your car with gasoline).

7. From Inertia to Passion Habitual Problem Solving Limited Problem Solving Midrange Problem Solving Extended Problem Solving Inertia Passion Simple Elaboration Nature of Processing

8. Nature of the Decision: • First time vs Repeat purchase • Purchase for Self versus Another • Functional products (e.g. washing machine) • Hedonic products (e.g. perfume, clothing)

9. Routine Decision Making • Consumers are “cognitive misers” • Heuristics are used as shortcuts to decision making • What might some of these be? • Purchase decision based on: • Habit, Promotion, Impulse

10. The Rational Decision Process: Preferences & Beliefs Need Recognition Search Evaluation Purchase Decision Post-Purchase Feelings

11. Need Recognition Ideal State Ideal State Ideal State Actual State Actual State Actual State No Problem Opportunity Need Recognition Recognition

12. How are Needs Activated? • Changed circumstances • Graduation, new job, marriage, first baby … • Product acquisition • DVD player, Xbox • Product consumption • Toothpaste, milk, gasoline… • Product innovation • Software • Marketing influence

13. Sources of Problem Recognition • Need Recognition • Stock out – “Got Milk” campaign

14. The Role of Self Concept Alter the buyer’s perception of “ideal self” Products that enhance “self-concept” reduce the dissonance between the ideal and actual self. Ideal Self Actual Self Extended Self

15. How Companies Can Activate Need Recognition • Instill fear • Gets attention • Memorable • Need to provide a solution

16. Information Search • Internal search • Personal knowledge and experience stored in memory • External search • Personal sources (wom, friends, etc) • Independent sources (media, experts, etc) • Marketing sources (advertising, salespeople, packaging, etc) • Experiential sources (trial)

17. Information Search • Types of Information • Search Information -- observable prior to purchase • Experience Information -- can be obtained from direct experience with the product or service • Credence Information – product claims that are not readily observed even post purchase

18. Information Search • Limited! • Surveys indicate that 50% of consumers shop at a single store for a durable good, only 30% look at more than one brand of appliance • What does this not take into account? • Internal search • Ongoing search • Incidental learning

19. Consideration Set • Consumers only consider a small number of alternatives • Typically 3 – 4 brands; size may vary by product category • Highlights why top-of-mind awareness is crucial

20. What determines search? • Cost • Effort, time, delay, immediacy of need, money • The internet can lower search costs • What are the effects? • Benefits • Savings, performance, satisfaction, avoidance of regret, ease of justification

21. What determines search? • Consumer knowledge (Bettman & Park 1980)

22. Assignment • Finish reading Chapters 3, 4 & 6 • Write-up Shopping Insights Diary • Exam questions need to be submitted by Friday evening.