Consumer Decision-Making: Evaluation, Choice, and Behavior

1. Chapter 3 Alternative Evaluation and Choice

2. Chapter Spotlights • Alternative evaluation • Consumer benefits and evaluative criteria • Consumer decision rules and heuristics • Planned versus unplanned purchasing • Outlet selection • Outlet image • Consumer choice and shopping behavior

3. Consumer Evaluation Sets • Universal set: all product classes and/or all brand alternatives (and outlets) with reasonable marketplace access whether the consumer is aware of them or not • Retrieval set: subset of universal set that consumers can bring up from memory • Consideration set: subset of retrieval set from which the consumer intends to make a selection

4. Evaluative Criteria Evaluative criteria: the means by which consumers compare product classes, brands, vendors, etc. • Tangible: benefits based on such things as price, color, size, shape, performance • Intangible: benefits based on such things as brand image, ownership feelings

5. Alternative Evaluation • The process through which we compare and contrast different solutions to the same marketplace problem. • It is the third step in the consumer decision-making process: • Problem recognition • Information Search • Alternative evaluation • Choice • Outcomes

6. Evaluative Criteria • Typically, consumers use from four to six criteria. • The more important the purchase and/or the greater experience a consumer has with the product class, the greater the number of criteria used. • Criteria may be used in combination. • The more important the decision, the fewer are the acceptable alternatives.

7. What Is the Relative Importance of Each Criterion? • Importance = salience • Evaluative criteria salience varies by product, situation, and person • Determining relative importance – the “100 points” rule; ask consumers to distribute 100 “importance points” among criteria based on relative importance (see Exhibit 3-1)

8. Country of Origin, Price, and Brand, as Evaluative Criteria • Country of origin is used to signal product quality • Use of price as criterion varies across product categories: • Acceptable price range is determined by past purchases; perception of benefits vs. costs indicates value; and the buying situation. • Brand reputation • Brand may be viewed as an indicator of quality and/or consistency of satisfaction - lessening risk.

9. Consumer Decision Rules • How consumers evaluate and choose products and services in different buying situations. • Rules are used consciously or unconsciously • Three types of rules • Noncompensatory rule: one in which the weaknesses of an alternative are not offset by its strengths (not designed to find “winners”) • Compensatory rule: allowing for trade-offs among strengths and weaknesses (find “winners”) • Decision heuristics: these are rules of thumb or short cuts that allow quick decision-making

10. Noncompensatory Rules • Disjunctive: decide which criteria are determinant (or not) and then establish a minimum score for each one. Meet minimum “in” do not “out” • Conjunctive: consider all criteria as determinant and then establish a minimum acceptable score for each one. Meet all minima “in” otherwise “out” • Lexicographic: rank each of the evaluative criteria in order of importance; compare alternatives on most important with highest score winning; if tie for high score those tied evaluated on second most important criterion, etc., until “winner” is found

11. Compensatory Rules • Simple additive: total scores on all evaluative criteria for each alternative and the highest score wins (assumes all criteria of equal importance) • 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, sum scores, highest weighted score wins

12. Decision Heuristics • Mental rules of thumb or shortcuts 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

13. Choice – Purchase Situations • Four types of purchase situation: • Specifically planned • Generally planned • Substitute • Unplanned

14. Planned Purchasing Behavior • Understanding “buying intention” is key to predicting and potentially influencing planned behavior • Measuring purchasing intention can be done: • Measures of intention may not provide accurate results since situational influences change • The method of questioning may be flawed itself. (A solution: “Yes” or “No” about doing something; then determine probability of doing this)

15. Intervening variables: changes that may have an impact on the actual purchase behavior Financial status, employment situation, family or household size, weather, etc. Deliberation: the longer we put off a purchase the higher the likelihood that either the purchase will not be made or the choice will change. Intervention of Planned Purchases

16. Unplanned Purchasing Behavior • Four types of unplanned purchases • Pure impulse: those that are bought for the sake of novelty • Reminder impulse: are routine purchases, albeit unanticipated. • Suggestion impulse: when a product (not previously seen) stimulates immediate need recognition • Planned impulse: responding to a special incentive to buy an item considered in the past but not selected

17. How do Marketers Encourage Unplanned Purchases? • Point-of-purchase displays • Reduced prices • In-store coupons or specials (Kmart’s Blue Light specials) • Multiple-item discounts • Packaging • In-store demonstrations • Store atmosphere • Salespeople

18. Choice • 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) • 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

19. Outlet Image and Choice • Image: the sum total of various functional and psychological outlet attributes • Functional attributes: merchandise, prices, credit policies, store layout, etc. • Psychological attributes: sense of belonging, feeling of warmth or excitement, etc.

20. Outlet Image (continued) • Retailers (stores, catalogs, Web sites, etc.) use attributes that imply certain benefits to attempt to create 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.

21. Consumer Choice and Shopping Behavior • Why do people shop? • Personal and social motives • How do people shop? • Shopping orientation: their style or way of shopping • Choice decision during the shopping process: • Which product to buy, how many, which brands to buy, which outlet to use, when to buy, how to pay, and other (should we buy extended warranty)?