Chapter 16

1. Chapter 16 Consumer Decision Making

2. Table 16.1 Types of Purchase or Consumption Decisions DECISION CATEGORY ALTERNATIVE A ALERNATIVE B Basic purchase or consumption decision To purchase or consume a product (or service) Not to purchase or consume a product (or service) Brand purchase or consumption decision To purchase or consume a specific brand To purchase or consumer another brand To purchase or consume one’s usual brand To purchase or consume another established product To purchase or consume a basic model To purchase or consume a luxury or status model

3. Table 16.1 continued DECISION CATEGORY ALTERNATIVE A ALERNATIVE B Brand purchase or consumption decision To purchase or consume a new brand To purchase or consumer one’s usual brand or some other established brand To purchase or consume a standard quantity To purchase or consume more or less than a standard quantity To purchase or consume an on-sale brand To purchase or consume a nonsale brand To purchase or consume a national brand To purchase or consume a store brand

4. Table 16.1 continued DECISION CATEGORY ALTERNATIVE A ALERNATIVE B Channel purchase decisions To purchase from a specific type of store To purchase from some other type of store To purchase from one’s usual store To purchase from some other store To purchase in-home To purchase in-store merchandise To purchase from a local store To purchase from a store requiring some travel Payment purchase decisions To pay for the purchase with cash To pay for the purchase with a credit card To pay the bill in full when it arrives To pay for the purchase in installments

5. Levels of Consumer Decision Making Extensive Problem Solving Limited Problem Solving Routinized Response Behavior

6. Extensive Problem Solving A search by the consumer to establish the necessary product criteria to evaluate knowledgeably the most suitable product to fulfill a need.

7. Limited Problem Solving A limited search by a consumer for a product that will satisfy his or her basic criteria from among a selected group of brands.

8. Routinized Response Behavior A habitual purchase response based on predetermined criteria.

9. Models of Consumers: Four Views of Consumer Decision Making • An Economic View • A Passive View • A Cognitive View • An Emotional View

10. Rational Customers Have To … • Be aware of all available product alternatives • Be capable of correctly ranking each alternative in terms of its benefits and disadvantages • Be able to identify the one best alternative

11. Why is the Classical Economic Model Considered Unrealistic? • People are limited by their existing skills, habits, and reflexes • People are limited by their existing values and goals • People are limited by the extent of their knowledge

12. Information Overload A situation in which the consumer is presented with too much product- or brand-related information.

13. A Model of Consumer Decision Making INPUT PROCESS OUTPUT

14. Figure 16.2 A Simple Model of Consumer Decision Making External Influences Firm’s Marketing Efforts 1. Product 2. Promotion 3. Price 4. Channels of distribution Sociocultural Environment 1. Family 2. Informal sources 3. Other noncommercial sources 4. Social class 5. Subculture and culture Input Consumer Decision Making Need Recognition Prepurchase Search Evaluation of Alternatives Psychological Field 1. Motivation 2. Perception 3. Learning 4. Personality 5. Attitudes Process Experience Postdecision Behavior Purchase 1. Trial 2. Repeat purchase Postpurchase Evaluation Output

15. Need Recognition The realization by the consumer that there is a difference between “what is” and “what should be.”

16. Prepurchase Search A stage in the consumer decision-making process in which the consumer perceives a need and actively seeks out information concerning products that will help satisfy that need.

17. Evaluation of Alternatives A stage in the consumer decision-making process in which the consumer appraises the benefits to be derived from each of the product alternatives being considered.

18. Table 16.2 Factors that are Likely to Increase Prepurchase Search Product Factors Long interpurchase time (a long-lasting or infrequently used product) Frequent changes in product styling Volume purchasing (large number of units) High price Many alternative brands Much variation in features

19. Table 16.2 continued Experience First-time purchase No past experience because the product is new Unsatisfactory past experience within the product category Social Acceptability The purchase is for a gift The product is socially visible Value-Related Considerations Purchase is discretionary rather than necessary Al alternatives have both desirable and undesirable consequences Family members disagree on product requirements or evaluation of alternatives Product usage deviates from important reference group The purchase involves ecological considerations Many sources of conflicting information

20. Table 16.2 continued Product Factors Demographic Characteristics of Consumer Well-educated High-income White-collar occupation Under 35 years of age Personality Low dogmatic Low-risk perceiver (broad categorizer) Other personal factors, such as high product involvement and enjoyment of shopping and search

21. Table 16.3 Alternative Prepurchse Information Sources for a Home Security System PERSONAL Friends Neighbors Relatives Coworkers Security system salespeople Calling the security alarm company IMPERSONAL Newspaper articles Magazine articles Consumer Reports Direct-mail brochures Information from product advertisements Internal web-site

22. Issues in Alternative Evaluation • Evoked Set • Criteria Used for Evaluating Brands • Consumer Decision Rules • Lifestyles as a Consumer Decision Strategy • Incomplete Information and Noncomparable Alternatives • Series of Decisions • Decision Rules and Marketing Strategy • Consumption Vision

23. Figure 16.3 The Evoked Set as a Subset of All Brands in a Product Class All Brands Known Brands Unknown Brands (1) Evoked Set Inept Set Inert Set Acceptable Brands Unacceptable Brands Indifferent Brands Overlooked Brands (2) (3) (4) Purchased Brands Not Purchased Brands (5)

24. Evoked Set The specific brands a consumer considers in making a purchase choice in a particular product category.

25. Inept Set Brands that a consumer excludes from purchase consideration.

26. Inert Set Brands that a consumer is indifferent towards because they are perceived as having no particular advantage.

27. Table 16.4 Possible Product Attributes Used as Purchase Criteria for Nine Product Categories PERSONAL COMPUTERS Processing speed Price Type of display Hard-disk size Amount of memory Laptop or desktop CD PLAYER Mega bass Electronic shock protection Length of play on batteries Random play feature Water resistance Size of dial WRISTWATCHES Watchband Alarm feature Price Water-resistant Quartz movement VCRs Ease of programming Number of heads Number of tape speeds Sow-motion feature Automatic tracking

28. Table 16.4 continued COLOR TVs Picture quality Length of warranty Cable-ready Price Size of screen FROZEN DINNERS Taste Type of main course Type of side dishes Price Preparation requirements 35-MM CAMERAS Autofocus Built-in flash Automatic film loading Lens type Size and weight FOUNTAIN PENS Balance Price Gold nib Smoothness Ink reserve COLOR INKJET PRINTER Output speed Number of ink colors Resolution (DPI) Length of warranty USB capability

29. Table 16.5 Comparison of Selected Characteristics of Home Security Systems FEATURE ST. LOUIS ALARM SYSTEM CLAYTON SECURITY SERVICES MISSOURI BUGLARY System Price $99 $1950 $999 Monthly monitoring fee $19.95 $19.95 $19.95 Number of entry doors protected 1 3 2 Number of keypads included 1 3 2

30. Need to check about the price of additional keypads Table 16.5 continued FEATURE ST. LOUIS ALARM SYSTEM CLAYTON SECURITY SERVICES MISSOURI BUGLARY Price for each additional keypad ($75) ($90) (no more needed) Number of included smoke detectors wired to system 0 ($100 each, if desired) 3 0 How home is protected 2 motion detectors plus contact on front door 2 motion detectors plus contacts on all windows and outer doors 2 motion detectors plus contacts on all outer doors

31. Consumer Decision Rules • Compensatory • Noncompensatory • Conjunctive Decision Rule • Disjunctive Decision Rule • Lexicographic Rule

32. Compensatory Decision Rules A type of decision rule in which a consumer evaluates each brand in terms of each relevant attribute and then selects the brand with the highest weighted score.

33. Table 16.6 Hypothetical Ratings for Security Systems FEATURE ST. LOUIS ALARM SYSTEM CLAYTON SECURITY SERVICES MISSOURI BUGLARY System Price 10 1 5 Monthly monitoring fee 4 6 5 Number of entry doors protected 1 10 5 Number of keypads included 3 10 6 Price for each additional keypad 3 10 6 Number of included smoke detectors wired to system 3 2 1 How home is protected 2 10 6 27 56 34

34. Non-compensatory Decision Rules A type of consumer decision rule by which positive evaluation of a brand attribute does not compensate for a negative evaluation of the same brand on some other attribute.

35. Conjunctive Decision Rule A noncompensatory decision rule in which consumers establish a minimally acceptable cutoff point for each attribute evaluated. Brands that fall below the cutoff point on any one attribute are eliminated from further consideration.

36. Disjunctive Rule A noncompensatory decision rule in which consumers establish a minimally acceptable cutoff point for each relevant product attribute; any brand meeting or surpassing the cutoff point for any one attribute is considered an acceptable choice.

37. Lexicographic Rule A noncompensatory decision rule in which consumers first rank product attributes in terms of their importance, then compare brands in terms of the attribute considered most important. If one brand scores higher than the other brands, it is selected; if not, the process is continued with the second ranked attribute, and so on.

38. Affect Referral Decision Rule A simplified decision rule by which consumers make a product choice on the basis of their previously established overall ratings of the brands considered, rather than on specific attributes.

39. Table 16.7 Hypothetical Use of Popular Decision Rules in Making a Decision to Purchase a Home Security System DECISION RULE MENTAL STATEMENT Compensatory rule “We selected the security system that came out best when we balanced the good ratings against the bad ratings.” Conjunctive rule “We picked the security system that had no bad features.” Disjunctive rule “We selected the security system that excelled in at least one attribute.” Lexicographic rule “We looked at the feature that was most important to us and chose the security system that ranked highest on that attribute.” Affect referral rule “Everything they do is outstanding, so we decided to have them install our security system.”

40. Types of Purchases Trial Purchases Repeat Purchases Long-Term Commitment Purchases

41. Postpurchase Evaluation An assessment of a product based on actual trial after purchase.

42. Outcomes of Postpurchase Evaluation • Actual Performance Matches Expectations • Neutral Feeling • Actual Performance Exceeds Expectations • Positive Disconfirmation of Expectations • Performance is Below Expectations • Negative Disconfirmation of Expectations

43. Table 16.8 Five Giver-Receiver Gifting Subdivisions GIVERS INDIVIDUAL RECEIVES “OTHER” GROUP SELF* INDIVIDUAL Interpersonal gifting Intercategory gifting Intrapersonal gifting GROUP Intercategory gifting Intergroup gifting Intragroup gifting *This “SELF” is either singular self (“me”) or plural (“us”).

44. Table 16.9 Major Differences Between Gift-Giving Behavior or Anglo-Celtic, Sino-Vietnamese, and Israeli Mothers GIFT-GIVING ELEMENTS: ANGLO-CELTIC SINO-VIETNAMESE ISRAELI 1. MOTIVATION Justification Short-term goals Long-term goals Long-term/short-term goals Significance Prestige gifts Birthday gifts Practical gifts Lucky Money Importance to recipient Timing Special occasions, e.g. birthdays, Christmas Chinese New Year and academic reward Birthdays and general needs

45. Table 16.9 continued GIFT-GIVING ELEMENTS: ANGLO-CELTIC SINO-VIETNAMESE ISRAELI 2. SELECTION Involvement High Priority Social and psychological risks Low Priority Financial Risks Low Priority Family Influences Children Mother Mother dominant with younger children and influenced by older children Promotional Influences Status Symbols Sale Items Sale Items Gift Attributes Quality Money unsuitable Price Money suitable Price Money suitable

46. Table 16.9 continued GIFT-GIVING ELEMENTS: ANGLO-CELTIC SINO-VIETNAMESE ISRAELI 3. PRESENTATION Presentation Messages Immediate self-gratification Delayed self-gratification Immediate self-gratification Allocation Messages Multiple gifts Mothers favored Single gifts Eldest child favored Single gifts Understanding of Messages Always Not always Never 4. REACTION Achievement Often Most of the time Never Feedback More expensive Less expensive Least expensive Usage Often private Often shared Never shared

47. Table 16.10 Reported Circumstances and Motivations for Self-Gift Behavior CIRCUMSTANCES Personal accomplishment Feeling down Holiday Feeling stressed Have some extra money Need Had not bought for self in awhile Attainment of a desired goal Others MOTIVATIONS To reward oneself To be nice to oneself To cheer up oneself To fulfill a need To celebrate To relieve stress To maintain a good feeling To provide an incentive toward a goal Others

48. Table 16.11 Gifting Relationship Categories: Definitions and Examples GIFTING RELATIONSHIP DEFINITION EXAMPLE Intergroup A group giving a gift to another group A Christmas gift from one family to another family Intercategory An individual giving a gift to a group or a group giving a gift to an individual A group of friends chips in to buy a new mother a baby gift Intragroup A group giving a gift to itself or its members A family buys a VCR for itself as a Christmas gift Interpersonal An individual giving a gift to another individual Valentine’s Day chocolates presented from a boyfriend to a girlfriend Intrapersonal Self-gift A woman buys herself jewelry to cheer herself up

49. Figure 16.5 A Simple Model of Consumption Choice or Purchase Decision Consumption Set Added to one’s assortment or portfolio Input Consuming Style How the individual fulfills his or her consumption requirements Process of Consuming and Possessing Consuming and Possessing Things and Experiences Using, Possessing, Collecting, Disposing Feelings, Moods, Attitudes, Behavior Altered consumer satisfaction, change in lifestyle and/or quality of life, learning and knowledge, expressing and entertaining oneself Output

50. Relationship Marketing Marketing aimed at creating strong, lasting relationships with a core group of customers by making them feel good about the company and by giving them some kind of personal connection with the business.