LEVELS OF CONSUMER DECISION MAKING

1. LEVELS OF CONSUMER DECISION MAKING • Not all decision making situations receive or require the same degree of information search • Effort Continuum LOW EFFORT HIGH EFFORT Routinized Problem Solving Limited Problem Solving Extensive Problem Solving

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

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

4. 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.

5. 4 PARADIGMS (MODELS) OF CONSUMER DECISION MAKING • ECONOMIC VIEW Assumptions • LIMITATIONS • If consumers were to behave rationally : BUT THIS IS NOT REALISTIC :

6. 2nd PARADIGM (B) PASSIVE VIEW • Opposite of economic view LIMITATIONS

7. 3rd PARADIGMS (C) COGNITIVE VIEW This view is in between the Passive & the Economic view

8. 4th PARADIGMS (D)_____

9. INPUT PROCESS OUTPUT A Model of Consumer Decision Making

10. 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 Need Recognition Pre-purchase Search Evaluation of Alternatives Psychological Field 1. Motivation 2. Perception 3. Learning 4. Personality 5. Attitudes Experience Post decision Behavior Purchase 1. Trial 2. Repeat purchase Post purchase Evaluation A Model of Consumer Decision Making External Influences Input Consumer Decision Making Process Output

11. Need Recognition The realization by a consumer that there is a difference between “what is” and “what should be.” Do not copy

12. NEED RECOGNITION • Actual State Types: • Desired State Types:

13. Pre-purchase Search Consumer perceives a need and actively seeks out information concerning products that will help satisfy that need. Do not copy

14. PRE-PURCHASE SEARCH • Internal Search • Memory • Past experiences • External Sources • Shopping : (Men Vs. Women!) • Internet • Personal Sources • Friends, relatives, …

15. Evaluation of Alternatives Consumer appraises the benefits from each product alternative. Do not copy

16. EVALUATION OF ALTERNATIVES It is based on two criteria: • List of brands from which to decide • Criteria used to evaluate each brand

17. EVALUATION OF ALTERNATIVES • LIST OF BRANDS FROM WHICH TO DECIDE. - Why consumers have a list of brands from which to decide? BRANDS SIMPLIFY DECISION MAKING • Evoked set • Inept set • Inert set • Overlooked set

18. All Brands Known Brands Unknown Brands Evoked Set Inept Set Inert Set Acceptable Brands Unacceptable Brands Indifferent Brands Overlooked Brands Purchased Brands Not Purchased Brands The Evoked Set as a Subset of All Brands in a Product Class

19. Evoked Set The brands a consumer considers in making a purchase choice.

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

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

22. CRITERIA USED TO EVALUATE BRANDS Companies can ‘guide’ consumers to change their criteria & lead to a better decision - Toyota/ Honda determine what consumers perceive to be important while Ford does what its engineer perceive important.

23. CRITERIA USED TO EVALUATE BRANDS Consumer Decision Rules Both reduce burden of complex decision making

24. CRITERIA USED TO EVALUATE BRANDS Consumer Decision Rules

25. CRITERIA USED TO EVALUATE BRANDS Consumer Decision Rules Consumer Decision Rules

26. Cognitive Decision Rules Consumer Decision Rules • Compensatory • Non-compensatory • Conjunctive Decision Rule • Disjunctive Decision Rule • Lexicographic Rule

27. 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.

28. Cognitive Decision Rules Consumer Decision Rules • Compensatory • Non-compensatory • Conjunctive Decision Rule • Disjunctive Decision Rule • Lexicographic Rule

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

30. Conjunctive Decision Rule • 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.

31. Disjunctive Rule • Consumers establish a minimally acceptable cutoff point for each relevant product attribute. • Brand meeting or surpassing the cutoff point for any one attribute is considered an acceptable choice.

32. Lexicographic Rule • 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.

33. INCOMPLETE INFORMATION & NON-COMPARABLE ALTERNATIVES OUTPUT