Understanding Consumer Decision Process: Market Insights

1. Launch your PollEV session: Text: UWMBUSINESS to 37607 Alternate #: (747) 444-3548

3. Understanding the Marketplace – Consumer Behavior Ref: Text, chapter 6

4. The Consumer Decision Process

5. Step 1 – Need Recognition • Recognize an unsatisfied need • Needy  Not needy any more • Wants:not necessarily needed, but are desired

6. Step 1 – Need Recognition • Functional needs – what does the product do? What function does it perform? • Psychological needs – How does it make me feel? What do others think of me for using this?

9. Step 1 – Need Recognition • Key to successful marketing - determining the correct balance

10. Step 2 – Search for Information • Internal search – buyer examines own memory and knowledge about product through past experiences • External search – buyer seeks information outside personal knowledge base

13. Step 2 – Factors affecting info search? • Perceived benefits vs perceived costs of search • The locus of control: internal, external “locus” = “center”

15. Step 2 – Factors affecting info search? • Actual or perceived risk: • Performance risk – what if the product fails to perform? • Financial risk – risk associated with financial outlay, costs involved in use and purchase

16. Actual or perceived risk: • Social risk – fear that others might not regard purchase positively • Physiological risk (safety risk) – fear of actual harm from use of the product • Psychological risk – what if product does not convey the right image?

19. The Consumer Decision Process

20. Step 3 – Evaluation of Alternatives • Consumer must sift through choices and evaluate the alternatives

21. Attribute sets – the way a consumer’s mind organizes and categorizes alternatives, to aid decision process • Universal set: all possible choices for the product category • Retrieval set: which choices are readily brought forth from memory? • Evoked set: the alternatives that the consumer would actually consider when making a purchase decision

22. U-R-E Attribute Sets e.g., Every brand & model of car BMW, Porsche Boxster, Ford Mustang, Pontiac G6, Pontiac Vibe, Chevrolet Malibu, Chevrolet Cobalt, Mitsubishi Eclipse Malibu, Cobalt, Eclipse

24. U-R-E Attribute Sets e.g., Every brand & model of car BMW, Porsche Boxster, Ford Mustang, Pontiac G6, Pontiac Vibe, Chevrolet Malibu, Chevrolet Cobalt, Mitsubishi Eclipse Malibu, Cobalt, Eclipse

26. What goes on in the “black box”??

27. Step 3 – Evaluation of Alternatives • Evaluative criteria – salient attributes about a product often used by consumers to help base their evaluations

28. “Evaluative criteria” – criteria that help me evaluate alternatives: “Is it whole grain?” “It’s got to be low-fat” “Is it a store brand?” “It’s got to be a green product”

29. Determinant attributes – product features important to the buyer on which competing brands may differ • Something special that helps differentiate one brand from another

30. “Caffeine-free?” Determinant attribute example:

31. Consumer decision rules – set of criteria that help consumers to quickly and efficiently select from among several alternatives • Compensatory decision rule – there is a trade-off here such that good characteristics can compensate for bad ones

32. Expensive (-) • Style • Brand • (+ +) Compensatory

33. Consumer decision rules – set of criteria that help consumers to quickly and efficiently select from among several alternatives • Noncompensatory decision rule – consumer chooses a product on the basis of one characteristic regardless of the values of its other attributes

34. Expensive (-) • Color • Style • Brand • (+ + +) Noncompensatory

36. Decision: Don’t Buy • It looks like fun • It’s eco-friendly • Save me a lot of time walking • (3 positives) It costs $5000!! (1 negative)

38. Decision: Buy • It’s really expensive • No touch ID • Fewer color options • One size only • (4 negatives) It’s an Apple! (1 positive)

39. The Consumer Decision Process How can we influence this?

40. Step 4 – Purchase and Consumption • Consumers are ready to buy • Consumers don’t always purchase the brand on which they’d originally decided!

42. Step 5 – Postpurchase • Customer satisfaction is important. Dissatisfied customers may leave or spread negative word-of-mouth • Cognitive dissonance – this is an internal conflict that arises after purchase, from an inconsistency between two beliefs, or between beliefs and behavior (“buyer’s remorse”)

44. Step 5 – Postpurchase • Customer loyalty - marketers attempt to solidify a loyal relationship with their customers • Loyal customers are very valuable to firms • Undesirable customer behaviors • Passive consumers • Negative consumer behavior (rumors, negative word-of-mouth, complaining)

46. Ted Levitt in Myopia: "Consumers are unpredictable, varied, fickle, stupid, shortsighted, stubborn, and generally bothersome.”

48. Factors Influencing the Consumer Decision Process • Marketing mix elements • Psychological (motives, attitudes, perception, learning, lifestyle) • Social factors • Situational factors

49. Factors Influencing the Consumer Decision Process

50. Maslow’s Hierarchy of Needs Motive = energized need