Decision Making

1. Decision Making

2. Decision Making • How do you make purchase decisions? • What factors affect your decision? • What strategies do you use? • Outline your decision making process for a significant product/service you recently purchased

3. How does Decision Making relate to other aspects of CB? • What was it? • How much did it cost? • Where did you buy it? • When did you buy it? • Why did you buy it? • Was anyone with you when you made the purchase? • Do you know anyone who used/owned the product before you made your purchase? • How important is this product to your lifestyle? • At the time of this purchase, was there another product which you seriously considered buying instead of the item selected? • What circumstances led to your realization that you should buy the item purchased? • Did you purchase the item at the first store visited? • Why did you buy at the particular where you made the purchase?

4. 3 Perspectives on Consumer Decision Making • Experiential perspective • Behavioral perspective • Decision making perspective Next day Focus of today

5. Decision Making Perspective SITUATIONS Problem Recognition Information Search Alternative Evaluation Product Choice Postpurchase Processes SITUATIONS • Rational, information- processing approach • Move through stages in a linear fashion

6. Purchase vs. ProductInvolvement In groups, tell me… • The difference? • Situations where product involvement is high and purchase involvement is low. • Situations where purchase involvement is high and product involvement is low. • Why this matters in studying decision making?

7. Involvement and Decision Making Purchase Involvement is: • the level of concern for, or interest in, the purchase process • triggered by the need to consider a particular purchase • is a temporary state • not the same as Product Involvement

8. Continuum of Buying Decision Behavior

9. Step 1: Problem Recognition 1st stage of consumer decision process Definition: Is the result of a discrepancy between a desired state and an actual state that is sufficient to arouse and activate the decision process Actual state – how you perceive your situation right now Ideal state – the way you want to feel or be at the present time

10. Activating Problem Solving • In groups of 3 or 4 figure out the following… • How would you activate problem solving in the following… • United Way blood drive (increasing donations) • Dixon Recreation Center (increasing activity) • A healthier diet

11. Information sources Internal information External information Actively acquired Passively acquired Actively acquired Past searches Personal experience Low-involvement learning Independent groups Personal contacts Marketer information Experiential Step 2: Information Search

12. Discussion • Choosing a brand/product among available alternatives requires much of the effort that goes into a purchase decision. • Which is the greater problem for a consumer: • Not having enough choices or having too many choices? • Why?

13. Step 3: Identifying Alternatives Evoked, inert, inept: • Beer? • Toothpaste? • fast food?

14. Describe your next car! Characteristics of this car, not just brand What about… • 35-year-old couple, both working professional jobs • with 5 preteenage children Or • 55-year-old bank president Or • 30-year-old married, no children, female, school teacher How would you make the decision to buy?

15. Step 4: Product Choice Evaluative criteria: dimensions used to judge merits of competing options

16. Evaluative Criteria Beer Identify brands of beer. What are your evaluative criteria for beer? Type? Importance?

17. Evaluative Criteria Perceptual Mapping of Beer Brand Perception

18. How do you decide? • Several alternatives, how do you decided which is the right one for you?

19. Attribute Based Decision Rules • 5 decision rules: • Conjunctive • Disjunctive • Elimination • Lexicographic • Compensatory Non-Compensatory & Low-involvement Compensatory & High-involvement

20. Attribute Based Decision Rules: Noncompensatory • Conjunctive: • Set minimum criteria level for each attribute • Eliminate alternatives that do not meet that criteria • Disjunctive: • Set minimum criteria for each important attribute • Only accept alternatives that exceed this minimum level • Elimination- by aspects: • Determine the importance of attributes • Compare alternatives on the most important attribute • Those not meeting the minimum criteria are eliminated • The next most important attribute is considered • Lexicographic: • Consumers determine the most important attribute and select the brand that performs best on that attribute

21. Attribute Based Decision Rules • Compensatory: • a high level on one attribute can offset or compensate for low values on other attributes • - high values compensate for poor performance • Example: • basketball game ticket packages • Seat selection – extremely important • Price – less important

22. Step 5: Postpurchase Processes Postpurchase Dissonance: • The doubt or anxiety associated with a purchase • Based on cognitive dissonance theory

23. Describe a recent purchase that produced postpurchase dissonance and one that did not. What factors led to these postpurchase processes?

24. Characteristics of the Situation Likely to Contribute to Postpurchase Dissonance • Degree of irrevocability • Importance to the consumer • Difficulty of choosing among alternatives • Individual’s tendency to experience anxiety

25. How do consumers attempt to avoid anxiety before a purchase? • Avoid the decision • Delay the decision • Use a purchase decision rule to minimize regret

26. How can Consumers Reduce Postpurchase Dissonance? • Increase desirability of brand or product purchased • Decrease desirability of rejected alternatives • Decrease perceived importance of the purchase • Reverse the purchase (return the item)

27. Think about • How can marketers improve consumer decisions?