Types of Purchase Behavior and the Consumer Decision Making Process

1. Types of Purchase Behavior and the Consumer Decision Making Process

2. Outline • Types of purchase decisions • Need arousal • Information acquisition (types of search, determinants of search, and sources of information) • Evaluation of alternatives and choice (choice sets, choice alternatives, choice criteria, choice heuristics, context effects)

3. The purchase cube Deliberate purchases Spontaneous purchases Extended purchase decision making Symbolic purchase behavior Promotional purchase behavior Exploratory purchase behavior HI HI Repetitive purchase behavior Hedonic purchase behavior Casual purchase behavior Impulsive purchase behavior LI LI Think Feel Think Feel

4. Functional motives Psycho-social motives Problem solving (problem removal or avoidance) Quality and performance Price and value Familiarity Convenience Normal depletion Social approval Self-expression Variety and change Emotional stimulation Intellectual stimulation Sensory gratification Types of purchase motives

5. FCB grid for some common products high involvement life insurance sports car stereo component 35 mm camera washer/dryer expensive watch car battery portable TV perfume wine for dinner party complexion/face soap jeans think suntan lotion feel toothpaste dry bleach salad oil greeting card fast food restaurant liquid bleach regular beer disposable razor liquid hand soap salty snacks paper towels low involvement

6. Current (initial) state Desired (end) state Discrepancy ? Need arousal • generic • selective Need arousal

7. Information acquisition • ongoing search: motivated by intrinsic enjoyment of the search process and the desire to build an information bank; • prepurchase search: motivated by the desire to make better purchase decisions; • internal: • external:

8. Internal search Experiences 0/+ ++ Brand C Brand A Purchase goal Attribute information + Brand B

9. Determinants of external search effort • Environmental and situational variables: • number of alternatives + • product differences + • store distribution (distance) – • time pressure – • Product characteristics: • price + • social visibility (style and appearance) + • perceived risk + • number of crucial attributes + • Consumer characteristics: • prior knowledge and experience – • involvement + • positive attitude toward search + • education + • income – • age –

10. Information sources personal sources nonpersonal sources commercial sources noncommercial sources

11. Alternative evaluation • the following information is particularly relevant to making a choice: • choice alternatives (e.g., brands, stores); • choice criteria (e.g., product or store attributes); • in order for a product or store to be chosen, it has to be in the consumer’s consideration set and it has to be perceived favorably on the choice criteria that are important to the consumer;

12. A choice sets model of retail selection (Spiggle and Sewall 1987) unawareness set inert set (0) inaction set (+/0) quiet set (+/0) retailer not chosen (+/0) total set awareness set evoked set (+) action set (+) interaction set (+) retailer chosen (+) inept set (-) reject set (-)

13. In-class exercise: Choice sets Choose a product category in which three acquaintances who are not in this class made a recent purchase (e.g., soft drinks, fast food restaurants, energy bars, etc.). Ask your respondents to list all the brands in the product category that they were aware of prior to making the purchase (awareness set), and then have them indicate which brands they considered buying (consideration set), which brands they were indifferent toward (inert set), and which brands they knew they didn’t want to buy (inept set). Of course, you should also keep track of which brand they actually purchased. Try to find out from your respondents why different brands belong to each of the different choice sets.

14. Purchasing a diamond engagement ring Awareness Evoked Action Interaction Choice set set set set set Fine Jewels 90 74 56 36 9 (10) (12) (15) (23) Hargrave 30 19 13 9 4 (13) (21) (30) (44) A.A. Gray 28 10 5 1 <1 (2) (6) (13) (40) Mass Mart 69 7 4 1 0 (0) (0) (0) (0)

15. Choice heuristics • if an overall evaluation for each brand is available in memory, the decision can be made based on affect referral; • attribute-based choice heuristics differ based on whether they are compensatory or noncompensatory and whether processing occurs by brand or by attribute; • phased decision strategies are often used in practice;

16. Attribute-based choice heuristics Compensatory Noncompensatory weighted additive rule equal weight heuristic Processing by brand conjunctive heuristic lexicographic heuristic elimination by aspects heuristic Processing by attribute additive difference rule

17. In-class exercise: Decision rules Use the data in the table below to decide which product a consumer would choose if (s)he were to use the following decision rules or heuristics: (a) weighted additive rule (according to this rule, the overall score is the weighted sum of the subjective values, where the weights are the attribute importances); (b) equal weight heuristic (according to this rule, unit weights are used for all attributes); (c) conjunctive heuristic; (d) lexicographic heuristic; and (e) elimination by aspects heuristic (read Chapter 7 in Peter and Olson, esp. Exhibit 7.4, before doing this assignment). Note: Numbers in parentheses are subjective ratings on a scale from 1 to 10, with 10 being the maximum score. Use these ratings in your calculations. The cutoff levels refer to the minimum or maximum acceptable standard on a given attribute (e.g., >5 on image means that the rating on this attribute has to be greater than 5 in order for the car to be considered).

18. Choosing a mid-size sedan

19. The cost-benefit approach to consumer choice • question of how consumers decide which choice heuristic to use in a given case; • the cost/benefit framework suggests that rule usage depends on the costs and benefits associated with the application of a given heuristic; • important components of costs and benefits are the cognitive effort required by a choice heuristic and the accuracy of the choice resulting from the use of a heuristic;

20. Contextual influences on consumer decision making • because consumers’ preferences are often not well-formed, seemingly minor variations in the way the decision is framed (either by the consumer or the marketer) can have a profound effect on choice; • marketers can influence consumer decision making by manipulating various task and context factors;

21. Effect of choice set composition on consumers’ purchase decisions:The attraction effect Cross pen $6 Choice 1: Choice 2: Cross pen inferior, lesser-known pen $6

22. Effect of choice set composition on consumers’ purchase decisions:The compromise effect Brand B costs $350, w/ a picture quality of 85 Brand C costs $299, w/ a picture quality of 80 Same as above, except that there is also Brand A, at a price of $503 and a picture quality of 100 Same as above, except that there is also Brand D, at a price of $146 and a picture quality of 65

23. Methods for studying decision making • input-output approaches: a decision process is hypothesized and factors that affect this process are identified; if manipulations of these factors (inputs) lead to the predicted results (outputs), this is interpreted as evidence in support of the underlying process; • process tracing approaches: ongoing decision processes are measured directly; • verbal protocols: concurrent or retrospective thought verbalizations; • information acquisition approaches: information display boards, eye movement recording, and computer-based information displays; • chronometric analysis: analysis of response times;

24. Brand personality • idea that brands have “personalities” (sets of human characteristics) and that consumers may use brands for self-expressive purposes; • recent research by Aaker (1997) suggests that a brand’s personality can be described in terms of five underlying dimensions; • according to the image congruence hypothesis, consumers prefer brands that have images similar to their own self-image;

25. A brand personality framework Brand personality Sincerity Competence Sophistication Excitement Ruggedness • down-to-earth • honest • wholesome • cheerful • daring • spirited • imaginative • up-to-date • reliable • intelligent • successful • upper class • charming • tough • outdoorsy