Consumer Behavior Chapter 8 2n1g2f
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Chapter 8
Decision Making
CONSUMER BEHAVIOR, 9e Michael R. Solomon
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-1
Chapter Objectives When you finish this chapter, you should understand why:
• Consumer decision making is a central part of consumer behavior, but the way we evaluate and choose products varies widely.
• A decision is actually composed of a series of stages that results in the selection of one product over competing options.
• Decision making is not always rational. 12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-2
Chapter Objectives (continued) When you finish this chapter, you should understand why:
• Our access to online sources is changing the way we decide what to buy.
• We often fall back on well-learned “rules-ofthumb” to make decisions.
• Consumers rely upon different decision rules when evaluating competing options.
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-3
Figure 8.1 Stages in Consumer Decision Making
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-4
Decision-Making Perspectives
• Are consumers rational when they make purchase decisions?
• What is purchase momentum? • What cognitive processing styles affect consumer decision making?
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-5
Figure 8.2 Continuum of Buying Decision Behavior
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-6
Steps in the Decision-Making Process Problem recognition Information search Evaluation of alternatives Product choice 12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-7
Stage 1: Problem Recognition
• Occurs when consumer sees difference between current state and ideal state • Need recognition: actual state declines • Opportunity recognition: ideal state moves upward
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-8
Figure 8.3 Problem Recognition
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-9
Stage 2: Information Search
• The process by which we survey the environment for appropriate data to make a reasonable decision • Prepurchase or ongoing search • Internal or external search • Online search
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-10
Table 8.2 A Framework for Consumer Information Search Prepurchase versus Ongoing Search Prepurchase Search
Ongoing Search
Determinants
Involvement with purchase
Involvement with product
Motives
Making better purchase decisions
Building a bank of information for future use
Outcomes
Better purchase decisions
Increased impulse buying
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-11
Deliberate versus “Accidental” Search
• Directed learning: existing product knowledge obtained from previous information search or experience of alternatives
• Incidental learning: mere exposure over time to conditioned stimuli and observations of others
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-12
Do Consumers Always Search Rationally?
• Some consumers avoid external search, especially with minimal time to do so and with durable goods (e.g. autos)
• Symbolic items require more external search • Brand switching: we select familiar brands when decision situation is ambiguous
• Variety seeking: desire to choose new alternatives over more familiar ones
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-13
Biases in Decision-Making Process
• Mental ing: framing a problem in of gains/losses influences our decisions
• Sunk-cost fallacy: We are reluctant to waste something we have paid for
• Loss aversion: We emphasize losses more than gains
• Prospect theory: risk differs when we face gains versus losses 12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-14
Figure 8.5 Amount of Information Search and Product Knowledge
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-15
Minolta Understands Perceived Risk
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-16
Figure 8.6 Five Types of Perceived Risk Monetary risk Functional risk Physical risk Social risk Psychological risk 12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-17
An Appeal to Social Risk
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-18
Discussion
• What risky products have you considered recently?
• Which forms of risk were involved?
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-19
Alternatives Evoked Set Consideration Set
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-20
Figure 8.7 Levels of Abstraction
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-21
Discussion
• Using the levels of categorization tool, design three levels of categorization for fast food restaurants:
• What is the superordinate level? • What choices are there for the basic level? • What choices are there for the subordinate level?
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-22
Strategic Implications of Product Categorization
• Position a product • Identify competitors • Create an exemplar product • Locate products in a store
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-23
Product Choice: How Do We Decide?
• Once we assemble and evaluate relevant options from a category, we must choose among them
• Decision rules for product choice can be very simple or very complicated • Prior experience with (similar) product • Present information at time of purchase • Beliefs about brands (from advertising)
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-24
Evaluative Criteria
• Evaluative criteria: dimensions used to judge merits of competing options
• Determinant attributes: features we use to differentiate among our choices • Criteria on which products differ carry more weight • Marketers educate consumers about (or even invent) determinant attributes • Pepsi’s freshness date stamps on cans 12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-25
Information Necessary for Recommending a New Decision Criterion
• It should point out that there are significant differences among brands on the attribute
• It should supply the consumer with a decision-making rule, such as if, then
• It should convey a rule that is consistent with how the person made the decision on prior occasions
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-26
Neuromarketing
• Uses functional magnetic resonance imaging, a brain-scanning device that tracks blood flow as we perform mental tasks
• Marketers measure consumers’ reactions to movie trailers, choices about automobiles, the appeal of a pretty face, and loyalty to specific brands
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-27
Cybermediaries
• The Web delivers enormous amounts of product information in seconds
• Cybermediary: helps filter and organize online market information • Examples: Shopping.com, BizRate.com • MySimon.com • NextTag.com, PriceGrabber.com • PriceSCAN.com
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-28
Heuristics: Mental Shortcuts
• Heuristics: mental rules-of-thumb for efficient decisions
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-29
Heuristics
Product Signals Market Beliefs Country of Origin
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-30
Choosing Familiar Brand Names
• Zipf’s Law: our tendency to prefer a number one brand to the competition
• Consumer inertia: the tendency to buy a brand out of habit merely because it requires less effort
• Brand loyalty: repeat purchasing behavior that reflects a conscious decision to continue buying the same brand
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-31
Noncompensatory Decision Rules
• Lexicographic rule: consumers select the brand that is the best on the most important attribute
• Elimination-by-aspects rule: the buyer also evaluates brands on the most important attribute
• Conjunctive rule: entails processing by brand
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-32
Table 8.4 Hypothetical Alternatives for a TV Set Brand Ratings Attribute
Importance Prime Wave Ranking
Precision
Kamashita
Size of screen
1
Excellent
Excellent
Excellent
Stereo broadcast capability
2
Poor
Excellent
Good
Brand reputation
3
Excellent
Excellent
Poor
Onscreen programming
4
Excellent
Poor
Poor
Cable-ready capability
5
Good
Good
Good
Sleep timer
6
Excellent
Poor
good
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-33
Compensatory Decision Rules
• Simple additive rule: the consumer merely chooses the alternative that has the largest number of positive attributes
• Weighted additive rule: the consumer also takes into the relative importance of positively rated attributes, essentially multiplying brand ratings by importance weights
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-34
Chapter Summary
• Decision making is a central part of consumer behavior and decisions are made in stages
• Decision making is not always rational • We use rules of thumb and decision rules to make decisions more efficiently
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-35
Decision Making
CONSUMER BEHAVIOR, 9e Michael R. Solomon
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-1
Chapter Objectives When you finish this chapter, you should understand why:
• Consumer decision making is a central part of consumer behavior, but the way we evaluate and choose products varies widely.
• A decision is actually composed of a series of stages that results in the selection of one product over competing options.
• Decision making is not always rational. 12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-2
Chapter Objectives (continued) When you finish this chapter, you should understand why:
• Our access to online sources is changing the way we decide what to buy.
• We often fall back on well-learned “rules-ofthumb” to make decisions.
• Consumers rely upon different decision rules when evaluating competing options.
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-3
Figure 8.1 Stages in Consumer Decision Making
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-4
Decision-Making Perspectives
• Are consumers rational when they make purchase decisions?
• What is purchase momentum? • What cognitive processing styles affect consumer decision making?
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-5
Figure 8.2 Continuum of Buying Decision Behavior
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-6
Steps in the Decision-Making Process Problem recognition Information search Evaluation of alternatives Product choice 12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-7
Stage 1: Problem Recognition
• Occurs when consumer sees difference between current state and ideal state • Need recognition: actual state declines • Opportunity recognition: ideal state moves upward
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-8
Figure 8.3 Problem Recognition
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-9
Stage 2: Information Search
• The process by which we survey the environment for appropriate data to make a reasonable decision • Prepurchase or ongoing search • Internal or external search • Online search
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-10
Table 8.2 A Framework for Consumer Information Search Prepurchase versus Ongoing Search Prepurchase Search
Ongoing Search
Determinants
Involvement with purchase
Involvement with product
Motives
Making better purchase decisions
Building a bank of information for future use
Outcomes
Better purchase decisions
Increased impulse buying
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-11
Deliberate versus “Accidental” Search
• Directed learning: existing product knowledge obtained from previous information search or experience of alternatives
• Incidental learning: mere exposure over time to conditioned stimuli and observations of others
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-12
Do Consumers Always Search Rationally?
• Some consumers avoid external search, especially with minimal time to do so and with durable goods (e.g. autos)
• Symbolic items require more external search • Brand switching: we select familiar brands when decision situation is ambiguous
• Variety seeking: desire to choose new alternatives over more familiar ones
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-13
Biases in Decision-Making Process
• Mental ing: framing a problem in of gains/losses influences our decisions
• Sunk-cost fallacy: We are reluctant to waste something we have paid for
• Loss aversion: We emphasize losses more than gains
• Prospect theory: risk differs when we face gains versus losses 12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-14
Figure 8.5 Amount of Information Search and Product Knowledge
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-15
Minolta Understands Perceived Risk
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-16
Figure 8.6 Five Types of Perceived Risk Monetary risk Functional risk Physical risk Social risk Psychological risk 12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-17
An Appeal to Social Risk
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-18
Discussion
• What risky products have you considered recently?
• Which forms of risk were involved?
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-19
Alternatives Evoked Set Consideration Set
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-20
Figure 8.7 Levels of Abstraction
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-21
Discussion
• Using the levels of categorization tool, design three levels of categorization for fast food restaurants:
• What is the superordinate level? • What choices are there for the basic level? • What choices are there for the subordinate level?
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-22
Strategic Implications of Product Categorization
• Position a product • Identify competitors • Create an exemplar product • Locate products in a store
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-23
Product Choice: How Do We Decide?
• Once we assemble and evaluate relevant options from a category, we must choose among them
• Decision rules for product choice can be very simple or very complicated • Prior experience with (similar) product • Present information at time of purchase • Beliefs about brands (from advertising)
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-24
Evaluative Criteria
• Evaluative criteria: dimensions used to judge merits of competing options
• Determinant attributes: features we use to differentiate among our choices • Criteria on which products differ carry more weight • Marketers educate consumers about (or even invent) determinant attributes • Pepsi’s freshness date stamps on cans 12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-25
Information Necessary for Recommending a New Decision Criterion
• It should point out that there are significant differences among brands on the attribute
• It should supply the consumer with a decision-making rule, such as if, then
• It should convey a rule that is consistent with how the person made the decision on prior occasions
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-26
Neuromarketing
• Uses functional magnetic resonance imaging, a brain-scanning device that tracks blood flow as we perform mental tasks
• Marketers measure consumers’ reactions to movie trailers, choices about automobiles, the appeal of a pretty face, and loyalty to specific brands
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-27
Cybermediaries
• The Web delivers enormous amounts of product information in seconds
• Cybermediary: helps filter and organize online market information • Examples: Shopping.com, BizRate.com • MySimon.com • NextTag.com, PriceGrabber.com • PriceSCAN.com
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-28
Heuristics: Mental Shortcuts
• Heuristics: mental rules-of-thumb for efficient decisions
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-29
Heuristics
Product Signals Market Beliefs Country of Origin
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-30
Choosing Familiar Brand Names
• Zipf’s Law: our tendency to prefer a number one brand to the competition
• Consumer inertia: the tendency to buy a brand out of habit merely because it requires less effort
• Brand loyalty: repeat purchasing behavior that reflects a conscious decision to continue buying the same brand
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-31
Noncompensatory Decision Rules
• Lexicographic rule: consumers select the brand that is the best on the most important attribute
• Elimination-by-aspects rule: the buyer also evaluates brands on the most important attribute
• Conjunctive rule: entails processing by brand
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-32
Table 8.4 Hypothetical Alternatives for a TV Set Brand Ratings Attribute
Importance Prime Wave Ranking
Precision
Kamashita
Size of screen
1
Excellent
Excellent
Excellent
Stereo broadcast capability
2
Poor
Excellent
Good
Brand reputation
3
Excellent
Excellent
Poor
Onscreen programming
4
Excellent
Poor
Poor
Cable-ready capability
5
Good
Good
Good
Sleep timer
6
Excellent
Poor
good
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-33
Compensatory Decision Rules
• Simple additive rule: the consumer merely chooses the alternative that has the largest number of positive attributes
• Weighted additive rule: the consumer also takes into the relative importance of positively rated attributes, essentially multiplying brand ratings by importance weights
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-34
Chapter Summary
• Decision making is a central part of consumer behavior and decisions are made in stages
• Decision making is not always rational • We use rules of thumb and decision rules to make decisions more efficiently
12/20/10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
8-35
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