Consumers as Decision Makers
Individual Decision-Making Process, Purchasing, and Post Evaluation


How does a consumer recognize a need for a product?

Are there a series of steps before a purchase is made? Are these steps the same for different consumers? Are they the same steps for different products purchased by the individual?

After the purchase is made is there an evaluation process that one goes through?

Stages in Consumer Decision Making:

PROBLEM RECOGNITION--> INFORMATION SEARCH--> EVALUATION OF ALTERNATIVES--> PRODUCT CHOICE--> CONSUMPTION AND LEARNING

Review the video below for an explanation of the Stages in Decision Making:

URL: https://youtu.be/ud00Xa3tth4

PERSPECTIVES ON DECISION MAKING

Problem Recognition

the process that occurs whenever the consumer sees a significant difference between their current state of affairs and ideal state; this recognition initiates the decision-making process; happens two ways; need recognition happens (run out of gas), opportunity recognition (craving a better one)

Constructive Processing

consumer evaluates effort required for choice and chooses best strategy best suited to level of effort

Extended Problem Solving

an elaborate decision-making process, often initiated by a motive that is fairly central to the self-concept and accompanied by perceived risk; the consumer tries to collect as much information as possible and carefully weighs alternatives. The rational perspective is an example of extended problem solving

Rational Perspective

view of consumer as a careful analytical decision maker who tries to maximize utility in purchase decisions; is accurate for many; consumer uses many different strategies (think of using head vs heart to make a decision)

Start with PROBLEM recognition

Remember Multi-Attribute Models

Determinant Attributes

Attributes used to choose in decision process are called determinant attributes.

Limited Problem Solving

a problem solving process in which consumers are not motivated to search for information or to evaluate each alternative rigorously; instead they use simple decision making rules. What example could you think of?

Habitual Decision Making

the consumption choices made out of habit, without additional information search or deliberation among products.

This category includes two types: those who are brand loyal and then those who buy out of brand inertia. Someone who is brand loyal doesn't consider any alternatives; while a person who buys out of inertia repeatedly has no particular commitment to the brand. Inertia is buying out of habit but without commitment.

Product Choice in Marketplace

Behavioural Influence Perspective

the view that consumer decisions are learned responses to environmental cues; under low involvement consumer influenced by placement, package, surrounding . Remember the paradox- the less important the product is to you the more the surroundings and marketing stimuli will affect a purchase
see http://www.youtube.com/watch?v=yx-Z5hpZh48

Experiential Perspective

an approach stressing the Gestalt, or totality of the product/service experience, focusing on consumers' affective responses in the marketplace; consumer highly involved in decision, but may not be a rational approach. (this is perhaps more emotional) Example music purchase....no accounting for taste.

Types of Demand

Primary Demand

a marketer encourages consumer to use a product regardless of brand. The first one of its type offered

Introducing TV Remote control http://www.youtube.com/watch?v=tSvsWGAsEIM

First cell phone ad http://www.youtube.com/watch?v=ptbJZ9HBw2k


The First Flying Car

Secondary Demand

marketer encourages consumer to prefer a specific demand; primary demand exists already; there is a category of "X" products already.

SEARCH

Information Search

process where a consumer searches for appropriate information to make a reasonable decision; types: browsing, ongoing search; internal ( what you know) external search (what you find out here)

Internal Search

information in mind from directed learning, incidental learning

External Search

what is found from web search, marketplace exploration, asking others

Cybermediary

Cybermediary is intermediary that helps filter and organize information for consumer to evaluate: directories, portals, forums, groups, could be online reviewer, shopping bots, search engines

Showrooming

When consumers visit stores in person to view products and then go online to buy -the consumer uses the in store experience to make a decision for an online purchase. External Search

Economics-of-Information Approach

assumes consumers gather as much information to make informed decision

 

 

Variety Seeking

priority is to vary product usage as stimulation to reduce boredom

BIASES IN DECISION MAKING

Framing

You are given free ticket concert and there is snow storm; you pay for ticket to concert and there is snow storm. This is a mental process called "framing"; problem is put in term of gain/loss; called sunk-cost fallacy: I paid and am reluctant to waste my moneyLoss aversion: we place more emphasis on loss than gain.

If you would like a further explanation of sunk cost fallacy watch the short 3 minute video below.

Watch Psychologist Dan Airley Talk about Framing and the Concept of Free

Will you think differently now when you see something advertised as free?

How much search occurs? Who is the searcher?

Generally, the more important the purchase, search is greater; younger better educated searches more; women search more than men; those concerned with style/image search more

How much information is needed? Is more information better?

Does consumer's prior expertise influence the search?

Expert versus novice; neither searches more; search is greatest by moderate. Why would that be?

RISK

Is there a risk involved in purchasing? Perceived risk can be greater when product expensive, complex, and visible. A self-confident person is less worried about social risk

Types of risk: Monetary Risk, Functional Risk, Physical Risk, Social Risk, Psychological Risk. Click-->What examples could you think of for each category?

How do we decide what criteria are important and how do we narrow down the alternatives and choose?

The alternatives actively considered in choice process is called the evoked set (composed of products in memory. Consumers often only consider a small number of alternatives. Consumer considers products in a category- category has different levels- example food-dessert/fattening desserts/non fattening. How a product is grouped or categorized is important; positioning of product must convince consumer that product fits in category; competitors must be examined

PRODUCT CHOICE

Choice influenced by integration from prior experience, information at hand and beliefs created by ads

Determinant Attributes: Functional, Experiential, Symbolic

Evaluative criteria; can be functional, experiential, symbolic features this versus others. Attributes used to choose are called determinant attributes. Marketer can create a criteria: example freshness date on soda

The evaluative criteria we use can be functional, experiential or symbolic.

Functional: A functional product or brand is something we can use; for example a cell phone, a computer, a car or a type of soap. With these products we can look at the features or attributes and how they function.

Experiential: An experiential brand or product delivers a sensory experience. The marketer seeks to create a positive experience. If you consider Starbucks, you could say it is an experiential brand. It's not just the coffee that is being sold it's a feeling, an atmosphere that goes along with it. How a product makes you feel when you use it would have experiential attributes.

Symbolic: The symbolic features or image features of a product relate to more intangible aspects of a product; for example, a need for social approval or personal expression. These products create an emotional connection. A product can be prestigious, exclusive, or fashionable and may be considered because of how the brand relates to a person's self-concept.

For marketer to decide on new criteria 3 things are needed three: point out significant differences among brands; should supply consumer with decision-making rule such as If-----then-------.; Should convey a rule that can be easily integrated with how the person has made decision previously.

Decision Making Rules

HEURISTICS

To simplify decisions consumers use heuristics (mental rules that lead to a speedy decision) For example:a person may believe high priced is better; I bought it last time; I buy what mom bought; infer hidden dimensions from observable attributes (judging the car by outside appearance


Heuristics:

Heuristic is an adjective for experience-based techniques that help in problem solving, learning and discovery. A heuristic method is particularly used to rapidly come to a solution that is hoped to be close to the best possible answer, or 'optimal solution'.
Heuristics are "rules of thumb", educated guesses, intuitive judgments or simply common sense.

Consumer often forms beliefs about relationships in marketplace: market beliefs (all brands are same; generic is name brand under different label; specialty store will give you information, but go to discount outlet; window display reflects the store; larger store has better price; sale is to get rid of slow moving stuff; hard sell=low quality; you pay for label; larger item is cheaper synthetic is lower quality than natural; if it is from my country, it is better (ethnocentrism)

INERTIA

Do you choose an item because you are brand loyal or is it a habit (inertia)?

Many people buy out of inertia or habit; this consumer can be influenced, no commitment

The brand loyal consciously decides to repeat purchase, and become habitual

TOP BRANDS

Boston Consulting Company found many brand in top 100 in 1930 are still in top today

What do you think are the most popular brands in world today?

The world's 10 most valuable brands in 2016

1. Apple,178,119 million 2. Google 133,252 million 3. Coca Cola 73,102 million (down-7%) 4. Microsoft 72,795 5. Toyota, 53,580 million 6. IBM 52,500 million (down-19%) 7. Samsung 51,808 8.amazon 9 Mercedes. 10 GE
See the top 100 http://interbrand.com/best-brands/best-global-brands/2016/ranking/ Sources: Interbrand's Best Global Brands report

Most Powerful Brands 2016 according to Millward Brown: Google, Apple, Microsoft, AT&T, facebook, Visa, amazon, Verizon, McDonalds, IBM, Tencent, Marlboro, Wells Fargo

In last few years the technology brands have risen to the top

DECISION RULES

Noncompensatory Decision Rules

a set of simple rules where a brand with low standing on one attribute can't make up for this position by being better on another attribute; simple decision rules are noncompensatory. Example if your idea is to buy a name brand, no matter what features are you won't deviate from name brand

Lexicographic Rule

the brand that is the best on the most important attribute is selected

Elimination-by-aspects Rule

brands are evaluated on most important attribute with specific cut-off. If it doesn't have x feature it's out

The Conjunctive Rule

processing by brand; cutoffs are set for each attribute. Brand is chosen if it meets all; negative data rated heavier

Disjunctive Rule

consumer develops acceptable standards usually higher the minimum; if it exceeds it is chosen

Compensatory Decision Rules

a set of rules that allows information about attributes of competing products to be averaged in some way; poor standing on one attribute can potentially be offset by good standing on another;; consumer tends to be more involved

View this video on the Science of Persuasion

URL: http://www.youtube.com/watch?v=cFdCzN7RYbw



Buying and Disposing


After the sale is it over?

SITUATIONAL EFFECTS ON CONSUMER BEHAVIOUR

Consumption situation is defined by more than person and product; situational effects can be behavioural; perceptual; purchases can be for an occasion; and for a mood of the time. When the product and how the product is used is important; usage situations. Marketers tailor message to the above and to the situational self of the person; ethnic identity influence; marketer defines a matrix with product usages and features of product. Physical surroundings and social surroundings can have effect: the smell, the music, the number of people. Type of people around.

Temporal factors: time is important as an economic variable because we are experiencing "time poverty"; we often do more than one thing at one time: read newspaper and eat breakfast; perception of waiting time also influences


ANTECEDENT CONDITIONS

A person's mood or physiological condition has effect. "Don't shop for food when hungry"; stress can effect problem solving; mood can be affected by the atmosphere; when in a positive mood less elaboration used; Antecedent Conditions

SHOPPING ORIENTATION

Shopping orientation is a consumer's general attitude and motivations regarding the act of shopping

I'm in the worst shape of my life http://www.youtube.com/watch?v=O9qHluTac_g I'm a spendster http://www.youtube.com/watch?v=KAqErsH1Gt0

According to Stats Canada, "In 2010, Canadians placed nearly 114 million orders while shopping online, averaging about 10 orders per person. Orders totalled $15.3 billion, with an average value of $1,362 per person per year."

online buying

Online buying increases convenience and saves time but there are concerns about lack of security. You can't touch item; colour may be different; there are shipping costs; return cost; and lack of human involvement.

Positive of aspects of online: 24 hours, no travel, information in seconds, more choice, the world is the market; quick and convenient.

To compete, retailing is becoming entertainment or theatre: the mall as community with entertainment; interactive experience. A store's image creates impression-Gestalt-the whole thing is product. Atmospherics is the space and physical features in store design to evoke certain effects in buyers: colours, scents, sounds become more important.

IN STORE DECISION MAKING

Many items are the result of impulse buying-85% of candy and gum sales is impulse

Point-of-purchase (POP) is promotional material in location to prompt sale

Exchange theory says every interaction involves an exchange of value

Consumer may look for sales person to be good looking, likable, a warm relationship, an expert; knowledgeable about consumer personality, adaptable.

SHOWROOMING

Showrooming is checking out merchandise in a traditional retail store without buying. The consumer then shops online to find a lower price for the item they looked at in the store. Even online versions of the same retail store may offer lower prices. The rationale is that they don't have the overhead. Showrooming can be costly to retailers because the retail stores loose business, sales people may waste their time on customers who have no intention of buying and product floor samples may become damaged.

ONLINE DECISION MAKING

Websites make it easier and easier to push a button to buy. Many create a relationship with the consumer by sending newsletters or being part of a social network, or setting up your own page on their site; for example Amazon creates you a page.

In the past if you wanted to question if an online purchase went through, you may have had to phone perhaps a long distance number or wait for a response from an email. Today many online sites have instant chat access online to an operator during or after your purchase.

Consumers today are aware that their information may not necessarily be secure in store as cards and pin numbers can be swiped or viewed with hidden cameras. Are we less safe online? It depends on the site, and the situation.

Consumers now have access to much information from everyday consumers posting and blogging about products. Sometimes, however, some comments may be planted. Critical evaluation and research is key. Many consumers are now searching online for information about products (usually high involvement products) and prices and going into stores armed with information

We can buy 24 hours a day, but maybe we have to be 24 times as smart.

POSTPURCHASE SATISFACTION

Consumer satisfaction/dissatisfaction is determined by overall feeling or attitude a person has for a product after purchase. Evaluation is a constant process (remember cognitive dissonance) Perception of product quality is determined by quality and value determined by brand name and how much money is put into ads

Marketer is wise to manage expectations: example- strange smell in new car. Unhappy consumer has options to respond by boycott of store, report on blog, third party-legal action; action is more likely for expensive product. Consumers do have power.

Expectancy Confirmation/Disconfirmation Model

According to the expectancy confirmation/disconfirmation model, as consumers we form beliefs about product performance based on prior experience with the product and the communications about the product. If the product performs as expected, we don't think about it. However, if the product does not perform as expected, there's a negative effect.

Expectation Confirmation Theory-Expectation and Percieved performance lead to Disconfirmarion of beliefs and satisfaction

 

DISPOSAL OPTIONS

See the Story of Stuff Electronics

OPTIONS: keep it; temporarily dispose; dispose; example: computer still works; recycle


child in e-waste

About 50 million tons of electronic waste is created each year and a large percentage of it ends up in the developing world.

According to Canadian Geographic's Thomas Hall, the United Nations Environmental Programme, says that almost 90% of global e-waste is illegally traded or dumped. In 2017,  50 million tonnes are expected to be dumped. This e-waste is worth   between $12.5 billion to $18.8 billion USD.  The value is in the metals, especially the gold and copper found in the circuits of everyday electronics.

Countries where e-waste typically goes are China, India, and Nigeria. It's often much cheaper for recyclers to ship waste to China rather than to dispose of it in North America.

Electronics are stripped for gold, copper, and aluminum. A ton of computer scrap contains more gold than 17 tons of gold ore. Circuit boards are rich in copper. Workers in e-waste dumps sort through the computer waste and melt down valuable parts. Melting the metals releases toxins dangerous to the environment and to the health of the people who scavenge, melt and sort. Many times children are the ones sorting through the e-waste.

 (source:  Canadian Geographic and http://socialroi.com/interesting-facts-about-digital-waste.html )

 



To find out about recycling of e-waste in Toronto see Electronic Recycling Association http://www.era.ca/donations/recycling/index.html

Reference as noted above and: Solomon, Michael R., Zaichkowsky, Judith and Rosemary Polegato. Consumer Behaviour: Buying, Having, Being. Toronto: Pearson Education Canada



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