Consumers as Decision
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:
PERSPECTIVES ON DECISION MAKING
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)
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
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
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
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
a marketer encourages consumer to use a product regardless of brand. The first one of its type offered
The First Flying car would be primary demand
Introducing TV Remote control https://www.youtube.com/watch?v=tSvsWGAsEIM
First cell phone ad https://www.youtube.com/watch?v=ptbJZ9HBw2k
marketer encourages consumer to prefer a specific demand; primary demand exists already; there is a category of "X" products already.
For example, Smart Phone, a new modeil is secondary demand
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 is intermediary that helps filter and organize information for consumer to evaluate: directories, portals, forums, groups, could be online reviewer, shopping bots, search engines
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
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 money Loss 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?
More information not always better; short term memory limited
Does consumer's prior expertise influence the search?
Expert versus novice; neither searches more; search is greatest by moderate. Why would that be?
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
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
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
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)
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
Boston Consulting Company found many brand in top 100 in 1930 are still in top today. The top brands now are taken over by significant numbers of technology/internet driven companies
What do you think are the most popular brands in world today?
The world's 10 most valuable brands in 2019
1. Apple +9% 234,241 M 2. Google +8% 167,713 M, 3. Amazon +24% 125,263 M. 4. Microsoft +17% 108,847 M 5. Coca Cola -4% 63,365M 6. Samsung + 2% 61, 098 M 7. Toyota +5% 56,246M 8. Mercedes +5% 50,832 M, 9. McDonalds+4%45,362M 10. Disney +11% 44,352 M ....14 facebook -12%
Source: Interbrand's Best Global Brands 2019 https://www.interbrand.com/best-brands/best-global-brands/2019/ranking/
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 https://interbrand.com/best-brands/best-global-brands/2016/ranking/ Sources: Interbrand's Best Global Brands report
Most Powerful Brands 2019 according to Millward Brown: Amazon, Apple, Google, Microsoft, Visa, facebook, Alibaba, tencent, McDonalds, AT&T,
In last few years the technology brands have risen to the top
DECISION RULES TYPES
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
the brand that is the best on the most important attribute is selected
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
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
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
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
Why do we shop?
- Social experiences: the mall is a community
- Sharing common interests
- Interpersonal Attraction: hang out at the mall; mall walkers
- Instant status: to be waited upon-to be served..."I am important"
- The thrill of the chase: to bargain with salesperson
Shopping orientation is a consumer's general attitude and motivations regarding the act of shopping
Types of Shopping Orientations
I'm in the worst shape of my life http://www.youtube.com/watch?v=O9qHluTac_g I'm a spendster https://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."
- 83% placed orders from companies in Canada
- 60% ordered from the United States
- 18% from other countries.
- 74% of Internet users window-shopped online or browsed without placing an order.
- Of those who did not place an order, 32% said that the main reason was that they had no interest, while 26% preferred to shop in person, and 19% cited security concerns.
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 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.
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.
See the Story of Stuff Electronics
OPTIONS: keep it; temporarily dispose; dispose; example: computer still works; recycle
To find out about recycling of e-waste in Toronto see Electronic Recycling Association http://www.era.ca/donations/recycling/index.html
Fast Fashion: From Runway to Consumer to Garbage
"In wealthy countries around the world, clothes shopping has become a widespread pastime, a powerfully pleasurable and sometimes addictive activity that exists as a constant presence, much like social media. The Internet and the proliferation of inexpensive clothing have made shopping a form of cheap, endlessly available entertainment—one where the point isn't what you buy so much as it's the act of shopping itself." (Mark Bain, The Atlantic)
If you look up the definition of fast fashion you will find a number of different ways the term is defined. Basically it is clothing that is inspired by designs worn by celebrities or models on the runways, manufactured quickly and cheaply to get to market to meet the demands of quickly changing trends.
In a way it is not unlike fast foods. It will fill you up for awhile; it won't last and it may not be healthy!
It satisfies a desire to have a trendy style for a short period time. It is not built to last. Low prices mean consumers can buy things they don't need without much thought.
Companies like Zara, H&M and Forever 21 and a number of online outlets have been churning out inexpensive clothing at a record pace. By 2019 some of the in store companies have felt the pain of competition from the online outlets who are able to move out product even faster and cheaper. 2019 saw H&M closing some outlets and Forever 21 filing for bankruptcy.
On top of the competition a younger generation more concerned with the environment has questioned the ethics of fast fashion.
Sandford Stein in Forbes writes,
"It's no secret that fast fashion has been responsible for a catastrophic level of environmental pollution. The trifecta of overt use of raw materials, water pollution and greenhouse gas emissions are only a part of the story. Not only is this circular buy, wear and toss behavior impacting landfills and becoming a major carbon contributor, but that may not be the worst of it. Fast fashion has played a very dark role in contributing to black-market trafficking of forced labor, as evidenced in the New York Times documentary, Invisible Hands, by journalist Shraysi Tandon."
- The clothing industry is the second-highest polluter of clean water. Retailers of fast fashion dump toxic chemicals into clean water supplies because clothing production is a land- and water-intensive industry. (Institute of Sustainable Communication)
- Many fast-fashion retailers outsource production to developing countries where resources and labor are cheap,
- Workers where fashions are made work in dangerous environments, human rights abuse and often do not make a living wage (40 million garment workers around the world 85% are women)
- Outsourcing is to countries that depend on coal power, a bad-carbon footprint.
- fashions created from polyester derived from fossil fuels (contributes to global warming ans sheds microfibers during washing adding to plastic levels in oceans)
- Textile Waste in Landfills because it is cheap it ends up thrown out (source Culture Trip)
What can you do to support sustainable fashion?
- Buy less
- Look for organic materials
- Support companies that consider sustainable fashion, organics, natural dye, concern for worker rights
- Recycle your clothing- Donate
Watch this short video for a quick overview of Fast Fashion
and to learn more see by the Economist
Too Much Stuff? Sustainable Human
Reference as noted above and: Solomon, Michael R., Zaichkowsky, Judith and Rosemary Polegato. Consumer Behaviour: Buying, Having, Being. Toronto: Pearson Education Canada
Information on this site is for use by the students of this course. For copyright information of the linked sites please see the respective authors.