8--Consumer Decision Making %28student%290

8/10/2019 8--Consumer Decision Making %28student%290

1/23

Consumer Decision Making

Dr. Kelly HawsMKTG 650


2/23

Key Questions

What are the basic processes that consumer

use to make decisions?

What factors determine when more or less

effort is expended in making decisions?

Think vs. Blink

What do we do to simplify our decision

making?

This will continue to next week as well


3/23

Readings

8.1 Court, David, Elzinga, Dave, Mulder, Susanand Ole Jorgen Vetvik (2009), The ConsumerDecision Journey, McKinsey Quarterly

8.2 Paradox of Choice, Chapter 3, Decidingand Choosing

8.3 Think, Chapter 1, Dont Blink, Think

8.4 Blink, Chapter 3 The Warren HardingEffect: Why We Fall for Tall, Dark, andHandsome Men


4/23

Consumers as Problem Solvers

Consumer decision (purchase) =response to problem

Difference in actual vs. ideal state

Decision-making process After realization that we want to

make a purchase, we go through aseries of steps in order to make it

Can seem automatic or like a full-time job


5/23

Extended Problem Solving

Eventual purchase decision is perceived as a

risk and/or highly involving/personally

relevant

Consumer collects extensive information

Internal and external search

Careful evaluation of brand attributes

Compared on many criteria

Might visit many different outlets


6/23

Limited Problem Solving

More straightforward/simple

Lower risk/involvement

Less search Limited # of brands considered

Limited # of attributes evaluated

Limited shopping time/venues


7/23

Habitual Decision Making/Routine Response Behavior

Automaticity: choices made with little/noconscious effort Efficient decisions: minimal time/energy

Little to no comparison of brands/attributes May only consider one or two brands

Example: habit = buy same brand bought last time

Challenge for marketers Consumers must be convinced to unfreeze their former habit and

replace it with new one POP becomes important


8/23

Continuum of Consumer Decision Making

LOW MAOHIGH MAO


9/23

1: Problem Recognition:Starting the Decision Making Process

Occurs when consumer perceives differencebetween current state and ideal state

Need recognition: actual state moves downward

Running out of a product, buying a deficient product,product breaks, etc.

Opportunity recognition: ideal state moves upward

Exposed to different/better quality products (new

standard of comparison), become aware of newproducts/innovations


10/23

2: Information Search

Consumers need information to solve problems We search our memories and survey our environment

for appropriate data to make decision

What do we search for? Information about Brands

Attributes

Evaluations/Attitudes

Experiences

Where do we search? Internally

Externally


11/23

What Determines How Much we Search?The Economics of Information

Consumers will gather as much data as

needed to make informed decisions

We continue to search until costs exceed utility of

information search

Cost/Benefit analysis

Utility of new information depends on importance of

decision

We will collect most valuable information first


12/23

3: Identification and Evaluation ofAlternatives

How many alternatives do we actuallyconsider/evaluate?

Depends on decision-making process!

Extended problem solving = evaluation of severalbrands

May also consider multiple brands in limited problemsolving

Typical consideration set = 2-8

Habitual decision = consider few/no brandalternatives


13/23

UnawarenessSet/ A

Evoked / AwarenessSet

Inept Set

Unacceptable

Inert Set

Indifference

Consideration

Set

GOAL! Not enough to be in evoked set

What Alternatives Do We Consider?

Universe of Potential

Brands & Products

Search


14/23

Stage 3: Evaluative Criteria

= Dimensions used to judge merits of competingoptions

Determinant attributes: features we use todifferentiate among our choices

Criteria on which products differ carry more weight Marketers educate consumers about (or even

invent) determinant attributes Strategy: get consumers to evaluative alternatives

using criteria on which your product is superior to

competitors Inform consumers about determinant attributes that

differentiate you from your competition


15/23

4: Product Choice

Selecting among alternatives

Once we assemble and evaluate relevant options

from a category, we must choose among them

Decision process for product choice can be very

simple or very complicated

Depends on MAO


16/23

Decision Processes:

Compensatory Cost/Benefit analysis

Excelling at one dimension can make up for poor

dimensions Non-compensatory

Simpler decision models

Being bad on one dimension cannot be made up

for Heuristics

Very simple decision short-cuts

Usually reasonable decisions, bad

in specific situations

Higher Effort

Higher Accuracy

Lower Effort

Lower Accuracy


17/23

Many times a high effort decisionprocess proceeds in two stages

First consideration set

Reducedconsideration set

Non-compensatoryMethods

Compensatory MethodsNon-compensatory Methods

Heuristics

Choice


18/23

How Do We Make Decisions WhenMAO is Low?

Use Heuristics (more next week)

Why? They make things easier

Consumers are lazy! (cognitive misers)

Consumers satisfice (Simon 1955; Schwartz) Dont search for the perfect solution

Find a solution that is good enough Choice Tacticsdecision heuristics used in

common, repeat purchase situations


19/23

Court, David, Elzinga, Dave, Mulder, Susan and Ole JorgenVetvik (2009), The Consumer Decision Journey, McKinsey

Quarterly, 29 (3), pp. 1-11. (Library)

Marketing has sought to reach consumers through touch

points. For years, these touch points have been understood

through the funnel metaphor. Describe how the funnel

works.***


20/23

The Consumer Decision Journey,McKinsey Quarterly

What is the consumer decision journey? What is the most

difficult part for marketers?***


21/23


What are the four primary phases of the decision-making

process and why are these important?***

Problem Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Post-purchase

Initial Consideration

Active Evaluation

Purchase Decision

Post-purchase


22/23


What are the four primary phases of the decision-makingprocess and why are these important?***

Problem Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Post-purchase

Initial Consideration

Active Evaluation

Purchase Decision

Post-purchase

Figure out your goals

Array the options

Evaluate options vs. goals

Pick the winning option

Use consequences to modify

Evaluate goal importance


23/23

Paradox of Choice,Deciding and Choosing

Understand the importance of each of thefollowing influences on our decision makingand the implications for marketers:***

Availability Anchoring

Framing (including prospect theory and theendowment effect)

We will cover some of this (prospect theory, forexample) in more detail next week.

Documents

8--Consumer Decision Making %28student%290