Microsoft PowerPoint - Decision Making and Consumer Behavior 1229507455326755

2/2/2020
Consumers as Problem Solvers
• Every consumer decision we make is a response to problem.
Course 2: Decision Making and Sometimes the decision‐

making process is almost
At other times, the decision
process resembles a full time
automatic: we make our
Consumer Behavior choice based on very little
job
information.
Dr. Narjes Haj Salem, Assistant Professor

Email: nhajsalem@sharjah.ac.ae
0302370 Consumer Behavior © Dr. Narjes Haj Salem 2
Hyperchoice
How consumer build their decision
32% bought a jar of jam under “limited choice” condition (6 flavors) vs. only 3%
bought a jar of jam under “ extensive choice” ( 24 flavors) © Dr. Narjes Haj Salem 4
© Dr. Narjes Haj Salem 3
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Three Types of Decision‐Making Example: diet decision
• Individual (consumer) possess a repertoire of
strategies that help him to make decision.
Cognitive decision Emotional decision
© Dr. Narjes Haj Salem Source: Solomon 2016 5 © Dr. Narjes Haj Salem 6
Same choice situation but different
Involvement
perspectives
• My husband: I want the car I read about in the latest issue of • Involvement is a person’s perceived relevance
Car and Drive magazine. It has a six‐cylinder turbo engine, a
double‐clutch transmission, a 90 stroke bore, and 10:1 of the object based on their inherent needs,
compression ration . values, and interests.
• Me: I want a red one.
– The term object is used in the generic sense to
refer to a product, brand, ad, purchase situation
Why different consumers may approach the same choice
or behavior.
situation from a very different perspective ?
© Dr. Narjes Haj Salem 7 © Dr. Narjes Haj Salem 8
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Involvement Types of Involvement
• Involvement reflects our level of motivation Product Involvement
to process information about a product or
service we believe will help us to solve a
problem, or reach our goal. Message Involvement
Cognitive decision making
Habitual decision making Emotional decision making
Situational Involvement
Lack of interest Obsession
Involvement
Product involvement Minolta Understands Perceived Risk
• Product involvement is a consumer’s level of
interest in a particular product.
• As a rule, product decisions are likely to be Minolta addresses the fear created by a sense
of no risk by offering a guarantee.
highly involving if the consumer believes there
is perceived risk.
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Five Types of Perceived Risk Five Types of Perceived Risk
Monetary risk
Functional risk
Physical risk
Social risk
Psychological risk
© Dr. Narjes Haj Salem 13 © Dr. Narjes Haj Salem Source: Solomon 2016 14
Message Involvement
• Message involvement reflect the level of attention
that consumer gives to a specific “message”.
An Appeal
• High‐involved consumers process more information
to Social comparing to low‐involved ones.
Risk
– Print is a high‐involvement medium .
– TV is a low‐involvement medium.
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• Use novel stimuli, such as unusual How to boost person’s motivation to
cinematography, sudden silences, or
unexpected movements, in a commercials.
process information?
• Use prominent stimuli, such as loud music • Provide value that consumers
and fast action, to capture attention. appreciate.
How to boost • Include celebrity endorsers.
person’s
motivation to
process
information? • Invent new media platforms
to grab attention.
How to boost person’s motivation to
Situational Involvement
process information?
• Create a spectacles where message is itself a • Situational involvement take place with a
form of entertainment. store, Website, or a location where people
consume a product or service
http://advertising.chinasmack.com/2011/ariel‐china‐big‐stain‐with‐nintendo‐
wii.html
© Dr. Narjes Haj Salem 19 © Dr. Narjes Haj Salem 2‐20
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Three Types of Decision‐Making
• Individual (consumer) possess a repertoire of
strategies that help him to make decision.
COGNITIVE DECISION MAKING
Cognitive decision making Cognitive decision making
• According to this perspective: • Individuals tend to be “cognitive misers” : we
– people carefully integrate as much collect just as much data as we need to make
information as possible with what an informed decision.
they already know about a product,
weigh the pluses and minuses of
each alternative, and arrive at a
satisfactory decision.
– Especially relevant to activities like
financial planning or decision that
impact a consumers quality of life.
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Steps in the cognitive Decision‐Making Process
Hello!
I am Richard
1. Problem recognition
2. Information search
3. Evaluation of alternatives
4. Product choice
5. Post purchase evaluation
Example: Consumer Decision Making Step 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
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Problem Recognition: Shifts in actual or ideal
states
Step 2: Information Search
• The process by which we survey the
environment for appropriate data to make a
reasonable decision.
– Prepurchase or ongoing search (hard‐core
shoppers).
– Internal (memory) or external search (Ad, friends,
web, cybermediary..).
How much do we search
• We search more when the product is
important.
• All things equal: Who search more: novices or expert ?
– Younger, better educated people who enjoy the
shopping / fact finding process tend to conduct Moderately knowledgeable
more information searches.
– Women are more inclined to search than man.
– Individual who place greater value on style and
the image they process.
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The Relationship between Amount of Information
Search and Product Knowledge Step 3: Evaluate Alternatives
Evoked set : Consideration set
Inept set consists of brands that the
consumer excludes from purchase
consideration because they are
unacceptable(or they are seen as
inferior)
Overlooked brands that have not
Inert set: consists of brands the been clearly positioned
consumer is indifferent toward because
they are perceived as not having any
particular advantages.
How we put products into categories ? How we put products into categories ?
• We typically represent a product in a cognitive
• We cognitively represent information we have about structure at one of three levels
products in knowledge structures
• Knowledge structure : refers to a set of beliefs and
the way we organize these believes in our minds. The The
subordinate The basic level superordinate
• These structures matter to marketers because they level level
need to ensure that customer correctly group their
product.
‐ often includes ‐ Items tend to ‐ More abstract.
individual have a lot in
brands common with
/categories. each other.
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Levels of Abstraction in Dessert Categories Strategic implication of product categorization
1. Product position: the success of positioning
strategy hinges on the marketer’s ability to
convince the consumer to consider its
product within a given category.
– E.g., Orange juice it’s not just for breakfast
anymore
– Pepsi A.M. coffee substitute
Strategic implication of product categorization
2. Identify competitors
2. Create an exemplars
2. Locate products in a store
Source: Solomon 2016 © Dr. Narjes Haj Salem 40
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Evaluative criteria
• Evaluative criteria are the dimensions we use
to judge the merits of competing options (e.g.
functional attributes, experiential).
• Determinant attributes are the features we
actually use to differentiate among choices.
Marketers need to educate consumer about which
criteria they should use as determinant attributes.
Consumer decision rules Consumer decision rules
• Are procedures used by consumers to facilitate brands Compensatory decision rules Noncompensatory decision rules
and other consumption related choices. • Each relevant attribute weighted • Do not allow consumers to
• Summated score for each brand balance positive evaluations of a
• This rules reduce the burden of making a complex brand on one attribute against a
decisions by providing guideline that make the process The consumer will select the negative evaluation on some
brand that scores highest among other attribute.
less taxing.
the alternatives.
• 3 types:
• Two types of consumer decision rules: o Conjunctive
– Compensatory decision rules o Lexicographic
o Disjunctive
– Non‐compensatory decision rules (mainly apply with
habitual and emotional decisions)
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Noncompensatory Consumer Decision Rules Hypothetical Alternatives for a TV Set

• Lexicographic rule:
– Product attributes are identified
– Product attributes are ranked in terms of importance
– brands are compared in terms of the attribute considered most important
– Brand that scores highest on the first attribute is chosen
– If there is a tie, the scores on the next attribute are considered
• Elimination‐by‐aspects rule: the buyer also evaluates brands on the most

important attribute and imposes a specific cutoff.
• Conjunctive rule (brand):
– Product attributes are identified
– a minimally acceptable cutoff point is established for each attribute
– brands that fall below the cutoff point on any one attribute are eliminated
from further consideration.
© Dr. Narjes Haj Salem 45 © Dr. Narjes Haj Salem Source: Solomon 2016 46
Step 4: Product choice Step 5: Postpurchase Evaluation

• Postpurchase Evaluation closes the loop; it
• In this step the occurs when we experience the product or
consumer choose one service we selected and decide whether it
product among the meets (or may be even exceeds) our
product he evaluate. expectations.
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Habitual decision making
• Habitual decision making describes the
choices we make with little or no conscious
HABITUAL DECISION MAKING effort.
• There is a lot of factors that bias our decisions:

– Priming: cues in the environment that make us
more likely to react in a certain way even tough
we are unaware of these influences.
Habitual decision making Habitual decision making decision making
• Default bias: we are more likely to comply with a

requirement than to make an effort not to comply.
– Opt in vs opt out
• We often take the easy way out (less mental effort)

when we make decisions.
Satisfying solution: The “good enough”
Tradition, intelligence responsibility
Creativity, nonconformity innovation
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Heuristics: mental shortcuts or “mental
Framing
rules‐of‐thumb”
• Framing (mental acconting): the way we pose a
Covariation: infers hidden dimensions of products from
problem and whether it’s phrased in terms of gains attributes we observe
and losses influences our decisions.
– e.g: Free ticket vs. paid small fortune for the ticket.
Country of Origin
• Sunk‐cost fallacy: We are reluctant to waste
something we have paid for
Familiar Brand Names
• Loss aversion: We emphasize losses more than gains
• Prospect theory: risk differs when we face gains
versus losses Higher Prices
Emotion and consumption
• With affective decision making, consumers make a
decision because the choice feels right rather than
AFFECTIVE DECISION MAKING because they have made a detailed, systematic
evaluation of the alternatives
• Affect is the emotional response to products.
• Appraisal theory: emotions are elicited and
differentiated on the basis of a person's subjective
evaluation of the personal significance of a
situation, object, or event.
– Our interpretation of a situation causes a emotional
response that is based on that interpretations
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Positive and negative affect
• A passionate commitment to a
brand is called a lovemark.
• Negative emotions like disgust
work to influence consumers to
avoid some things.
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2/2/2020

Course 2: Decision Making and Sometimes the decision‐

Dr. Narjes Haj Salem, Assistant Professor

© Dr. Narjes Haj Salem Source: Solomon 2016 5 © Dr. Narjes Haj Salem 6

© Dr. Narjes Haj Salem 7 © Dr. Narjes Haj Salem 8

© Dr. Narjes Haj Salem Source: Solomon 2016 9 © Dr. Narjes Haj Salem 10

© Dr. Narjes Haj Salem 13 © Dr. Narjes Haj Salem Source: Solomon 2016 14

© Dr. Narjes Haj Salem Source: Solomon 2016 33 © Dr. Narjes Haj Salem 34

© Dr. Narjes Haj Salem 35 © Dr. Narjes Haj Salem 36

© Dr. Narjes Haj Salem Source: Solomon 2016 37 © Dr. Narjes Haj Salem 38

Noncompensatory Consumer Decision Rules Hypothetical Alternatives for a TV Set

• Elimination‐by‐aspects rule: the buyer also evaluates brands on the most

Step 4: Product choice Step 5: Postpurchase Evaluation

• There is a lot of factors that bias our decisions:

• Default bias: we are more likely to comply with a

• We often take the easy way out (less mental effort)

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