Decision Making slides

• PURCHASING BEHAVIOUR may be for

  • IMMEDIATE CONSUMPTION - Ice-cream, hamburger
  • STOCK REPLACEMENT - soup
  • PERIOD CONSUMPTION - coffee
  • LONG TERM - house, furniture
  • FUTURE CONSUMPTION - holiday, insurance
  • PAST CONSUMPTION - credit card payment
• Objectives of Consumer Decision Making

  • To understand how and why people shop
  • To explain different decision making styles
  • To show how understanding consumption styles impacts on segmentation strategy
  • To introduce the concepts of high and low involvement decision making
• Consumer Decision-Making Styles

  • Quality-consciousness shoppers
  • Brand-conscious shoppers
  • Novelty-fashion-conscious shoppers
  • Recreational shoppers
  • Value-conscious shoppers
  • Impulsive shoppers
  • Confused shoppers
  • Brand-loyal shoppers
  • Apathetic shopper
• Issues related to purchase and post-purchase
• Purchase
• Brand beliefs are formed first by passive learning, then a purchase decision is made, and the brand may or may not be evaluated afterwards
• Impulse Buying: Not only associated with low-value goods
• We almost constantly need to make decisions about products, some important and effortful, others automatic
• Sephora: Changing the way we shop
• The way we evaluate and choose products varies widely, depending on dimensions such as the degree of novelty or risk related to the decision
• Impulse Buying: Diminished concern as to consequences
• IKEA: Changing the way we shop
• Shopping Motives

  • Diversion, Self-gratification, Physical activity, Sensory stimulation, Social and communication, Peer group attraction, Status and authority, pleasure of bargaining (Tauber, 1972)
  • Adventure shopping, Social shopping, Gratification shopping, Idea shopping, role shopping, value shopping (Arnold and Reynolds, 2003)
  • Compensatory Consumption (Woodruff, 1997)
• Customer Buying Behaviors Based on Brand Differences & Involvement
• Pre-purchase awareness of want or need, search/evaluation of information about brands, products, services
• Consumers are problem-solvers
• Post-purchase evaluation in use, assuage anxiety, information to other users and potential users
• Impulse Buying: Consumer experiences sudden, powerful and persistent urge to buy product immediately
• Consumer decision-making is a central part of consumer behaviour
• CONSUMPTION BEHAVIOUR may

  • CHANGE OVER TIME
  • CHANGE BY SITUATION
  • VARY BY CONSUMER
• The decision-making process is complicated due to the sheer number of decisions in a marketplace characterized by consumer hyper choice
• Impulse Buying: Emotional rather than rational
• Impact of recession on shopping
• Consumption
• Brand beliefs are formed first by active learning, then brands are evaluated, a purchase decision is made, and a comparison of low and high involvement hierarchies is made
• Types of problem recognition

  • Need recognition - when a current possession malfunctions
  • Opportunity recognition - the desire for something new
• Research in the field of behavioural economics illustrates that decision-making is not always strictly rational
• Antecedent states

  Factors that affect a customer's choice, such as mood, time pressure, or disposition towards shopping
• Today choices are more likely to involve weeding out excess detail rather than searching for more alternatives
• Issues related to purchase and post-purchase activities

  • Factors affecting a customer’s choice
• Deliberate vs. accidental search

  Directed learning where consumers actively seek information or more incidental learning where consumers passively absorb information in their day-to-day routines
• One common belief is that quality can be determined by looking at the price
• Problem recognition occurs whenever we see a significant difference between our current state of affairs and some desired or ideal state. It is when a consumer recognizes that there is a need to take action.
• Internal vs. external information search

  1. Internal searches of memory banks help consumers assemble information about different product alternatives

  2. External information searches (advertisements, etc.) help consumers supplement current knowledge
• Levels of abstraction in categories of dessert

  Levels of categorization
• Marketers’ role in problem creation

  • Primary demand, encouraging consumers to use products regardless of the brand they choose
  • Secondary demand, encouraging consumers to prefer one brand over another
• Consumer Decision Process under High Involvement

  1. Problem recognition

  2. Search

  3. Alternative evaluation

  4. Choice

  5. Outcomes

  6. Evaluative criteria
• Heuristics

  Mental rules-of-thumb used to simplify decision-making and lead to speedy decisions
• Problem Recognition

  The perceived difference between an ideal and an actual state that motivates the consumer to act
• Satisfaction leads to positive word of mouth