Individual decision-making

1
Individual decision-making
2

• Consumers as problem solvers
• A consumer purchase occurs as a response to a
  problem.
• Consumers go through a number of different steps
  in order to make a purchase.
• As some purchases are more important than
  others, so the effort put into each decision to
  buy is different.

3

• Decision-making perspectives
• The rational perspective - people calmly and
  careful integrate as mush information as possible
  with what they already know about a product and
  weigh up the pros and cons of each before making
  a decision.
• Behavioural Influence perspective - (in
  conditions of low involvement) where decisions
  are made as a result of a learned response to
  environmental cues, e.g. buying on impulse as a
  result of a special offer.
• Experiential perspective - in conditions of high
  involvement but where the selection made cannot
  be entirely rational.

4

• Stages in the consumer decision
  making process
• Problem recognition - occurs whenever consumers
  see a significant difference between current
  state of affairs and some desired ideal state.
• Information search - consumers survey their
  environment for appropriate data to make a
  reasonable decision.
• Evaluation of alternatives - where alternatives
  are identified, categorised and compared against
  evaluative criteria.
• Product choice - against non compensatory or
  compensatory decision rules.
• Outcomes - does product satisfy consumers needs
  and wants.

5

• Types of consumer decisions
• Habitual decision-making - those that are made
  routinely and with little or no conscious
  effort.
• Extended decision-making - usually initiated by a
  motive that is fairly central to self-concept and
  the final decision is perceived to carry a fair
  degree of risk.
• Limited decision-making - usually straightforward
  and simple. There is no real motivation to
  search for information and evaluate each
  alternative rigorously.

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Continuum of buying decision behaviour
Figure 8.1
7
Characteristics of limited versusextended
problem-solving
Table 8.1 
8

• Problem recognition
• When a consumer recognises that there is a
  perceived problem to be solved. The problem can
  be small or large, simple or complex.
• Need recognition can occur by a consumer running
  out of a product, or by the creation of a new
  need, e.g. after decorating a room replacement
  furnishings to match new colour scheme.
• Marketers attempt to create
• - primary demand, encouraging consumers to
  use products regardless of the brand they
  choose.- secondary demand, encouraging consumers
  to prefer one brand over another.

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Problem recognition shifts in actual or ideal
states
Figure 8.2
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• Different search models
• Internal versus external information search -
  Internal searches of our memory banks helps
  consumers assemble information about different
  product alternatives. External information
  searches (advertisements, etc.) helps consumers
  to supplement current knowledge.
• Deliberate versus accidental search - Directed
  learning where consumers actively seek
  information or more incidental learning where
  consumers passively absorb information in their
  day to day routines.

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• The economics of information
• Consumers will put themselves out to gather the
  information providing it is not too onerous or
  time consuming.
• The amount of external search for most products
  (not clothing though) is surprisingly small, even
  when additional searches would benefit consumers.
• As a general rule search activity is greater when
  the purchase is important, there is a need to
  learn about the purchase or when the relevant
  information is easily obtained and utilised.

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• Evaluation of alternatives
• Much of the effort that goes into a purchase
  decision occurs at the stage where a choice must
  be made from alternatives.
• The alternatives actively considered are known as
  the evoked set. These comprise those products
  already in memory (the retrieval set) plus those
  prominent in the retail environment.
• Marketers want their products to be in the evoked
  set.

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Identifying alternatives
Figure 8.3
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• Product categorisation
• Categorisation is a crucial determinant of how a
  product is evaluated.
• Products in consumers evoked sets are likely to
  share similar features.
• Careful product grouping is important.

15

• Strategic implications for product categorisation
• The way a product is grouped with others has
  important ramifications for determining its
  competitors for adoption and the criteria used to
  make this choice.
• Product positioning - this hinges on the
  marketers ability to convince consumers that a
  product should be considered within a given
  category.
• Identifying competitors - many different product
  forms compete for membership of a category.
• Where a product is a really good example of a
  category it is more familiar to consumers and is
  more easily recognised and recalled.

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• Evaluative criteria
• These are the dimensions used to judge the merits
  of competing options.
• Marketers can play a role in educating consumers
  about which criteria should be used as
  determinant attributes.
• The decision about which attributes to use is the
  result of procedural learning where a consumer
  undergoes a series of cognitive steps before
  making a choice.

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• Heuristics
• Mental rule of thumbs that are used to simplify
  decision-making and lead to speedy decisions.
• The rules vary from the very general to very
  specific.
• Shortcuts include - relying on a product signal,
  relying n well known brand names as a signal of
  quality and believing market beliefs.
• When a brand is consistently purchased over time,
  this pattern may be due to true brand identity or
  inertia because it is the easiest thing to do.

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Common market beliefs (1 of 5)
Table 8.2 Source Adapted from Calvin P. Duncan,
Consumer Market Beliefs A Review of the
Literature and an Agenda for Future Research, in
Marvin E. Goldberg, Gerald Gorn and Richard W.
Pollay, eds., Advances in Consumer Research 17
(Provo, UT Association for Consumer
Research,1990) 72935.
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Common market beliefs (2 of 5)
Table 8.2 Continued
20
Common market beliefs (3 of 5)
Table 8.2 Continued
21
Common market beliefs (4 of 5)
Table 8.2 Continued
22
Common market beliefs (5 of 5)
Table 8.2 Continued