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Consumer Decision Making

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Chapter 8 Consumer Decision Making Consumer Decision Making 7-* Response Modes Exit Voice Continued Patronage Twist Methods of Redressing Consumer Complaints ... – PowerPoint PPT presentation

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Title: Consumer Decision Making


1
Chapter 8
ConsumerDecision Making
  • Consumer Decision Making

2
Snapshot from the Marketplace
  • One culprit in our economys recent downturn was
    the subprime mortgage crisis.
  • View vary regarding precisely who was responsible
    for the collapse of the market.
  • Many observers blame faulty decision making on
    the part of consumers to take out such loans just
    as much as faulty decision making on the part of
    the banks that issued these loans.

3
Consumers and Decisions
  • The U.S. consumer is one of the most cared for
    and pampered in the world.
  • Consumers in our society are faced with a wide
    product selection, vast product information, and
    myriads of places at which to shop.
  • The process of buying is almost always preceded
    by some sort of decision process.

4
The Decision Process
  • A decision is an act that occurs only if we are
    faced with two or more alternative courses of
    action, all of which have high probabilities of
    bringing about a desired end result.

5
Are Consumers Rational?
  • Unlike the rational decision maker picture
    painted by classical economic theory, we as
    consumers are unlikely to act as computing
    entities that mathematically gauge the outcomes
    of each alternative considered.
  • We engage in a variety of shortcuts to make
    choices by weighing shopping effort against task
    importance, a tendency known as constructive
    processing.

6
Q. 1. Define Involvement.
7
Effort Variation in Decision Making
  • Effort consumers expend when buying is largely a
    function of involvement.
  • Involvement Degree of personal relevance a
    product or service holds for the consumer
  • Two degrees of involvement
  • Low involvement
  • High involvement

8
Marketing Implications of Different Levels of
Involvement
  • High-Involvement Purchase and Consumption
  • Complex purchase process by highly involved
    consumers
  • Attention is increased and more importance is
    attached to the stimulus object.
  • Low-Involvement Purchase and Consumption
  • Minimal decision making for low-involvement
    products
  • Attention is low and less importance is attached
    to the stimulus object

9
Classification of Decision-Making
  • Decisions fall somewhere between the two extremes
    of
  • Nonprogrammed Decisions Novel or infrequently
    encountered decisions requiring a tailored
    approach
  • These include
  • Extended problem solving
  • Limited problem solving
  • Impulse purchases
  • Programmed Decisions Habitual routines
    requiring no special thought

10
Q. 2. What are types and characteristics of
consumer involvement?
11
Consumer Involvement
  • Cognitive involvement
  • involvement that includes heightened thinking and
    processing of information about the goal object.
  • Affective involvement
  • involvement that includes heightened feelings and
    emotional energy.
  • Enduring involvement
  • represents the long-term interest that a consumer
    has in a product class.
  • Situational involvement
  • temporary interest in a purchase or consumption
    process.

12
Q. 3. What is the nature of the consumer decision
process?
13
Stages in Problem Solving
  • 1. Problem recognition
  • 2. Search activity
  • 3. Identifying and evaluating alternative
    solutions
  • 4. Purchase or commitment
  • 5. Postpurchase considerations

Problem Recognition
14
1. Problem Recognition
  • To get consumers to act, it is necessary for
    marketers to arouse in consumers a state of
    tension or incongruity between an actual and a
    desired state of affairs.
  • Problem recognition its associated tension
    state trigger behavior

15
Sources of Problem Recognition
  • Assortment depletions
  • Assortment inadequacies due to changing life
    circumstances
  • Other product acquisitions
  • Product obsolescence
  • Expanded or contracted means
  • Expanded awareness via marketing stimuli

16
2. Search Activity
  • Familiarizing oneself with courses of action
    available to solve the problem
  • Types of search
  • Internal Search Retrieving relevantinformation
    from memory
  • Sharpening
  • Leveling
  • External Search Seeking information from
    exogenous (outside) sources

17
3. Identifying Evaluating Alternative Solutions
  • Two activities are involved in the evaluation
    process
  • A. To narrow down product alternatives to a
    manageable number
  • B. To evaluate attributes of each alternative in
    order to select the best option

18
3. Identifying Evaluating Alternative Solutions
(contd)
  • A. Narrowing down product alternatives calls to
    mind our evoked set
  • An evoked set is a small number of brands that we
    recall when we contemplate buying a particular
    product
  • Consumers often seek to simplify purchase
    decisions by seeking shortcuts to reduce both
    mental and physical shopping efforta practice
    known as employing heuristics

19
3. Identifying Evaluating Alternative Solutions
(contd)
  • B. Evaluating attributes of the contemplated
    choices can be either effort-laden (in the case
    of systematic information search) or effortless
    (in the case of heuristic processing).

20
3. Identifying Evaluating Alternative Solutions
(contd)
  • Assessing the positiveness or negativeness of
    alternatives can be explained by Prospect theory.
  • This theory suggests that a consumers perceptual
    apparatus is attuned to the evaluation of
    relative rather than absolute magnitude of value.
  • According to this theory, as a consumer
    psychologically evaluates the positiveness or
    negativeness of prospects (options), the
    evaluation of the impact of these possible
    outcomes does not always align with their actual
    value.

21
4. Purchase or Commitment
  • The purchase decision is the outcome of the
    search process.
  • Consumers use a number of decision rules
    (analytical procedures) to reach a choice among
    alternatives.
  • Types of decision rules
  • Compensatory simultaneous evaluation of
    alternatives on various product attributesa high
    score on one attribute of a brand can offset a
    low score on another
  • Noncompensatory alternatives are evaluated
    singly, eliminating options that fail to meet a
    specific important attribute

22
5. Postpurchase Considerations
  • Feelings of satisfaction or dissatisfaction due
    to product performance are natural outcomes of
    the purchase process
  • Distinguish between
  • Instrumental performance utilitarian performance
    of the product as a means to a set of ends
  • Expressive performance the social or
    psychological aspects of the product that
    consumers regard as ends in themselves

23
Q. 4. How can involvement be used as a
segmentation variable?
24
Involvement as a Segmentation Variable
  • Brand loyalists
  • those who are highly involved both with the
    product category and with particular
    brands.
  • Information seekers
  • those who are highly involved with a product
    category but who do not have a
    preferred brand.
  • Routine brand buyers
  • those who are not highly involved with the
    product category but are involved with a
    particular brand in that category.
  • Brand switchers
  • those who are not involved with the product
    category or with particular brands.

25
Q. 5. Define Satisfaction.
26
Satisfaction
  • The mental state of feeling adequately rewarded
    in a buying situation.
  • Judgment of a pleasurable level of
    consumption-related fulfillment, including levels
    of under fulfillment or over fulfillment.

27
Consumer Satisfaction/Dissatisfaction
  • Consumer dissatisfaction is an attitude formed
    toward a product, place, or action.
  • This attitude is influenced by both the level of
    expended effort and by the level of expectations
    of the outcome.
  • Effort is equated with financial, physical,
    and/or mental sacrifice.
  • Satisfaction is equated with feelings of being
    adequately or inadequately rewarded for the
    sacrifice made.

28
Marketing Implications of Consumer Satisfaction
or Dissatisfaction
  • Satisfaction or dissatisfaction is a function of
    the discrepancy between obtained versus expected
    outcomes.
  • If expectations are high, but product performance
    falls below expectations, dissatisfaction arises.
  • Since overstated product claims can
    unrealistically raise consumers expectation
    levels, use of such strategy may be
    counterproductive in promotional efforts.

29
Consumer Complaints
  • Consumer dissatisfaction is of great concern to
    marketers.
  • It is more cost-effective to keep existing
    customers than to win new ones.
  • A typical dissatisfied customer informs a number
    of others about the incident.
  • It is vital that companies immediately redress
    consumer dissatisfaction.

30
To Whom Do Consumers Complain?
  • Consumers direct their complaints to a variety of
    places including
  • The firms customer service department
  • State agencies
  • The Federal Trade Commission
  • The mass media
  • Credit card companies
  • The Better Business Bureau (BBB)

31
Q. 6. What are the five emotional response modes?
32
Response Modes
  • Satisfaction as Contentment
  • Satisfaction as Pleasure
  • Satisfaction as Delight
  • Satisfaction as Relief
  • Satisfaction as Ambivalence

33
Q. 7. What are the consequences of satisfaction
and dissatisfaction?
34
Response Modes
  • Exit
  • Voice
  • Continued Patronage
  • Twist

35
Methods of Redressing Consumer Complaints
  • Establishing web-based service centers (or
    web-enabled customer contact centers) to
    facilitate communication with consumers
  • Establishing a customer service department to
    collect, analyze, and diligently respond to
    consumer complaints
  • Providing consumers with factual and objective
    information from credible sources including
    blogs, testimonials, and experts
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