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					             Consumer Behavior
              Decision making




Types of Purchase
 Behavior and the
Consumer Decision
 Making Process
                                      Consumer Behavior
                                       Decision making


                   Outline
• Types of purchase decisions
• Need arousal
• Information acquisition
   (types of search, determinants of search, and
   sources of information)
• Evaluation of alternatives and choice
   (choice sets, choice alternatives, choice criteria,
   choice heuristics, context effects)
                                             Consumer Behavior
                                              Decision making


              The purchase cube
       Deliberate purchases         Spontaneous purchases


     Extended
                   Symbolic        Promotional Exploratory
HI   purchase                 HI
                   purchase         purchase    purchase
     decision
                   behavior         behavior    behavior
      making

     Repetitive    Hedonic           Casual         Impulsive
LI   purchase      purchase   LI    purchase        purchase
     behavior      behavior         behavior        behavior


     Think           Feel            Think            Feel
                                     Consumer Behavior
                                      Decision making



       Types of purchase motives

  Functional motives       Psycho-social motives
Problem solving (problem   Social approval
 removal or avoidance)     Self-expression
Quality and performance    Variety and change
Price and value            Emotional stimulation
Familiarity
Convenience                Intellectual stimulation
Normal depletion           Sensory gratification
                                                                     Consumer Behavior
                                                                      Decision making

FCB grid for some common products
                                 high involvement
                           life insurance
                                                               sports car
                        35 mm camera            stereo component
                        washer/dryer
                                                          expensive watch
    car battery              portable TV
                                                                           perfume
                                                                       wine for dinner party
                                                    complexion/face soap
   think                        suntan lotion              jeans
                                                   toothpaste
                                                                                 feel
                  dry bleach
                                salad oil                                 greeting card
                                                              fast food restaurant
                               liquid bleach
                   disposable razor                           regular beer
                                                   liquid
                                                   hand soap salty snacks
                         paper towels


                                 low involvement
                                      Consumer Behavior
                                       Decision making


           Need arousal
Current (initial)                 Desired (end)
     state                            state


                Discrepancy ?



                Need arousal
                    • generic
                    • selective
                                       Consumer Behavior
                                        Decision making


             In-class exercise
• What triggered the process and what was the basic
  motivation for the purchase?
• How long did it take for the consumer to
  acknowledge the need for this product? Was the
  need general at first, or was there a specific brand
  preference right away?
• What were the major influences on problem
  recognition? Were marketing influences involved
  in generating the consumer's desire for this
  product?
                                    Consumer Behavior
                                     Decision making


        Information acquisition
• ongoing search: motivated by intrinsic enjoyment
   of the search process and the desire to build an
   information bank;
• prepurchase search: motivated by the desire to
   make better purchase decisions;
   – internal: information is retrieved from
        memory;
   – external: information is obtained from the
        environment; research has found that the
        level of external search is relatively low;
                                     Consumer Behavior
                                      Decision making


                 Internal search
Experiences                                      0/+

                    ++                Brand C
       Brand A
                         Purchase
                           goal
       Attribute
      information

                                                 +
                                    Brand B
                                                 Consumer Behavior
                                                  Decision making


Determinants of external search effort
 Environmental and situational variables:
    – number of alternatives                             +
    – product differences                                +
    – store distribution (distance)                      –
    – time pressure                                      –
 Product characteristics:
    – price                                              +
    – social visibility (style and appearance)           +
    – perceived risk                                     +
    – number of crucial attributes                       +
 Consumer characteristics:
    – prior knowledge and experience                     –
    – involvement                                        +
    – positive attitude toward search                    +
    – education                                          +
    – income                                             –
    – age                                                –
                                       Consumer Behavior
                                        Decision making



              Information sources
                 personal sources   nonpersonal sources



 commercial
   sources




noncommercial
   sources
                                   Consumer Behavior
                                    Decision making



     In-class exercise (cont’d)
• How much search was involved in the purchase?
• How was the search conducted? Was the search
  memory-based or was external information
  consulted?
• What information sources were used?
                                        Consumer Behavior
                                         Decision making


          Alternative evaluation
• the following information is particularly relevant
  to making a choice:
   – choice alternatives (e.g., brands, stores);
   – choice criteria (e.g., product or store
        attributes);
• in order for a product or store to be chosen, it has
  to be in the consumer’s consideration set and it
  has to be perceived favorably on the choice
  criteria that are important to the consumer;
                                                  Consumer Behavior
                                                   Decision making


       A choice sets model of retail selection
            (Spiggle and Sewall 1987)

            unawareness    inert    inaction         quiet        retailer not
                set       set (0)   set (+/0)      set (+/0)     chosen (+/0)

total set

            awareness     evoked     action      interaction      retailer
               set        set (+)    set (+)       set (+)       chosen (+)



                           inept
                          set (-)               reject set (-)
                 Consumer Behavior
                  Decision making


Purchasing a diamond
  engagement ring
                                  Consumer Behavior
                                   Decision making



           Choice heuristics
• if an overall evaluation for each brand is
  available in memory, the decision can be
  made based on affect referral;
• attribute-based choice heuristics differ
  based on whether they are compensatory or
  noncompensatory and whether processing
  occurs by brand or by attribute;
• phased decision strategies are often used in
  practice;
                                                  Consumer Behavior
                                                   Decision making


       Attribute-based choice heuristics
                   Compensatory             Noncompensatory



Processing     weighted additive rule
 by brand                                 conjunctive heuristic
               equal weight heuristic



                                          lexicographic heuristic
Processing     additive difference rule   elimination by aspects
by attribute
                                                 heuristic
                  Choosing a mid-size sedan
                                   Warranty   J.D.Power     Crash               EPA mileage
                Brand                                                  Horse-
                         Price      (years/   mechanical     test                  (city/
                Image                                                  power
                                     miles)     quality     rating               highway)
Nissan Altima           $19,800     3/36K         3        Excellent    175        23/29
                 (6)      (7)         (7)        (6)         (10)       (8)         (8)
Honda Accord            $17,095     3/36K         4        Excellent    160        24/34
                 (8)      (8)         (7)        (8)         (10)       (7)         (9)
Toyota Camry            $19,025     3/36K         3        Excellent    160        24/34
                 (9)      (7)         (7)        (6)         (10)       (7)         (9)
Ford Taurus             $21,200     3/36K         3         Good        153        20/27
                 (6)      (5)         (7)        (6)         (8)        (5)         (7)
VW Jetta                $25,045     5/50K         4        Excellent    180        22/29
                (10)      (4)         (9)        (8)         (10)       (9)         (8)


Attribute         6       10          9           8            6         5           7
  importance
Cutoff level    >(5)    <$22,000    >2/30K      >2 (6)      at least   >170       >20/27
                                                             good
                                      Consumer Behavior
                                       Decision making


      The cost-benefit approach to
            consumer choice
• question of how consumers decide which choice
  heuristic to use in a given case;
• the cost/benefit framework suggests that rule
  usage depends on the costs and benefits associated
  with the application of a given heuristic;
• important components of costs and benefits are the
  cognitive effort required by a choice heuristic and
  the accuracy of the choice resulting from the use
  of a heuristic;
                                 Consumer Behavior
                                  Decision making


        Contextual influences on
       consumer decision making
• because consumers’ preferences are often
  not well-formed, seemingly minor
  variations in the way the decision is framed
  (either by the consumer or the marketer) can
  have a profound effect on choice;
• marketers can influence consumer decision
  making by manipulating various task and
  context factors;
                              Consumer Behavior
                               Decision making

Effect of choice set composition on
 consumers’ purchase decisions:
       The attraction effect

Cross pen
$6


 Cross pen
 inferior, lesser-known pen
 $6
                                          Consumer Behavior
                                           Decision making

       Effect of choice set composition on
        consumers’ purchase decisions:
             The compromise effect
Brand B costs $350, w/ a picture quality of 85

Brand C costs $299, w/ a picture quality of 80


Same as above, except that there is also Brand A,
at a price of $503 and a picture quality of 100

Same as above, except that there is also Brand D,
at a price of $146 and a picture quality of 65
                                                  Consumer Behavior
                                                   Decision making

    Methods for studying decision making
• input-output approaches: a decision process is
  hypothesized and factors that affect this process are
  identified; if manipulations of these factors (inputs) lead to
  the predicted results (outputs), this is interpreted as
  evidence in support of the underlying process;
• process tracing approaches: ongoing decision processes
  are measured directly;
   – verbal protocols: concurrent or retrospective thought
     verbalizations;
   – information acquisition approaches: information display boards,
     eye movement recording, and computer-based information
     displays;
   – chronometric analysis: analysis of response times;
                                  Consumer Behavior
                                   Decision making



          Brand personality
• idea that brands have “personalities” (sets of
  human characteristics) and that consumers
  may use brands for self-expressive purposes;
• recent research by Aaker (1997) suggests
  that a brand’s personality can be described in
  terms of five underlying dimensions;
• according to the image congruence
  hypothesis, consumers prefer brands that
  have images similar to their own self-image;
                                                           Consumer Behavior
                                                            Decision making


         A brand personality framework
                                    Brand
                                  personality



 Sincerity        Excitement      Competence       Sophistication Ruggedness



• down-to-earth   • daring
                                   • reliable
• honest          • spirited                         • upper class     • tough
                                   • intelligent                       • outdoorsy
• wholesome       • imaginative                      • charming
                                   • successful
• cheerful        • up-to-date

				
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