Consumer Decision Making II MKT 750 Dr. West
Consumer Decision Making II MKT 750 Dr. West. Agenda Discuss Shopping Diary Insights Classical, Modified, and Extended Frameworks Back to Stages of Decision.
Dec 16, 2015
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Consumer Decision Making II
MKT 750Dr. West
Agenda
Discuss Shopping Diary InsightsClassical, Modified, and Extended Frameworks
Back to Stages of Decision MakingEvaluation of Alternative, Decision Rules, Choice and Post-purchase Evaluation
A Model of Customer Satisfaction
3
Classical Framework:
Preferences & Beliefs
Need Recognition
Search
Evaluation
Purchase Decision
Post-Purchase Feelings
Modified Framework
Decision Sequence: Know Feel Do
Decision Stages
When Product Class is:
When Brand is:
Need
RecognitionInformation
SearchEvaluation Behavior
Purchase Decision
Post-purchase Evaluation
NEW NEW
FAMILIAR NEW
FAMILIAR FAMILIAR
Extended Framework
Low Involvement
High Involvement
RoutineUtilitarian/Functional
Hedonic/Ego-
Expressive
Decision Making
Usage
Primary Motivational Conditions
Contexts
Variations in Choice
Utilitarian/
Functional
Decision Sequence?Triggers?Problem solving?Search?Choice heuristic/rule?Role of Price?
Low Hedonic/Involvement Ego Expressive
Variations in Use
Utilitarian/
Functional
Source of satisfaction?
Brand Loyalty?
Low Hedonic/Involvement Ego Expressive
8
Classical Framework:
Preferences & Beliefs
Need Recognition
Search
Evaluation
Purchase Decision
Post-Purchase Feelings
Evaluating Alternatives
Determine criteria to be used for evaluation of products
Assess the relative importance of the each criteria
Evaluate each product based on the identified criteria
Evaluating Alternatives
Criteria for the purchase of a car: Space Reliability Safety Longevity Handling Styling
Evaluating Alternatives
Assessing Importance: ei
Space 5 Reliability 4 Safety 4 Longevity 3 Handling 3 Styling 2
* Importance: 5=Most Important, 1=Least Important
Evaluating Alternatives
Beliefs Regarding Product Performance:
Product Evaluation: 4=Excellent, 3=Very Good, 2=Good, 1=Fair
bi’s
Importance
ei
ToyotaSienna
SubaruOutback
Volvo Cross
Country
Space 5 4 2 4
Reliability
4 3 4 3
Safety 4 3 3 4
Longevity
3 2 4 4
Handling 3 1 4 2
Styling 2 3 4 3
Decision Rules
Cutoffs/Thresholds: restriction or requirements for acceptable performance
Signals are product attributes used to infer other product attributes (e.g. high price often infers higher quality)
Decision Rules
Compensatory Rule: a perceived weakness of one attribute may be offset or compensated for by the perceived strength of another attribute
Noncompensatory Rule: a product’s weakness on one attribute cannot be offset by strong performance on another attribute
Compensatory Decision Rules
Simple additive (Equal Weight): bi The consumer adds the product
evaluations across the set of salient evaluative criteria. The product with the largest score is chosen.
Weighted additive: biei
Judgments of product evaluations are weighted according to importance
Simple Additive (Equal Weight)
biToyotaSienna
SubaruOutback
Volvo Cross
Country
Space 4 2 4
Reliability
3 4 3
Safety 3 4 4
Longevity
2 4 4
Handling 1 4 2
Styling 2 4 2
15 22 19
Weighted Additive
biei Importance
ToyotaSienna
SubaruOutback
Volvo Cross
Country
Space 5 4 (20) 2 (10) 4 (20)
Reliability
4 3 (12) 4 (16) 3 (12)
Safety 4 3 (12) 4 (16) 4 (16)
Longevity
3 2 (6) 4 (12) 4 (12)
Handling 3 1 (3) 4 (12) 2 (6)
Styling 2 2 (4) 4 (8) 2 (4)
57 74 70
Noncompensatory Decision Rules:
Lexicographic strategy: Brands are compared on their most important attribute, and the winner is chosen.
If there is a tie the second most-important is considered, and so on, until a choice is identified
Lexicographic Rule
Importance
ToyotaSienna
SubaruOutback
Volvo Cross
Country
Space 5 4 2 4
Reliability
4 3 4 3
Safety 4 3 4 4
Longevity
3 2 4 4
Handling 3 1 4 2
Styling 2 2 4 2
Lexicographic Rule
Importance
ToyotaSienna
SubaruOutback
Volvo Cross
Country
Space 5 4 2 4
Reliability
4 3 4 3
Safety 4 3 4 4
Longevity
3 2 4 4
Handling 3 1 4 2
Styling 2 2 4 2
Lexicographic Rule
Importance
ToyotaSienna
SubaruOutback
Volvo Cross
Country
Space 5 4 2 4
Reliability
4 3 4 3
Safety 4 3 4 4
Longevity
3 2 4 4
Handling 3 1 4 2
Styling 2 2 4 2
Noncompensatory Decision Rules:
Elimination by aspects (EBA): Brands are compared on an attribute by attribute basis.
Alternatives are eliminated that fall below the consumer imposed cutoffs.
Process continues until a single alternative remains.
Elimination by Aspects Rule
Cutoff = 3
Importance
ToyotaSienna
SubaruOutback
Volvo Cross
Country
Space 5 4 2 4
Reliability
4 3 4 3
Safety 4 3 4 4
Longevity
3 2 4 4
Handling 3 1 4 2
Styling 2 2 4 2
Noncompensatory Decision Rules:
Conjunctive strategy (Satisficing): Brand are evaluated, one at a time, against a set of thresholds established for each attribute.
The first brand that meets or exceeds the threshold for each attribute is chosen.
Conjunctive Rule
Cutoff = 2
ToyotaSienna
SubaruOutback
Volvo Cross
Country
Space 3 2 4
Reliability
3 4 3
Safety 3 4 4
Longevity
2 4 4
Handling 1 4 2
Styling 2 4 2
Very sensitive to order
Implications
Purchase decisions involve multiple parties
Initiator/Gatekeeper – Who starts the process and gathers information
Influencer – Whose opinions are sought concerning criteria to evaluate alternatives
Decider – The person(s) with authority to determine how money will be spent
Buyer – The purchasing agent
User – The person(s) who use the product
Implications
Products are not strictly functional or hedonic
Customer service is key Salespeople need to avoid offending the
customer
• Getting into the customer’s consideration set is essential.
Determinants of Satisfaction:
What happens when product performance doesn’t meet expectations?
Assimilation – a reluctance to acknowledge discrepancies via rationalization and attribution Contrast – the tendency to exaggerate differences, a phenomenon known as reactance
Assimilation & Contrast
Zon
e o
f Tole
ran
ce
AssimilationContrast
10
Favorable 9Performance 8
7
6 ExpectationUnfavorable 5 Performance 4
3 2
1
10 High ExpectationsFavorable 9Performance 8
7 6
Unfavorable 5 Performance 4
3 2
1
Expectancy Disconfirmation
Dis
sati
sfa
cti
on
S
ati
sfa
cti
on
Z
on
e Z
on
e
Negative Disconfirmation “Disappointment”
10 High ExpectationsFavorable 9Performance 8
7 6
Unfavorable 5 Performance 4
3 2
1
Expectancy Disconfirmation
Dis
sati
sfa
cti
on
S
ati
sfa
cti
on
Z
on
e Z
on
e
Negative Disconfirmation “Betrayal”
Expectancy Disconfirmation
Dis
sati
sfa
cti
on
S
ati
sfa
cti
on
Z
on
e Z
on
e
10
Favorable 9Performance 8
7 6
Unfavorable 5 Performance 4
3 2 1 Low Expectations
Positive Disconfirmation “Ambivalence”
Expectancy Disconfirmation
Dis
sati
sfa
cti
on
S
ati
sfa
cti
on
Z
on
e Z
on
e
10
Favorable 9Performance 8
7 6
Unfavorable 5 Performance 4
3 2 1 Low Expectations
Positive Disconfirmation “Elation”
Customer Satisfaction
Satisfaction influences repeat buying
Positive post-consumption evaluations are essential for retaining customers
The likelihood that customers will remain loyal depends on their level of satisfaction
Customer Satisfaction
Consumers often talk about their consumption experiences
A firm’s ability to satisfy customers will affect its success in retaining current customers as well as recruiting new ones
It Shapes Word-of-Mouth
Customer Satisfaction
Monitor satisfaction levels
Encourage dissatisfied customers to voice their concerns
Have a recovery system in place to address customer concerns
Implications for Competitive Strategy
Advertising claims
Brand names
Packaging
Price
Influencing Expectations
Summary of Decision Making
& Satisfaction
Means-to-an-end End-in-itself
Choice Process:
Low Involvement
Routine
High Involvement
Functional
Hedonic/
Ego Expressive
Decision Sequence
Process Trigger
Search
Evaluation
Decision Rule
Price
Means to an end End in itself
Usage
Experience:Low Involvement High Involvement
Hedonic/
Ego Expressive
Satisfaction Model
Brand Loyalty
Core Concepts to Consider
Define the market: What problem is the consumer trying to solve? What goals is the firm helping the consumer attain? What needs, latent or manifest, are being filled?
Core Concepts to Consider
Decision-making unit: Users
Who uses the product or service?
Decider/ Buyer Who approves, and who makes the purchase?
Influencer Who influences the choice?
Initiator/Gatekeeper Who is responsible for initiating the process and gathering information?
Core Concepts to Consider
Basis for segmentation: Benefit segments
Psychographics
Use FrequencyHeavy & Light users
Price Sensitivity Deal prone & Price insensitive
Relationship Strength Committed, Switcher
Core Concepts to Consider
Market Diffusion Process: What were consumers doing before? What could make the product obsolete? What characteristics facilitate adoption?
Product versus Consumer
Who are early adopters? Laggards?
Core Concepts to Consider
Decision-making process:Type of product or service
Utilitarian/Functional, Hedonic/Ego-expressive, Low Involvement/Routine
What triggered the event? Is there a search for information How are alternatives evaluated? How does post-purchase evaluation feed back?
Core Concepts to Consider
Attributes influencing choice:Product-related
Similarities and differences between brands? Which determine attributes choice? What is the relative importance of attributes?
Situation-related Why are non-buyers not buying? What prevents need recognition? What obstacles prevent decision making?
Core Concepts to Consider
How is the product used: How much, how often, when, where, with whom? What would increase the frequency? Who gets credit for success, and blamed for failure? How is the product stored, transported, dispensed? What services accompany product use?
Core Concepts to Consider
Characterization of the Relationship:What kind of things have gone wrong?What kind of surprises were experienced?
Relationship Effects:How likely is the consumer to
Recommend the brand to others? Try an extension of the brand? Remain inoculated against competition?
How long is the relationship likely to persist?Does the brand command a price premium?
Core Concepts to Consider
Relationship Effects:How likely is the consumer to
Recommend the brand to others?Try an extension of the brand?Remain inoculated against competition?
How long is the relationship likely to persist?How many other brands would the consumer consider?Does the brand command a price premium?
Assignment
Study, Study, Study!!
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