Rationality vs. Emotions: Insights into Consumer Decision Making Professor West.

Rationality vs. Emotions: Insights into

Consumer Decision Making

Professor West

Means-End Chain Analysis:

Consumer behavior is both: Purposeful

We strive to achieve short-term, and long-term goals

Revealing Our behavior reflects our values Trade-offs

Understanding Consumer Motives Motivations are the underlying reasons for

behaviorPreservation Growth

Cognitive Consistency Attribution Categorize Objectification

Autonomy Stimulation Teleological needs Utilitarian needs

Affective Tension reduction Expression Ego defense Reinforcement

Assertion Affiliation Identification Modeling

Laddering Technique

Values

Attributes

Consequences

I: “Why is it important to you to use a camcorder that allows for five hours on one tape and one battery?”R: “Because I can take it to outside events, like baseball games.”I: “Why is that important to you?”R: “It assures me that I will capture important moments in my kids lives without worrying.”I: “Why is that important to you?”R: “Being a good parent requires that kids are left with visual images of their childhood to enjoy as adults..”

Hierarchical Value Map

Values

Attributes

Consequences

Motivational Conflict

Approach-Approach Choosing between two attractive alternatives (e.g.,

two great job offers) Approach-Avoidance

A choice situation that entails both positive and negative consequences (e.g., the desire to stay healthy but an aversion to exercise)

Avoidance-Avoidance A choice between undesirable outcomes (e.g.

breast self-exams, colonoscopy, seeing your dentist)

Understanding Motives

Effective communication requires understanding what consumers are looking for, and why.

Consumer Involvement

Involvement is the “perceived relevance” based on inherent needs, values, and interests

From “inertia to passion” Involvement determines the degree of effort or

energy expended toward the object or activity

Many faces Product, Message-related, Situational, Purchase

Consumer-side

Traditional Model of Decision Making

ChoiceAlternativeEvaluation

SearchNeed

RecognitionPost-Purchase

Evaluation

Consumer Decision Making

Consumer-side

Marketer-side

Action Desire Interest Awareness

ChoiceAlternativeEvaluation

SearchNeed

RecognitionPost-Purchase

Evaluation

Consumer Decision Making

Consumers make a wide variety of choices that range from life-altering (the decision to go to graduate school, getting married) to mundane (filling your car with gasoline).

Nature of Processing

Midrange Problem Solving

Habitual Problem Solving

Extended Problem Solving

PassionInertia

Limited Problem Solving

Simple Elaboration

From Inertia to Passion

Nature of the Decision:

First time vs Repeat purchase

Purchase for Self versus Another

Functional products (e.g. washing machine, car)

Experiential products (e.g. perfume, clothing)

Consumers are “cognitive misers” Heuristics are used as shortcuts to

decision making What might some of these be?

Ask a friend or family member By what my mother always buys Find the cheapest Pick the compromise alternative

…

ChoiceAlternativeEvaluation

SearchNeed

RecognitionPost-Purchase

Evaluation

Rational Decision Making:

Need Recognition

Ideal State

Ideal State Ideal State

Actual State Actual State

Actual State

Status Opportunity Problem Quo Recognition Recognition

How are Needs Activated?

Changed circumstances Graduation, new job, marriage, first baby …

Product acquisition DVD player, Xbox

Product consumption Toothpaste, milk, gasoline…

Product innovation Jump Drives

Marketing influence

The Role of Self-Concept

Alter the buyer’s perception of “ideal self”

IdealSelf

ActualSelf

ExtendedSelf

Products that enhance “self-concept” reduce the dissonance between the ideal and actual self.

Information Search

Information Search

Types of Information Search Information -- observable prior to

purchase Credence Information – product claims that are

not readily observed even post purchase Experience Information -- can be obtained from

direct experience with the product or service

Information Search

Information Search

Search is usually limited Surveys indicate that 50% of consumers shop at

a single store for a durable good, only 30% look at more than one brand of appliance

Highlights why top-of-mind awareness, and product differentiation are crucial

What Determines Extent of Search? Cost

Effort, time, delay, immediacy of need, money The internet can lower search costs

Benefits Savings, performance, satisfaction, avoidance of

regret, ease of justification

Evaluation & Choice

Evaluation & Choice

Determine criteria to be used for evaluation of products

Assess the relative importance of the each criteria

Evaluate each alternative based on the identified criteria

Rationality versus Emotions

Buying a new car

Finding the perfect prom dress

Criteria for the purchase of a car: Handling Longevity Reliability Safety Space Styling

Evaluating Alternatives

Assessing Importance: ei

Space 5 Reliability 4 Safety 4 Longevity 3 Handling 3

* Importance: 5=Most Important, 1=Least Important

Evaluating Alternatives

Beliefs Regarding Product Performance:bi’s

Importance

ei

Toyota

Sienna

Subaru

Outback

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

Evaluating Alternatives

Product Evaluation: 4=Excellent, 3=Very Good, 2=Good, 1=Fair

Decision Rules

Compensatory Rule: a perceived weakness of one attribute may be offset or compensated for by the perceived strength of another attribute Economic models of rational behavior whereby

consumers maximize utility

Noncompensatory Rule: a product’s weakness on one attribute cannot be offset by strong performance on another attribute. Descriptive models of behavior that capture how

consumers simplify their decision making

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

Compensatory Decision Rules

biToyota

Sienna

Subaru

Outback

Volvo

X-Country Space 4 2 4 Reliability 3 4 3 Safety 3 3 4 Longevity 2 4 4 Handling 1 4 2

13 17 17

Simple Additive (Equal Weight)

bieiImportance

Toyota

Sienna

Subaru

Outback

Volvo

X-Country Space 5 4 (20) 2 (10) 4 (20)

Reliability 4 3 (12) 4 (16) 3 (12)

Safety 4 3 (12) 3 (12) 4 (16)

Longevity 3 2 (6) 4 (12) 4 (12)

Handling 3 1 (3) 4 (12) 2 (6)

53 62 66

Weighted Additive

Noncompensatory Decision Rules Cutoffs/Thresholds: restriction or

requirements for acceptable performance

Signals (surrogate indicators) are product attributes used to infer other product attributes (e.g. high price often infers higher quality)

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

Importance

Toyota

Sienna

Subaru

Outback

Volvo

X-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

Lexicographic Rule

Importance

Toyota

Sienna

Subaru

Outback

Volvo

X-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

Lexicographic Rule

Importance

Toyota

Sienna

Subaru

Outback

Volvo

X-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

Lexicographic Rule

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.

Noncompensatory Decision Rules

Cutoff = 3 Importance

Toyota

Sienna

Subaru

Outback

Volvo

X-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

Elimination by Aspects Rule

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.

Noncompensatory Decision Rules

Cutoff = 2

Toyota

Sienna

Subaru

Outback

Volvo

Cross Country

Space 3 2 4

Reliability 3 4 3

Safety 3 3 4

Longevity 2 4 4

Handling 1 4 2

Conjunctive Rule

Buying A New Car

Marketing Insights

What can an auto manufacturer learn from this?

What can a dealer learn from this?

Emotional Decision Making

Planning for prom… Depends on if you’re a girl or guy

Marketing Insights

What can a marketing learn from this?

How is the process different than buying a car?

Marketer’s Job

To understand the process Anticipate where consumers will look for

information and make it easily accessible Be aware of what matters, (the head or the

heart) Search for opportunities to delight your

customers

Assignment

Read Chapters 10, 14 – 16, 18 (pp 362 – 367, 500 -

508, 513 - 517, 525 - 542, 556 - 565, 570 – 578, 626 - 629, 637 - 651)

Exam Essay -- Examine one of your own or another person’s recent purchase. Detail the steps involved and provide insights to a marketer or another consumer.