15-1 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

15-2 PART IV: CONSUMER DECISION PROCESS

15-3 CHAPTER 15 INFORMATIONSEARCH

15-4 Consumer Behavior In The News… Broadband Rocks!  Marketers love broadband. So do consumers.  It provides a richer and more flexible online information experience.  Can you predict how fast it will grow in the next five years? Source: “Turbulent New World,” Business Week, March 7, 2005, p. 89.

15-5 Consumer Behavior In The News… Broadband Rocks!  Can you predict how fast it will grow in the next five years?  Roughly 100%!  2005: Households with broadband – 42M  2010: Households with broadband – 83M  Expect continued growth in online as a source of information! Source: “Turbulent New World,” Business Week, March 7, 2005, p. 89.

15-6 Nature of Information Search Internal Search Search of long-term memory to determine if a satisfactory solution is known. External Search If a resolution is not reached through internal search, then the search process is focused on relevant external information. Consumers continually recognize problems and opportunities, so internal and external searches for information to solve these problems are ongoing processes.

15-7 Types of Information Sought Consumer decisions require information about:  Appropriate evaluative criteria  The existence of various alternatives  Performance of each alternative on each evaluative criterion

15-8 Types of Information Sought Information Search

15-9 Types of Information Sought evaluative criteria One potential objective of both internal and external search is the determination of appropriate evaluative criteria.   Government agencies and consumer organizations want consumers to use sound evaluative criteria.   Marketers wanted consumer to use evaluative criteria that match their brand’s strengths.   Both marketers and government agencies provide information designed to influence the evaluative criteria used. Evaluative Criteria

15-10 Types of Information Sought 1.evoked setconsideration set 1.The evoked set or consideration set contains brands or products one will evaluate. 2.inept set 2.The inept set consists of brands found to be completely unworthy of further consideration. 3.inert set 3.The inert set contains brands for which the consumer is aware of but basically indifferent toward. Awareness set The Awareness set is composed of three subcategories of considerable importance to marketers: Appropriate Alternatives

15-11 Types of Information Sought

15-12 Types of Information Sought Awareness Versus Evoked Sets for Various Products

15-13 Types of Information Sought evoked set To choose among the brands in the evoked set, the consumer compares them on the relevant evaluative criteria. This process requires the consumer to gather information about each brand on each pertinent evaluative criterion. Alternative Characteristics

15-14 Sources of Information  Memory of past searches, personal experiences, and low- involvement learning  Personal sources, such as friends, family, and others.  Independent sources, such as magazines, consumer groups, and government agencies  Marketing sources, such as sales personnel, websites, and advertising  Experiential sources, such as inspection or product trial Five primary sources of information available to consumers:

15-15 Sources of Information

15-16 Sources of Information Information Search on the Internet

15-17 Sources of Information Demographics of U.S. Adult Internet Users

15-18 Sources of Information Top 10 Activities of Adult Internet Users 91% Use search engine to find information 84 Search for a map or driving directions 84 Do an Internet search to answer a specific question 80 Research a product/service before buying it 78 Check the weather 78 Look for informtion on a habbyor interest 77 Get travel information 73 Get news 72 Buy a Product 67 Source: Internet Activities (Washington, DC: Pew Internet & American Life Project, May 18, Number represents percent who have ever engaged in the activity

15-19 Sources of Information The Nature of Search Using Online Search Engines

15-20 Sources of Information The Internet influences search. Provides increased speed and efficiency to vast information. More efficient search and better decisions can result. information overload However, information overload can also occur. Information Search on the Internet

15-21 Sources of Information There are numerous shopping services on the Internet that can:   search out the lowest prices for specific items   search out online retailers of specific merchandise   suggest specific brands based on your prior purchases and pre-specified criteria botsshopping bots These services use bots or shopping bots, which are software “robots” that do the shopping/searching for users. Information Search on the Internet

15-22 Sources of Information Marketing Strategy and Information Search on the Internet The online environment is continually evolving. Information Search on the Internet As the online population increasingly mirrors the general population… segmentation and target marketing are increasingly critical to online success.

15-23 Sources of Information Three major strategic issues marketers face regarding the Internet’s role in information search and decision making Three major strategic issues marketers face regarding the Internet’s role in information search and decision making: Information Search on the Internet 1.How can they drive their information to consumers? 2.How can they drive consumers to their information? 3.How (if at all) can online selling be utilized or integrated with existing channels (Chapter 17)?

15-24 Sources of Information  Banner ads  Permission-based Driving Information to Consumers

15-25 Sources of Information Search engine optimization (SEO) Search engine optimization (SEO) - techniques to ensure that a company's web pages are accessible to search engines and improving the chances they are found. Offline Media Offline Media such as print and TV. Behavioral targeting Behavioral targeting involves tracking consumer click patterns on a website and using that information to decide on banner ad placement. Driving Consumers to a Firm’s Information

15-26 Sources of Information Consumers need ongoing incentives to return such as: product-related news features user-related discussion forums updates on new products Website design Website design is also critical. Ongoing and repeat traffic requires relevant and frequently updated content. Driving Consumers to a Firm’s Information Firms use various incentive techniques to encourage repeat traffic

15-27 Applications in Consumer Behavior These materials have been reproduced with the permission of eBay Inc. COPYRIGHT ©EBAY INC. ALL RIGHTS RESERVED. The eBay ad shows how firms use traditional mass media advertising to drive website traffic.

15-28 Amount of External Information Search Marketers are particularly interested in external search, as this provides them with direct access to consumers.   Most purchases involves limited external search immediately prior to purchase.   However, this does not mean a bad judgment on part of consumers since they are balancing the costs and benefits of search.

15-29 Amount of External Information Search Various measures of external information search: 1.Number of stores visited 2.Number of alternatives considered 3.Number of personal sources used, and 4.Overall or combination measures

15-30 Costs vs. Benefits of External Search  Market Characteristics  Product Characteristics  Consumer Characteristics  Situation Characteristics

15-31 Costs vs. Benefits of External Search Factor Affecting External Search: Part I Influencing FactorIncrease in Factor Causes Search to: I. Market characteristics A. Number of alternativesIncrease B. Price rangeIncrease C. Store concentrationIncrease D. Information availabilityIncrease 1. Advertising 2. Point-of-purchase 3. Sales personnel 4. Packaging 5. Experienced consumers 6. Independent sources II. Product characteristics A. PriceIncrease B.DifferentiationIncrease C.Positive productsIncrease

15-32 Costs vs. Benefits of External Search Factor Affecting External Search: Part II Influencing FactorIncrease in Factor Causes Search to: III. Consumer characteristics A.Learning and experienceDecrease B. Shopping orientationMixed C. Social statusIncrease D. Age and household life cycleMixed E.Product involvementIncrease F.Perceived riskIncrease IV. Situation characteristics A. Time availabilityIncrease B.Purchase for selfDecrease C.Pleasant surroundingsIncrease D.Social surroundingsMixed E.Physical/mental energyIncrease

15-33 Costs vs. Benefits of External Search Market characteristics include the number of alternatives, price range, store distribution, and information availability.   Consumer perceptions of the market characteristics, not the actual characteristics, influence shopping behavior.   The greater the number of alternatives available to resolve a problem, the more external search there is likely to be. Market Characteristics

15-34 Costs vs. Benefits of External Search Product differentiation is associated with greater external search. Product Characteristics Shopping for a physician can be be unpleasant, and thus, seen as a negative product And, positive products tend to engender greater search than negative products.

15-35 Costs vs. Benefits of External Search A variety of consumer characteristics affect perceptions of search costs and benefits.   Confidence in one’s knowledge of existing solutions is an important determinant.   However, consumers often do not know what they think they know! Consumer Characteristics

15-36 Costs vs. Benefits of External Search There are a variety of types of knowledge where a low level of calibration frequently occurs to the detriment of consumers and firms, including Memory of Facts Memory of Events Belief Polarization Belief Validity Personal Forecasts Consumer Characteristics

15-37 Costs vs. Benefits of External Search Consumer Perception of Risk Consumer Perception of Risk associated with unsatisfactory product performance increases information search.   Perceived risk is high for products whose failure to perform as expected would result in a high Social cost Financial cost Time cost Effort cost Physical cost Consumer Characteristics

15-38 Costs vs. Benefits of External Search Situational variables can have a major impact on search behavior including the following:   Temporal perspective   Task definition   Antecedent state   Physical surroundings   Social surroundings Situation Characteristics

15-39 Marketing Strategies Base on Information Search Patterns 1.The type of decision influences the level of search, and 2.The nature of the evoked set influences the direction of the search Sound marketing strategies take into account the nature of information search prior to purchase. Two dimensions of search are particularly appropriate:

15-40 Marketing Strategies Based on Information Search Patterns

15-41 Marketing Strategies Based on Information Search Patterns Six marketing strategies based on search patterns: 1.Maintenance Strategy 2.Disrupt Strategy 3.Capture Strategy 4.Intercept Strategy 5.Preference Strategy 6.Acceptance Strategy

15-42 Marketing Strategies Based on Information Search Patterns If the brand is purchased habitually by the target market, the marketer’s strategy is to maintain that behavior This requires consistent attention to product quality, distribution, and a reinforcement advertising strategy. Maintenance Strategy Del Monte has large repeat purchaser segments for their canned vegetables which they successfully maintain

15-43 Marketing Strategies Based on Information Search Patterns disrupt If the brand is not part of the evoked set and the target market engages in nominal decision making, the marketer’s first task is to disrupt the existing decision pattern. Disrupt Strategy Soy products are a good example of how disrupt strategies have been used to induce trial adoption.

15-44 Marketing Strategies Based on Information Search Patterns Disrupt Strategy Long-Run Major brand improvement along with attention- attracting advertising could shift consumer to more extensive decision making. Short-Run Attention-attracting advertising aimed specifically at breaking habitual decision making can be successful.

15-45 Marketing Strategies Based on Information Search Patterns Tactics include:   Free samples, coupons, rebates, and tie-in sales.   Striking package designs and point-of-purchase displays.   Comparative advertising. Disrupt Strategy

15-46 Marketing Strategies Based on Information Search Patterns Limited decision making generally involves a few brands evaluated on only a few criteria.   Brand is in evoked set.   Search occurs mainly at the point-of-purchase or in readily available media.   Objective is to capture as large a share as practical. Capture Strategy

15-47 Marketing Strategies Based on Information Search Patterns The marketer will want to supply information, often on price and availability, on their website, in local media through cooperative advertising, and at the point-of-purchase through displays and adequate shelf space. Capture Strategy Implementing a capture strategy also requires emphasis on maintaining consistent product quality and adequate distribution

15-48 Marketing Strategies Based on Information Search Patterns If limited decision making and brand is not part of evoked set, objective will be to intercept the consumer during search.   Emphasis will be on local media, point-of-purchase displays, shelf space, package design, etc.   Coupons can also be effective. Intercept Strategy

15-49 Marketing Strategies Based on Information Search Patterns Extended decision making with the brand in the evoked set requires a preference strategy.   A simple capture strategy not likely adequate.   Instead, marketer needs to structure information so brand becomes preferred by target market. Preference Strategy

15-50 Marketing Strategies Based on Information Search Patterns Similar to preference strategy, but complicated by fact that target market is not seeking information about the brand.   Beyond preference strategy, marketer must attract consumer attention or motivate brand learning.   Incentives to try product, long-term advertising to enhance low-involvement learning and use of the Internet are useful for gaining acceptance. Acceptance Strategy