Consumer Decision Making II MKT 750 Dr. West

Agenda Back to Stages of Decision Making Evaluation of Alternative, Decision Rules, Choice and Post-purchase Evaluation A Model of Customer Satisfaction

Rational Decision Making: Choice Alternative Evaluation Search Need Recognition Post-Purchase

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: bi’s Importance ei Toyota Sienna Subaru Outback Volvo Cross Country Space 5 4 2 Reliability 3 Safety Longevity Handling 1 Styling Product Evaluation: 4=Excellent, 3=Very Good, 2=Good, 1=Fair

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) bi Toyota Sienna Subaru Outback Volvo Cross Country Space 4 2 Reliability 3 Safety Longevity Handling 1 Styling 15 21 20

Weighted Additive biei Importance Toyota Sienna Subaru Outback Volvo Cross Country Space 5 4 (20) 2 (10) Reliability 4 3 (12) 4 (16) Safety Longevity 3 2 (6) 4 (12) Handling 1 (3) 2 (6) Styling 2 2 (4) 4 (8) 3 (6) 57 70 72

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 Toyota Sienna Subaru Outback Volvo Cross Country Space 5 4 2 Reliability 3 Safety Longevity Handling 1 Styling

Lexicographic Rule Importance Toyota Sienna Subaru Outback Volvo Cross Country Space 5 4 2 Reliability 3 Safety Longevity Handling 1 Styling

Lexicographic Rule Importance Toyota Sienna Subaru Outback Volvo Cross Country Space 5 4 2 Reliability 3 Safety Longevity Handling 1 Styling

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 Toyota Sienna Subaru Outback Volvo Cross Country Space 5 4 2 Reliability 3 Safety Longevity Handling 1 Styling

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 Very sensitive to order Cutoff = 2 Toyota Sienna Subaru Outback Volvo Cross Country Space 3 2 4 Reliability Safety Longevity Handling 1 Styling Very sensitive to order

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 10 Favorable 9 Performance 8 7 6 Expectation Unfavorable 5 Performance 4 3 2 1 Zone of Tolerance

Expectancy Disconfirmation 10 High Expectations Favorable 9 Performance 8 7 6 Unfavorable 5 Performance 4 3 2 1 Negative Disconfirmation “Disappointment” Dissatisfaction Satisfaction Zone Zone

Expectancy Disconfirmation 10 High Expectations Favorable 9 Performance 8 7 6 Unfavorable 5 Performance 4 3 2 1 Negative Disconfirmation “Betrayal” Dissatisfaction Satisfaction Zone Zone

Expectancy Disconfirmation 10 Favorable 9 Performance 8 7 6 Unfavorable 5 Performance 4 3 2 1 Low Expectations Dissatisfaction Satisfaction Zone Zone Positive Disconfirmation “Ambivalence”

Expectancy Disconfirmation 10 Favorable 9 Performance 8 7 6 Unfavorable 5 Performance 4 3 2 1 Low Expectations Dissatisfaction Satisfaction Zone Zone 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 It Shapes Word-of-Mouth 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

Customer Satisfaction Implications for Competitive Strategy Monitor satisfaction levels Encourage dissatisfied customers to voice their concerns Have a recovery system in place to address customer concerns

Influencing Expectations Advertising claims Brand names Packaging Price

Assignment