Chapter 3 Problem Recognition Nature of problem recognition Difference between habitual, limited and extended decision making Methods for measuring problem recognition Marketing strategies based on problem recognition Problem recognition is the first stage of the consumer decision making process. (Definition on page 63.) This influences the amount and type of information search: but we will cover that in the next lecture. As the level of involvement increases, the consumer moves from virtually no decision making through to an extended decision making process. Before devising a marketing strategy, a manager needs to be able to know the extent of the problem recognition. This should be objectively measured where possible. Finally, the manager is in a position to devise marketing strategies that take into account the degree of problem recognition present. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Need/Problem Recognition What happens during need/problem recognition? Can they be activated? Are there non-marketing influences? What marketing influences are used? Does it vary from one person to the next? Implications for marketing strategy? To understand how consumers behave during this early stage of decision making it is necessary to pose a number of questions: Do consumers readily recognise that they have a need for the product or service? If not, can this be activated? What are the major influences on consumers? And how does this vary from one consumer to the next? How can this knowledge be used to devise a suitable marketing strategy? Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Types of Consumer Decisions Problem recognition Purchase involvement See page 63 for definitions of these. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Types of Consumer Decisions (cont.) Purchase involvement influenced by the interaction of individual, product and situational characteristics Forms of involvement and outcomes Habitual decision making—single brand Limited decision making Extended decision making Implications for strategy Purchase involvement can be complex to understand. It can be influenced by the interaction of the individual consumer, the particular product and the specific situation, as we discussed in the previous lecture. When involvement is low, such as when habitual decision making is being used, there is very little actual decision making. Brand-loyal consumers are habitual decision makers. There is a single preferred decision to the problem. Limited decision making covers the middle ground between habitual and extended decision making. Sometimes one aspect only is considered; for example, a search for the lowest-priced brand. Extensive decision making usually involves both internal and external search for information and the decision making can become very complex. Products such as holidays, cars, homes and personal computers usually involve high involvement decision making. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Purchase Involvement and Types of Decision Making Low purchase involvement High purchase involvement Habitual decision making Limited decision making Extended decision making Purchase involvement is defined on page 63. As the consumer moves from a very low level of purchase involvement to a high level of purchase involvement, the decision making becomes increasingly complex. Purchase involvement is a continuum and it is also worthwhile to note that habitual, limited and extended decision making are areas along this continuum and not distinctive points. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Purchase Involvement and Types of Decision Making (cont.) Habitual decision making is in effect no decision at all: a single brand choice can solve the problem and requires very little (internal) searching for information. Extended decision making is at the other end of the continuum, where a number of brands within the product category can reduce the discrepancy between the actual state and the desired state. The consumer is compelled to search for information both internally and externally in order to reach a purchase decision. Fortunately, few purchases are in this area. However, some examples could be a car, a house or a computer.

Purchase Involvement and Types of Decision Making (cont.) A purchase in the habitual area often requires no or very little decision making, while in contrast a purchase in the extended decision making area requires complex decision making. We will discuss these in more detail in later lectures. There is seldom any postpurchase dissonance with habitual decision making and very little evaluation. In contrast, with extended decision making there is quite often some form of postpurchase dissonance which can also involve complex evaluation as to whether or not the correct decision was made.

Marketing Strategy and Types of Consumer Decisions The process of problem recognition The nature of problem recognition Desired state Actual state See page 66 for definitions. Problem recognition involves recognising the existence of a discrepancy between the consumer’s desired state (what the consumer would like) and the actual state (what the consumer perceives as already existing). Both the desired state and the actual state are influenced by the consumer’s lifestyle and current situation. If the discrepancy between these two states is sufficiently large and important, the consumer will begin to search for a solution to the problem. (See pages 66–67.) Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

The Process of Problem Recognition

The Process of Problem Recognition (cont.)

The Desire to Resolve Recognised Problems Depends on two factors: The magnitude of the discrepancy between the desired state and the actual state The relative importance of the problem See page 68. If the discrepancy is large and the problem is not important to the consumer, they may not move to the next stage—information search. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Types of Consumer Problems Active problem Inactive problem See page 69 for definitions. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Types of Consumer Problems and Action Required Routine problems Expected, require immediate solution Emergency problems Not expected, require immediate solution Planning problems Expected, don’t require immediate solution Evolving problems Not expected, don’t require immediate solution Problem types and action required. Routine problems: need food, need fuel, etc. Emergency: flat battery in the car + need to get to work. Planning: car needs a service, but too much on at the moment, will wait for signs or until I have time. Evolving: car will need replacing sometime, will not give problems for ages yet, no problem at this stage. Should investigate Roadside Assistance Insurance cover one day, probably won’t be worthwhile. Insurance: Health problems usually not expected e.g. health insurance is not recognised as a problem by young adolescents. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Non-Marketing Factors Affecting Problem Recognition See pages 69–70.

Factors that Influence the Desired State Culture/social class, e.g. cleanliness Reference groups, e.g. after graduation Family/household, e.g. family brands Change in financial status, e.g. retrenchment Previous purchase decisions Individual development Motives: refer to Maslow’s needs Emotions: seek positive experiences? The situation A number of factors beyond the control of the marketing manager can affect problem recognition: culture/social class may mean that, e.g., cleanliness is an important desired state; reference groups are a major influence and can change, e.g. after graduation when you are working, one of your main reference groups will change very quickly; family/household influences brands purchased; a sudden change in financial status can change an individual’s desired state; a previous purchase, such as buying a house, will trigger the need for a large range of new purchases; individual development is associated with change in tastes, etc. and is independent of other changes such as getting older or having more money; individual’s motives can influence their buying and consumption. the situation: refer to previous lecture notes Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Factors Influencing the Actual State Past decisions Normal depletion Product/brand performance Individual development Emotions The efforts of consumer groups The availability of products The current situation See page 71 for notes. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Brand Performance Many products need to perform on two levels: 1. Instrumental performance 2. Expressive performance See page 71 for definitions. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Marketing Strategy and Problem Recognition Measuring problem recognition activity analysis—study of meal preparation product analysis—problems using it? Before marketing managers can affect problem recognition, they must be able to measure it. This may involve qualitative market research techniques. Some examples of problem recognition are found in the activity analysis surrounding meal preparation: a desire for healthy, tasty and quick-to-prepare meals has provided an opportunity to market instant meals for busy people. Problems involving the product should be known: consumers are asked about the purchase and/or the use of a particular product or brand. (See page 72.) Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Marketing Strategy and Problem Recognition (cont.) Measuring problem recognition (cont.) 3. problem analysis—product/brand solutions? 4. human factors research—suit users 5. emotion research—how people feel about it Problems with using the product should be known: e.g. VCRs that are difficult to tune or packages that are difficult to open. Human factors research can involve observations, such as supermarket shoppers queuing at the checkout. When queues get too long they become very frustrated and may choose another store. Emotion research could involve focus groups to discover how consumers feel about the brand or product. Some of the methods are Observation, Focus groups (10–12 people in a group), Panels (can be contacted by mail and email), Indepth interviews, and Means-end to find consumers’ deeper motivations. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Responding to Consumer Problems Activating problem recognition generic problem e.g. dairy foods When the problem is latent or of low importance selective e.g. one brand solution Marketers can instigate the problem recognition and guide consumers to their products: for example, the dairy industry may want to raise the problem of osteoporosis in women, and provide information about the high calcium content of dairy foods. All (dairy) products will solve the generic problem. A selective approach refers to the recognition that only one brand in the category will solve the problem, e.g. Nurofen for pain. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

An Active Attempt to Activate Problem Recognition

Responding to a Recognised Problem

Responding to Consumer Problems Timing problem recognition e.g. winter colds Timely reminders can be used to alert consumers to the need to purchase certain products, e.g. products for winter colds and batteries for smoke alarms when daylight saving stops/starts. (See page 77.) Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Responding to Consumer Problems (cont.) Suppressing problem recognition avoid upsetting habitual buyers anticipate and counteract negatives Marketers may desire to suppress any problems, especially if habitual buyers are likely to start searching for other brands or product categories. Product attributes or quality, rather than prices, may need to be brought to the attention of regular consumers. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Next lecture… Chapter 4 Information Search Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins