Consumer Decision Making Consumer Decision making is a central part of consumer behavior but the way we evaluate and choose products varies widely.

How do you choose the food that you eat?

Stages in CDM

Decision making perspectives Rational Carefully integrating information about the product e.g cooking oil Behavior influence Based upon environmental cues e.g attention grabbing packages. Experiential Offerings that create a positive emotional response e.g. buying the same chocolate again Experiential: going to a good restaurant again after a good experience Behavior influence: external stimuli.

A continuum of buying decision behavior It can help us to understand the decision-making process when we think about the amount of effort that goes into a decision each time we must make it. Consumer researchers think of decision effort on a continuum. On one end we have habitual decision making and at the other, there is extended problem solving. Many decisions fall somewhere in between, which we refer to as limited problem solving. Habitual or routine response behavior is for low involvement products and these decisions are made mostly out of habit. Limited problem solving involves using decision rules to make choices. Extended problem solving is for high risk choices.

Characteristics of limited vs. extended problem solving Motivation: Low risk vs. high risk Low involvement vs. high involvement Information search Little search vs. extensive search Alternative Evaluation Weakly held beliefs vs. strongly held beliefs Purchase Limited time vs. ample time Influenced by store displays vs. communication with store personnel

Stage 1: Problem recognition Problem = which carries a rather negative connotation; no one wants to have problems. Add example: mehran and city Mehran actual state -→ city (oppurtunity) Mehran kharab ho gai hai --→ need based problem arises and you satisfy the need Availability of regular raw chicken (actual state) -→ easy to cook k&n (opportunity)

Home cooked Chicken ( Actual State ) K & Ns - Safe and Healthy chicken ( Opportunity) Home cooked Chicken ( Actual State ) Chicken not available Market closed/ Bird flu ( Need ) Sources Dissatisfaction Out of stock market induced Social Class/ Reference groups

OPPORTUNITY Ideal states goes up NEED Actual state goes down NO PROBLEM Acceptable state OPPORTUNITY Ideal states goes up NEED Actual state goes down

Stage 2: information search Deliberate Search Directed learning Purchase based upon previous knowledge Accidental Search Incidental learning Purchase based upon mere exposure Directed --→ service shoes for comfortable shoes Purchase based upon previous knowledge: good experience in the past, buying again / visiting the same restaurant again Incidental -→ harpic after marriage/ if seen at home or ads/ mosquito repellent Ama buying cooking oil so you buy the same one Subway example

Do we always search or buy rationally?

Mental accounting This process demonstrates that the way we pose a problem and whether it’s phrased in terms of gains or losses influences our decisions. Add picture After bulk shopping, if you get a voucher for free concert and it rains, you might not go since it was free (no losses) BUT if you get the concert ticket yourself then you are more likely to risk going in the rain

Segerate losses Segerate gains integrate smaller losses with larger gains Segregate small gains with larger losses

How much do we search? This figure shows us that there is an inverted-U relationship between knowledge and external search effort. People with very limited expertise may not feel they are competent to search extensively. Experts have a better sense of what information is relevant so they engage in selective search. Novice consumers tend to process information in terms of the big picture instead of detailed information. Who searches the most? Moderately knowledgeable consumers. Example - bottled water.

Stage 3: evaluation of alternatives Purchase decision at the stage where we have to choose a product from several alternatives E.g different types of burgers of the same brand Different franchises of burgers Brands of shampoo both national and international (pantene, loreal, garnier, all-clear, john frieda) Consideration set: for e.g, habitually buying kellogs cornflakes, or buying tea of the same brand always a person engaging in extended in extensive problem solving may even evaluate several other brands and think about the pros and cons Marketing plays an imp role in creation of evoked set (seen that new brands are more likely to be in evoked sets, compared to old ones, even after positive ascpets have been shown. (biscuits, fruit juices, ice cream brands- hagen daz, omore, wall, hico, ben &  jerrys)

Evoked Set: Consideration Set: Alternatives a consumer already knows about (knowledge of the shampoo brands) Consideration Set: Alternatives that a consumer actually considers while purchasing (based upon price range, availability, past experience)

Product categorization First: Superordinate level (general category-dessert) Second: Basic level (sugar vs. sugar free) Third: Subordinate level Sugar: brownies, donuts, bounty Sugar-free: wheatables, mithai, chamam ice cream we represent  a product in a cognitive structure at one of the three levels. Or fattening and non-fattening dessert : ice cream, pie, cake vs. fruit, yoghurt, low fat ice cream

Stage 4: product choice Once we assemble and evaluate the relative options in a category, eventually we have to choose one. Evaluative criteria Dimensions we use to judge the merits of competing options Determinant attributes: Features we use to differentiate among our choices (yoghurt: texture, taste, nutritional value, price, freshness, size of packaging) Differences in products carry more weightage in the decision process than do similarities Going to eat food, both are fast foods, so less effort required in decision making BUT if more options in food are present (fast food vs. Chinese), more effort required Our decision making can range from very simple and quick strategies to complex processes requiring much attention and cognitive processes

Heuristics (rule of thumb): If a salad is green, its fresh Nutritional chart given, high quality product Pioneer product (e.g national foods/ nestle) What heuristic approach do you use while buying foods? Mental shortcuts/assumptions we make for speedy decisions we rely on rule of thumb (expensive product, better quality), buying the same cooking oil mother bought

Market beliefs Brand Store Price/discount/sale The best brands are the ones purchased the most Store Larger stores offer more variety (Alfatah/Hyperstar) Price/discount/sale Sales are typically run to get rid of slow moving merchandise/ defected stuff Advertising & sales promotion Items tied to giveaways are not a good value (Vim + maggie noodles) or (free product is of low quality) Product/packaging Large size containers are cheaper compared to individual small size packing ( coke vs. coke carton) Colgate and brush, we think the brush is of bad quality

Decision rules Consumers rely on different decision rules when they evaluate competing options Non-compensatory decision rules: When we feel that a product with a low standing of one attribute can’t compensate for this flaw even if there is another better attribute (e.g size of TV screen small, but good picture quality) Compensatory decision rules: When a product has a chance to make up for its shortcoming (though the pizza is small but good topping)

Happy decision making! :D Stage 5: outcomes This is the final stage of decision making where you buy the product of your choice and leave the rest Happy decision making! :D

Marketers approach Marketers create the opportunity, or create a need Marketers provide info according to the response they want (if they want you to search, less info) – zn protected bottle, improves immunity _info already provided by nestle so more likely to get the product since info is there Create alternatives (within the brand, and outside of the brand – tea), more alternatives within brand, more likely to sell How marketers endorse determined attributes through advertising (cadbury silk), safe and healthy chicken, packaging, color scheme Eventually, marketers use these strategies to help you make a final decision (marketers maintain our attitude towards a product by staying consistent and analyzing transitions of change in decision making process or improving their marketing strategies accordingly).