© Pearson Education Limited 2003 OHT 8.1 Individual decision-making

© Pearson Education Limited 2003 OHT 8.2 Consumers as problem solvers 1.A consumer purchase occurs as a response to a problem. 2.Consumers go through a number of different steps in order to make a purchase. 3.As some purchases are more important than others, so the effort put into each decision to buy is different.

© Pearson Education Limited 2003 OHT 8.3 Decision-making perspectives 1.The rational perspective - people calmly and careful integrate as mush information as possible with what they already know about a product and weigh up the pros and cons of each before making a decision. Behavioural Influence perspective - (in conditions of low involvement) where decisions are made as a result of a learned response to environmental cues, e.g. buying on impulse as a result of a ‘special offer’. Experiential perspective - in conditions of high involvement but where the selection made cannot be entirely rational.

© Pearson Education Limited 2003 OHT 8.4 Stages in the consumer decision making process 1.Problem recognition - occurs whenever consumers see a significant difference between current state of affairs and some desired ideal state. 2.Information search - consumers survey their environment for appropriate data to make a reasonable decision. 3.Evaluation of alternatives - where alternatives are identified, categorised and compared against evaluative criteria. 4.Product choice - against non compensatory or compensatory decision rules. 5.Outcomes - does product satisfy consumers needs and wants.

© Pearson Education Limited 2003 OHT 8.5 Types of consumer decisions 1.Habitual decision-making - those that are made routinely and with little or no conscious effort. 2.Extended decision-making - usually initiated by a motive that is fairly central to self-concept and the final decision is perceived to carry a fair degree of risk. 3.Limited decision-making - usually straightforward and simple. There is no real motivation to search for information and evaluate each alternative rigorously.

© Pearson Education Limited 2003 OHT 8.6 Continuum of buying decision behaviour Figure 8.1

© Pearson Education Limited 2003 OHT 8.7 Characteristics of limited versus extended problem-solving Table 8.1

© Pearson Education Limited 2003 OHT 8.8 Problem recognition 1.When a consumer recognises that there is a perceived problem to be solved. The problem can be small or large, simple or complex. 2.Need recognition can occur by a consumer running out of a product, or by the creation of a new need, e.g. after decorating a room replacement furnishings to match new colour scheme. 3.Marketers attempt to create: - primary demand, encouraging consumers to use products regardless of the brand they choose. - secondary demand, encouraging consumers to prefer one brand over another.

© Pearson Education Limited 2003 OHT 8.9 Problem recognition: shifts in actual or ideal states Figure 8.2

© Pearson Education Limited 2003 OHT 8.10 Different search models 1.Internal versus external information search - Internal searches of our memory banks helps consumers assemble information about different product alternatives. External information searches (advertisements, etc.) helps consumers to supplement current knowledge. Deliberate versus accidental search - Directed learning where consumers actively seek information or more incidental learning where consumers passively absorb information in their day to day routines.

© Pearson Education Limited 2003 OHT 8.11 The economics of information Consumers will put themselves out to gather the information providing it is not too onerous or time consuming. The amount of external search for most products (not clothing though) is surprisingly small, even when additional searches would benefit consumers. As a general rule search activity is greater when the purchase is important, there is a need to learn about the purchase or when the relevant information is easily obtained and utilised.

© Pearson Education Limited 2003 OHT 8.12 Evaluation of alternatives 1.Much of the effort that goes into a purchase decision occurs at the stage where a choice must be made from alternatives. 2.The alternatives actively considered are known as the evoked set. These comprise those products already in memory (the retrieval set) plus those prominent in the retail environment. 3.Marketers want their products to be in the evoked set.

© Pearson Education Limited 2003 OHT 8.13 Identifying alternatives Figure 8.3

© Pearson Education Limited 2003 OHT 8.14 Product categorisation 1.Categorisation is a crucial determinant of how a product is evaluated. Products in consumers’ evoked sets are likely to share similar features. Careful product grouping is important.

© Pearson Education Limited 2003 OHT 8.15 Strategic implications for product categorisation 1.The way a product is grouped with others has important ramifications for determining its competitors for adoption and the criteria used to make this choice. 2.Product positioning - this hinges on the marketer’s ability to convince consumers that a product should be considered within a given category. 3.Identifying competitors - many different product forms compete for membership of a category. 4.Where a product is a really good example of a category it is more familiar to consumers and is more easily recognised and recalled.

© Pearson Education Limited 2003 OHT 8.16 Evaluative criteria These are the dimensions used to judge the merits of competing options. Marketers can play a role in educating consumers about which criteria should be used as determinant attributes. The decision about which attributes to use is the result of procedural learning where a consumer undergoes a series of cognitive steps before making a choice.

© Pearson Education Limited 2003 OHT 8.17 Heuristics Mental rule of thumbs that are used to simplify decision- making and lead to speedy decisions. The rules vary from the very general to very specific. Shortcuts include - relying on a product signal, relying n well known brand names as a signal of quality and believing market beliefs. When a brand is consistently purchased over time, this pattern may be due to true brand identity or inertia because it is the easiest thing to do.

© Pearson Education Limited 2003 OHT 8.18 Common market beliefs (1 of 5) Table 8.2 Source: Adapted from Calvin P. Duncan, ‘Consumer Market Beliefs: A Review of the Literature and an Agenda for Future Research’, in Marvin E. Goldberg, Gerald Gorn and Richard W. Pollay, eds., Advances in Consumer Research 17 (Provo, UT: Association for Consumer Research, 1990): 729–35.

© Pearson Education Limited 2003 OHT 8.19 Common market beliefs (2 of 5) Table 8.2 Continued

© Pearson Education Limited 2003 OHT 8.20 Common market beliefs (3 of 5) Table 8.2 Continued

© Pearson Education Limited 2003 OHT 8.21 Common market beliefs (4 of 5) Table 8.2 Continued

© Pearson Education Limited 2003 OHT 8.22 Common market beliefs (5 of 5) Table 8.2 Continued