1. Consumer Decision Making
Chapter 5 Consumer Decision Making
Consumer Decision Making
CHAPTER 5
Essentials of Marketing Lamb, Hair, McDaniel 6
Designed by
Eric Brengle
B-books, Ltd.
Prepared by
Deborah Baker
Texas Christian University

2. Learning Outcomes LOI LO2 LO3
Chapter 5 Consumer Decision Making
Learning Outcomes
Explain why marketing managers should understand consumer behavior
Analyze the components of the consumer decision-making process
Explain the consumer’s postpurchase evaluation process
LOI
LO2
LO3

3. Learning Outcomes LO4 LO5 LO6
Chapter 5 Consumer Decision Making
Learning Outcomes
Identify the types of consumer buying decisions and discuss the significance of consumer involvement
Identify and understand the cultural factors that affect consumer buying decisions
Identify and understand the social factors that affect consumer buying decisions
LO4
LO5
LO6

4. Learning Outcomes LO7 LO8
Chapter 5 Consumer Decision Making
Learning Outcomes
Identify and understand the individual factors that affect consumer buying decisions
Identify and understand the psychological factors that affect consumer buying decisions
LO7
LO8

5. The Importance of Understanding Consumer Behavior
Chapter 5 Consumer Decision Making
The Importance of Understanding Consumer Behavior
LOI
Explain why marketing managers should understand consumer behavior
Notes:
Whether a company is analyzing buying behavior, sharpening its target marketing skills, or understanding the competition, information is the key to success. It should realize that the marketplace belongs to the entire company, making it everyone’s responsibility to gather marketplace information.
Consumer product and service preferences are constantly changing. Understanding consumer behavior can help marketing managers adapt the marketing mix to influence consumer purchasing decisions. For example, if a manager knows through research that gas mileage is the most important attribute for a certain target market, the manufacturer can redesign the product, and create the appropriate marketing mix, to meet that criterion.

6. Consumer Behavior LOI Consumer Behavior
Chapter 5 Consumer Decision Making
Consumer Behavior
LOI
Consumer Behavior
Processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and the product use.

7. REVIEW LEARNING OUTCOME Understanding Consumer Behavior
Chapter 5 Consumer Decision Making
REVIEW LEARNING OUTCOME Understanding Consumer Behavior
LOI
Consumer behavior
consumers make purchase decisions
consumers use and dispose of product
= HOW

8. The Consumer Decision-Making Process
Chapter 5 Consumer Decision Making
The Consumer Decision-Making Process
LO2
Analyze the components of the consumer decision-making process

9. Consumer Decision-Making Process
Chapter 5 Consumer Decision Making
Consumer Decision-Making Process
LO2
Consumer Decision-Making Process
A five-step process used by consumers when buying goods or services.
Notes:
The consumer decision-making process represents a general five-step process that moves the consumer from recognition of a need to the evaluation of a purchase decision. It is a guideline for studying how consumers make decisions.
Note that consumer decisions may not proceed in order through all the processes, and in fact, may end at any time without a purchase decision.

10. Consumer Decision-Making Process
Chapter 5 Consumer Decision Making
Consumer Decision-Making Process
LO2
Postpurchase
Behavior
Purchase
Evaluation
of Alternatives
Information Search
Need Recognition
Cultural, Social, Individual and
Psychological Factors affect all steps
The consumer decision-making process is shown here and described on subsequent slides.

11. Need Recognition LO2 Need Recognition
Chapter 5 Consumer Decision Making
Need Recognition
LO2
Need
Recognition
Result of an imbalance between actual and desired states.
Notes:
The first stage in the decision-making process is need recognition.

12. Need Recognition
Chapter 5 Consumer Decision Making
LO2
Marketing helps consumers recognize an imbalance between present status and preferred state.
Present
Status
Preferred State
Internal
Stimuli
External
Notes:
A marketing manager’s objective is to get consumers to recognize an imbalance between their present status and their preferred state. Advertising and sales promotion often provide this stimulus.
Recognition of needs may be triggered by internal stimuli, such as hunger and thirst, or by external stimuli, including package design, advertisements, or a brand name mentioned by a friend.
Surveying buyer preferences provides information about consumer wants and needs that can be used to tailor products and services. For example, Proctor & Gamble used the Internet to test market its Crest Whitestrips home-bleaching kit. The test revealed that 80% of potential buyers were women between ages 35 and 54, identifying the best target market.
Discussion/Team Activity
List products and services that have been purchased recently. Indicate the types of internal and/or external stimuli that influenced the decision.

13. Recognition of Unfulfilled Wants
Chapter 5 Consumer Decision Making
Recognition of Unfulfilled Wants
LO2
When a current product isn’t performing properly
When the consumer is running out of a product
When another product seems superior to the one currently used
Notes:
Marketers create new products and services by observing trends in the marketplace, and can create wants on the part of the consumer.
Consumers recognize unfilled wants in various ways, in particular, in the ways shown on this slide.

14. Information Search LO2 Internal Information Search
Chapter 5 Consumer Decision Making
Information Search
LO2
Internal Information Search
Recall information in memory
External Information search
Seek information in outside environment
Nonmarketing controlled
Marketing controlled
Notes:
An internal information search is the process of recalling information in memory. This includes prior experience or prior knowledge about a product.
An external information search relies on information in the outside environment. This includes personal and public references, advertisements, and publicity.
External information may be obtained from non-marketing controlled sources and/or marketing controlled sources. Nonmarketing controlled sources include personal experience, personal sources, and public sources such as Underwriters Laboratories. Marketing-controlled information is biased toward a specific product because it originates with marketers promoting that product. These sources include mass-media advertising, sales promotion, salespeople, product labels and packaging, and the Internet.

15. External Information Searches
Chapter 5 Consumer Decision Making
LO2
Need More Information
More Risk
Less knowledge
Less product experience
High level of interest
Lack of confidence
Less Risk
More knowledge
More product experience
Low level of interest
Confidence in decision
Need Less Information
Notes:
The extent to which an individual conducts an external source depends on such factors as the perceived risk of purchasing a product, knowledge, prior experience, and level of interest in the good or service. The external search is also influenced by the consumer’s confidence in decision making. If a consumer has prior experience, he/she will spend less time searching.
Discussion/Team Activity:
Discuss information searches conducted for products or services recently evaluated or purchased. Characterize this discussion based on the factors described on this slide.

16. Evoked Set LO2 Evoked Set
Chapter 5 Consumer Decision Making
Evoked Set
LO2
Evoked Set
Group of brands, resulting from an information search, from which a buyer can choose.
Notes:
The information search should yield a group of brands, or evoked set, which are the consumer’s preferred alternatives. From this set, consumers will further evaluate the alternatives and make a choice.
Discussion/Team Activity:
Describe the evoked set derived from information searches previously conducted. What were the characteristics that made these products the preferred alternatives?

17. Evaluation of Alternatives and Purchase
Chapter 5 Consumer Decision Making
Evaluation of Alternatives and Purchase
LO2
Evoked Set
Purchase!
Analyze product attributes
Rank attributes by
importance
Use cutoff criteria
Notes:
Once the evoked set is constructed, the consumer is ready to make a decision.
One way to make a choice is to pick product attributes that are important to him/her, then exclude all products in the set that do not meet that criteria.
Another way to narrow the number of choices is to use cutoffs, or minimum or maximum levels of an attribute that an alternative must have. Many times, price is an important cutoff attribute.
The goal of the marketing manager is to determine which attributes have the most influence on a consumer’s choice, and design a marketing mix that stresses those attributes to the consumer.
A single attribute, such as price, may not always explain a consumer’s evaluation of products. Attributes that the marketer may consider important are not always important to the consumer.
Brand names, such as Johnson & Johnson, have a significant impact over the choice of products.

18. REVIEW LEARNING OUTCOME Consumer Decision-Making Process
Chapter 5 Consumer Decision Making
REVIEW LEARNING OUTCOME Consumer Decision-Making Process
LO2
CULTURAL
SOCIAL
PSYCHOLOGICAL
INDIVIDUAL
Need
Recognition 1
Information Search 2
Evaluate Alternatives 3
Purchase 4

19. Postpurchase Behavior
Chapter 5 Consumer Decision Making
Postpurchase Behavior
LO3
Explain the consumer’s postpurchase evaluation process
Notes:
The next step in the process is an evaluation of the product after the purchase.

20. Cognitive Dissonance LO3 Cognitive Dissonance
Chapter 5 Consumer Decision Making
Cognitive Dissonance
LO3
Cognitive Dissonance
Inner tension that a consumer experiences after recognizing an inconsistency between behavior and values or opinions.
Notes:
Once a purchase decision is made, the next step in the process is the evaluation of the product after purchase. Consumers expect certain outcomes from the purchase, and how well these expectations are met determines the level of customer satisfaction.
Price influences the level of expectations for a product or service.
When people feel inconsistency between their values or opinions and their behavior, they feel an inner tension called cognitive dissonance. In purchase decisions, this is also called “buyer’s remorse.” 75 percent of consumers say they had a bad experience in the last year with a product purchased. Marketers try to reduce any lingering doubt.

21. Postpurchase Behavior
Chapter 5 Consumer Decision Making
Postpurchase Behavior
Consumers can reduce dissonance by:
Seeking information that reinforces positive ideas about the purchase
Avoiding information that contradicts the purchase decision
Revoking the original decision by returning the product
Will talk bad about the product
May return the product
Justify their behavior as a one-time mistake
Notes:
Marketing managers can help reduce cognitive dissonance through effective communication with consumers, such as follow-up notes, advertising, and guarantees.
Discussion/Team Activity:
Discuss any of your purchases that generated cognitive dissonance and what was done to address the situation. What role, if any, did marketing play in minimizing cognitive dissonance? What was the outcome? Discuss ways in which the provider of the products/services might have reduced this inner tension.
LO3

22. Consumer Buying Decisions and Consumer Involvement
Chapter 5 Consumer Decision Making
Consumer Buying Decisions and Consumer Involvement
LO4
Identify the types of consumer buying decisions and a
discuss the significance a
of consumer involvement

23. Consumer Buying Decisions and Consumer Involvement
Chapter 5 Consumer Decision Making
Consumer Buying Decisions and Consumer Involvement
LO4
More
Involvement
Less
Routine
Response
Behavior
Limited
Decision
Making
Extensive
Notes:
Consumer buying decisions fall along a continuum of three broad categories: routine response behavior, limited decision making, and extensive decision making.
Routine response behavior: Frequently purchased, low-cost goods and services, with low involvement on search and decisions by consumers before making the purchase. Consumers buy first and evaluate later.
Limited decision making: Consumer has previous product experience but is unfamiliar with the current brands available. A moderate effort is spent searching for information or in considering alternatives.
Extensive decision making: Applies to unfamiliar, expensive products, or an infrequently bought item. The most complex type of consumer buying decisions, and is associated with high involvement on the part of the consumer.
Discussion/Team Activity:
Name products that fall into each of the decision making descriptions, and describe the decision making process for each.

24. Five Factors Influencing Decisions
Chapter 5 Consumer Decision Making
LO4
1. Level of consumer involvement
2. Length of time to make decision
3. Cost of good or service
4. Degree of information search
5. Number of alternatives considered
Notes:
The level of consumer involvement is the most significant determinant in classifying buying decisions. Involvement is the amount of time and effort a buyer invests in the search, evaluation, and decision processes of consumer behavior.

25. Continuum of Consumer Buying Decisions
Chapter 5 Consumer Decision Making
Continuum of Consumer Buying Decisions
LO4
Notes:
1. Exhibit 5.2 compares the three categories of buying decisions.

26. Routine Response Behavior
Chapter 5 Consumer Decision Making
Routine Response Behavior
LO4
Little involvement in selection process
Frequently purchased low cost goods
May stick with one brand
Buy first/evaluate later
Quick decision

27. Limited Decision Making
Chapter 5 Consumer Decision Making
Limited Decision Making
LO4
Low levels of involvement
Low to moderate cost goods
Evaluation of a few alternative brands
Short to moderate time to decide

28. Extensive Decision Making
Chapter 5 Consumer Decision Making
Extensive Decision Making
LO4
High levels of involvement
High cost goods
Evaluation of many brands
Long time to decide
May experience cognitive dissonance

29. Factors Determining the Level of Consumer Involvement
Chapter 5 Consumer Decision Making
Factors Determining the Level of Consumer Involvement
LO4
Situation
Social Visibility
Interest
Perceived Risk of Negative Consequences
Previous Experience
Notes:
The level of involvement in the purchase depends on the following factors:
Previous experience: When consumers have had previous experience with a product or repeat trials, quick choices are made.
Interest: Involvement is directly related to consumer interests, such as cars, motorcycles, or electronics.
Perceived risk of negative consequences: As the risk increases, so does the consumer level of involvement. Risks include financial risks, social risks, and psychological risk.
Situation: The circumstances of a purchase may transform a low-involvement decision into a high-involvement one. For example, a low-priced brand of wine may be purchased routinely, but a high-involvement decision might be required for purchasing a more prestigious wine for a special occasion.
Social visibility: Involvement increases as the social visibility of a product increases. These products that make a statement about the user may include cars, jewelry, furniture, and clothing.

30. Marketing Implications of Involvement
Chapter 5 Consumer Decision Making
Marketing Implications of Involvement
LO4
High-involvement purchases require:
Extensive and informative promotion to target market
Low-involvement purchases require:
In-store promotion, eye-catching package design, and good displays. Coupons, cents-off, 2-for-1 offers
Notes:
For high involvement products, a good ad gives consumers the information they need for making the purchase decision, as well as specifying the benefits and advantages of owning the product.
For low-involvement purchases, customers may not recognize their wants until they are in the store. In-store promotion and package design are important tools for catching the customer’s attention. Good displays can help explain a product’s purpose and create recognition of a want.

31. Chapter 5 Consumer Decision Making
REVIEW LEARNING OUTCOME Consumer Buying Decisions and Consumer Involvement
LO4
Routine
Limited
Extensive
Previous experience
Interest
Perceived risk of negative consequences
Situation
Social visibility