1. Copyright Atomic Dog Publishing, 2002 Chapter 2 Problem Recognition & Information Search

2. Copyright Atomic Dog Publishing, 2002 Chapter Spotlights Consumer decision process action options Problem recognition: actual state versus desired state and motivation arousal Pre-purchase, post-purchase, and ongoing information search Internal and external information search Consideration sets Sources of marketplace information

3. Copyright Atomic Dog Publishing, 2002 Consumer Decision Process Action Options Start through steps and complete them in order Start, stop, start, stop, etc. and complete steps in order Start steps and “loop back” as needed based on what happens and complete process Start into the process then stop somewhere along the way and never finish Do not start the process

4. Copyright Atomic Dog Publishing, 2002 Problem Recognition When consumers realize that they need something! It is the first step in the decision-making process: Problem recognition Information search Alternative evaluation Choice Outcomes

5. Copyright Atomic Dog Publishing, 2002 Motivational Arousal Different people have different benefit motivations for purchasing different products or services. Types of benefit motives: To optimize satisfaction To prevent possible future problems To escape from a problem To resolve a conflict To maintain the status quo or satisfaction

6. Copyright Atomic Dog Publishing, 2002 Problem Recognition: Actual State versus Desired State It is the psychological process used to determine the difference between the consumer’s actual benefits state (where you are) and the desired benefits state (where you want to be). Opportunity (vs. problem) recognition

7. Copyright Atomic Dog Publishing, 2002 Problem Recognition Influences Situational influences Consumer influences Marketing influences

8. Copyright Atomic Dog Publishing, 2002 Situational Influences Product consumption (e.g., running out of gas) Product acquisition (e.g., purchasing a new home may stimulate other purchases) Changed circumstances (e.g., moving away from home to college)

9. Copyright Atomic Dog Publishing, 2002 Consumer Influences Actual state consumers: those who look to existing products to solve their problems. Desired state consumers: those who shop for new products to address their problems. They enjoy the shopping experience

10. Copyright Atomic Dog Publishing, 2002 Marketing Influences Marketing mix changes and/or promotion actions may help stimulate problem recognition: Advertising Coupons Free offers sweepstakes

11. Copyright Atomic Dog Publishing, 2002 Information Search Information collected by consumers is the basis for evaluation and choice behavior. It is important for marketers to know: Why consumers are searching for information Where will they look What information consumers seek How extensively they are willing to search

12. Copyright Atomic Dog Publishing, 2002 Types of Information Search Prepurchase search: Directed searches: consumer searches for information that will help solve a specific problem. Browsing: consumer is “just looking” with no immediate intent to buy. Accidental search: consumer is not actively looking for information, but takes note of information that is formally presented or inadvertently encountered. Post-purchase search: gathering information on choice made after the purchase. Ongoing search: continuous information gathering to stay “marketplace-current.”

13. Copyright Atomic Dog Publishing, 2002 Internal and External Information Search Internal search: search based on existing information in memory. Information quantity, quality, relevance, currency Experts vs. novices External search: the search of information beyond one’s memory. Personal sources: friends, experts, salespeople Impersonal sources: advertising, in-store displays, trade reports, the Internet. Experts vs. novices

14. Copyright Atomic Dog Publishing, 2002 Why Do Consumers Engage in External Information Search? High perceived value versus perceived cost of search Need to acquire information Ease of acquiring and using information Confidence in decision-making ability Locus of control (internals vs. externals) Actual or perceived risk Costs of external search Types of products sought Characteristics of the purchase decision

15. Copyright Atomic Dog Publishing, 2002 Types of Risk Functional or performance Financial Psychological Social Physiological Time Linked-decision

16. Copyright Atomic Dog Publishing, 2002 Costs of External Search Financial Time Decision delay (opportunity cost) Physical cost Psychological cost Information overload

17. Copyright Atomic Dog Publishing, 2002 Type of Product Sought Specialty goods: search willingness is high when consumer has developed strong preferences Shopping goods: less search willingness for products that the consumer must devote time and effort to compare and contrast. Convenience goods: consumer is reluctant to spend any time and effort in search and evaluation before purchase.

18. Copyright Atomic Dog Publishing, 2002 Characteristics of Purchase Decision If number of possible solutions is limited – extensive search is acceptable If need for trial is high – more likely to search Difficulty of trial high – search is for quality supplier

19. Copyright Atomic Dog Publishing, 2002 External Search Strategy Consideration set: those brands, outlets, etc. that have front-of-mind presence and from among which there is intention to choose. Which brands of computers would you consider purchasing? Also called “evoked set” or “relevant set” Marketplace information sources: General (face-to-face or mass media) Marketer-controlled (face-to-face or mass media)