1. Chapter 7 Consumer Decision Making

2. Sample Consumption Decisions Buy or not buy? Buy car or go on a cruise? Buy sedan or coupe? Buy Toyota or Volvo? Buy Camry or Avalon? Buy V6 or V4?

3. Process of Deciding Consumer Decision Making refers to the cognitive process in which consumers integrate information about options, evaluate them, and select one. The outcome of the CDM process is choice. It is a goal directed, problem-solving process.

4. A model of consumer decision making Memory Product knowledge and involvement Information in the environment Interpretation Exposure, attention, and comprehension Knowledge and beliefs Integration Attitudes and intentions Behavior Consumer decision making

5. Problem recognition Search for relevant info Evaluation of alternatives Choice decisions Purchase Post-purchase use and reevaluation A generic model of consumer problem solving

6. Limitations of the Generic Process Real world CDM is rarely fully linear (?) It is not just cognitive, it involves interactions between behaviors, feelings, environment and cognitive processes. Often involve multiple-problems and multiple solutions

7. Elements of Problem Solving Problem representation –End goal –Goal hierarchy –Relevant knowledge for problem representation –Heuristics for searching, evaluating, and integrating knowledge –Choice alternatives (next slide)

8. All brands in a product class Unknown brandsKnown brands Brands found accidentally Brands found through search Evoked set Unrecalled brands Consideration set of brand choice alternatives Forming a Consideration Set of a Brand of Alternatives

9. Elements of Problem Solving (contd.) Integration processes –How information about options are combined and options are evaluated –Compensatory processes –Non-compensatory processes –Heuristics

10. Compensatory Processes Multi-attribute model A perceived weakness or negative evaluation on one criterion can be compensated for by a positive evaluation on another criterion. Separate evaluations for each choice criterion are combined (added or averaged) to form an overall evaluation of each alternative. The highest rated alternative is chosen.

11. Non-compensatory Processes Conjunctive Accept alternative only if each criterion equals or exceeds the minimum cutoff level. A product is acceptable only if it exceeds the minimum level on at least one criterion Rank criterion from most to least important and choose best alternative on most important criterion Select one criterion and eliminate alternatives that don’t exceed it’s established cutoff level. Continue eliminating until one alternative remains. Disjunctive Lexicographic Elimination by aspects

12. Matrix of Evaluations BrandToyotaVolvo Reliability97 Safety710 Gas Mileage88 Compensatory2425 Conjunctive At least 8 on every attribute Choose Disjunctive At least 9 on safety Choose Lexicographic Gas mileage is most important, followed by reliability. Choose

13. Combination Processes Mix of compensatory and non-compensatory processes, combined or “constructed” on the spot to adapt to environmental factors

14. Examples of Consumer Heuristics Search Heuristics Store selection Sources of information Source credibility If you are buying stereo equipment, always go to Sam’s Hi-Fi If you want to know which alternatives are worth searching for, read test reports in Consumer Reports If a magazine accepts advertisements from the tested products, don’t believe its product tests

15. Examples of Consumer Heuristics, cont.. Evaluation Heuristics Key criteria Negative criteria Significant differences If comparing processes foods, examine sodium content. If a salient consequence is negative, give the choice criterion extra weight in the integration process. If alternatives are similar on a salient consequence, ignore that choice criterion.

16. Examples of Consumer Heuristics, cont.. Choice Heuristics Works best Bought last Price-based rule Chooses the product that you think works best - that provides the best level of performance Select the alternative you used last, if it was satisfactory Buy the least expensive (or the most expensive, depending on your belief about relationship between price and product. If choosing among familiar products...

17. Examples of Consumer Heuristics, cont.. Choice Heuristics Wait and see Expert consultant Don’t buy any software until someone you know has used it for a month and recommends it. Find an expert or more knowledgeable person, have him or her evaluate the alternatives in terms of your goals, then buy the alternative the expert selects. If choosing among unfamiliar products

18. Problem-Solving in Purchase Decisions Three types of problem-solving –Extensive decision making –Limited decision making –Routinized decision making