1. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.

2. Roger D. Blackwell Paul W. Miniard James F. Engel Consumer Behavior Requests for permission to make copies of any part of the work should be mailed to the following address: Permissions Department, Thomson Business and Economics 5109 Natorp Boulevard Mason, OH 45040 800–423–0563

3. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Pre-Purchase Processes: Need Recognition, Search, and Evaluation CHAPTER 4

4. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Need Recognition

5. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Need Recognition The difference between consumers’ actual and desired states The need recognition process centers on the degree of discrepancy between the actual state and desired state

6. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Need Recognition Process

7. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Need Recognition Process

8. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Need Recognition Understanding need recognition may identify a segment with unsatisfied desires Unsatisfied needs help identify new business and product opportunities for the future Analyzing need recognition can reveal existing barriers

9. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. How Companies Can Activate Need Recognition Change consumers’ desired state with new products or innovations

10. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. How Companies Can Activate Need Recognition

11. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. How Companies Can Activate Need Recognition Change consumers’ desired state with new products or innovations Influence how consumers perceive their current state

12. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. How Companies Can Activate Need Recognition Change consumers’ desired state with new products or innovations Influence how consumers perceive their current state Remind consumers of a need

13. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. How Companies Can Activate Need Recognition Generic need recognition occurs when companies seek to grow the size of the total market for a product category

14. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Selective need recognition is the result of stimulating the need for a specific brand within a category How Companies Can Activate Need Recognition

15. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Search

16. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Search The motivated acquisition of knowledge stored in memory or acquisition of information from the environment

17. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Internal Search Internal search involves scanning and retrieving decision-relevant knowledge stored in memory

18. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Internal Search

19. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. External Search External search involves collecting information from the environment

20. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. During external search, consumers may gather information from a variety of sources including: - Advertisements - Magazines - Internet - Friends and family members

21. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. External Search When motivated by an upcoming purchase decision, external search is known as pre-purchase search

22. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. External Search When information acquisition takes place on a relatively regular basis, regardless of sporadic purchase needs, it is known as ongoing search

23. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. External Search External search can occur: to make better consumption choices to create a knowledge base for future decisions simply for enjoyment

24. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. What to Search? Which choice alternatives should the consumer search? Those choice alternatives that consumers gather information about during pre-purchase search are referred to as the external search set

25. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. What to Search? Depending on the consumer’s experience and the importance of the decision, a considerable amount of effort may be invested into identifying search set members Consumers must also decide what they wish to learn about each of the set members

26. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Where to Search? Different informational sources are available to the consumer

27. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Where to Search? Consumers are more likely to rely upon the opinions of other individuals than information sources with vested interests in their decisions Other consumers respected for their expertise in a particular product category are referred to as opinion leaders or influentials

28. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Consumer Search on the Internet Consumers are increasingly turning to the Internet for their search needs

29. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Consumer Search on the Internet Particular search words or phrases used by consumers fall into three categories 70% Generic terms; representing product categories 20% Specific retailers; e.g., Best Buy, Gateway.com 10% Specific products; e.g., Canon digital camcorder, HP notebook

30. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Consumer Search on the Internet

31. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. How Much Do Consumers Search? Cost versus benefit perspective: people search for decision-relevant information when the perceived benefits of the new information are greater than perceived costs of acquiring the information

32. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. How Much Do Consumers Search? Cost versus benefit perspective: people search for decision-relevant information when the perceived benefits of the new information are greater than perceived costs of acquiring the information Benefit: making better decisions Cost: time/effort spent searching

33. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. How Much Do Consumers Search? While making better purchase decisions is the primary benefit of pre-purchase search, this benefit depends on the perceived risk involved - Perceived risk represents consumers’ uncertainty about the potential positive and negative consequences of the purchase decision

34. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Consumers’ Knowledge and the Amount of Search

35. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. How Companies Benefit from Understanding Search Adjusting the breadth of a product line based on consumers’ willingness to search Monitoring consumers’ price comparison activities to gauge their price sensitivity

36. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. How Companies Benefit from Understanding Search Focus promotions on sources that consumers search most, including individuals that provide information Monitor search activities to identify new ways to reach and gain customers

37. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Pre-purchase Evaluation

38. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Pre-purchase Evaluation The evaluation of choice alternatives Intertwined with the search process

39. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Pre-purchase Evaluation

40. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Forming the Consideration Set

41. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Pre-purchase Evaluation Consideration set: alternatives considered during decision making (also known as the evoked set)

42. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. How Companies Can Get Into Consumers’ Consideration Sets Ask to be in the set Offer incentives Modify the product offering

43. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing the Consideration Set Primarily from Memory Retrieval set: consideration set that depends on recall of alternatives from memory

44. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing the Consideration Set Primarily from Memory Retrieval set: consideration set that depends on recall of alternatives from memory Not all alternatives retrieved from memory will be considered Consumers limit their consideration to those alternatives toward which they are favorably predisposed

45. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing the Consideration Set Without Prior Knowledge Consumers may talk to others or consider all brands in the store

46. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing the Consideration Set Without Prior Knowledge Consumers may talk to others or consider all brands in the store External factors have greater oppor- tunity to affect consideration set with less knowledgeable consumers than when search is from memory Recognition of brands or products at point of sale is important to get into consumers’ consideration set

47. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Evaluating Alternatives

48. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Deciding How to Evaluate Choice Alternatives Rely on preexisting product evaluations stored in memory Direct Experience: prior purchase or consumption experiences with product Indirect Experience: experiences or impressions gained second-hand

49. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Deciding How to Evaluate Choice Alternatives Rely on preexisting product evaluations stored in memory Construct new evaluations based on information acquired through internal or external search Direct Experience: prior purchase or consumption experiences with product Indirect Experience: experiences or impressions gained second-hand

50. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Evaluating Alternatives

51. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing New Evaluations The Categorization Process: the evaluation of a choice alternative based on the evaluation of the category to which it is assigned

52. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing New Evaluations The Categorization Process: the evaluation of a choice alternative based on the evaluation of the category to which it is assigned Categories may be general (drinks) or specific (colas) Evaluation of a category can be transferred to a new product assigned to that category Brand extensions allow firms to use categorization to their advantage

53. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing New Evaluations The Piecemeal Process: constructing an evaluation of a choice alternative by considering its advantages and disadvantages along important product dimensions

54. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing New Evaluations The Piecemeal Process: Determine the particular criteria or product dimensions to be used in evaluation Evaluate each considered alternative based on the identified criteria Cutoff: restriction or requirement for acceptable performance Signals: product attributes used to infer other product attributes (e.g., using high price to infer higher quality)

55. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Consumer Perceptions Based on Signals

56. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing New Evaluations Noncompensatory Evaluation Strategies: a product’s weakness on one attribute cannot be offset by strong performance on another attribute

57. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing New Evaluations Noncompensatory Evaluation Strategies Lexicographic strategy: brands are compared initially on the most important attribute, and the winner is chosen. If more than one is evaluated similarly on that attribute, the second most important is considered, and so on, until a winner is identified.

58. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing New Evaluations Noncompensatory Evaluation Strategies Elimination by aspects: similar to the lexicographic strategy; however, the consumer imposes cutoffs Conjunctive strategy: each brand is compared, one at a time, against a set of attributes which is established for each salient attribute. If a brand meets the cutoffs for all attributes, it is chosen.

59. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing New Evaluations Noncompensatory Evaluation Strategies

60. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing New Evaluations Compensatory Evaluation Strategies

61. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing New Evaluations Compensatory Evaluation Strategies: a perceived weakness of one attribute may be offset or compensated for by the perceived strength of another attribute

62. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing New Evaluations Compensatory Evaluation Strategies Simple additive: the consumer counts or adds the number of times each alternative is judged favorably in terms of the set of salient evaluative criteria. The alternative with the largest number of positive attributes is chosen.

63. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Constructing New Evaluations Compensatory Evaluation Strategies Weighted additive: judgments about an alternative’s attribute performance are weighted by the attribute’s importance. The alternative with the best overall performance is chosen.

64. COPYRIGHT © 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. How Good Are We at Evaluating Alternatives? Consumers are often not very good at figuring out which alternative is best for them - Tend to rely on certain signals (e.g., price, brand name, warranty, package) to make inferences about a product quality; however, such signals may be inaccurate - Often possess limited abilities to accurately evaluate choice alternatives