Class 16 Consumer Decision Making

1. Class 16Consumer Decision Making CA 2018 Consumer Insight A.KwantaSirivajjanangkul A.Panitta Kanchanavasita Albert Laurence School of Communication Arts Department of Advertising 2013

2. Consumers as Decision Makers

3. We Are Problem Solvers • Type of Consumer Decisions • Steps in Decision Making Process • Problem Recognition • Information Search • Evaluation of Alternatives • Product Choice • Rules-of Thumb Chapter outline

4. 1 We Are Problem Solvers

5. 1 • Consumer purchase is a response to a problem Problem Recognition Information Search Evaluation of Alternatives Product Choice Overview of Consumer Decision Process Outcomes

6. 2 Types of Consumer Decisions

7. 2 • Extended Problem Solving: • Most closely to traditional decision making • Collect as much as information search both from our memory (internal search) and from outside source such as Google • Evaluate each product alternative – often consider the attributes of one brand at a time Types of Consumer Decisions

8. 2 • Limited Problem Solving: • More straightforward and simple • We are likely to use simple decision rules as we choose among alternatives • These cognitive shortcuts enable us to fall back on general guidelines, instead of having to start from scratch every time we need to decide Types of Consumer Decisions

9. 2 • Habitual Problem Solving: • We choose choices with little conscious effort • Many purchases are so routinized that we may not realize we have made them until we look in our shopping carts • We make these choices without conscious control – “automaticity” Types of Consumer Decisions

10. 2 Routine Response Behavior Limited Problem Solving Extended Problem Solving Low cost products Expensive product infrequent purchasing Frequent purchasing Low consumer involvement High consumer involvement Types of Consumer Decisions Familiar product class and brands Unfamiliar product class and brands Little thought search or time given to purchase Extensive thought search or time given to purchase

11. 2 Characteristics of Limited VS Extended Problem Solving

12. 3 Steps in Decision Making Process

13. 3 • When we experience a significant between our current state of affairs and some state we desire • We realize that to get from here to there we need to solve problem • Problem could be small, large or complex • Ex. We are hungry  we need to find something to eat • Ex. We are tired  we need to take a rest • Ex. We need a new eco car  we need to buy a new car ? Problem Recognition

14. 3 Problem Recognition: Shifts in actual or ideal state Ideal Ideal Ideal state Problem Recognition Actual state Actual Actual No Problem Opportunity Recognition Need Recognition

15. 3 • The process by which we survey the environment for appropriate data to make a reasonable decision • Recognizing a need and search the marketplace for specific information  prepurchase search • Browsing and searching to stay up-to-date on what’s happening in the marketplace  ongoing search • Internal search: scan our own memory banks to assemble information about different product alternatives • External search: obtain information from advertisements, friends, or just plain people watching Information Search

16. 3 A Framework for Consumer Information Search

17. 3 • We search more: • when the purchase is important • when we have more of a need to learn more about the purchase • when it is easy to obtain the relevant information Amount of Search How Much Do We Search? Product Knowledge • The Relationship Between Amount of Information Search and Product Knowledge

18. 3 Evaluation of Alternatives

19. 3 • Evoked set: the alternatives that consumers know • Consideration set: the alternatives that consumers consider • Consumers do not consider every single brand they know about because it is out of their price range or they have had a bad experience with it • Consumers often consider a small number of alternatives How Do We Decide Among Alternatives?

20. 3 • How Do We Decide Among Alternatives? • How do we put products into categories? • Knowledge Structure: a set of beliefs and the way we organize these beliefs in our minds • Marketers need to ensure that customers correctly group their products • There are basically 3 levels for product category: • Superordinate category: is more abstract ex. Dessert • Basic level category: the most useful to classify product, group product that have a lot in common with each other, but still have a broad enough range of alternatives ex. Fatterning dessert or Nonfatterning dessert • Subordinate category: is more specific, often include individual brands ex. Ice cream, pie, cake

21. 3 Application for Marketers

22. 3 • Position a Product • Positioning strategy has ability to convince consumers to consider products within a given category • Identify Competitors • At the abstract, superordinate level, many products will be compared with other brands in the same category • Creating an overlapping category can associate consumers to think about different attributes • Create an Examplar Product • Create a sample to make product to be easy to recognize and recall • Locate Products in a Store • Product categorization also can affect consumers’ expectations regarding the places they can locate a desired product Strategic Implications of Product Categorization

23. 3 Product Choice

24. 3 • Evaluation Criteria: the dimensions we use to judge the merits of competing options • Mostly, the choices will be considered based on each product attributes of each brand • Determinant Attributes: are the feature we actually use to differentiate among our choices How Do We Select from the Alternatives?

25. 3 • Recommendations for marketers to create a new decision criterion • Messages should convey 3 pieces of information: • There are significant among brands on the attributes • There is a decision making rule ex. If…(deciding among competing brands), then … (use the attributes as a criterion). • There is a rule that consistent with how the person made the decision on prior occasions How Do We Select from the Alternatives?

26. 4 Rules-of-Thumb

27. 4 Why do we often fall back on well-learned “rules-of-thumb” to make decisions?

28. 4 • Heuristics: or mental rules-of-thumb to make a speedy decision • It happens especially when limited problems solving occurs prior to making a choice • These rules can range from the very general • Ex. Higher priced product = higher quality • Ex. Buy the same brand I bought last time • And it could range to the very specific • Ex. Buy Domino, the brand of sugar my mother always bought • Consumers often simplify when they use heuristics such as automatically choosing a favorite color or brand Heuristics: Mental Shortcuts

29. 4 • Product signal: the visible elements ex. Brand names, country of origin, price, the retail outlets that carry the product • Country of Origin: is a determinant attribute in the decision-making process • Consumers strongly associate certain items with specific countries and products from those countries often attempt to benefit from these linkages • Ethnocentrism: is the tendency to prefer products or people of one’s own culture to those of other countries • Ethnocentric consumers are likely to feel it is wrong to buy products made elsewhere, particularly this may have a negative effect on the domestic industry Heuristics: Mental Shortcuts

30. 4 Do We Choose Familiar Brand Names Because of Loyalty or Habit?

31. 4 • Inertia: The Lazy Customer • Consumers buy a brand out of habit because it requires less effort • If the product is out of stock, they will not hesitate to change their mind • Brand Loyalty: A “Friend”, “Tried-and- True” • Brand loyalty describes repeat purchasing behavior that reflects a conscious decision to continue buying the same brand • They will not only buy the brand but they will also have a strong positive attitude toward the brand Loyalty VS Habit

32. AnyQuestions