CA 2018 Consumer Insight

A.Kwanta Sirivajjanangkul

A.Panitta Kanchanavasita

Albert Laurence School of Communication Arts

Department of Advertising

2013

*Class 16Consumer Decision Making

*Consumers as Decision Makers

• Basic sequence of steps we undergo when we make decisionsDecision Making

• How the particular situation in which we find ourselves affects these decisions and how we go about evaluating the results of our choices

Buying and Disposing

• An overview of group processes and discusses the reasons we are motivated to conform to the expectations of others when we choose and display our phurchases

Group Influence and Opinion Leadership

• The purchase decisions in conjunction with others, especially coworkers or family members

Organizational and Household

Decision Making

*Chapter outline1. We Are Problem Solvers

2. Type of Consumer Decisions

3. Steps in Decision Making Process

*Problem Recognition

*Information Search

*Evaluation of Alternatives

*Product Choice

4. Rules-of Thumb

*We Are Problem Solvers

1

* Overview of Consumer Decision Process

*Consumer purchase is a response to a problem

1

Problem Recognition

Information Search

Evaluation of Alternatives

Product Choice

Outcomes

*Types of Consumer Decisions

2

*Types of Consumer Decisions

1. 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

2

*Types of Consumer Decisions

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

2

*Types of Consumer Decisions

3. 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”

2

*Types of Consumer Decisions

Low cost products Expensive product

2

Routine Response Behavior

Limited Problem Solving

Extended Problem Solving

Frequent purchasing

infrequent purchasing

Low consumer involvement

High consumer involvement

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

*Characteristics of Limited VS Extended Problem Solving

2

Limited Problem Solving

Extended Problem Solving

Motivation Low risk and involvement High risk and involvement

Information Search

Little searchInformation processed passivelyIn-store decision likely

Extensive searchInformation processed activelyMultiple sources consulted prior to visits

Alternative Evaluation

Weakly held beliefsOnly most prominent criteria usedAlternatives perceived as basically similarNoncompensatory strategy used

Strongly held beliefsMany criteria usedSignificant differences perceived among alternativesCompensatory strategy used

Purchase Limited shopping time; may prefer self-serviceChoice often influenced by store displays

Many outlets shopped if neededCommunication with store personnel often desirable

*Steps in Decision Making

Process

3

*Problem Recognition3

* 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 Recognition3

No Problem OpportunityRecognition

Need Recognition

Ideal state

Actual state

Ideal

Ideal

Actual

Actual

Problem Recognition: Shifts in actual or ideal state

*Information Search3

*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

* A Framework for Consumer Information Search

3Prepurchase Search Ongoing Search

DeterminantsInvolvement in the purchaseMarket environmentSituational factors

DeterminantsInvolvement in the productMarket environmentSituational factors

MotivesMaking better purchase decisions

MotivesBuilding a bank of information for future useExperiencing fun and pleasure

OutcomesIncreased product and market knowledgeBetter purchase decisionsIncreased satisfaction with the purchase outcome

OutcomesIncreased product and market knowledge leading to

• Future buying efficiencies• Personal influence

Increase impulse buyingIncreased satisfaction from search and other outcomes

*How Much Do We Search?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

Product Knowledge

Am

ount

of

Searc

h

* The Relationship Between Amount of Information Search and Product Knowledge

*Evaluation of

Alternatives

3

*How Do We Decide Among Alternatives?

*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

3

*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

3 *How Do We Decide Among Alternatives?

*Application for Marketers

3

* Strategic Implications of Product Categorization

3

1. Position a Product

* Positioning strategy has ability to convince consumers to consider products within a given category

2. 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

3. Create an Examplar Product

*Create a sample to make product to be easy to recognize and recall

4. Locate Products in a Store

*Product categorization also can affect consumers’ expectations regarding the places they can locate a desired product

*Product Choice

3

*How Do We Select from the Alternatives?

*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

3

*How Do We Select from the Alternatives?

*Recommendations for marketers to create a new decision criterion

*Messages should convey 3 pieces of information:

1. There are significant among brands on the attributes

2. There is a decision making rule ex. If…(deciding among competing brands), then … (use the attributes as a criterion).

3. There is a rule that consistent with how the person made the decision on prior occasions

3

*Rules-of-Thumb

4

*Why do we often fall back on well-learned

“rules-of-thumb” to make decisions?

4

*Heuristics: Mental Shortcuts

*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

4

*Heuristics: Mental Shortcuts

*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

4

*Do We Choose Familiar Brand Names Because

of Loyalty or Habit?

4

*Loyalty VS Habit

*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

4

*Any Questions