Consumer Decision Making process

EVALUATION OF ALTERNATIVES

What Is Evaluation of alternatives?

The process through which we compare and contrast different solutions to the same marketplace problem.

It is the third step in the consumer decision-making process.Let's say a consumer is evaluating the attributes of a groups of

computers. They have identified four attributes: performance, design, price, and value.  During the evaluation the consumer will place different levels of importance with each attribute based of what is most important to them.

During this stage consumers usually compare products based on their various feature and benefits using the information from pervious stage

The consumer will "evaluate" each brand and form beliefs on how each brand rates on each attribute.  The consumer may turn to friends and family, consult consumer reviews, or discuss their situation with sales people during the Information Search.

During this stage consumers usually compare products based on their various feature and benefits using the information from pervious stage.

there are several processes at work inside the consumer's mind, forming beliefs and attitudes about all of the products to choose from.

Consumer evaluation sets The brands you thought of as potential solutions for a

problem are known as the awareness set. The alternatives actively considered during a

consumer’s choice process are his or her evoked set or consideration set. The evoked set comprises those products already in memory (the retrieval set), plus those prominent in the retail environment

An evoked set is those brands or products one will evaluate for the solution of a particular consumer problem. It is important to note that the evoked set or consideration set will vary depending on the usage situation

Consumer evaluation sets The brand you found completely unworthy of further

consideration is a member of what is called the inept set. Brands in the inept set are actively disliked or avoided by the consumer. Positive information about these brands is not likely to be processed even if it is readily available.

Brands of which you were aware but were basically indifferent toward are composed of what is known as an inert set. Consumers will generally accept favorable information about brands in the inert set, although they do not seek out such information.

Alternative CharacteristicsTo choose among the brands in the evoked set,

the consumer compares them on the relevant evaluative criteria. This process requires the consumer to gather information about each brand on each pertinent evaluative criterion.

Consumers engage in internal and external search for (1) appropriate evaluative criteria, (2) the existence of potential solutions, and (3) the characteristics of potential solutions

Evaluative criteriaEvaluative criteria are the dimensions used to

judge the merits of competing options. In comparing alternative products using any number of criteria, ranging from very functional attributes to experiential ones.

Typically, consumers use from four to six criteria.The more important the purchase and/or the

greater experience a consumer has with the product class, the greater the number of criteria used.

Criteria may be used in combination.

Evaluative criteria Another important point is that criteria on which products differ

from one another carry more weight in the decision process than do those where the alternatives are similar.

The attributes actually used to differentiate among choices are determinant attributes.

The decision about which attributes to use is the result of procedural learning, in which a person undergoes a series of cognitive steps before making a choice. These steps include identifying important attributes, remembering whether competing brands differ on those attributes, and so on. In order for a marketer to recommend a new decision criterion effectively, his or her communication should convey three pieces of information:

Evaluative criteria It should point out that there are significant

differences among brands on the attribute. It should supply the consumer with a decision-making

rule, such as if (deciding among competing brands), then ... (use the attribute as a criterion).

It should convey a rule that can be easily integrated with how the person has made this decision in the past. Otherwise, the recommendation is likely to be ignored because it requires too much mental work

Country of Origin, Price, and Brand, as Evaluative Criteria

Country of origin is used to signal product quality. Ex Peoples May have negative perception about china products than the Germans products.

Use of price as criterion varies across product categories: ex Peoples may have a perception that as products with low price with low quality.

Brand reputation Brand may be viewed as an indicator of quality and/or

consistency of satisfaction - lessening risk. Like adidas shoe Nike and so on

Choosing familiar brand names: loyalty or habit?

Branding is a marketing strategy that often functions as a heuristic. People form preferences for a favorite brand, and then they literally may never change their minds in the course of a lifetime

Consumer inertia: the tendency to buy a brand out of habit merely because it requires less effort: examples..

Customer is too busy to check out your shop Customer may visit the store but find no suitable customer service She wants to buy online but website is too badly designed and takes a lot of time to load. Brand loyalty: repeat purchasing behavior that reflects a

conscious decision to continue buying the same brand

Decision Heuristics Mental rules of thumb or shortcuts that help consumers reach decisions

quickly and efficiently. Especially where limited problem-solving occurs prior to making a choice,

consumers often fall back on heuristics, or mental rules-of-thumb that lead to a speedy decision.

Examples: Price: “the higher the price the better the quality” Brand reputation: if it’s brand X, it must be good (or bad) Key product features: if a used car has a clean interior, a buyer may also infer a

mechanically sound vehicle.

Decision rules How consumers evaluate and choose products and

services in different buying situations. Rules are used consciously or unconsciously Cognitive decision-making models describe how

consumers systematically use information about attributes to reach a decision. Researchers also recognize that consumers may make decisions on the basis of feelings or emotions, using affective decision-making models. Therefore, marketers need to know how consumers make choices when the decision is either cognitive or more emotional in nature.

Cognitive models describe the processes by which consumers combine information about attributes to reach a decision in a rational, systematic manner. Two types of cognitive models are (1) compensatory versus no compensatory and (2) brand versus attribute

Compensatory model It is a mental cost-benefit analysis model in which

negative features can be compensated for by positive ones.

With a compensatory model, consumers evaluate how good each of the attributes of the brands in their consideration set is (i.e., they make judgments about goodness and badness) and weight them in terms of how important the attributes are to their decisions

Types of compensatory rules

Simple additive: total scores on all evaluative criteria for each alternative and the highest score wins (assumes all criteria of equal importance

Weighted additive: assign relative weight to each criterion based on perceived importance and then multiply the score by the relative weight to arrive at a weighted score, sum scores, highest weighted score wins

No compensatory model Is simple decision model in which negative information

leads to rejection of the option With a no compensatory model, consumers use

negative information to evaluate brands and immediately eliminate from the consideration set those that are inadequate on any one or more important attributes

No compensatory models require less cognitive effort than compensatory models do because consumers set up cutoff levels for each attribute and reject any brand with attribute rankings below the cutoff.

Types of non compensatory model

Conjunctive model - A non-compensatory model that sets minimum cutoffs to reject “bad” options

Disjunctive model - A non compensatory model that sets acceptable cutoffs to find options that are “good.” Meet minimum “in” do not “out

Lexicographic: rank each of the evaluative criteria in order of importance; compare alternatives on most important with highest score winning; if tie for high score those tied evaluated on second most important criterion, etc., until “winner” is found

Types of Cognitive Choice Models

Decisions Based on Brands In making a decision, consumers may evaluate one

brand at a time. Brand processing is evaluating one brand at a time.

Much research has focused on brand-based compensatory models, also called multi attribute expectancy-value models

Note that when considering multiple attributes, consumers tend to give more weight to those that are compatible with their goals. Conjunctive model and Disjunctive model

Decisions Based on Product Attributes

Attribute processing occurs when consumers compare across brands one attribute at a time, such as comparing each brand on price

Additive difference model - Compensatory model in which brands are compared by attribute, two brands at a time.

Lexicographic model - A non-compensatory model that compares brands by attributes, one at a time in order of importance.

Elimination-by-aspects model - Similar to the lexicographic model but adds the notion of acceptable cutoffs.

Consumers first order attributes in terms of importance and then compare options on the most important attribute.

Decisions Based on Gains and Losses

Research shows that the decisions consumers make also depend on whether the consumer is motivated to seek gains or to avoid losses. According to prospect theory, losses loom larger than gains for consumers even when the two outcomes are of the same magnitude

This has been called the endowment effect because ownership increases the value (and loss) associated with an item

High Effort Affective Decisions With affective decision making, consumers make a

decision because the choice feels right rather than because they have made a detailed, systematic evaluation of offerings

Appraisals and Feelings Appraisal theory examines how our emotions

are determined by the way that we think about or “appraise” the situation. This theory also explains how and why certain emotions can affect future judgments and choices. People who are fearful tend to see more risk in new situations than do people who are angry,

Affective Forecasts and Choices -Consumers’ predictions of what they will feel in the future affective forecasting—can influence the choices they make today

Affective forecasting occurs when consumers try to predict how they will feel in a future consumption situation. Specifically, they try to predict what feelings they will have, how strongly these feelings will be, and how long the feelings will last.

Imagery

Imagery plays a key role in emotional decision making. Consumers can attempt to imagine themselves consuming the product or service and can use any emotions they experience as input for the decision

Adding information actually makes imagery processing easier because more information makes it easier for consumers to form an accurate image (whereas it may lead to information overload under cognitive processing)

What affects high effort decisions?

Consumer Characteristics Characteristics associated with consumers—

such as their expertise, mood, extremeness aversion, time pressure, and metacognitive experiences—can affect the decisions they make.

Extremeness aversion -Options that are extreme on some attributes are less attractive than those with a moderate level of those attributes.

Compromise effect - When a brand gains share it is seen as an intermediate or compromise rather than an extreme option.

Attribute balancing -Picking a brand because it scores equally well on certain attributes rather than faring unequally on these attributes.

Metacognitive experiences - How the information is processed beyond the content of the decision

Characteristics of the Decision In addition to consumer characteristics,

decision characteristics can affect how consumers make their choices. Two decision characteristics of particular note are the availability of information on which to base a decision and the presence of trivial attributes.

Group Context Finally, consumers’ decisions can be affected

by the presence of a group, such as when a group of people is dining out and each member is deciding what to order.

As each group member makes a decision in turn, he or she attempts to balance two sets of goals: (1) goals that are attained by the individual’s action alone (individual alone) and (2) goals that are achieved depending on the actions of both the individual and the group (individual group).

In a group, consumers face three types of individual-group goals,

Self-presentation. Consumers seek to convey a certain image through the decisions they make in a group context.

Minimizing regret. Consumers who are risk averse and want to minimize regret will tend to make choices that are similar to those made by the rest of the group, leading to uniformity at the group level

Information gathering. Consumers can learn more about the different choices each has made through interaction with other group members.

GOAL

INDIVIDUAL ALONE

NO GROUP EFFEC

T

INDIVIDUAL GRUOP

SELF PRESENTATI

ON

GROUP VARITY & UNIFORMI

TY  

MINIMIZE REGERET

UNIFORMITY

INFORMATION

GATHERING

GROUP VARIETY

Post Purchase Decisions