Problem Recognition

In this information processing model, the consumer buying process begins when the buyer recognizes a
problem or need. For example, Doug may realize that his best suit doesn’t look contemporary any
more. Or, Kathleen may recognize that her personal computer is not performing as well as she thought
it should. These are the kinds of problem that we as consumers encounter all the time. When we found
out a difference between the actual state and a desired state, a problem is recognized. When we find a
problem, we usually try to solve the problem. We, in other words, recognize the need to solve the
problem. But how?

 When consumers realize that they need something!

 It is the first step in the decision-making process:

 Problem recognition

 Information search

 Alternative evaluation

 Choice

 Outcomes

 Different people have different benefit motivations for purchasing different products or services.

 Types of benefit motives:

 To optimize satisfaction

 To prevent possible future problems

 To escape from a problem

 To resolve a conflict

 To maintain the status quo or satisfaction

Problem Recognition: Actual State versus Desired State

 It is the psychological process used to determine the difference between the consumer’s actual
benefits state (where you are) and the desired benefits state (where you want to be).

 Opportunity (vs. problem) recognition

Problem Recognition Influences

 Situational influences

 Consumer influences

 Marketing influences

Situational influences

 Product consumption (e.g., running out of gas)

 Product acquisition (e.g., purchasing a new home may stimulate other purchases)

 Changed circumstances (e.g., moving away from home to college)

Consumer Influences

 Actual state consumers: those who look to existing products to solve their problems.

 Desired state consumers: those who shop for new products to address their problems.

 They enjoy the shopping experience

Marketing Influences

 Marketing mix changes and/or promotion actions may help stimulate problem recognition:

 Advertising

 Coupons

 Free offers

 sweepstakes
Information Search
When a consumer discovers a problem, he/she is likely to search for more information. Kathleen may
simply pay more attention to product information of a personal computer. She becomes more attentive
to computer ads, computers purchased by her friends, and peer conversations about computers. Or,
she may more actively seek information by visiting stores, talking to friends, or reading computer
magazines, among others. Through gathering information, the consumer learns more about some
brands that compete in the market and their features and characteristics. Theoretically, there is a total
set of brands available to Kathleen, but she will become aware of only a subset of the brands
(awareness set) in the market. Some of these brands may satisfy her initial buying criteria, such as price
and processing speed (consideration set). As Kathleen proceeds to more information search, only a few
will remain as strong candidates (choice set).

 Information collected by consumers is the basis for evaluation and choice behavior.

 It is important for marketers to know:

 Why consumers are searching for information

 Where will they look

 What information consumers seek

 How extensively they are willing to search

Types of Information Search

 Prepurchase search:

 Directed searches: consumer searches for information that will help solve a specific
problem.

 Browsing: consumer is “just looking” with no immediate intent to buy.

 Accidental search: consumer is not actively looking for information, but takes note of
information that is formally presented or inadvertently encountered.

 Post-purchase search: gathering information on choice made after the purchase.

 Ongoing search: continuous information gathering to stay “marketplace-current.”

Internal and External Information Search

  Internal search: search based on existing information in memory.

 Information quantity, quality, relevance, currency

 Experts vs. novices

 External search: the search of information beyond one’s memory.

 Personal sources: friends, experts, salespeople

 Impersonal sources: advertising, in-store displays, trade reports, the Internet.

 Experts vs. novices

Why Do Consumers Engage in External Information Search?

 High perceived value versus perceived cost of search

 Need to acquire information

 Ease of acquiring and using information

 Confidence in decision-making ability

 Locus of control (internals vs. externals)

 Actual or perceived risk

 Costs of external search

 Types of products sought

Alternative Evaluation
 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.

 The more important the decision, the fewer are the acceptable alternatives.

 Pick an attribute; eliminate all products/services not meeting that attribute.

 Use cutoffs or minimum or maximums.

 Rank the attributes in order of importance and then evaluate the products/services on the most important attributes

How does the consumer process competitive brand information and evaluate the value of the
brands? Unfortunately there is no single, simple evaluation process applied by all consumers or by
one consumer in all buying situations.
One dominant view, however, is to see the evaluation process as being cognitively driven and
rational. Under this view, a consumer is trying to solve the problem and ultimately satisfying his/her
need. In other words, he/she will look for problem-solving benefits from the product. The
consumer, then, looks for products with a certain set of attributes that deliver the benefits. Thus,
the consumer sees each product as a bundle of attributes with different levels of ability of delivering
the problem solving benefits to satisfy his/her need. The distinctions among the need, benefits, and
attributes are very important. One useful way to organize the relationships among the three is a
hierarchical one (Figure 2). Although simplified, Figure 2 is an example of how a bundle of attributes
(i.e., a product or, more specifically, personal computer) relates to the benefits and underlying
needs of Kathleen.

HelpsMeSurvive
UnderlyingNeeds BabsonMBAPogram

Doesn’t Break Com putational

Benefits Portability Economy HorsePow er
dow n

Warranty

Attributes Size
Brand Software CPUSpeed
Reputation Price
Bundle

HardDriveSize
GlobeNet
Ready

Figure 2 Hierarchical View of Needs, Benefits, and Attributes

From this figure and the preceding discussion, you might recognize that the product attributes
are relevant and important only to the extent that they lead to a certain set of benefits.
Likewise, benefits are meaningful only if they can address the problem and be instrumental to
satisfy the underlying need. As the underlying need is often personal, consumers differ as to
their beliefs about what product benefits and attributes are more (or less) important and
relevant in satisfying their needs. Based on their personal judgment on importance of benefits
and attributes, consumers develop a set of attitudes (or preferences) toward the various brands.
 One may express his/her preferences of the brands in terms of ranking, probability of choice,
and so forth.

Purchase
To actually implement the purchase decision, however, a consumer needs to select both specific items
(brands) and specific outlets (where to buy) to resolve the problems. There are, in fact, three ways
these decisions can be made: 1) simultaneously; 2) item first, outlet second; or 3) outlet first, item
second.i In many situations, consumers engage in a simultaneous selection process of stores ii and
brands. For example, in our Kathleen’s personal computer case, she may select a set of brands based on
both the product’s technical features (attributes) and availability of brands in the computer stores and
mail-order catalogs she knows well. It is also possible, that she decides where to buy (e.g., CompUSA in
her neighborhood) and then chooses one or two brands the store carries. Once the brand and outlet
have been decided, the consumer moves on to the transaction (“buying”).

 Understanding “buying intention” is key to predicting and potentially influencing planned

behavior

 Measuring purchasing intention can be done:

 Measures of intention may not provide accurate results since situational influences
change

 The method of questioning may be flawed itself. (A solution: “Yes” or “No” about doing
something; then determine probability of doing this)

 Intervening variables: changes that may have an impact on the actual purchase behavior

 Financial status, employment situation, family or household size, weather, etc.

 Deliberation: the longer we put off a purchase the higher the likelihood that either the
purchase will not be made or the choice will change.

 Four types of unplanned purchases

 Pure impulse: those that are bought for the sake of novelty

 Reminder impulse: are routine purchases, albeit unanticipated.

 Suggestion impulse: when a product (not previously seen) stimulates immediate need
recognition

 Planned impulse: responding to a special incentive to buy an item considered in the past
but not selected

 Outlet selection or brand choice, which comes first?

 Brand choice first

 Brand loyalty

 No outlet loyalty or preference

 No need for the expertise of salespeople (knowledgeable consumers)

 Outlet choice first

 High store loyalty or preference

 Low brand loyalty

 Need for helpful sales staff

 Brand and outlet working together

 Find the best fit for the consumer’s self-image

Post-Purchase Behavior

?
Cognitive Dissonance

Did I make a good decision?

Did I buy the right product?
Did I get a good value?

 It’s as important as understanding what causes consumers to buy.

 It deals with actual rather than potential customers

 It has an impact on future sales.

 Information learned can be used to improve products and services, undertake better targeted
promotions, and design more effective strategies to keep actual customers and attract new
ones.

Positive Post-purchase Behavior

 Customer loyalty: a feeling of “commitment” on the part of the consumer to a product, brand,
marketer, or outlet that results in high levels of repeat purchase or outlet visit

 Loyalty develops over time through positive market experiences

 Loyalty phases:

 Cognitive (based on beliefs only)

 Affective (like, based on repeated satisfying use)

 Conative (behavioral intention loyalty)

  Action (strong readiness to act)\

Negative Post-Purchase Behavior

 Passive: lack of repeat purchase or recommendations to other consumers

 Active: potentially damaging to the reputation and future sales of the product

 Types of negative post-purchase behavior:

 Negative word-of-mouth

 Rumor

Complaint behavior (no action, private action, public action)

Post-purchase evaluation processes are directly influenced by the type of preceding decision-making
process. Directly relevant here is the level of purchase involvement of the consumer. Purchase
involvement is often referred to as “the level of concern for or interest in the purchase” iii situation, and
it determines how extensively the consumer searches information in making a purchase decision. iv
Although purchase involvement is viewed as a continuum (from low to high), it is useful to consider two
extreme cases here. Suppose one buys a certain brand of product (e.g., Diet Pepsi) as a matter of habit
(habitual purchase). For him/her, buying a cola drink is a very low purchase involvement situation, and
he/she is not likely to search and evaluate product information extensively. In such a case, the
consumer would simply purchase, consume and/or dispose of the product with very limited post-
purchase evaluation, and generally maintain a high level of repeat purchase motivation (Figure 3).

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