Consumer Decision Process

Your book covers six aspects of the extended consumer decision process

• Situations
• Problem Recognition
• Information Search
• Alternative Evaluation and Selection
• Outlet Selection and Purchase
• Post purchase Processes

However, extended decision-making occurs only in those relatively rare situations when the
consumer is highly involved in the purchase. Lower levels of purchase involvement produce
limited or nominal decision-making, and the first chapter (on situations) describes the
various types of decisions and their relationship to involvement.

Situational Influence

Situational influence is defined as all those factors particular to a time and place that do not
follow from a knowledge of personal (the relatively stable or permanent attributes of the
individual) and stimulus attributes (the characteristics of the stimulus object), and that have
a demonstrable and systematic effect on current behavior. In effect, it is like our POS, where
the focus is on the context of the decision situation.

Note that transient characteristics of the individual such as mood, time pressure, and
emotion are a part of the situation rather than a part of the individual. Also note that the
situation may include consumption rituals (weddings, birthdays, parties) that I referred
to when we were talking about consumption subcultures and reference group influence.

As you can see in Figure 13-1, this chapter talks about situations, situation characteristics,
and marketing activity (the three boxes on the left). Individual characteristics we have
already talked about, and consumption responses are the next few chapters.

The consumer finds themselves in four situations – the communications situation where they
receive information, the purchase situation, use of the product, and ultimately disposal. The
question I have is what can we, as marketers, do about these situations? We have no control,
so we must anticipate situations and facilitate the consumers’ inclination to purchase our
product.
Communications situation – Are we alone or with others, in a good mood or bad, in a
hurry or have lots of time? All of these affect the degree to which we see and listen to
marketing communications.
Purchase situation – Are the kids along, are friends with you, what is your mood?
Usage situation – When and how is the product used? How can we expand the usage
situations to increase the demand for our product? Can we change the product in
ways that will expand usage?
 Disposition situation – As marketers, we have only recently begun to consider disposal
a part of our domain of influence. It is important not only in product design but also
in package design (remember the focus group video where one lady was particularly
concerned about packaging). This is an important environmental issue.

Figure 13-1 – The situation interacts with marketing activity and the individual to
determine behavior.

There are five key characteristics of situations that help determine the situation’s impact on
behavior – physical features, social surroundings, time perspective, task objectives, and
antecedent states.

Physical features – Your book’s discussion of physical features focuses on the retail
environment, which is the purchase situation (but you should also consider physical

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 features of the communications, use, and disposal situations). The sum of all the
physical features of a retail environment is called atmospherics (or servicescape
when describing a service business such as a hospital, bank, or restaurant).
Atmospherics includes décor, colors (think about when you might use hot colors such
as red, and cool colors such as blue), aromas (department stores spray scents into the
store), background music (what is the impact of fast versus slow music in a restaurant
or bar), lighting (bright or subdued), and the configuration of merchandise displays.
These elements are under the control of the retailer.

Social surroundings – Your book’s discussion of social surroundings focuses on the

consumption process (but you should also consider the impact of social surroundings
on the other three situations). Depending on your heritage, you will prefer different
types of food in situations where business associates are present versus a visit by your
parents. You wear different clothes in different situations. Some activities involve
social situations. Sometimes shopping is a social experience. Social influence is a
significant force acting on our behavior.

Temporal perspective – Time pressure has its most significant impact on the purchase
situation. If you’re under pressure, you will spend less time in information search, use
less information, evaluate fewer alternatives, and make quicker decisions. Time
pressure increases brand loyalty. People will shop in fewer stores. People look for time
convenience. They want high quality products that are fast and easy to use.

Task definition – Are people buying for personal use or for a gift? The nature of gifts
varies by occasion. Wedding gifts tend to be utilitarian (durability, usefulness, need,
and performance) while birthday gifts tend to be fun (enjoyable, unique, durable,
performance). Also, the relationship between the individuals has an impact on the
nature of the gift (personal items for closer friends). Gifts generally have an implied
value, image, and functionality that imply the giver’s impression of the image and
personality of the receiver. Gift giving produces anxiety because of this symbolic
meaning.

Antecedent states – These are features of the individual such as momentary moods or
conditions. Moods are transient feeling states that are generally not tied to a specific
event or object. Consumers actively manage their moods, and often seek situations,
activities, or objects that will alleviate negative moods or enhance positive ones. The
purchase of products and services is one way consumers manage their mood states.
Momentary conditions reflect temporary states of being such as being tired, being
ill, having extra money, being broke, etc. (note that moods were states of mind, while
momentary conditions are states of being).

Your book does talk about ritual situations that are a set of interrelated behaviors that occur
in a structured format, that have symbolic meaning, and that occur in response to socially
defined occasions. By now you should realize that I think many behaviors are built around
ritual situations, consumption rituals, social situations, group influence, consumption
subcultures, scripts (from the chapter on memory), and related concepts.

So, what’s the marketing impact? Individuals don’t encounter situations randomly, but
create many of the situations they face. Marketers can develop products, advertising, and

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segmentation strategies based on the situations that individuals selecting various lifestyles
are likely to encounter. Your book talks about a 5-step approach for developing situation-
based marketing strategies.
1. Use observational studies and focus groups to discover usage situations that influence
the consumption of the product.
2. Survey a large sample of consumers to better understand and quantify how the
product is used and the benefits sought in the usage situation by each market
segment.
3. Construct a person-situation segmentation matrix. Each cell contains the key benefits
sought (Table 13-2 illustrates this for suntan lotion).
4. Evaluate each cell in terms of potential sales, price, cost to serve, competitor strength,
etc.
5. Develop and implement a marketing strategy for those cells that offer sufficient profit
potential.

Table 13-2 – Person-Situation segments for suntan lotions.

Note that there are four usage situations (beach/boat, etc.) and four segment groups (young
children, etc.). Also note that the last column lists the product features/benefits associated
with each usage situation, and the last row lists the features/benefits sought by each market
segment. This is a great exercise to try with other products – who are the potential markets,

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under what situations do they use the product, what benefits are they looking for, and what
benefits can the product provide in each situation?

Problem Recognition

While the term consumer decision implies an individual carefully evaluating the attributes
of a set of products and rationally selecting the one that solves a clearly recognized need for
the least cost, many consumer decision focus not on brand attributes but rather the feelings
or emotions associated with acquiring and/or using the brand, or with the environment in
which the product is purchased and/or used. These are referred to as attribute-based,
emotion-based, and environment-based decisions.

This chapter deals with how the consumer recognizes and reacts to a problem, and much of
this revolves around the level of purchase involvement which is the level of concern for, or
interest in, the purchase process triggered by the need to consider a particular purchase.
Purchase involvement is a temporary state, and is influenced by the interaction of the
individual, the product, and the situational characteristics (wow . . . POS . . . what a surprise).
Note that purchase involvement is not the same as product involvement or enduring
involvement, a topic we covered when talking about opinion leadership. For example, I have
a great deal of product involvement in computer equipment and accessories, but I generally
have little purchase involvement because of my biases (which we could call brand loyalty
and/or store loyalty).

There are three broad levels of decision making, depending on involvement – nominal,
limited, and extended. As you can imagine, nominal decision making is where there is
little purchase involvement, and there really isn’t any decision to make, you just buy the
product/brand. I do like to point out that there are two quite different extremes that explain
nominal decision making.
Complete brand loyalty – at one point you may have considered a number of brands,
but you settled on the one you like and you always purchase it. You are brand loyal,
and it would be difficult for a competitor to change your mind.
Complete brand indifference – you may believe that all brands are about the same, so
you will pick up whatever is available with having to think about it.

Limited decision making involves internal and limited external search, few alternatives,
simple decision rules on a few attributes, and little postpurchase evaluation. You put a little
work into the decision, but not too much. Note that most information used in the decision is
internal, from your memory, and you spend little time searching for more information, and
little time in the decision making process.

As you could guess, extended decision making involves an extensive internal and external
information search followed by a complex evaluation of multiple alternatives.

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Problem recognition is the result of a discrepancy between a desired state and an actual
state that is sufficient to arouse and activate the decision process. Of course, you should
recognize that it is not really the consumer’s actual state that is important, but their
perception of their actual state (people don’t always deal in reality, and it is perceptions that
count in marketing . . . perception is everything). The desired state is driven by the desired
life style. But to some extent, the current actual state is also driven by the desired life style
since it has driven past decisions. In other words, it is desired life style that got you where
you are (subject to resource constraints), and desired life style that is driving your current
decisions and actions.

There may be a discrepancy or gap between desired and actual states, but two factors affect
whether an individual will resolve that discrepancy: (1) the magnitude of the discrepancy,
and (2) the relative importance of the problem. Think about situations in your life where
there is a large discrepancy between desired and actual states, but it’s no big deal (at least
at the moment), or situations where there is a small discrepancy but it is really important to
you. How do you react and how hard to you work to solve the problem?

From a marketing perspective, you want to activate problem recognition and show how your
product solves the problem. So, you can change the desired state (promote your product’s
benefits), change the perceived actual state (is your coffee really good tasting), or change the
importance (having a quality automobile tire is the most important thing you can do to
protect your family).

As you can imagine, virtually everything we have talked about affects both desired and actual
states. Culture, subculture, social status, reference groups, household characteristics,
financial status, financial expectations, previous decisions, individual development,
emotions, motives, situation, normal depletion, product/brand performance, government,
consumer groups, availability of products . . .

Think back to Table 13-2 above. How would you identify the problems people have. Surveys
and focus groups tend to take one of three approaches to problem identification.
Activity analysis – focus on a particular consumer activity, such as preparing a meal,
mowing the lawn, or hair care. Try to find out what problems people have when
performing this activity.
Product analysis – focus on the purchase or use of a particular product, such as using
a computer, caring for the car, or using the refrigerator.
Problem analysis – this starts with a list of problems and asks the consumer to
identify which activities, products, or brands are associated with these problems.

In all cases you’re trying to understand the consumer, their daily activities, their problems,
their needs . . . and trying to learn how your product can make a positive contribution to
people’s lives. That sounds like a lofty goal, but if you can accomplish it, you will be successful.

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Information Search

Many, perhaps most, consumer problems are resolved by the consumer using only previously
stored information (and we discussed that much of that information comes from just living
and being exposed to stimuli . . . much of that coming from conditioning and iconic rote
learning, none of which require any significant amount of thinking). This is the source of
information for internal search.

External search looks to sources such as

The opinions, attitudes, behaviors, and feelings of friends, neighbors, relatives, and
increasingly, strangers contacted on the internet.
Professional information that is provided in pamphlets, articles, books, the internet,
and personal contacts.
Direct experiences with the product through inspection, trial, or observation.
Marketer generated information presented in advertisements, web sites, displays, and
by sales personnel.

Of course, deliberate external search can take place without their being a problem to solve.
We talked about those with enduring involvement with a product category. These people are
always collecting and evaluating information about product categories and brands.

What kind of information does someone search for? They look for appropriate evaluative
criteria, existence of alternatives, and the ratings of each alternative on the evaluative
criteria.
The appropriate evaluative criteria for the solution of a problem – Suppose you wanted
to buy a new computer, but were unsure of what features would meet your needs. You
need information about the appropriate evaluative criteria, and you would probably
find this by talking with friends, experts, and reading articles about computers. You
might even look at marketing brochures, and search the internet.
The existence of various alternative solutions – If, in the computer example, you didn’t
know much about the what was available and where computers could be purchased,
you would get information about both brands and stores.
The performance level of each alternative solution on each evaluative criterion – The
potential brands and stores would be compared on each of the evaluative criteria. A
later chapter talks about how you take all of this comparative information and finally
make a decision.

How much external information search really takes place? Not a whole lot. Surveys of
shopping behavior have shown a significant percent of all durable purchases are made after
visiting only one store. The number of alternatives considered also shows a limited amount
of prepurchase search. While the number of alternative brands and/or models considered
tends to increase as the price of the product increases, for some product categories, such as
watches, almost half of the purchasers considered only one brand and one model. Another
study found that 27 percent of the purchasers of major appliances considered only one brand.

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Seven separate studies found remarkable consistency in terms of the total external
information search undertaken (see the following table). You could say that for major
purchase, typically half the people are non-searchers, about 40 percent do limited search, and
less than one-in-ten goes through an extensive information search process.

What does this tell you as a marketer? You had better get into their heads before they have
a problem and need information . . . because they are not going to search much for information
when the problem arises.

What will affect the cost/benefit ratio for information search?

• The greater the number of alternatives available, the more external search there is
likely to be.
• The higher the perceived range of prices, the more external search.
• The more product differentiation, the greater the search.
• People enjoy shopping for positive products (acquisition results in positive
reinforcement) and will search more, but don’t enjoy shopping for negative products
(removal of an unpleasant condition – rodent extermination, automobile repair) and
will not engage in much search (do you agree with this?).
• Middle income people search more than lower and upper income people.
• Those with higher education and occupation search more.
• Search is inversely related to age.
• New households search more than established households.
• The higher the perceived risk, either instrumental or symbolic, the greater the
information search. Perceived risk is high for products whose failure to perform as
expected would result in high social cost (people may laugh at your choices), financial
cost (didn’t get what you paid for), time cost (spend a lot of time in repairs), effort cost
(a computer that constantly crashes), physical cost (harmful side effects).
• Gift giving situations will increase information search.

Alternative Evaluation and Selection

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It is important to understand consumers’ desired product benefits (their evaluative criteria)
and the way in which they choose between products with differing combinations of benefits.
Choice is a complex process, and our simplifications, while useful in managing and predicting
outcomes, are certainly not complete descriptions of the process. And our models may imply
that consumers are more logical, structured, rational, and deliberate than they really are.

One way to look at choice is whether it is attribute-based or attitude based. Attribute-based

choice requires the knowledge of specific attributes at the time the choice is made and involves
attribute-by-attribute comparisons across brands. Attitude-based choice involves the use of
general attitudes, summary impressions, intuitions, or heuristics, and no attribute-by-
attribute comparisons are made at the time of choice.

Consider the following two processes a consumer might use to purchase an answering
machine:
Process 1: The consumer remembers that the Casio his last roommate had seemed to
work well and looked "good," his parents had a Toshiba that also worked well but was
rather large and bulky, and his old Samsung had not performed as well as he had
expected. He goes to a store and gathers price, recording time, and ease of remote
access information on each of these brands. He mentally ranks each brand on these
three attributes and his general impression of their quality. Based on these
evaluations, he makes a choice.
Process 2: The consumer remembers that the Casio his last roommate had seemed to
work well and looked "good," his parents had a Toshiba that also worked well but was
rather large and bulky, and his old Samsung had not performed as well as he had
expected. At the store, he sees that the Casio and Toshiba are about the same price
and decides to buy the Casio.

Clearly, Process 1 is an attribute based choice process, and Process 2 is an attitude based
choice process. When would an attribute-based choice process be more likely? If an individual
is motivated to make an optimal decision, if attribute-specific information is readily available,
and if time is available to make comparisons, then attribute-based decisions are more likely.
But there are lots of other reasons/situations that would affect whether attitude-based or
attribute-based decisions would dominate. Thus, marketers must provide information and
experiences that produce a strong attitude-based position (for consumers making an attitude-
based choice) and they must provide performance levels and supporting information that will
result in preference among those consumers making attribute-based choices.

Another general model is affective choice, where the evaluation of products is more holistic
and focuses on the way they will make the user feel as they are used. Neither attribute- nor
attitude-based approaches work in this case, since both imply some sort of objective
rationality. Affective choice is based on feelings.

Speaking of rationality, we do need to consider the objectives of the decision maker as they
ponder a choice. Rational choice models assume that the goal is to maximize the accuracy of
the decision. However, sometimes the goal may be to minimize the cognitive effort required
for the decision (these people will use simpler choice rules, consider fewer alternatives, and
evaluate fewer attributes). Sometimes you may want to avoid negative emotions. Sometimes
you may want to maximize the ease with which the decision can be justified.

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Your book has a section on evaluative criteria - the various dimensions, features, or benefits
a consumer looks for in response to a specific problem. The marketer must determine which
evaluative criteria are used (projective techniques are useful here), determine consumer’s
judgments of brand performance on specific evaluative criteria (the semantic differential),
and determine the relative importance of evaluative criteria (a constant sum scale can be
used).

People aren’t necessarily skilled at making judgments about product attributes. Some
features are difficult to judge (sound quality, durability). Consumers sometimes use
surrogate indicators that are observable characteristics that are used as indicators of
hidden attributes. Such things as price, brand, or country of origin are often surrogate
indicators of quality.

It is important for you to understand the decision rules used by consumers in attribute-based
choice situations. Recall that attribute based decisions involve the comparison of brands on
the relevant evaluative criteria.

Despite the fact that the choice rules we describe are not precise representations of
consumer decisions, they do enhance our understanding of how consumers make decisions
and provide guidance for marketing strategy.

Suppose you have evaluated a particular model of each of the six notebook computer brands
in your evoked set on six evaluative criteria: price, weight, processor, battery life, after-sale
support and display quality. Further, suppose that each brand excels on one attribute but
falls short on one or more of the remaining attributes, as shown in Table 16-1 (on the
following page).

Which brand would you select? The answer would depend on the decision rule you utilize.
Consumers use five decision rules: conjunctive, disjunctive, elimination-by-aspects,
lexicographic, and compensatory. Consumers frequently use more than one rule to make a
single decision. The most common instance of this is using a relatively simple rule to reduce
the number of alternatives considered and then to apply a more complex rule to choose among
the remaining options. An example would be eliminating from consideration all those
apartments that are too far from campus or that rent for more than $700 per month
(conjunctive decision rule). The choice from among the remaining apartments might involve
carefully trading-off among features such as convenience of location, price, presence of a pool,
size of rooms, and so forth (compensatory rule).

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Table 16-1 Performance

The first four rules we will describe are noncompensatory rules. This means that a high level
of one attribute cannot offset a low level of another. In the apartment example, the consumer
described would not consider an apartment that was right next to campus if it cost more than
$700 per month. An excellent location cannot compensate for an inappropriate price. In
contrast, the last rule is a compensatory rule, in which consumers average across attribute
levels. This allows a high level of one value to offset a low value of another.

Finally note that the conjunctive and disjunctive decision rules my produce a set of
acceptable alternatives, while the remaining rules generally produce a single best
alternative.

Conjunctive Decision Rule

The conjunctive decision rule establishes minimum required performance standards for
each evaluative criterion and selects the first or all brands that surpass these minimum stan-
dards. In essence, you would say: "I'll consider all (or I'll buy the first) brands that are all
right on the attributes I think are important." For example, assume that the following
represent your minimum standards for a notebook computer:

Any brand of computer falling below any of these minimum standards (cutoff points) would
be eliminated from further consideration. Referring to Table 16-1, we can see that four
computers are eliminated-IBM, Gateway, Dell, and Toshiba. These are the computers that
failed to meet all the minimum standards. Under these circumstances, the two remaining

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brands may be equally satisfying. Or, the consumer may use another decision rule to select
a single brand from these two alternatives.

Because individuals have limited ability to process information, the conjunctive rule is
frequently used to reduce the size of the information processing task to some manageable
level. It first eliminates those alternatives that do not meet minimum standards. This is often
done in the purchase of such products as homes, computers, and bicycles; in the rental of
apartments; or the selection of vacation options. A conjunctive rule is used to eliminate
alternatives that are out of a consumer's price range, outside the location preferred, or that
do not offer other desired features. Once alternatives not providing these features are
eliminated, another decision rule may be used to make a brand choice among those
alternatives that satisfy these minimum standards.

The conjunctive decision rule is commonly used in many low-involvement purchases as well.
In such a purchase, the consumer evaluates a set of brands one at a time and selects the first
brand that meets all the minimum requirements.

If the conjunctive decision rule is used by a target market, it is critical to surpass the
consumers' minimum requirement on each criteria. Since the first brand the consumer
evaluates that does so is often purchased, extensive distribution and dominant shelf space
are important. It is also necessary to understand how consumers "break ties" if the first
satisfactory option is not chosen.

Disjunctive Decision Rule

The disjunctive decision rule establishes a minimum level of performance for each
important attribute (often a fairly high level). All brands that surpass the performance level
for any key attribute are considered acceptable. Using this rule, you would say: "I'll consider
all (or buy the first) brands that perform really well on any attribute I consider to be
important." Assume that you are using a disjunctive decision rule and the attribute cutoff
points shown below:

You would find Gateway (price), Compaq (weight), and Dell (display quality) to warrant
further consideration (see Table 16-1). As with the conjunctive decision rule, you might
purchase the first brand you find acceptable, use another decision rule to choose among the
three, or add additional criteria to your list.

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When the disjunctive decision rule is used by a target market, it is critical to surpass the
consumers' requirements on at least one of the key criteria. This should be stressed in ad-
vertising messages and on the product package. Since the first brand the consumer evaluates
that exceeds one of the requirements is often purchased, again extensive distribution and
dominant shelf space are important, as is understanding how consumers "break ties" if the
first satisfactory option is not chosen.

Elimination-by-Aspects Decision Rule

The elimination-by-aspects rule requires the consumer to rank the evaluative criteria in
terms of their importance and to establish a cutoff point for each criterion. All brands are
first considered on the most important criterion. Those that do not surpass the cutoff point
are dropped from consideration. If more than one brand passes the cutoff point, the process
is repeated on those brands for the second most important criterion. This continues until only
one brand remains. Thus, the consumer's logic is: "I want to buy the brand that has a high
level of an important attribute that other brands do not have."

Consider the rank order and cutoff points shown below. What would you choose using the
elimination-by-aspects rule?

Price would eliminate IBM and Toshiba (see Table 16-1). Of those remaining, Compaq, HP,
and Dell surpass the weight hurdle (Gateway is eliminated). Notice that Toshiba also
exceeded the minimum weight requirement but was not considered because it had been
eliminated in the initial consideration of price. Only Dell exceeds the third requirement,
display quality.

Using the elimination-by-aspects rule, we end up with a choice that has all the desired
features of all the other alternatives, plus one more. In this case, Dell would be selected.

For a target market using the elimination-by-aspects rule, it is critical to surpass the
consumers' requirements on one more (in order) of the criteria used than the competition.
This competitive superiority should be stressed in advertising messages and on the product
package. Firms can also attempt to alter the relative importance that consumers assign to
the evaluative criteria.

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Lexicographic Decision Rule

The lexicographic decision rule requires the consumer to rank the criteria in order of
importance. The consumer then selects the brand that performs best on the most important
attribute. If two or more brands tie on this attribute, they are evaluated on the second most
important attribute. This continues through the attributes until one brand outperforms the
others. The consumer's thinking is something like this: "I want to get the brand that does
best on the attribute of most importance to me. If there is a tie, I'll break it by choosing the
one that does best on my second most important criterion."

The lexicographic decision rule is very similar to the elimination-by-aspects rule. The
difference is that the lexicographic rule seeks maximum performance at each stage while the
elimination-by-aspects seeks satisfactory performance at each stage. Thus, using the
lexicographic rule and the data from the elimination-by-aspects example above would result
in the selection of Gateway, because it has the best performance on the most important
attribute. Had Gateway been rated a 4 on price, it would be tied with Dell. Then, Dell would
be chosen based on its superior weight rating.

When this rule is being used by a target market, the firm should try to be superior to the
competition on the key attribute. This competitive superiority should be emphasized in
advertising. It is essential that the product at least equal the performance of all other
competitors on the most important criteria. Outstanding performance on lesser criteria will
not matter if a competitor is superior on the most important attribute. If a competitive
advantage is not possible on the most important feature, attention should be shifted to the
second most important (assuming equal performance on the most important one). If it is not
possible to meet or beat the competition on the key attribute, the firm must attempt to make
another attribute more important.

The ad shown in Illustration 16-6 emphasizes the ability of this Columbia parka to protect
the wearer from bad weather. No other attributes are mentioned. This ad is appropriate for
those consumers whose decision rules place primary importance on this attribute.

Compensatory Decision Rule

The four previous rules are noncompensatory decision rules, since very good performance on
one evaluative criterion cannot compensate for poor performance on another evaluative
criterion. On occasion, consumers may wish to average out some very good features with some
less attractive features of a product in determining overall brand preference. Therefore, the
compensatory decision rule states that the brand that rates highest on the sum of the
consumer's judgments of the relevant evaluative criteria will be chosen. This can be
illustrated as:

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This is the same as the multi attribute attitude model described in Chapter 12. If you used
the relative importance scores shown below, which brand would you choose using the
compensatory rule?

Using this rule, Dell has the highest preference (see Table 16-1). The calculations for Dell are
as follows:

RDell = 30(4) + 25(4) + 10(2) + 5(3) + 10(3) + 20(5)

= 120 + 100 + 20 + 15 + 30 + 100
= 385

Products and services targeting consumers likely to use a compensatory rule can offset
relatively low performance on some features with relatively high performance on others.
However, it is important to have a performance level at or near the competition on the more
important features since they receive more weight in the decision than do other attributes.
Recall the description of the minivan purchase from the beginning of this section. This
customer preferred most of the features of the Ford but bought the GM because Ford was
very weak on one key attribute. However, the consumer did express a willingness to change
the decision had the price differential been greater. Thus, for compensatory decisions, the
total mix of the relevant attributes must be considered to be superior to those of the
competition.

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Marketing Applications of Decision Rules

As shown below, each decision rule yields a somewhat different choice. Therefore, marketers
must understand which decision rules are being used by target buyers in order to position a
product within this decision framework.

We cannot specify with precision which rules are used by consumers in which situations.
However, research clearly indicates that people do use the rules. Low-involvement purchases
generally involve relatively simple decision rules (conjunctive, disjunctive, elimination-by-
aspects, or lexicographic), since consumers will attempt to minimize the mental "cost" of such
decisions. High-involvement decisions and purchases involving considerable perceived risk
tend to increase evaluation efforts and often may involve not only more complex rules
(compensatory) but stages of decision making, with different attributes being evaluated using
different rules at each stage. Of course, individual, product, and situational characteristics
also influence the type of decision rule used.

A marketing manager must determine, for the market segment under consideration, which
is the most likely rule or combination of rules and then develop appropriate marketing
strategy.

Outlet Selection and Purchase

Selecting a retail outlet involves the same process as selecting a brand (problem recognition,
information search, evaluate alternatives, and choice). This chapter describes the evaluative
criteria used to choose a retail outlet, consumer characteristics that influence the criteria
used, and in-store characteristics that affect the amounts and brands purchased.

The chapter also uses the term retail outlet in a very generic sense. With the changes in the
retail scene, it includes any source of products or services. That is, retail stores as well as in-
home shopping such as telephone, mail, and computer. I would also include vending
machines, kiosks, and any other place where the consumer places and order and receives a
product or service (though I don’t think your book mentions these sources) What else would
you consider as a retail outlet?

Internet retailing is on the increase. High-income households dominate on-line shopping,

with those earning over $50,000 accounting for 74 percent of all Internet sales (compared to

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47 percent of all retail sales). This will drop as more lower income families begin to use this
channel. The following table gives you some idea of the number of households and their on-
line shopping behavior.

What kinds of items do people purchase on-line?

Convenience items: low-risk discretionary items. Internet sales will be most
successful where huge selections and deep discounts are important and easy
shipping is available. Examples are books, CDs, flowers, and event tickets.
Researched items: high-information, big ticket planned purchases. Internet sales
will be led by items with low style content and those for which "touch" is not
important. Examples are leisure travel, computer hardware, consumer electronics,
and appliances.
Replenishment goods: moderate cost, high-frequency purchases. Items that are
relatively expensive and easy to ship will be most successful. Examples include health
care items such as vitamins, beauty aids, and gourmet foods.

As you might expect, the largest percentage of sales will be in areas such as computer
hardware and consumer electronics, event tickets, videos, music, books, and software (by far
the largest).

In 1998 less than a third of those using the internet shopped on it. The following table shows
some of the major reasons.

Internet shoppers tend to have higher education, somewhat higher incomes, and to be white,
male, and live in the northeast or west. Those under age 24 and over age 64 shop on-line less
than the other age groups.

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The vast majority of retail sales take place in stores. In addition to the traditional small
specialty and general stores, and larger department stores, we have seen the emergence of
the category killers or superstores, and the small kiosks in malls, airports, and other high
traffic areas.

Earlier we were focusing on product choice followed by search for the retail outlet. However,
for many consumers and/or products, store-choice precedes brand choice. I have a few stores
that I consistently shop at and choose from among the brands they carry. I’m using the store
as the expert in brand choice.

Marketing strategy would be a focus on brand image and advertising for brand-first decisions,
and focus on distributing through key-outlets and point-of-purchase displays for outlet-first
decisions.

A number of factors affect retail outlet selection.

Outlet image is one of the key factors. One study produced the following nine affective
dimensions of store image. These would probably change for non-store outlets, but the
concepts would be similar.

Of course, different groups of customers want different things from various types of retail
outlets. Department store images have become too diffuse to attract customers, and they have
evolved into collections of distinctive specialty stores or boutiques, each with a sharply
focused image keyed to a well-defined target market.

As I look at these dimensions of retail image, I am reminded that you can’t have everything.
It is impossible to be a very low cost, very high service retail outlet. There are tradeoffs. A
store must have a clearly defined target market, develop a clear image and strategy, and
focus its efforts.

Choice is also affected by retail outlet location and size. The attractiveness of a store is
directly proportional to its size (larger stores are more attractive because they tend to have
larger selection). Attractiveness is inversely proportional to distance (or more accurately,
travel time). The longer it takes to get to a store, the less likely you are to shop there. Of
course, the impact of size and distance depends on whether the consumer is buying
convenience goods or shopping goods. For convenience goods (like food and incidentals)

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travel time is very important. For shopping goods (like furniture and automobiles)
size/selection is very important.

The perceived risk is a characteristic of the consumer that affects retail outlet choice (see
page 8 on the cost/benefit of information search). Non-traditional outlets are inherently risky,
so they must take steps to minimize risks by providing excellent service, no-hassle return
policies, brand name merchandise, warranties, etc.

Researchers like to classify consumers into shopping orientation categories that

emphasize certain activities or shopping motivations. One study identified seven commonly
held psychographic-based shopping orientations. Just out of curiosity, what type of people do
you think hold each orientation?
Inactive Shoppers (15 percent) have extremely restricted lifestyles and shopping
interests. Best characterized by their inactivity, Inactive Shoppers do not engage in
outdoor or do-it-yourself activities except for working in the yard or garden. They do
not express strong enjoyment or interest in shopping, nor are they particularly
concerned about such shopping attributes as price, employee service, or product
selection.
Active Shoppers (12.8 percent) have demanding lifestyles and are "tough" shoppers.
They engage in all forms of outdoor activities and are usually do-it-yourselfers. Actives
enjoy "shopping around," and price is a major consideration in their search. Actives
appear to shop more as an expression of their intense lifestyles rather than an interest
in finding bargains. Therefore, these shoppers balance price with quality, fashion, and
selection in their search for value.
Service Shoppers (10 percent) demand a high level of in-store service when shopping.
They usually seek convenient stores with friendly, helpful employees, and they
quickly become impatient if they have to wait for a clerk to help them.
Traditional Shoppers (14.1 percent) share Active Shoppers' preoccupation with
outdoor activities, but not their enthusiasm for shopping. They actively hike, camp,
hunt, and fish, and are do-it-yourselfers who often work on their cars. In general,
though, Traditional Shoppers are not price sensitive nor do they have other strong
shopper requirements.
Dedicated Fringe Shoppers (8.8 percent) are heavy catalog shoppers. They are do-
ityourselfers and are more likely than average to try new products. They have
almost a compulsion for being different. Dedicated Fringe Shoppers are not
interested in extensive socializing. They have little interest in television and radio
advertisements and exhibit limited brand and store loyalty.
Price Shoppers (10.4 percent), as the name implies, are most identifiable by their
extreme price consciousness. Price Shoppers are willing to undertake an extended
search to meet their price requirements, and they rely heavily on all forms of
advertising to find the lowest prices.
Transitional Shoppers (6.9 percent) seem to be consumers in earlier stages of the
family life cycle who have not yet formalized their lifestyle patterns and shopping
values. They take an active interest in repairing and personalizing cars. Most
participate in a variety of outdoor activities. They are more likely than average to try

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 new products. Transitional Shoppers exhibit little interest in shopping around for low
prices. They are probably "eclectic shoppers" because they appear to make up their
minds quickly to buy products once they become interested.

There are a host of other factors that will affect brand choice, particularly those things that
occur once the consumer is in the store. Point-of-purchase displays will have an impact. Price
reductions and promotional deals may change the consumer’s choice. Atmospherics will
influence the consumer. Stockouts will clearly have an impact on brand choice. Finally, sales
personnel themselves may influence the final brand choice.

Postpurchase Processes, Satisfaction, and Commitment

From the first time a guest registers at a Ritz-Carlton hotel, every preference and special
order is entered into a database accessible from all the chain's hotels. Employees carry
special note cards on which guest comments and concerns are noted for subsequent entry into
the database. Thus, the next time a customer checks into a Ritz-Carlton, the hotel will know
if an iron should be in the room, if bed turn-down is desired, or if a particular type of room
is preferred. The guest's needs can then be met without the guest having to make requests.

The Ritz-Carlton loyalty program is also customized. Most hotel programs provide points per
stay that can be redeemed for upgrades, free nights, or other predetermined and limited
prizes. "When we recognize guests for their long stays or repeat business, we recognize them
with something that's appropriate for them." Recognition awards are often chosen at a staff
meeting held at the start of each shift, where a list of guests and their preferences is
reviewed. For example, if a guest who prefers a room with an ocean view is visiting for the
fifth time and the staff sees that a deluxe room with that view is available, they will upgrade
the guest. When the guest checks in, the registration clerk will give the upgrade with a thank
you. However, "you should always tell the guest why he or she is being rewarded. That way a
customer won't expect rewards every visit."

Though rare only a few years ago, such customer loyalty programs are now common in
American firms. This chapter deals with everything that takes place after the purchase, and
focuses on satisfying customers, and developing committed customers.

A very common reaction after making a difficult, relatively permanent decision is doubt or
anxiety, referred to as postpurchase dissonance. The probability that a consumer
experiences dissonance, as well as the magnitude of such dissonance is a function of
The degree of commitment or irrevocability of the decision. The easier it is to alter
the decision, the less likely the consumer is to experience dissonance.
The importance of the decision to the consumer. The more important the decision, the
more likely dissonance will result.
The difficulty of choosing among the alternatives. The more difficult it is to select
from among the alternatives, the more likely the experience and magnitude of

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 dissonance. Decision difficulty is a function of the number of alternatives considered,
the number of relevant attributes associated with each alternative, and the extent to
which each alternative offers attributes not available with the other alternatives.
The individual's tendency to experience anxiety. Some individuals have a higher ten-
dency to experience anxiety than do others. The higher the tendency to experience
anxiety, the more likely the individual will experience postpurchase dissonance.

Dissonance occurs because making a relatively permanent commitment to a chosen

alternative requires one to give up the attractive features of the unchosen alternative. This
typically occurs in high-involvement situations (nominal and limited decision making
generally doesn’t product dissonance).

Consumers often search for information to validate their decisions. The heightened
receptiveness to information after the purchase greatly enhances the role that advertising
and follow-up sales efforts can have. They build consumer confidence.

A related concept is consumption guilt which occurs when some negative emotions or guilt
feelings are aroused by the use of a product or service.

Your book has a brief section on product disposal. We know that packaging is a problem, but
a number of products are harmful to the environment and need special handling for proper
disposal.

Postpurchase evaluation and ultimate satisfaction are important concepts to marketers.

Consumers may evaluate all aspects of the prepurchase process, the purchase itself, the final
performance of the product, instruction manuals, customer service, and repair or warranty
service. All of these things fold into what I call the total product.

Satisfaction depends upon the performance of the product (or total product) relative to
expectations. When I go to a fast food restaurant I don’t expect much in the way of service or
product, that’s what I get, and I’m generally satisfied. I really get committed to a product
when I expect a lot and I get even better than expected. I’m committed to Hondas, McGuckins,
Suzanne, and Moose Tracks.

For many products there are two dimensions to performance. Instrumental performance
relates to the physical functioning of the product. Symbolic performance relates to
aesthetic or image-enhancement performance. For example, durability of a sport coat is an
aspect of instrumental performance, while styling represents symbolic performance. Your
book also mentions affective performance which is the emotional response that owning or
using the product provides.

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If a consumer is dissatisfied, what do they do? One study of grocery purchasers found that
when there was a case in which one of the products they normally purchase was defective
• 25 percent of unsatisfactory purchases resulted in brand switching
• 19 percent cause the shopper to stop buying the procducts
• 13 percent let to an in-store inspection of future purchases
• 3 percent produced complaints to the manufacturer
• 5 percent produced complaints to the retailer
• 35 percent resulted in the item being returned.

One of the other things people do when there is a problem or product failure is to tell all of
their friends, particularly if they are upset about the problem. Unfortunately, consumers
often don’t complain to the manufacturer or retailer, so they don’t know there is a problem.
Firms need to anticipate dissatisfaction and remove the potential cause before it occurs. It
has been estimated that it costs only one-fifth as much to retain an old customer as to obtain
a new one.

The goal is to develop repeat purchases who are not only brand loyal but committed
customers. A committed customer has an emotional attachment to the brand and likes the
brand in a manner somewhat similar to a friendship. Customers use expressions such as I
trust this brand, I like this outlet, and I believe in this firm to describe their commitment.

A new trend in marketing is relationship marketing, an attempt to develop an ongoing,

expanding exchange relationship with the customer. In many ways it seeks to mimic the
relationships that existed between neighborhood stores and their customers many years ago.

The material in this handout was extracted and synthesized by R. H. Taylor from the Hawkins, Best,
and Coney textbook, Consumer Behavior, McGraw-Hill. The purpose is to shorten the reading material
over decision making.

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