TITLE DATE

Types of consumer decision making

Perspective - consumer as a problem solver

Extended problem solving

01
• considederable time and effort to analyze alternatives
• High level of risk and uncertainty
• Personal knowledge not enough

02
• New product - or a product with high cost or technically
Limited problem solving
• moderate amount of time and effort
• Having some period experience of purchase

03
• Reply on personal information and prior experience
Habitual decision making
• little or no conscious efforts

04
• Brands and store loyalty play a significant role

Other models of decision making:

05
Behavioural influence perspective
• when a person decides to buy something on impulse that is promoted as a “surprise special: in a store
Experiemental perspecitve

06
• consumer buy based on totality of product appeal

Stages in consumer decision making - extended problem solving

07
08
09
10
11
12

2 02 3 VERSION FREE 1 2 TAB S NOT E B OOK NOT F OR SA L E ⒸIVORYDIGITA LHUB

 TITLE DATE

Problem recognition
When we experience a significant difference between out current state of affairs and some state we desire.

Problems arise in two ways

01
1. Actual state - need recognition
2. Ideal state - opportunity recognition

02
Information search
• internal versus external search
• Deliberate versus “accidental” search

03
Which one is intern, external, deliberate or accidental?
• obtaining information from ads, retailers, catalogs, friends,etc external
• Scanning memory to assemble product alternative information internal

04
• Searching on the internet for information external
• An advertisment ton social media which triggers a purchase accidental
• Noticed an unheard brand/company in the top 10 search result accidental

05
Do consumer always search rationally
• external searches are surprisingly low
• Low income shoppers search less

06
• Satisficing vs maximizing and bounded rationality
• Personalized product recommendation
• Brand switching
• Variety seeking

07
Few important observations
• the mind ignores what it knows and focuses on differences

08
• Shoppers want to feel smart when decisions
• Shoppers have difficulty making decisions

Mental accounting: biases in the decisions making process

09

Framing a problem in terms of gains/losses influences out decisions

• hyperopia
Reluctant to waste something we have paid for
10

Prospect theory:
Risks differ when consumer face options involving gains versus those involving losses
1. Reference point
11

2. Risk averse
3. Loss averse
4.
12

2 02 3 VERSION FREE 1 2 TAB S NOT E B OOK NOT F OR SA L E ⒸIVORYDIGITA LHUB

 TITLE DATE

4. overweight small probabilities

Consumer prior expertise

Moderately knowledgeable consumers tent to search more than product experts and novices

01
• experts: selective search
• Novinves: others opinions

02
Perceived risk
Belied that product has negative consequences
• expensive, complex, hard to understand
• Product choice is visible to others

03
Five types of perceived risks

04
05
06
07
08
09

Identifying and evaluating alternatives

10

• evoked set - a brand for whcih the consume rha sa positive evaluation
• Inept set - a product with a negative evaluation
• Inert set - products for whcih the consumer has made no evaluation
11
12

2 02 3 VERSION FREE 1 2 TAB S NOT E B OOK NOT F OR SA L E ⒸIVORYDIGITA LHUB

 TITLE DATE

01
02
03
04
What is product categorization
• we evaluate products in terms of what we already know about a (similar product)

05
06
07
08
Strategic implications of product categorization
09

Product positing
• conning consumers that product should be considered within a given category
• Identifying competitions
10

• Exemplar products
Which is used to set criteria that to emulate all category memebers
But moderately unusual products stimulate more information processing and positive evaluation
• location product
11

•product that do not fit clearly into categories confused consumers

12

2 02 3 VERSION FREE 1 2 TAB S NOT E B OOK NOT F OR SA L E ⒸIVORYDIGITA LHUB

 TITLE DATE

Producy choice: selecting among alternatives

Decision riles for product choice can be very simple or very complicated
• prior experience with (similar) product
• Present information at time of purchase

01
• Beliefs about brands (from advertising)

Procedural learning determinant attributes

02
• marketers educate consumers about (or even invent) determinant attributes

A few new terms

Neoromarketing

03
• is the stufy of how peoples brains responded to advertising and other brand-related messages by scientifically monitoring
brainwave activity, eye tracking and skin response
Cybermediaries

04
• this term describes a website or app that helps to filter and organize online market information so that customer can
identify and emulate alternatives more effienctly

Decision rules

05
Noncompensatory: shortcuts via basic standards
• lexicographie rile
• Elimination

06
• Conjunctive rule
Compensatory
• simple additive rile
• Weighted additive rule

07
Decision rile - compensatory model of choice
• consumer rank products based on the total of their characteristics

08
Decision rule - non compensatory models of choice
In the evaluation stage, the consumer takes mental shortcuts also called as ‘heuristics’ in the decision making process.
• Conjunctive: minimum acceptable cut-off levels for each attributes
09

• Lexicographic: Best brand for the perceived most important attribute

• Elimination-by-aspects: eliminate brands that do not meet the cut-off levels
10

Post purchase evaluation

- post purchase evaluation closes the loop
This occurs when we consume the product or service we selected and decide whether it meets or even exceeds our
expectations
11

• this process called social scoring, both customers and service providers increasingly rate one another performance
12

2 02 3 VERSION FREE 1 2 TAB S NOT E B OOK NOT F OR SA L E ⒸIVORYDIGITA LHUB

 TITLE DATE

Market beliefs
• consumer assumptions about companies products and stores that become shortcuts for decisions
• Prince waking relationship: we tend to get what we pay for
• Other common marketing beliefs

01
all brands are basically the same
Larger stores offer better prices than smaller stores
Items tied to “give aways” are not a good value

02
Country of orgin as heuristic
• we rate our own country’s products more favourably than do people who live elsewhere
• Industrialized countries make better products than developing countries

03
• We strongly associate certain items with specific countries
• Attachment to own versus other cultures

04
Choosing familiar brand na,mes : loyalty or habit
• Zipf’s Law: Our tendency to prefer a higher ranked brand to the competition
• Brands that dominate the market are sometimes 50% more profitable than their nearest competitors
• Consumer inertia: Tendency to buy a brand out of habit merely because it requires less effort

05
• Brand loyalty: Repeat purchase behaviour reflecting a conscious decision to continue buying the same brand

06
What is attitude?
• a point of view
• A frame of mind

07
• A position/ posture
• A feeling

08
09
10
11
12

2 02 3 VERSION FREE 1 2 TAB S NOT E B OOK NOT F OR SA L E ⒸIVORYDIGITA LHUB