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Individual Decision Making

Problem Recognition Information Search Evaluation of Alternatives Product Choice Outlet Selection Outcomes


Rational perspective (high involvement) Emotional perspective (low

involvement)


Habitual Decision Making Limited Problem Solving Extensive Problem Solving
More Expensive Products Infrequent Purchasing High Consumer Involvement Unfamiliar Product Class and Brands Extensive Thought, Search, and Time Given to Purchase

Low-Cost Products Frequent Purchasing Low Consumer Involvement Familiar Product Class and Brands Little Thought, Search, or Time Given to Purchase

Problem Recognition

When there is discrepancy between actual state and ideal state

Information Search

(methods) (before purchase) >(on going)

(sources) >(internal) >(external)

> (intentional) >(not intentional)

How Much Search Occurs?


Purchase is Important Value Style and Image Search Activity is Greater When: Consumers Are Younger, Better-Educated Women Shop Than Men Need to Learn More About Purchase

Information is Easily Obtained

The Impact of Consumer Product Knowledge on Information Search


(product Knowledge)

Types of Risk that influence IS


Types of Risk
Monetary Psychological

Functional

Social

Physical

Alternative Evaluation

Product Class Hierarchy


Dessert Superordinate Levels

Fattening Dessert

Basic Levels Have Much More in Common, But a Number of Alternatives Exist.
Cake

Nonfattening Dessert

Ice Cream

Fruit Subordinate Levels Includes Individual Brands.

Diet Ice Cream Yogurt

Pie

Strategic Implications of Product Classification


Product Positioning
Conception of the Product Relative to Other Products in the Consumers Mind

Identifying Competitors
Are Different Products Substitutes?

Exemplar Products
Most Known, Accepted Product or Brand

Locating Products
Consumers Expectations Regarding the Places to Locate a Desired Product.

Heuristics
Heuristics are Mental Rules-of-Thumb That Lead to a Speedy Decision.
Country of Origin Brand Loyalty Retail Outlets Product Signal Market Beliefs

Common Heuristics

Price/Quality Relationship

Brand Names


Non-compensatory Decision Rules Conjunctive Disjunctive Elimination-By-Aspects Lexicographic Simple Additive Weighted Additive Compensatory Decision Rules


Conjunctive

e.g., good Disjunctive e.g., size of screen e.g., excellent Elimination-by-Aspects e.g., good


Lexicographic Decision Rule


Simple additive e.g., excellent=3, Good=2, poor=1 Weighted additive e.g., weights=0.3, 0.25, 0.2, 0.15, 0.07, 0.03

Hypothetical Alternatives for a TV Set

Types of Cognitive Choice Models

Evaluation
Evaluative criteria Price Weight Processor Battery life After-sale support Display quality Epson 5 3 5 1 3 3 Canon 3 4 5 3 3 3 Compaq 3 5 5 1 4 3 Samsung 4 4 2 4 3 5 IBM 2 3 5 1 5 3 Toshiba 1 4 5 5 3 3 Importance 30 25 10 05 10 20

evaluations: 1 = very poor; 5 = very good Or belief strengths: 3= very weak; +3= very strong if stated in terms of attribute level (e.g., low price, light weight, long battery life, etc.))

Different Choices, Depending on Different Decision Rules


Decision Rule Compensatory Conjunctive Disjunctive Lexicographic EBA Brand Choice Samsung Canon Toshiba Epson Samsung

Compensatory Model: Score for Samsung Score for Epson 30 * 4 = 120 25 * 4 = 100 10 * 2 = 20 05 * 4 = 20 10 * 3 = 30 20 * 5 = 100 ____ 390 30 * 5 = 150 25 * 3 = 75 10 * 5 = 50 05 * 1 = 05 10 * 3 = 30 20 * 3 = 60 ____ 370