Individual Decision Making

Chapter 9
Stages in consumer decision-making
 Types of consumer
decisions

• extended problem solving

• limited problem solving
• habitual decision making
PROBLEM RECOGNITION
A continuum of buying decision behaviour
 TYPES OF INFORMATION
SEARCH
1. INTERNAL VERSUS EXTERNAL SEARCH
2. DELIBERATE VERSUS "ACCIDENTAL" SEARCH
• PERCEIVED RISK
• As a rule, purchase decisions that involve
extensive search also entail some kind of perceived
risk, or the belief that the product has potentially
negative consequences. Perceived risk may be
present if the product is expensive or is complex
and hard to understand. Alternatively, perceived
risk can be a factor when a product choice is
visible to others, and we run the risk of
embarrassment if the wrong choice is made.
• Fig. 9-5
 DECISION RULES
• Consumers consider sets of
product attributes by using different
rules, depending on the complexity of
the decision and the importance of the
decision to them.
• One way to differentiate among
decision rules is to divide them into
those that are compensatory versus
those that are non-compensatory.
 NONCOMPENSATORY
DECISION RULES
• Simple decision rules are noncompensatory, meaning
that a product with a low standing on one attribute cannot
make up for this position by being better on another
attribute. In other words, people simply eliminate all options
that do not meet some basic standards.
• When people are less familiar with a product category or
are not very motivated to process complex information, they
tend to use simple, noncompensatory rules, which are
summarized below.
 The lexicographic Rule. When the lexicographic rule is
used, the brand that is the best on the most important
attribute is selected. If two or more brands are seen as being
equally good on that attribute, the consumer that compares
them on the second most important attribute.
 The elimination by-Aspects Rule. Using the
elimination-by-aspects rule, brands are also
evaluated on the most important attribute. In this
case, though, specific cutoffs are imposed.
 The conjunctive rule entails processing by brand.
As with the elimination-by-aspects procedure,
cutoffs are established for each attribute. A brand
is chosen if it meets all of the cutoffs, but failure
to meet any one cutoff means it will be rejected. If
none of the brands meet all of the cutoffs, the
choice may be delayed, the decision rule may be
changed, or the cutoffs may be modified.
 COMPENSATORY
DECISION RULES
• Unlike non-compensatory decision rules, compensatory
decision rules give a product a chance to make up for its
shortcomings. Consumers who employ these rules tend to be more
involved in the purchase and thus are willing to exert the effort to
consider the entire picture in a more exacting way. The willingness
to let good and bad product qualities balance out can result in quite
different choices.
• Two basic types of compensatory rules have been identified.
When using the simple additive rule, the consumer merely
chooses the alternative that has the largest number of positive
attributes. This choice is most likely to occur when his or her ability
or motivation to process information is limited. One drawback to
this approach for the consumer is that some of these attributes may
not be very meaningful or important.
• The more complex version is known as the weighted additive
rule. When using this rule, the consumer also takes into account
the relative importance of positively rated attributes, essentially
multiplying brand ratings by importance weights. If this process
sounds familiar, it should.
Use
Use Compensatory
Compensatory Decision
Decision Rule
Rule
ATTRIBUTE
ATTRIBUTE WEIGHT
WEIGHT Canon
Canon Nikon
Nikon Minolta
Minolta

Price
Price 60
60 22 22 33
(x60=120)
(x60=120) (x60=120)
(x60=120) (x60=180)
(x60=180)
Focus
Focus 30
30 11 33 22
(x30=30)
(x30=30) (x30=90)
(x30=90) (x30=60)
(x30=60)
Weight
Weight 10
10 33 11 22
(x1=30)
(x1=30) (x10=10)
(x10=10) (x10=20)
(x10=20)
SUM
SUM 100
100 180
180 220
220 260
260

CHOICE:
CHOICE: MINOLTA
MINOLTA
::Use
Use Lexicographic
Lexicographic Decision
Decision Rule
Rule

ATTRIBUTE
ATTRIBUTE WEIGHT
WEIGHT Canon
Canon Nikon
Nikon Minolta
Minolta

Price
Price 60
60 22 22 22

Focus
Focus 30
30 11 33 22

Weight
Weight 10
10 33 11 22

SUM
SUM 100
100

CHOICE:
CHOICE: NIKON
NIKON
Purchase, Post-purchase
Evaluation & Product
Disposal
Chapter 10
SITUATIONAL EFFECTS ON
CONSUMER BEHAVIOR
• A consumption situation is defined by
factors beyond characteristics of the person
and of the product that influence the
buying and/or using of products and
services. Situational effects can be
behavioral (e.g., entertaining friends) or
perceptual (e.g., being depressed or feeling
pressed for time). Common sense tells us
that people tailor their purchases to specific
occasions, and that the way we feel at a
specific point in time affects what we feel
like buying or doing.
 SITUATIONAL
SEGMENTATION
• TEMPORAL FACTORS
• Time is one of consumers' most precious
resources. We talk about "making time" or
"spending time," and we frequently are
reminded that "time is money." Our
perspectives on time can affect many stages
of decision making and consumption, such
as needs that are stimulated, the amount of
information search and deliberation occurs
when we have that luxury of taking our
time.
• ECONOMIC TIME
• Time is an economic variable; it is a resource that must be
divided among activities. Consumers try to maximize satisfaction by
allocating time to the appropriate combination of tasks.
• PSYCHOLOGICAL TIME
• The psychological dimension of time, or how is experienced, is
an important factor in queuing theory, the mathematical study of
waiting lines. A consumer's experience of waiting can radically
influence his or her perceptions of service quality. Although we
assume that something must be pretty good if we have to wait for it,
the negative feelings aroused by long waits can quickly turn off
customers.
• Some products and services are believed to be appropriate for
certain times and not for others. One study of fast-food preferences
found that consumers were more likely to choose Wendy's over other
fast-food outlets for an evening meal when they were not rushed
than when they were pressed for time.
 ANTECEDENT STATES: IF
IT FEELS GOOD, BUY IT…
• A person's mood or psychological condition
active at the time of purchase can have a big
impact on what is bought and can also affect how
products are evaluated. One reason is that
behavior is directed toward certain goal states.
• A consumer's mood can have a big impact on
purchase decisions. Two dimensions, pleasure
and arousal, determine if a shopper will react
positively or negatively to a consumption
environment. A person can enjoy or not enjoy a
situation, and he or she can feel stimulated or not.
 REASONS FOR SHOPPING
• Social experiences: the shopping center or department
store has replaced the traditional town square of county
fair as a community gathering place. Many people
(especially in suburban or rural areas) may have no place
else to go to spend their leisure time.
• Sharing of common interests: Stores frequently offer
specialized goods that allow people with shared interests
to communicate.
• Interpersonal attraction: Shopping centers are a natural
place to congregate. The shopping mall has become a
central "hangout" for teenagers. It also represents a
controlled, secure environment for the elderly, and many
malls now feature "Mall Walkers' clubs" for early morning
workouts.
 REASONS FOR SHOPPING
• Instant status: As every salesperson knows, some
people savor the experience of being waited on,
even though they may not necessarily buy
anything. One men's clothing salesman offered this
advice, "Remember their size, remember what you
sold them last time. Make them feel important! If
you can make people feel important, they are going
to come back. Everybody likes to feel important!.
• "The thrill of the chase": Some people pride
themselves on their knowledge of the marketplace.
They may relish the process of haggling and
bargaining, viewing it almost as a sport.
 SHOPPING ORIENTATION
• Several shopping types have been identified:
1. The economic shopper: a rational, goal-oriented shopper
who is primarily interested in maximizing the value of his
or her money.
2. The personalized shopper: a shopper who tends to form
strong attachments to store personnel ("I shop where they
know my name")
3. The ethical shopper: a shopper who likes to help out the
underdog and will support locally owned stores rather
than big chains.
4. The apathetic shopper: one who does not like to shop and
sees it as a necessary but unpleasant chore.
5. The recreational shopper: a person who views shopping
as a fun, social activity-- a preferred way to spend leisure
time.
 SPONTANEOUS SHOPPING
• When a shopper is promoted to buy
something in the store, one of two different
processes may be at work: Unplanned
buying may occur when a person is
unfamiliar with a store's layout or perhaps
when under some time pressure; or, a
person may be reminded to buy something
by seeing it on a store shelf. About one-
third of unplanned buying has been
attributed to the recognition of new needs
while within the store
 IMPULSE BUYING
• In contrast, impulse buying occurs when
the person experiences a sudden urge that
he or she cannot resist. The tendency to
buy spontaneously is most likely to result
in a purchase when the consumers believe
acting on impulse is appropriate, such as
purchasing a gift for a sick friend or picking
up the tab for a meal. To cater to these
urges, so-called impulse items such as
candy and gum are conveniently placed
near the checkout.
 POINT-OF-PURCHASE
STIMULI
• Each year, U.S. companies spend more than $13 billion
on point of-purchase stimuli (POP). A point-of purchase
stimulus can be an elaborate product display or
demonstration, a coupon-dispensing machine, or even
someone giving out free samples of a new cookie in the
grocery aisle.
• In-store displays are yet another commonly used device
to attract attention in the store environment. Most
displays consist of simple racks that dispense the
product and/or related coupons, but some highlight the
value of regarding retailing as theater by supplying the
"audience" with elaborate performances and scenery.
Some of the more dramatic POP displays have included
the following.
 Examples of POP Stimuli
• Timex: A ticking watch sits in the bottom of a filled
aquarium.
• Kellogg's Corn Flakes: A button with a picture of
Cornelius the Rooster is placed within the reach of
children near Corn Flakes. When a child presses
the button, he hears the rooster cock-a-doodle-doo.
• Elizabeth Arden: The company introduced
"Elizabeth," a computer and video makeover
system that allows customers to test out their
images with different shades of makeup, without
having to actually apply the products first.
 ACTING ON
DISSATISFACTION
• If a person is not happy with a product or service,
what can be done? A consumer has three possible
courses of action (more than one can be taken):
1. Voice response: The consumer can appeal directly to
the retailer for redress (e.g., a refund).
2. Private response: Express dissatisfaction about the
store or product to friends and/or boycott the store. As
will be discussed in chapter 11, negative word of mouth
(WOM) can be very damaging to a store's reputation.
3. Third-party response: the consumer can take legal
action against the merchant, register a complaint with
the Better Business Bureau, or perhaps write a letter to
the newspaper.
Reducing
Reducing Pre-Purchase
Pre-Purchase Perceived
Perceived Risk
Risk
•• Gather
Gather more
more information
information (any)
(any)
•• Don’t
Don’t buy/postpone
buy/postpone Decision
Decision
•• Let
Let someone
someone else
else decide
decide
•• Shop
Shop trusted
trusted store
store
•• Buy
Buy aa prominent
prominent brand
brand
•• Pay
Pay highest
highest price
price (or
(or lowest)
lowest)
•• Remain
Remain Brand
Brand Loyal
Loyal
•• Sample
Sample
 PRODUCT DISPOSAL
• DISPOSAL OPTIONS
• When a consumer decides that a
product is no longer of use, several choices
are available. The person can either (1) keep
the item, (2) temporarily dispose of it, or (3)
permanently dispose of it.
• The issue of product disposition is
doubly vital because of its enormous public
policy implications. We live in a throwaway
society, which creates problems for the
environment and also results in a great deal
of unfortunate waste.
 LATERAL CYCLING

• Interesting consumer processes occur during

lateral cycling, in which already -purchased objects
are sold to others or exchanged for still other
things. Many purchases are made secondhand,
rather than new. The reuse of other people's things
is especially important in our throwaway society
because, as on researcher put it, …. There is no
longer an 'away' to throw things to".
• Flea markets, garage sales, classified
advertisements, bartering for services, hand-
me-downs, and the black market all represent
important alternative marketing systems that
operate alongside the formal marketplace.