Chapter 8

Decision Making

CONSUMER
BEHAVIOR, 10e
Michael R. Solomon

8-1
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
 Chapter Objectives
When you finish this chapter, you should understand why:
1. Consumer decision making is a central part of consumer
behavior, but the way we evaluate and choose products varies
widely.
2. A decision is actually composed of a series of stages that results
in the selection of one product over competing options.

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 Chapter Objectives (continued)
• Decision making is not always rational.
• Our access to online sources is changing the way we decide what
to buy.
• We often fall back on well-learned “rules-of-thumb” to make
decisions.
• Consumers rely upon different decision rules when evaluating
competing options.

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 Learning Objective 1
• Consumer decision making is a central part of consumer
behavior, but the way we evaluate and choose products
varies widely.

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 Figure 8.1 Stages in Consumer Decision Making

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Figure 8.2 Continuum of Buying Decision Behavior

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 Figure 8.1: Steps in the Decision-Making Process

Problem recognition

Information search

Evaluation of alternatives

Product choice

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 Figure 8.3 Problem Recognition

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 Stage 1: Problem Recognition
• Occurs when consumer sees difference between
current state and ideal state
• Need recognition: actual state declines
• Opportunity recognition: ideal state moves
upward

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 Stage 2: Information Search
• The process by which we survey the environment for
appropriate data to make a reasonable decision
• Prepurchase or ongoing search
• Internal or external search
• Online search

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 A Framework for Consumer Information Search
Prepurchase versus Ongoing Search

Prepurchase Search Ongoing Search

Determinants Involvement with Involvement with product

purchase

Motives Making better purchase Building a bank of

decisions information for future use

Outcomes Better purchase decisions Increased impulse buying

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 Search for Information

Internal search:
Retrieving knowledge from memory

External search:
Collecting information from peers, family, and the marketplace
Internal Search
External Search

When motivated by an upcoming

purchase decision, external search
is known as pre-purchase search

When information acquisition takes

place on a relatively regular basis,
regardless of sporadic purchase
needs, it is known as ongoing search
 Deliberate versus “Accidental” Search
• Directed learning: existing product knowledge obtained from
previous information search or experience of alternatives
• Incidental learning: mere exposure over time to conditioned
stimuli and observations of others

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 What to Search?
Choice ALTERNATIVES (brands, offerings) referred to as the external search set and
contributes to the “awareness set”, “evoked/retrieval set”, and “inept set”.

The set of brands of which the consumer is aware is termed the "awareness set".

A brand for which the consumer has a positive evaluation is considered in the "evoked
set".
A product-with a negative evaluation is considered in the "inept set".

Choice CRITERIA that include attributes addressing price, quality, convenience,

performance, popularity, eco-friendliness, etc.
Where to Search?

The different External SOURCES of

informational include:
 Search is NOT Always Rational
• Some consumers avoid external search, especially with minimal time to do so
and with durable goods
• Examples of consumer durable goods include appliances such as washers,
dryers, refrigerators, and air conditioners; tools; computers, televisions, and
other electronics; jewellery; cars and trucks; and home and office furnishings.
• Symbolic offerings like jewelry, perfume, or fashion require more subjective
search
• Brand signaling and switching is a Mental Heuristic used for ambiguous
choices
• Variety Seeking is used to choose new alternatives over more familiar ones

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 • Brand Signals function as memory triggers: any tangible cue (sight, sound, touch,
taste, smell, action or ritual) that directly equates to a brand. ... Specifically, they
contain learned meaning that directly equates to the brand allowing consumers to
identify one brand from another via name, logo, packaging and so forth. A heuristic
is a mental shortcut that allows people to solve problems and make judgments
quickly and efficiently. These rule-of-thumb strategies shorten decision-making
time and allow people to function without constantly stopping to think about their
next course of action

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 Biases in Decision-Making SEARCH Process
• Mental accounting: framing a problem in terms of gains/losses
influences our decisions

• Sunk-cost fallacy: We are unwilling to waste something we have paid for

• Loss aversion: We emphasize losses over gains
• Prospect theory: risk differs for gains vs losses

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 Figure 8.6 Five Types of Perceived Risk

Monetary risk

Functional risk

Physical risk

Social risk

Psychological risk

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 Five Types of Perceived Risk

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 Types of Perceived Risk

Monetary risk occurs when making a poor choice will have a monetary consequence.

Functional risk is the risk that the product may not function as the consumer needs.

Physical risk is the risk that the choice may physically threaten the consumer.

Social risk is the risk that the choice will reflect poorly on the consumer and damage
his or her self-esteem or confidence.

Psychological risk is the risk that one may lose self-respect due to making a bad
decision.
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 ALTERNATIVES FOR EVALUATION
Total Market (“Universal”) Availability Set
(all available alternatives for problem/need)

Awareness Set
(awareness of available alternatives from internal/external search)

Evoked (“Retrieval”) Set

(usually recalled for problem/need from internal/external search)
“Share of Mind”
Included in
Solomon
Text
Consideration Set
(actual internal/external search set considered for purchase/use)
“Share of Wallet”
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Constructing the Consideration Set
Primarily from Memory
Retrieval set: consideration set that
depends on recall of alternatives
from memory
Not all alternatives retrieved from
memory will be considered
Consumers limit their consideration
to those alternatives toward which
they are favorably predisposed
Pre-purchase Evaluation

“EVOKED SET”
Alternatives & Evaluation Criteria
from
Internal & External Search
 Strategic Implications of Product Categorization
• Position a product
• Identify competitors
• Create an exemplar product
• Locate products in a store

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 EVALUATION with DECISION RULES: How We Decide On
the Best Choice
• Once a Search of relevant alternatives and criteria is completed for Problems, using brand
categories, we analyze and choose
• Decision rules for product choice can be very simple or very complicated
-- Prior experience with (similar) product
-- Present information at time of purchase
-- Beliefs about brands (from advertising)

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General EVALUATION Approaches

Rely on preexisting product evaluations

stored in memory
Direct Experience: prior purchase or consumption
experiences with product
Indirect Experience: experiences or impressions
gained second-hand
Construct new evaluations based on information
acquired through internal or external search
 Analyzing Determinant Criterion

• It should point out that there are significant

differences among brands on the attribute
• It should supply the consumer with a
decision-making rule, such as “If-Then”
• It should convey a rule that is consistent
with decisions from prior occasions
• Marketers can influence with ads/education

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 Categorizing for EVALUATION
The Categorization Process: the evaluation of
a choice alternative based on the evaluation
of the category to which it is assigned

Categories are general (drinks) or specific (colas)

Evaluation of a category can be transferred to
a new product assigned to that category
Brand extensions allow firms to use
categorization to their advantage
EVALUTION Strategies as Decision Rules
Noncompensatory Evaluation Strategies:
a product’s weakness on one attribute
cannot be offset by strong performance
on another attribute
 EVALUTION Strategies as Decision Rules
Noncompensatory Evaluation Strategies
Lexicographic strategy: brands are compared initially on the one most important attribute,
and the winner is chosen. If more than one is evaluated similarly on that attribute, the
second most important is considered, and so on, until a winner is identified.

Elimination by aspects: similar to the lexicographic strategy; however, the consumer imposes
cutoffs
Conjunctive strategy: each brand is compared, one at a time, against a set of cutoffs which is
established for each salient attribute. If a brand meets the cutoffs for all attributes, it is
chosen.
 Chapter Summary
• Decision making is a central part of consumer behavior
and decisions are made in stages
• Decision making is not always rational
• We use rules of thumb and decision rules to make
decisions more efficiently

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Disclaimer:
The contents of these slides are adapted from book Consumer Behavior
by  Michael R. Solomon. It is solely for the purpose of teaching marketing
concepts and assessing consumer behavior insight for students studying at Iqra
University.