The Decision-Making Process Flashcards
Consumer Decision Making
= Consumers are adaptive decision makers. They exploit and adapt to aspects of the environment in order to make decisions and achieve goals.
(Arnould, Price and Zinkhan, 2004)
When choosing what products to buy or what services to use, people often think they are making smart decisions and behaving in ways that are highly rational and congruent with their values and intentions. This is not always the case.
(Frederiks et al., 2015)
The Consumer Decision Making Process
(Lamb, Hair and McDaniel, 2011)
Need Recognition and Problem Awareness ↓ Information Search ↓ Evaluation of Alternatives ↓ Choice and Purchase ↓ Post-Purchase Evaluation
(other models out there)
Need Recognition and Problem Awareness
= Occurs when an individual experiences an imbalance between actual and desired states
= Need recognition is triggered when an individual is exposed to either an internal or external stimulus
Internal Stimulus > e.g. Hunger > “true needs”
External Stimulus > e.g. Advertising > “false needs”
Consumers may also recognise a need when…
= a current product breaks or runs out
= An alternative product becomes available that appears superior to the existing product
(Need Recognition and Problem Awareness) William Leiss –The Limits to Satisfaction (1978)
= ‘Individuals are encouraged to orient their needs toward the kinds of satisfactions that are embodied in the expanding array of commodities. In everyday life, the individual must be able to judge the suitability of various commodities in relation to the perception of his needs’ (pp24)
= ‘Wants’ arise out of social conditioning
= ‘Real’ and ‘Manipulated’ needs
The manipulative tendencies of contemporary capitalist societies create artificial ‘wants’ and false ‘needs’ through social pressures, communicated via the barrage of advertising
Information Search
Internal Information Search = The person recalls info stored in the memory
External Information Search = The person seeks initial info in the outside environment Lamb, Hair and McDaniel (2011, p191)
Internal = Brand recall, Brand Familiarity, Usage situation, Brand preference, Attitude recall = mainly for low risk items/low priced goods (Hoyer and MacInnis, 2008)
External = Personal sources (family, friends), Commercial sources (advertising, sales ppl, retailers, packaging, displays), Public sources (newspapers, radio, social media, tv, blogs), Experiential sources (handling, examining, using the product)
Evaluation of Alternatives
= Evoked sets – Brands that the buyer is willing to consider
= Inert sets – The buyer is aware of this group of brands. They are considered acceptable but are not preferred.
= Inept sets – The buyer does not consider these brands worthy of consideration
Choice and Purchase
= Is the final purchase made online or in the physical store?
= In-store service –customer perceptions based upon ‘expected service’ vs ‘actual service’
= What kind of overall experience does the customer have? Do unpredicted events happen which could influence perceptions?
= If this stage is ineffective or is not completed efficiently, individuals may return to previous stages of the decision-making process!
Post-Purchase Evaluation
= The consumer’s use and evaluation of a product is crucial bcs these evaluations influence future attitudes and memory
= Many of the most important evaluation moments come immediately after a purchase is made
= If problems occur, consumer dissatisfaction can lead to post-purchase resentment
• This impacts negatively on the retailer/brand
• If a retailer reacts to post-purchase resentment quickly, it can be overcome, limiting negative attitudes
= if an individual has made a purchase but they have some form of doubt surrounding the purchase = post-purchase dissonance (usually related to items where there is more of a financial risk
Expected Utility Theory
= This theory typically assumes that decision-makers are rational and have complete info about the probabilities and consequences attached to each alternative course of action
= They are expected to be able to calculate the advantages and disadvantages of each course of action
= too perfect a process for every purchase?
Criticisms = info about alts usually incomplete/uncertain, perception is selective, memory is imperfect and biased
High-Involvement Products
= Usually involves high expenditure or personal risk – buying a house or a car
= Consumers conduct a more in-depth information search (internal and external) and evaluate the alts in greater detail to try and reduce risk
= The complex decision-making process is more relevant here
Low-Involvement Products
= such as buying a soft drink or choosing a breakfast cereal
= Although there may be many alts, the consumer is less concerned with making a ‘wrong decision’ as there is less risk
= Consumers don’t want to invest a lot of their time making these decisions so brand recall, brand familiarity, usage situation, brand preference, and product attributes come into play here
Is loyalty dead?
= Low involvement Consumers have become ruthless in their hunt for value
= 50% of a brand’s ‘loyal’ users will not be with them in a years time
= No. of products sold on deals continues to climb, promotions now account for 40% of branded product sales
= Some categories maintain loyalty: 39% plan in advance the beer brand they are going to buy prior to shopping/ 51% plan their laundry products
(UK Shopper survey, 2016)
High/Low Involvement?
= Determining whether or not a product is high/low involvement is important for retailers and brands. It highlights how much info a consumer is likely to require
= Consider info in advertisements, packaging etc. Effective communication is key
= Products are not always considered to be the same level of
involvement for everyone e.g. allergies or dietary restrictions
involve high involvement
Satisficing
= Ultimately, consumers do not have an unlimited amount of time and energy to make choices
= Research suggests that many people satisfice rather than optimise when they are making decisions
• The final decision can be acceptable rather than optimal…
this is satisficing
(Dunne, Lusch and Carver, 2010)
