Consumer Behavior Decision making Types of Purchase Behavior

Consumer Behavior Decision making Types of Purchase Behavior and the Consumer Decision Making Process

Consumer Behavior Decision making Outline • Types of purchase decisions • Need arousal • Information acquisition (types of search, determinants of search, and sources of information) • Evaluation of alternatives and choice (choice sets, choice alternatives, choice criteria, choice heuristics, context effects)

Consumer Behavior Decision making The purchase cube Deliberate purchases HI Extended purchase decision making Symbolic purchase behavior LI Repetitive purchase behavior Hedonic purchase behavior Think Feel Spontaneous purchases HI LI Promotional Exploratory purchase behavior Casual purchase behavior Impulsive purchase behavior Think Feel

Consumer Behavior Decision making Types of purchase motives Functional motives Problem solving (problem removal or avoidance) Quality and performance Price and value Familiarity Convenience Normal depletion Psycho-social motives Social approval Self-expression Variety and change Emotional stimulation Intellectual stimulation Sensory gratification

Consumer Behavior Decision making FCB grid for some common products high involvement life insurance car battery think 35 mm camera washer/dryer portable TV suntan lotion dry bleach salad oil sports car stereo component expensive watch perfume wine for dinner party complexion/face soap jeans feel toothpaste greeting card fast food restaurant liquid bleach disposable razor paper towels liquid hand soap low involvement regular beer salty snacks

Consumer Behavior Decision making Need arousal Current (initial) state Desired (end) state Discrepancy ? Need arousal • generic • selective

Consumer Behavior Decision making Information acquisition • ongoing search: motivated by intrinsic enjoyment of the search process and the desire to build an information bank; • prepurchase search: motivated by the desire to make better purchase decisions; – internal: – external:

Consumer Behavior Decision making Internal search Experiences 0/+ ++ Brand C Brand A Purchase goal Attribute information Brand B +

Consumer Behavior Decision making Determinants of external search effort Environmental and situational variables: – number of alternatives – product differences – store distribution (distance) – time pressure Product characteristics: – price – social visibility (style and appearance) – perceived risk – number of crucial attributes Consumer characteristics: – prior knowledge and experience – involvement – positive attitude toward search – education – income – age + + – – + + + – –

Consumer Behavior Decision making Information sources personal sources commercial sources nonpersonal sources

Consumer Behavior Decision making Alternative evaluation • the following information is particularly relevant to making a choice: – choice alternatives (e. g. , brands, stores); – choice criteria (e. g. , product or store attributes); • in order for a product or store to be chosen, it has to be in the consumer’s consideration set and it has to be perceived favorably on the choice criteria that are important to the consumer;

Consumer Behavior Decision making A choice sets model of retail selection (Spiggle and Sewall 1987) unawareness set inert set (0) inaction set (+/0) quiet set (+/0) retailer not chosen (+/0) awareness set evoked set (+) action set (+) interaction set (+) retailer chosen (+) total set inept set (-) reject set (-)

Consumer Behavior Decision making In-class exercise: Choice sets Choose a product category in which three acquaintances who are not in this class made a recent purchase (e. g. , soft drinks, fast food restaurants, energy bars, etc. ). Ask your respondents to list all the brands in the product category that they were aware of prior to making the purchase (awareness set), and then have them indicate which brands they considered buying (consideration set), which brands they were indifferent toward (inert set), and which brands they knew they didn’t want to buy (inept set). Of course, you should also keep track of which brand they actually purchased. Try to find out from your respondents why different brands belong to each of the different choice sets. •

Consumer Behavior Decision making Purchasing a diamond engagement ring Awareness Evoked set Action Interaction Choice set set Fine Jewels 90 (10) 74 (12) 56 (15) 36 (23) 9 Hargrave 30 (13) 19 (21) 13 (30) 9 (44) 4 A. A. Gray 28 (2) 10 (6) 5 (13) 1 (40) <1 Mass Mart 69 (0) 7 (0) 4 (0) 1 (0) 0

Consumer Behavior Decision making Choice heuristics • if an overall evaluation for each brand is available in memory, the decision can be made based on affect referral; • attribute-based choice heuristics differ based on whether they are compensatory or noncompensatory and whether processing occurs by brand or by attribute; • phased decision strategies are often used in practice;

Consumer Behavior Decision making Attribute-based choice heuristics Processing by brand Processing by attribute Compensatory Noncompensatory weighted additive rule equal weight heuristic conjunctive heuristic additive difference rule lexicographic heuristic elimination by aspects heuristic

Consumer Behavior Decision making In-class exercise: Decision rules Use the data in the table below to decide which product a consumer would choose if (s)he were to use the following decision rules or heuristics: (a) weighted additive rule (according to this rule, the overall score is the weighted sum of the subjective values, where the weights are the attribute importances); (b) equal weight heuristic (according to this rule, unit weights are used for all attributes); (c) conjunctive heuristic; (d) lexicographic heuristic; and (e) elimination by aspects heuristic (read Chapter 7 in Peter and Olson, esp. Exhibit 7. 4, before doing this assignment). Note: Numbers in parentheses are subjective ratings on a scale from 1 to 10, with 10 being the maximum score. Use these ratings in your calculations. The cutoff levels refer to the minimum or maximum acceptable standard on a given attribute (e. g. , >5 on image means that the rating on this attribute has to be greater than 5 in order for the car to be considered).

Choosing a mid-size sedan Price Warranty (years/ miles) J. D. Power mechanical quality Crash test rating Horsepower EPA mileage (city/ highway) (6) $19, 800 (7) 3/36 K (7) 3 (6) Excellent (10) 175 (8) 23/29 (8) $17, 095 (8) 3/36 K (7) 4 (8) Excellent (10) 160 (7) 24/34 (9) $19, 025 (7) 3/36 K (7) 3 (6) Excellent (10) 160 (7) 24/34 (9) (6) $21, 200 (5) 3/36 K (7) 3 (6) Good (8) 153 (5) 20/27 (7) (10) $25, 045 (4) 5/50 K (9) 4 (8) Excellent (10) 180 (9) 22/29 (8) Attribute importance 6 10 9 8 6 5 7 Cutoff level >(5) <$22, 000 >2/30 K >2 (6) at least good >170 >20/27 Brand Image Nissan Altima Honda Accord Toyota Camry Ford Taurus VW Jetta

Consumer Behavior Decision making The cost-benefit approach to consumer choice • question of how consumers decide which choice heuristic to use in a given case; • the cost/benefit framework suggests that rule usage depends on the costs and benefits associated with the application of a given heuristic; • important components of costs and benefits are the cognitive effort required by a choice heuristic and the accuracy of the choice resulting from the use of a heuristic;

Consumer Behavior Decision making Contextual influences on consumer decision making • because consumers’ preferences are often not well-formed, seemingly minor variations in the way the decision is framed (either by the consumer or the marketer) can have a profound effect on choice; • marketers can influence consumer decision making by manipulating various task and context factors;

Consumer Behavior Decision making Effect of choice set composition on consumers’ purchase decisions: The attraction effect Choice 1: Cross pen $6 Choice 2: Cross pen inferior, lesser-known pen $6

Consumer Behavior Decision making Effect of choice set composition on consumers’ purchase decisions: The compromise effect Brand B costs $350, w/ a picture quality of 85 Brand C costs $299, w/ a picture quality of 80 Same as above, except that there is also Brand A, at a price of $503 and a picture quality of 100 Same as above, except that there is also Brand D, at a price of $146 and a picture quality of 65

Consumer Behavior Decision making Methods for studying decision making • input-output approaches: a decision process is hypothesized and factors that affect this process are identified; if manipulations of these factors (inputs) lead to the predicted results (outputs), this is interpreted as evidence in support of the underlying process; • process tracing approaches: ongoing decision processes are measured directly; – verbal protocols: concurrent or retrospective thought verbalizations; – information acquisition approaches: information display boards, eye movement recording, and computer-based information displays; – chronometric analysis: analysis of response times;

Consumer Behavior Decision making Brand personality • idea that brands have “personalities” (sets of human characteristics) and that consumers may use brands for self-expressive purposes; • recent research by Aaker (1997) suggests that a brand’s personality can be described in terms of five underlying dimensions; • according to the image congruence hypothesis, consumers prefer brands that have images similar to their own self-image;

Consumer Behavior Decision making A brand personality framework Brand personality Sincerity Excitement Competence Sophistication Ruggedness • down-to-earth • honest • wholesome • cheerful • daring • spirited • imaginative • up-to-date • reliable • intelligent • successful • upper class • charming • tough • outdoorsy