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CHAPTER 12 Decision Making I: Need Recognition and Search What Do You Think Polling Question Most of the time I am a rational decision maker. _____ Strongly Disagree _____ Disagree _____ Somewhat Disagree _____ Neither Agree nor Disagree _____ Somewhat Agree _____ Agree _____ Strongly Agree Have students access Course Mate at www.cengagebrain.com to answer the polling questions for each chapter of CB. Ask them to take the online poll to see how their answers compare with other students taking a consumer behavior course across the country. Then turn to the last page of the chapter to find the “What Others Have Thought” box feature. This graph is a snapshot of how other consumer behavior students have answered this polling question so far. Learning Objectives After studying this chapter, the student should be able to: 12-1 Understand the activities involved in the consumer decision-making process. 12-2 Describe the three major decision-making research perspectives. 12-3 Explain the three major types of decision-making approaches. 12-4 Understand the importance of the consideration set in the decision-making process. 12-5 Understand the factors that influence the type and amount of search performed by consumers. Lecture Example A primary job for marketers is to understand the decision-making process that operates behind consumer purchases. With ever-increasing amounts of information about products as well as viable alternatives available to customers, sometimes what a company offers is different from what the consumer wants. This discrepancy can negatively affect the sales of a company. For example, according to a study conducted by Polk, an auto industry data company, 35% percent or less of hybrid buyers will purchase another one. This decision has been facilitated by the cost-factor of hybrids and includes concerns over fuel economy problems, with many owners trading-in their hybrids for electric cars. Growing strength of fuel economy among compact and midsize competitors has also contributed to hybrid owners’ decision not to become repeat buyers. Source: Bob Holt, “Hybrid Car Buyers May Go Electric,” New Jersey News Room, April 11, 2012, http://www.newjerseynewsroom.com/science-updates/consumer-reports-survey-says-hybrid-buyers-will-not-buy-hybrid-again Lecture Outline with PowerPoint® Slides LO 12-1: Understand the activities involved in the consumer decision-making process. [Instructor PPT Slide 4] I. Consumer Decision Making Consumers encounter problem situations every day, and choices have to be made. The basic CB consumption process is shown in Exhibit 12.1.The process revolves around value-seeking activities that consumers perform as they go about satisfying needs. The decision-making process has been added to the Exhibit 12.1. Decision-making process generally include five activities: Need recognition Search for information Evaluation of alternatives Choice Postchoice evaluation Note that the activities found in the decision making process are not referred to as steps. The reason is that consumers do not always proceed through the activities in a sequential fashion, nor do they always complete the process. Because consumers face numerous decision-making situations daily, they often decide to simply defer a decision until a later time. A. Decision Making and Choice Decision-making processes lead to consumer choice. Choice does not necessarily mean identifying what brand of product to buy. In fact, one of the very first choices that consumers need to make when facing a decision is whether any purchase will be made at all. Decision-making processes don’t always involve a tangible product. And consumers, make choices about behaviors not relating directly to a purchase. Q: What courses did you sign up for in college? How did you make the decision of selecting these courses? A: Students’ answers will vary. Students can consider following points—talking to their advisor or the course instructor; going by faculty evaluations; taking courses that challenge or interest them; for example, opting for intensive writing courses if their language skills are poor. Decision Making and Value Both utilitarian value and hedonic value are associated with consumer decision making. The car-buying experience involves both value types. Value perceptions also influence the activities found in the decision-making process itself. For example, consumers generally continue searching for information about products only as long as the perceived benefits that come from searching exceed the perceived costs associated with the process. Decision Making and Motivation Motivations are the inner reasons or driving forces behind human actions as consumers are driven to address needs. It isn’t surprising, therefore, that decision making and motivation are closely related concepts. The relationship between decision making and motivation is well-known, and almost all consumer decisions revolve around goal pursuit. Decision Making and Emotion Consumer decision making is also closely related to emotion. Because the decision-making process can be draining, consumers frequently have feelings of frustration, irritation, or even anger as they attempt to satisfy needs. Decisions like these can be quite emotional. Marketers also realize that sometimes the decision-making process can actually be enjoyable, especially if consumers use search apps that they actually enjoy. LO 12-2: Describe the three major decision-making research perspectives. II. Decision-Making Perspectives Consumer researchers view the decision-making process from three perspectives: The rational decision-making perspective The experiential decision-making perspective The behavioral influence decision-making perspective It is important to remember two important aspects of these perspectives. First, each perspective serves as a theoretical framework from which decision making can be viewed. That is, the perspectives pertain to how consumer researchers view the decision-making process, and they are not consumer decision-making approaches. Second, most consumer decisions can be analyzed from a combination of these perspectives. These perspectives are illustrated in Exhibit 12.3. [Instructor PPT Slides 5–7] A. Rational Decision-Making Perspective This perspective is considered by many to be the traditional approach to studying decision-making. The rational decision-making perspective assumes that consumers diligently gather information about purchases, carefully compare various brands of products on salient attributes, and make informed decisions regarding what brand to buy. This approach centers on the assumption that human beings are rational creatures who carefully consider their decisions and that they can identify the expected values associated with a purchase. The rational perspective fits well within the concept of utilitarian value. A problem with this perspective is that one cannot assume that consumers are always rational, nor do they always follow a well-planned decision-making process. The assumption that consumers are rational is debatable. B. Experiential Decision-Making Perspective The experiential decision-making perspective assumes that consumers often make purchases and reach decisions based on the affect, or feeling, attached to the product or behavior under consideration. Behaviors are based largely on the sheer enjoyment involved with the consumption rather than on extensive cognitive effort. Experiential decision processes often focus on hedonic value. Value comes from the experience, not necessarily from an end result. Variety seeking behavior often results from feelings of boredom or a perceived need for change. C. Behavioral Influence Decision-Making Perspective The behavioral influence decision-making perspective assumes that many decisions are learned responses to environmental influences. The behavioral influence perspective also helps to explain how consumers react to store layout, store design, and POP (point-of-purchase) displays. Q: Cite examples that illustrate the three decision-making perspectives. A: Students’ answers will vary. Buying a computer could be attributed to the rational decision making perspective. Buying a bar of chocolate because it makes you feel good would be an example of an experiential decision. Being influenced by the store layout or design while window shopping and buying a product that is on display would be an example to illustrate behavioral influence decision-making perspective. LO 12-3: Explain the three major types of decision-making approaches. III. Decision-Making Approaches Consumers reach decisions in a number of different ways. The decision-making approach that is used depends heavily on the amount of involvement a consumer has with a product category or purchase and the amount of perceived risk involved with the decision. In general, as involvement and risk increase, consumers are motivated to move more carefully through the decision-making process. Consumer involvement represents the degree of personal relevance that a consumer finds in pursuing value from a given act. Perceived risk refers to the perception of the negative consequences that are likely to result from a course of action and the uncertainty of which course of action is best to take. Consumers face several types of risk, including: Financial risk—risk associated with the cost of the product. Social risk—risk associated with how other consumers will view the purchase. Performance risk—Risk associated with the likelihood of the product performing as expected. Physical risk—risk associated with the safety of the product and the likelihood that physical harm will result from its consumption. Time risk—risk associated with the time required to search for the product and the time necessary for the product to be serviced or maintained. Risk varies across consumers and situations. [Instructor PPT Slides 8–11] Decision-making approaches can be classified into three categories: Extended decision making Limited decision making Habitual (or “routine”) decision making Exhibit 12.4 presents these categories in the form of a continuum based on involvement and risk. A. Extended Decision Making When consumers engage in extended decision making, they tend to search diligently for information that will help them reach a satisfactory decision. This information can come from both internal sources and external sources. Consumers carefully assimilate the information they have gathered and evaluate each alternative based on its potential to satisfy their need. Extended decision making occurs when involvement is high and when there is a significant amount of purchase risk involved with the decision. B. Limited Decision Making With limited decision making, consumers search very little for information and often reach decisions based on prior beliefs about products and their attributes. Given the time constraints that consumers often feel, this type of decision making occurs with great frequency. Limited decision making usually occurs when there are relatively low amounts of purchase risk and product involvement. C. Habitual Decision Making With habitual decision making (sometimes referred to as “routine” decision making), consumers generally do not seek information at all when a problem is recognized. Two topics are of special importance concerning habitual decision making: brand loyalty and brand inertia. Brand loyalty may be defined as a deeply held commitment to rebuy a product or service regardless of situational influences that could lead to switching behavior. Brand inertia is present when a consumer simply buys a product repeatedly without any real attachment. Loyalty includes an attitudinal component that reflects a true affection for the product. Brand loyalty affects consumption value in a number of ways. First, loyalty enables consumers to reduce searching time drastically by insisting on the brand to which they are loyal. Second, loyalty creates value for a consumer through the benefits associated with brand image. Ford trucks are well-known for their ruggedness and durability. Brand loyalty also has an impact on the value of the brand to the firm. As branding expert David Aaker asserts, consumer brand loyalty influences the value of a product to a firm because: It costs much less to retain current customers than to attract new ones. Highly loyal customers generate predictable revenue streams Final Thought on Decision-Making Approaches Consumers go through decision-making processes, but these decision processes do not guarantee maximum value. Consumers often make mistakes or settle for alternatives that they are unsure of. In reality, many purchases are made with very little prepurchase decision effort. In many situations, consumers engage in what is called sacrificing, the practice of using decision-making shortcuts to arrive at satisfactory, rather than optimal, decisions. Other consumers, like “maximizers,” work to find the best solution. Research also indicates that consumer decision making may be influenced by heredity. Q: Ask students to provide examples to illustrate brand loyalty. A: Student’s answers will vary. Students may show partiality towards a particular brand of coffee, shoes or clothes. LO: 12-4: Understand the importance of the consideration set in the decision-making process. IV. Need Recognition, Internal Search, and the Consideration Set The recognition of a need leads the consumer to begin searching for information. Several important issues are relevant here. A. Need Recognition The decision-making process begins with the recognition of a need. Simply put, a need is recognized when a consumer perceives a difference between an actual state and a desired state. A consumer’s actual state is his perceived current state, while the desired state is the perceived state for which the consumer strives. A consumer recognizes a need when there is a gap between these two. When the actual state begins to drop, a need is recognized. Importantly, however, marketers also focus on what they term opportunity recognition. Here a consumer’s actual state doesn’t change, but her desired state changes in some significant way. Desired states can be affected by many factors, including reference group information, consumer novelty seeking, and cognitive thought processes. Desired states are also influenced by novelty. Finally, consumers have the ability to plan their actions by anticipating future needs. Not all needs are satisfied quickly, nor does the recognition of a need always trigger the other activities found in the decision-making process. Value is again important here. If the end goal is not highly valued, consumers may simply put off a decision. [Instructor PPT Slide 12] B. Search Behavior When consumers perceive a difference between an actual state (an empty gas tank) and a desired state (a full tank), the decision-making process is triggered. Consumer search behavior refers to the behaviors that consumers engage in as they seek information that can be used to satisfy needs. Consumers seek all types of information about potential solutions to needs, including: The number of alternatives available The price of various alternatives The relevant attributes that should be considered and their importance The performance of each alternative on the attributes Consumer search behaviors can be categorized in a number of ways, including ongoing search, prepurchase search, internal search, and external search. Ongoing and Prepurchase Search A consumer performs an ongoing search when she seeks information simply because she is interested in a particular topic (such as a product or organization). Consumers who perform ongoing searches are usually highly involved with the product category and seek information simply for enjoyment. Prepurchase search activities are focused on locating information that will enable the consumer to reach a decision for a specific problem. Prepurchase search can be exhibited in browsing behavior. When consumers browse, they are simply gathering information that can be used in decisions that involve a longer time frame. The difference between ongoing searches and browsing behavior is that an ongoing search is performed when consumers have an enduring interest or involvement with the product, not simply when information is being gathered for a specific purchase. The concept of information search has changed dramatically in recent years due to the mass adoption of the Internet as well as the proliferation of mobile information technologies like cell phones and personal data assistants. The problem is that there is simply too much information out there. Information overload refers to the situation in which consumers are presented with so much information that they cannot assimilate it all. One way that consumers can try to minimize information overload in the online environment is by joining a specific group for a product or brand on a site like Facebook. By focusing specifically on a group or fan page, consumers are able to look for relevant information in one place and can gain a sense of which other posters they can and cannot trust for information. Information search on social network sites can be either ongoing or prepurchase. Q: Ask students to provide an example of the steps involved in a prepurchase search A: Students’ answers will vary. The first step is identifying the need for a product say a mobile phone. Seeking information about price, features, and requirements would be the next step. Comparison of one model with another would also be a part of the prepurchase search. [Instructor PPT Slide 13] C. The Consideration Set Internal search includes the retrieval of knowledge about products, services, and experiences that is stored in memory. This type of knowledge is related directly to consumers’ experiences with products and services. When confronted with a need, consumers begin to scan their memories for available solutions to the problem that can aid in decision making. As such, consumers most often perform internal searches before any other type of search begins. Marketers find it valuable to understand the consideration set of their customers in order to learn about the total number of brands, or alternatives, that are considered in consumer decision making. The total collection of all possible solutions to a recognized need (for example, the total number of brands of deodorant available on the market) is referred to as the universal set of alternatives. Although the universal set may be quite large, consumers generally do not realize how many solutions are potentially available when a need arises. In fact, decision making is limited by what is referred to as the awareness set. The awareness set includes the set of brands or alternatives of which a consumer is aware. Within the awareness set, three categories of alternatives are found. The first is the consideration set (or “evoked set”). The consideration set includes the brands or alternatives that are considered acceptable for further consideration in decision making. There are also alternatives in the awareness set that are deemed to be unacceptable for further consideration. These alternatives comprise the inept set. The inert set includes those alternatives to which consumers are indifferent, or for which strong feelings are not held. Exhibit 12.5 demonstrates how the size of both the awareness set and the consideration set is smaller than the universal set—a situation typical for most decisions. Research confirms that consumers generally consider only a small fraction of the actual number of problem solutions that are available. LO 12-5: Understand the factors that influence the type and amount of search performed by consumers. V. External Search External search includes the gathering of information from sources external to the consumer, including friends, family, salespeople, advertising, independent research reports (such as Consumer Reports), the Internet, and smartphone technologies. In selecting the best information source, consumers consider factors such as: The ease of obtaining information from the source The objectivity of the source The trustworthiness of the source The speed with which the information can be obtained In general, consumers find that information from family and friends is dependable but that information from commercial sources (like advertising or salespeople) is less credible for input into decision making. Personal factors like self-esteem play a role, however. Q: What source of information would you use if you wanted to buy a computer or a book? A: Students’ answers will vary. You may buy a computer based on information acquired through independent research. You may buy a book if a friend or relative recommends it or by reading a review of it in a newspaper, magazine, or a blog. [Instructor PPT Slide 14] A. The Role of Price and Quality in the Search Process The term evaluative criteria is used to refer to the product attributes that consumers consider when reviewing possible solutions to a problem. Many things can become evaluative criteria. However, two evaluative criteria are used across almost all consumer decisions: price and quality. Consumers turn to price and quality very quickly as they consider most products. Price represents an important type of information that consumers generally seek. But, what is a price? A price is really a piece of information. More specifically, price is information signaling how much potential value may be derived from consuming something. Generally, one thinks of a high price as being a bad thing. In other words, a higher price means greater sacrifice to obtain some product. This view of price is referred to as the negative role of price. However, a positive role for price also exists. In this sense, price signals how desirable a product is and how much prestige may be associated with owning the product. Some consumers are more sensitive to the positive role of price and tend to desire things with high prices as a way of signaling prestige and desirability to others. Consumers also commonly search for information about a product’s quality. Consumers nearly always consider quality an important evaluative criterion. Although quality can mean many things to many people, from a consumer perspective, quality represents the perceived overall goodness or badness of a product. In other words, consumers generally use the word quality as a synonym for relative goodness. Quality perceptions take place both before and after purchase. However, consumers do not always seek high quality, because many times consumers do not need the “best” product available. Consumers almost always use price and quality when making decisions. Indeed, price and quality perceptions are related, as consumers generally assume that higher prices mean higher quality. This relationship is altered, however, by other variables. A relatively new tactic regarding pricing and quality is the “pay what you want” (PWYW) phenomenon. Products and services ranging from music downloads to sporting events to restaurants now include PWYW options. B. External Search and Emerging Technologies In today’s fast-paced, information-rich environment, a tremendous amount of information is at our fingertips. Due to the popularity of search engines, social networking sites, and smartphone apps, consumers can find solutions to all sorts of problems at their fingertips. What was once a novel computer tool has now become the first place that many consumers go to find information. The Internet has dramatically affected search behavior. First, it lowers the costs associated with search and can make the process more productive. Second, the search process itself has become more enjoyable by delivering hedonic value to the consumer. Third, consumers now have the ability to control information flow much more efficiently than if they are viewing product information from a television commercial. While many consumers now check smartphone apps first, websites are still popular. Craigslist, in particular, remains extremely popular. Consumers search craiglist every day for solutions to problems they face. C. Consumer Search and Smartphone Applications Smartphone capabilities have greatly impacted search. Smartphone apps have made it easier for consumers to search for information from practically any location, and they have played a major role in the advent of mobile commerce. Although new technologies are introduced daily, the following four advancements apply well to smartphone apps and mobile commerce. These technologies have also contributed to the use of the phrase consumer discovery, which describes how consumers are constantly discovering new information about products, services, experiences, and locations. QR Codes QR Codes (quick response codes) dramatically changed information availability. With a QR code reader, consumers can easily gain access to all types of product-related information. Early on, marketers viewed QR codes as an essential part of marketing strategy whereby promotional conversion rates (the rate at which a promotion is transitioned into a sale) could be improved. However, the codes have gradually decreased in popularity due to other types of visual recognition technologies. Mobile Visual Search Mobile visual search (MVS) technologies allow consumers to simply take a photo of an object or scan it into their screen and quickly receive information about it. Not only does this make it easier for consumers to gain information, it also makes the process faster. Augmented Reality A number of apps are currently available that bring the physical and virtual worlds together in new and exciting ways. Augmented reality apps do simply that— they augment reality with computer simulated information. GPS-Based Technologies Other search technologies combine elements of GPS capabilities with consumer needs. These apps allow consumers to quickly address specific needs that they have while they are traveling. It is easy to see how these technologies have affected consumer search processes. The search and discovery processes really become “branded consumer experiences”. The experience enables the consumer to learn about the product, interact with it, and begin to forge relationships with it. Q: Ask students if they have used any smartphone apps to make their purchases? A: Students’ answers will vary. Most people would use these apps to enhance their shopping experience. [Instructor PPT Slide 15] D. Amount of Search The amount of search that a consumer performs related to decision making can be measured in a number of ways including the number of stores visited, the number of websites sites visited, the number of personal sources (friends, family, salespeople) used, the number of alternatives considered, and the number of advertisements studied. Many factors influence the information search effort, including previous experience with a product, involvement, perceived risk, value of search effort, time availability, attitudes toward shopping, personal factors, and situational influencers. Product Experience Prior experience with a product has been shown to influence how much a consumer searches. As a general statement, evidence shows that moderately experienced consumers search for purchase-related information more than either experienced or inexperienced consumers. This finding is shown in Exhibit 12.6. One explanation for the finding that moderately experienced consumers search more than other consumers is that individuals with little experience are unable to make fine distinctions between product differences and will likely see product alternatives as being similar. Involvement Purchase involvement is positively associated with search activities, especially for ongoing searches. Because involvement represents a level of arousal and interest in a product, search tends to increase when a consumer possesses a high level of purchase involvement. Perceived Risk As perceived risk increases, search effort increases. Consumers are usually motivated to reduce these risks as much as possible and will therefore expend considerable time and effort in searching for information. Value of Search Effort When the benefits received from searching exceed the associated costs, consumers derive value. When searching costs are greater than the benefits of the search process, consumers no longer value the activity and search stops. Costs associated with search can be either monetary (for example, the cost of driving around town looking for a new bedroom dresser) or nonmonetary (for example, psychological or physical exhaustion or stress). Time Availability All other things being equal, more time to spend on a search usually results in increased search activity. Attitude toward Shopping Consumers who value shopping and who possess positive attitudes toward shopping generally spend more time searching for product information. Personal Factors Search tends to increase as a consumer’s level of education and income increase. Search also tends to decrease as consumers become older. Situational Influencers Situational factors also influence the amount of search that takes place. Perceived urgency, financial pressure, and mood can all impact search behavior. The purchase occasion can also affect the search. Consumers sometimes have such an urgent need for a product that they will select the first option they come across. Q: Which search factors are important when you need to buy furniture, a car or an insurance policy? A: Students’ answers will vary. Personal factors and situational influences can be important factors that compel you to purchase something. External Search Often Minimized While many factors influence the amount of search that takes place, consumers tend to search surprisingly little for most products. This is true for both high- and low-involvement products. E. Search Regret The term search regret refers to the negative emotions that come from failed search processes. Many times, consumers are simply not able to find an acceptable solution to their problem. As a result, the decision-making process stops. In these situations, consumers may feel as if the entire search process was a waste of time, and they will start to feel search regret. Video material for this chapter is starting on page 23 of the IM Chapter 13 Decision Making II: Alternative Evaluation and Choice What Do You Think Polling Question Getting a hair style for under $10 is a very good thing. _____ Strongly Disagree _____ Disagree _____ Somewhat Disagree _____ Neither Agree nor Disagree _____ Somewhat Agree _____ Agree _____ Strongly Agree Have students access Course Mate at www.cengagebrain.com to answer the polling questions for each chapter of CB. Ask them to take the online poll to see how their answers compare with other students taking a consumer behavior course across the country. Then turn to the last page of the chapter to find the “What Others Have Thought” box feature. This graph is a snapshot of how other consumer behavior students have answered this polling question so far. Learning Objectives After studying this chapter, the student should be able to: 13-1 Understand the difference between evaluative criteria and determinant criteria. 13-2 Comprehend how value affects the evaluation of alternatives. 13-3 Explain the importance of product categorization in the evaluation of alternatives process. 13-4 Distinguish between compensatory and noncompensatory rules that guide consumer choice. Lecture Example Ethical and green consumerism may be increasingly shaping consumer behavior and marketing practices, but when it comes to actual purchases, a key focus on environment sustainability may be overshadowed by the consumer’s evaluation of a product’s perceptual attributes. Most participants in a survey by the Carbon Trust in London said they would buy products labeled with carbon footprints only if they cost the same as conventional products. In 2009, William Young and his colleagues at the University of Leeds found that 30% of people in the U.K. said they were very concerned about the environment, but ethically sourced foods only account for 5% of the market. According to Young, most consumers choose products based on the price, along with other factors like brand name and appearance. Source: Tom DeLay, “Green Consumer Attitudes Questioned,” UPI.com, April 12, 2012, http://www.upi.com/Science_News/2012/04/12/Green-consumer-attitudes-questioned/UPI-77281334263043/ Lecture Outline with PowerPoint® Slides LO: 13-1. Understand the difference between evaluative criteria and determinant criteria. I. Evaluation of Alternatives: Criteria An important part of decision making is evaluating alternative solutions to problems. Consumers are bombarded daily by a dizzying array of product varieties, brands, and experiences from which to choose. Marketers sometimes refer to this situation as “hyperchoice” because so many alternatives are available. Fortunately, consumer researchers have learned much about how consumers evaluate alternatives. In some situations, consumers simply look for one or two attributes to consider. A. Evaluative Criteria After a need is recognized and a search process has taken place, consumers begin to examine the criteria that will be used for making a choice. Evaluative criteria are the attributes, features, or potential benefits that consumers consider when reviewing possible solutions to a problem. A feature is a performance characteristic of an object. A benefit is a perceived favorable result that is derived from the presence of a particular feature. These concepts are illustrated in Exhibit 13.2. Benefits play an important role in the value equation. [Instructor PPT Slide 4] Q: Ask students to provide the features and benefits of an iPad. A: Students’ answers will vary. Features would include details about its processor, operating system, capacity, screen size, resolution, size, and battery life. The benefits are most often perceived as favorable results, such as easy transportability or convenience or the ability to display or store high definition videos. B. Determinant Criteria Determinant criteria (sometimes called determinant attributes) are the evaluative criteria that are related to the actual choice that is made. Consumers don’t always reveal, or may not even know, the criteria that truly are determinant. This is true even when several attributes are considered to be important. Which criteria are determinant can depend largely on the situation in which a product is consumed. Marketers therefore position products on the determinant criteria that apply to a specific situation. [Instructor PPT Slide 5] LO: 13-2. Comprehend how value affects the evaluation of alternatives. II. Value and Alternative Evaluation The value that consumers believe they will receive from a product has a direct impact on their evaluation of that product. In fact, the word evaluate literally means to set a value or worth to an object. Benefits are at the heart of the value equation, and value is a function of both benefits and costs. A. Hedonic and Utilitarian Value The criteria that consumers use when evaluating a product can also often be classified as either hedonic or utilitarian. Hedonic criteria are emotional, symbolic, and subjective attributes or benefits that are associated with an alternative. Utilitarian criteria pertain to functional or economic aspects associated with an alternative. Marketers often promote both the utilitarian and hedonic potential of a product. Consumers often use both categories of criteria when evaluating alternatives and making a final choice. [Instructor PPT Slides 6] Rationality, Effort, and Variety Consumers are not always rational when they are evaluating and choosing from possible solutions to a problem. Consumers often have limited ability to process all the information that’s available in the environment. The term bounded rationality describes the idea that perfectly rational decisions are not always feasible due to constraints found in information processing. Even when consumers have the ability to consider all possible solutions to a problem, they do not always do so. Q: Discuss examples of products that have hedonic or utilitarian value. A: Students’ answers may vary. There might be cases where both the values are fulfilled. Buying groceries has a utilitarian value but buying an expensive watch would have a hedonic value. B. Affect-Based and Attribute-Based Evaluations There are two major types of evaluation processes: affect-based and attribute-based. With affect-based evaluation, consumers evaluate products based on the overall feeling that is evoked by the alternative. Emotions play a big role in affect-based evaluation, as do mood states. With attribute-based evaluation, alternatives are evaluated across a set of attributes that are considered relevant to the purchase situation. The rational decision-making process assumes that consumers carefully integrate information about product attributes and make careful comparisons between products. [Instructor PPT Slides 7, 8] LO: 13-3. Explain the importance of product categorization in the evaluation of alternatives process. III. Product Categorization and Criteria Selection One of the first things that a consumer does when she receives information from the environment is attempt to make sense of the information by placing it in the context of a familiar category. Within these schemata, both product categories and brand categories are found. Product categories are mental representations of stored knowledge about groups of products. When considering a new product, consumers rely on the knowledge that they have regarding the relevant product category. Knowledge about the existing category is then transferred to the novel item. Even if a product is very different from products that are currently available, consumers still draw on existing category knowledge to guide their expectations and attitudes toward the new product. [Instructor PPT Slide 9] A. Category Levels Consumers possess different levels of product categories. The number of levels and details within each level is influenced by familiarity and expertise with products. Distinctions at basic levels are generally made across product categories. Distinctions at subsequent levels increase in specificity, ultimately to the brand and attribute level. Expertise and familiarity play important roles in this process. Superordinate and Subordinate Categories The different levels of product categories are referred to as being either superordinate or subordinate. Superordinate categories are abstract in nature and represent the highest level of categorization. Subordinate categories are more detailed. Here, the consumer examines the knowledge that she has stored about various options. Perceptual and Underlying Attributes When evaluating products, consumers also distinguish between perceptual and underlying attributes. Perceptual attributes are visually apparent and easily recognizable. These attributes are sometimes referred to as search qualities, because they can easily be evaluated prior to actual purchase. Underlying attributes are not readily apparent and can only be learned through experience with the product. These attributes are sometimes referred to as experience qualities because they are often perceived only during consumption. The distinction between the two types of attributes is important, because consumers most often infer the existence of underlying attributes through perceptual attributes. A signal is a characteristic allowing a consumer to diagnose something distinctive about an alternative. Consumers use information about color, feel, brand name, price, and retailer reputation convey information about quality most frequently in the following situations: When the consumer is trying to reduce risk When purchase involvement is low When the consumer lacks product expertise [Instructor PPT Slides 10, 11] B. Criteria Selection There are a number of issues that relate to the selection of criteria that consumers use when evaluating products. What Determines the Type of Evaluative Criteria that Consumers Use? A number of factors influence the type of criteria that consumers use when evaluating alternatives. Situational influences—the type of criteria that are considered depends heavily on situational influences. Product knowledge—as a consumer’s level of knowledge increases, he is able to focus on criteria that are most important in making a selection and to discount irrelevant information. Expert opinions—because brand experts have well-developed knowledge banks for products and services, they can be used to help others determine what types of information to pay attention to when evaluating products. Social influences—friends, family members, and reference groups also have an impact on the type of criteria that are used for decision making. Online sources—numerous websites can assist consumers with information on product attributes and brand differences. Marketing communications—marketers assist consumers in deciding what features to consider when buying a particular product. Q: Ask students to share a shopping experience. Which of the above factors influenced the criteria that they used to evaluate the product or service? A: Students’ answers may vary. It could be a combination of various factors rather than one. Some could say that the most important could be the situational context which defines your shopping experience. [Instructor PPT Slide 12, 13] Are Consumers Accurate in their Assessment of Evaluative Criteria? The accuracy of a consumer’s evaluation depends heavily on the quality of judgments that they make. Judgments are mental assessments of the presence of attributes and the benefits associated with those attributes. Consumer judgments are affected by the amount of knowledge or experience a consumer has with a particular object. During the evaluation process, consumers make judgments about: Presence of features Feature levels Benefits associated with features Value associated with the benefit How objects differ from each other Q: What judgments would you make before purchasing an iPad? A: Students’ answers might vary. The answer should cover the following areas its features, benefits, advantages, value, and performance in comparison to another brand. There are several issues that affect consumer judgments. Just noticeable difference—the ability of a consumer to make accurate judgments when evaluating alternatives is influenced by their ability to perceive differences in levels of stimuli between two options. Attribute correlation—consumers often make judgments about features based on their perceived relationship with others. Here, consumers rely on attribute correlation to describe the perceived relationship between attributes of products. Quality perceptions—marketers have long realized that consumer perception is critical to marketing success. Perceptions are not always in line with reality. One issue that pertains to consumer judgments is the difference between objective quality and perceived quality. Objective quality refers to the actual quality of a product that can be assessed through industry specification or expert rating. Perceived quality is based on consumer perceptions. Brand name associations—brand names also impact consumer judgments. Much like price, brand names can be used as signals of quality. Consumer personality—personality traits affect consumer judgments. How Many Criteria are Necessary to Evaluate Alternatives Effectively? Too many alternatives can be draining for consumers. However, research suggests that consumers can handle a surprisingly high number of comparisons before overload sets in. Q: Which of the above criteria would affect you when you are buying a pair of shoes? A: Students’ answers will vary. Quality or brand name would be an important criterion. What if Information Is Missing? Consumers may have a good understanding of the types of attributes that they would like to use for alternative evaluation, but sometimes attribute information is not available. To help solve this dilemma, consumers tend to weigh the criteria that are common to both alternatives quite heavily in the evaluation. They also tend to discount information that is missing for the option that performs better on the common criteria. How Do Marketers Determine Which Criteria Consumers Use? Marketers can use several techniques to determine the criteria that consumers use when judging products. They can directly ask consumers through surveys. They can also gather information from warranty registrations that ask consumers to indicate the specific criteria that were used in arriving at a purchase decision. Marketers also use techniques such as perceptual mapping and conjoint analysis to assess choice criteria. Conjoint analysis is used to understand the attributes that guide preferences by having consumers compare products across levels of evaluative criteria and the expected utility associated with the alternatives. [Instructor PPT Slide 15] LO: 13-4. Distinguish between compensatory and noncompensatory rules that guide consumer choice. IV. Consumer Choice: Decision Rules Once consumers have evaluated alternative solutions to a problem, they begin to make a choice. Choice does not mean that a particular alternative will be chosen, as consumers may simply choose to delay a choice until a future date or to forgo a selection indefinitely. There are two major types of rules that consumers use when selecting products: compensatory rules and noncompensatory rules. Compensatory rules allow consumers to select products that may perform poorly on one attribute by compensating for the poor performance by good performance on another attribute. Noncompensatory models do not allow for this process to take place. Rather, when noncompensatory rules are used, strict guidelines are set prior to selection, and any option that does not meet the specifications is eliminated from consideration. A. Compensatory Models The attitude-toward-the-object model (Fishbein model) that was represents a compensatory approach. The formula Ao = ∑(bi)(ei) allows for poor scores on one attribute to be compensated for by good scores on another. The example from that chapter is again shown in Exhibit 13.6. [Instructor PPT Slide 16] B. Noncompensatory Models Consumer researchers have identified four major categories of noncompensatory decision rules. They include the conjunctive rule, the disjunctive rule, the lexicographic rule, and the elimination-by-aspects (EBA) rule. Following the conjunctive rule, the consumer sets a minimum mental cutoff point for various features and rejects any product that fails to meet or exceed this cutoff point across all features. Following the disjunctive rule, the consumer sets a minimum mental cutoff for various features. This is similar to the conjunctive rule. Following the lexicographic rule, consumers select the product that they believe performs best on the most important feature. Following the eliminations-by-aspects rule (EBA), consumers set minimum cutoff points for attributes. Beginning with the most important feature, they then eliminate options that don’t meet or surpass the cutoff point on this important feature. [Instructor PPT Slide 17] C. Use of Decision Rules Noncompensatory rules are often used in low-involvement situations, because these rules allow consumers to simplify their thought processes. However, these rules are also used in high-involvement purchase situations. Consumers can combine decision rules in order to arrive at a final solution. Studies have revealed that the lexicographic rule is very commonly used by consumers. The rules are used quite frequently. D. Retail Outlet Selection Consumers must also choose where they will buy the product. Sometimes, consumers will decide where they will buy before they determine what they will buy. Several factors influence the choice of retail outlet, including objective and subjective criteria such as product variety, store image, location, service, and product quality. The Internet has also become the channel of choice for many consumers. The actual decision of which website to use is based on several factors, including the availability of product variety and information, customer service, security, and navigational ease. Q: Which products that you would buy would demand the application of the non-compensatory rules of selection? A: Students’ answers will vary. Students might come up with a list of objects that are both expensive and utilitarian. The list of high-end luxury goods and the applicability of the non-compensatory rules of selection could lead to an interesting debate. Video material for this chapter is starting on page 17 of the IM. Instructor Manual for CB Consumer Behaviour Barry J. Babin, Eric G. Harris 9781305403222, 9781305577244
