Consumer Decision Making

2014 1 -CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

2014 2

The Give and Get of Marketing

-CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

2014 3

Stages in Consumer Decision

Process

Awareness

Interest

Decision

Satisfaction

Action

Advertising

Channel

Product /

Service

Price

Word-

of- Mouth

-CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

2014 4

The New View of Marketing

Four principles guide marketing:

– retention: keeping them coming back

– referrals: encourage them to recommend us

– relationships: build an emotional connection

– recovery: solve problems as they arise

-CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

2014 5

Consumer Problem-Solving Categories

Levels of Consumer Decision Making

Extensive Problem

Solving

Limited Problem

Solving

Routinized

Response Behavior

-CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

Consumer Mind?????

STIMULUS

FIRM

CONTROLLED

•PRODUCT

•PRICE

•ADVERTISING

•SALES PERSON

•DISPLAY

•DISTRIBUTION

MIND RESPONSE

SOCIAL

•WORD OF MOUTH

•REFERENCE GROUP

BUY

NO BUY

2014 6 -CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

Schiffman Model Of Consumer Decision

Making

FIRM oProduct

oPrice

oPromotion

oDistribution

SOCIO CULTURAL oFamily

oInformal Sources

oOther non-commercial sources

oSocial Class

oSubculture& culture

EXTERNAL INFLUENCES

INPUTS

Need Recognition

Pre-purchase Search

Evaluation Of Alternatives

Psychological Field *Motivation* Perception *Learning *Personality*Attitudes

EXPERIENCES

PURCHASE

Trial

Re-purchase

Post Purchase Evaluation

POST-DECISION BEHAVIOR

CONSUMER DECISION MAKING P

R

O

C

E

S

S

OUTPUT

2014 7 -CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

2014 8

Factors that are Likely to Increase

Prepurchase Search

Product Factors

Long inter purchase time (a long-lasting or

infrequently used product)

Frequent changes in product styling

Volume purchasing (large number of units)

High price

Many alternative brands

Much variation in features

-CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

2014 9

Factors that are Likely to Increase

Prepurchase Search

continued Experience

First-time purchase

No past experience because the product is new

Unsatisfactory past experience within the product category

Social Acceptability

The purchase is for a gift

The product is socially visible

Value-Related Considerations

Purchase is discretionary rather than necessary

Al alternatives have both desirable and undesirable consequences

Family members disagree on product requirements or evaluation of

alternatives

Product usage deviates from important reference group

The purchase involves ecological considerations

Many sources of conflicting information -CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

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2014 10

Factors that are Likely to Increase

Prepurchase Search

continued

Product Factors

Demographic Characteristics of Consumer

Well-educated

High-income

White-collar occupation

Under 35 years of age

Personality

Low dogmatic

Low-risk perceiver (broad categorizer)

Other personal factors, such as high product involvement and

enjoyment of shopping and search

-CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

2014 11

Issues in Alternative Evaluation

• Evoked Set – The number of brands that a consumer actually considers in making a purchase decision.

• Criteria Used for Evaluating Brands – Features the consumer considers in making a choice among alternatives

• Consumer Decision Rules

• Lifestyles as a Consumer Decision Strategy

• Incomplete Information and Noncomparable Alternatives

• Series of Decisions

• Decision Rules and Marketing Strategy

• Consumption Vision

-CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

2014 12

The Evoked Set as a Subset of All

Brands in a Product Class

All

Brands

Known

Brands

Unknown

Brands

Overlooked

Brands

Indifferent

Brands

Unacceptable

Brands

Acceptable

Brands

Not Purchased

Brands

Purchased

Brands

Evoked Set Inept Set Inert Set

(1)

-CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

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2014 13

Types of Purchases

Trial

Purchases

Repeat

Purchases

Long-Term

Commitment

Purchases

-CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

14

Marketing Strategy and Consumer Behavior

Outcomes Individual

Firm Society

Consumer decision process Problem Recognition Information Search

Alternative Evaluation Purchase

Use Evaluation

Marketing strategy Product, Price, Distribution,

Promotion, Service

Marketing segmentation Identify product-related need sets

Group Customers with similar need sets Describe each group

Select attractive segment(s) to target

Marketing analysis Company Competitors Conditions Consumers

2014 -CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

15

What is Customer satisfaction!

Firm’s total product

Competitors’ total product

Consumer decision

process

Sales Customer satisfaction

Superior value

expected

Perceived value

delivered

1-3

2014 -CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

16

Consumer Behavior is

Product—Person—Situation Specific

Marketing

strategy

Consumer

behavior

1-4

Personal

characteristics

Product

characteristics

Consumption

situation

2014 -CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

17

Hawkins Model of Consumer Behavior

1-5

SITUATIONS

Problem

Recognition

Information

Search

Alternative Evaluation

and Selection

Outlet Selection

and Purchases

Post purchase

Processes

SITUATIONS

EXTERNAL INFLUENCES

Culture

Subculture

Demographics

Social Status

Reference Groups

Family

Marketing Activities

INTERNAL INFLUENCES

Perception

Learning

Memory

Motives

Personality

Emotions

Attitudes

SELF-CONCEPT

and

LIFESTYLE

Needs

Desires

Experiences and Acquisitions Experiences & acquisitions

Experiences & acquisitions

2014 -CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY

2014 18

A Consumption model

Choice or Purchase Decision

Consumption Set

Added to one’s assortment or portfolio

Consuming Style

How the individual fulfills his or her

consumption requirements

Using, Possessing, Collecting, Disposing

Consuming and Possessing Things and Experiences

Altered consumer satisfaction, change in lifestyle and/or

quality of life, learning and knowledge, expressing and

entertaining oneself

Feelings, Moods, Attitudes, Behavior

Input

Process of

Consuming

and

Possessing

Output

-CONSUMEE BEHAVIOUR -- PGDM 2014

PROF. MOHAN B.RAO

FOR RESTRICTED CIRCULATION ONLY