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Chapter 8Decision Making
8-1Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
CONSUMER BEHAVIOR, 10eMichael R. Solomon
8-2Copyright © 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.
8-3Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
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.
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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8-5Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Figure 8.1 Stages in Consumer Decision Making
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Figure 8.2 Continuum of Buying Decision Behavior
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
For Reflection
• Is it a problem that consumers have too many choices? Would it be better to have less choices? How does it affect consumer decision-making?
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Learning Objective 2
• A decision is actually composed of a series of stages that results in the selection of one product over competing options.
8-8Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
8-9Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
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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Table 8.2 A Framework for Consumer Information Search
Prepurchase versus Ongoing Search
Prepurchase Search Ongoing Search
Determinants Involvement with purchase
Involvement with product
Motives Making better purchase decisions
Building a bank of information for future use
Outcomes Better purchase decisions Increased impulse buying
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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
For Reflection
• Share a situation in which you searched for information deliberately and one in which you had developed product knowledge incidentally. How would you say the variations in information search affected your decision?
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Learning Objective 3
• Decision making is not always rational.
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Do Consumers Always Search Rationally?
• Some consumers avoid external search, especially with minimal time to do so and with durable goods (e.g. autos)
• Symbolic items require more external search
• Brand switching: we select familiar brands when decision situation is ambiguous
• Variety seeking: desire to choose new alternatives over more familiar ones
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Biases in Decision-Making Process
• Mental accounting: framing a problem in terms of gains/losses influences our decisions
• Sunk-cost fallacy: We are reluctant to waste something we have paid for
• Loss aversion: We emphasize losses more than gains
• Prospect theory: risk differs when we face gains versus losses
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Figure 8.5 Amount of Information Search and Product Knowledge
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Minolta Understands Perceived Risk
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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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Alternatives
Evoked Set
Consideration Set
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Figure 8.7 Levels of Abstraction
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Strategic Implications of Product Categorization
• Position a product
• Identify competitors
• Create an exemplar product
• Locate products in a store
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Product Choice: How Do We Decide?
• Once we assemble and evaluate relevant options from a category, we must choose among them
• 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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Information Necessary for Recommending a New Decision 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 how the person made the decision on prior occasions
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Neuromarketing
• Uses functional magnetic resonance imaging, a brain-scanning device that tracks blood flow as we perform mental tasks
• Marketers measure consumers’ reactions to movie trailers, choices about automobiles, the appeal of a pretty face, and loyalty to specific brands
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For Reflection
• What risky products have you considered recently?
• Which forms of risk were involved?
Learning Objective 4
• Our access to online sources changes the way we decide what to buy.
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8-31Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Cybermediaries
• The Web delivers enormous amounts of product information in seconds
• Cybermediary: helps filter and organize online market information• Examples: Shopping.com, BizRate.com
For Reflection
• Which online sources of information are affecting your choices as a consumer?• Online reviews and ratings• Comments on social networks• Other?
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Learning Objective 5
• We often fall back on well-learned “rules-of-thumb” to make decisions.
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Heuristics
Product Signals
Market Beliefs
Country of Origin
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Choosing Familiar Brand Names
• Zipf’s Law: our tendency to prefer a number one brand to the competition
• Consumer inertia: the tendency to buy a brand out of habit merely because it requires less effort
• Brand loyalty: repeat purchasing behavior that reflects a conscious decision to continue buying the same brand
For Reflection
• Think of some of the common country of origin effects (e.g., watches, wine). Which ones affect your consumer choices? What could brands from other countries do to compete such effects?
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Learning Objective 6
• Consumers rely on different decision rules when they evaluate competing options.
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8-38Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Noncompensatory Decision Rules
• Lexicographic rule: consumers select the brand that is the best on the most important attribute
• Elimination-by-aspects rule: the buyer also evaluates brands on the most important attribute
• Conjunctive rule: entails processing by brand
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Compensatory Decision Rules
• Simple additive rule: the consumer merely chooses the alternative that has the largest number of positive attributes
• Weighted additive rule: the consumer also takes into account the relative importance of positively rated attributes, essentially multiplying brand ratings by importance weights
For Reflection
• Provide an example of a noncompensatory decision and a compensatory decision you made. Why did one rule format work for one situation but not for the other?
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