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Consumer Decision Making
• Refers to the thought process of a purchasing decision
• Can be determined by various mental and social factors
• Research helps businesses gain knowledge to provide value to consumers
• Research helps consumers make wise choices
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Consumer Decision Making Process
• Includes five stages:– need identification – information searching– alternative evaluation– purchase decision – post-purchase evaluation
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Need Identification
• Occurs when a person recognizes a difference between his or her ideal and actual situation
• Examples include: – recognizing the need of a
formal suit for a job interview– perceiving the need of a
better computer for running a high-demanding software
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Information Searching
• Involves searching for more information about the product or service
• Includes two methods– internal search– external search
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Internal Search
• Is based on previous experiences of using the product or service
• Is efficient for frequently purchased items• Examples include:
– buying the same brand of milk – having lunch at the school cafeteria
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External Search
• Involves searching for outside information to learn about the product or service
• Is often used when past experience is insufficient• Primary sources include:
– personal sources such as friends or family – public sources such as information on the Internet – marketing sources such as advertising and salespeople
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Alternative Evaluation
• Involves evaluating a product or service based on the consumer’s criteria of meeting the need
• Can be influenced by:– rational reasons
• cost-efficiency • certain attributes of a product
– cognitive impulses • favor of a brand
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Purchase Decision
• Refers to the actual decision of buying or not buying a product
• Has three possibilities:– item first
• selecting a set of brands and then considering when and where to buy
– outlet first• deciding when and where to buy
and then choosing certain brands– not to purchase
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Purchase Outlet
• Involves two main considerations:– where to buy, which can be influenced by:
• store atmosphere• quality of service• return policy
– when to buy, which can be influenced by:• discount sales• time pressure• certain holidays
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Post-Purchase Evaluation
• Involves comparing the product to expectations and deciding whether it is satisfying or dissatisfying
• May leads to:– positive consumer
perceptions – negative consumer
perceptions – repeat-purchase behavior
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Cognitive Dissonance
• Refers to the post-purchase anxiety caused by the doubt of whether a correct purchase decision has been made
• Can be reduced by:– follow-up calls– extended warranty– post-purchase customer service
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Consumer Skills• Assists consumers in purchasing the right product to suit their needs
• Helps consumers increase purchasing power
• buying the same product or service for less money
• buying more goods and services with the same amount of money
• buying better quality goods for the same amount of money
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Smart Shopping• Include three steps:
• identify the needs • what problem are you trying to solve? • how will you use this product and service?
• list the attributes • what functions do you have to have?• what functions would be nice to have but are not necessary?
• compare the items• which item is the most cost‐effective?• how well does each item fit in your budget?
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Reliable Consumer Organizations• Include:
• Consumers Union• publishes Consumer Reports, an unbiased source of product and service evaluations
• Underwriter’s Laboratories (UL)• establishes safety standards • gives the UL Seal of Approval to qualified products
• Better Business Bureau (BBB)• reports consumer complaints• provides consumers news and tips
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When Shopping for Food
• Consumers should read food labels and look for the following information:
• the name of the product • amount of contents • information of the processor, distributor or packer• list of ingredients • the Nutrition Facts panel
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The Nutrition Facts Panel • Must provide the following information:
• serving size• number of servings • calories per serving • protein per serving (in grams)• carbohydrates per serving (in grams)
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The Nutrition Facts Panel • Must provide the following information:
• fat per serving (in grams)• fiber per serving (in grams)• sodium per serving (in milligrams)• percent of Daily Value for protein, carbohydrates, fat, cholesterol and certain vitamins and minerals
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When Shopping for Clothes
• Consumers should read the following information on clothing labels:• fiber content• care instructions• where the clothing was made
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When Shopping for Clothes • Consumers should be able to select:
• well‐constructed clothes• attention to detail• well‐fitted• reliable stitching and assembly
• quality fabric clothes• even color throughout• free of snags and pulls• returns to the original shape after being stretched or pulled
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When Buying a Used Car• Consumers should:
• find the car’s value• value of a used car can be found at Kelley Blue Book (KBB) or the National Automobile Dealers Association (NADA)
• check the vehicle history report• can be found at CARFAX.com• includes information such as number of previous owners and whether it was salvaged, stolen, recalled or in an accident
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When Buying a Used Car
• Consumers should:• never sign an “As Is” statement with the dealer• have the financing and loan approvals ready
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When Buying a New Car• Consumers are suggested to:
• conduct extensive research and know what they want
• put their priorities in order and narrow down choices
• test drive • compare the price at several different places
• plan to negotiate the best price• take financing, warranties and insurance into consideration
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New Car or Used Car?New Car Used Car
Advantage • Freedom of choice• Better financing
• Lower cost• Better insurance
rates
Disadvantage • More expensive• Higher insurance
cost
• Unknown problems• Higher financing
rates• Limited choices
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When Buying a House• Consumer should:
• conduct extensive research• common sources include real estate agencies, newspaper classifieds, online sources, family and friends, etc.
• look for government aid• housing aid is provided by federal agencies such the Federal Housing Administration (FHA) and the U.S. Department of Housing and Urban Development (HUD)
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When Buying a House
• Consumers must:• have the property inspected
• professional home inspections are required by law in many states• know the laws and regulations of purchasing a home
• home buyers must have a title search in order to establish a clear claim to ownership
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When Renting a House• Tenants must understand:
• renter’s rights• have a safe and healthy environment• have privacy
• renter’s responsibilities• must care for the property • must pay the full rent when due• must obey terms and restrictions in lease
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Renting or Buying?• Should be considered based on:
• budget• renters: deposit, monthly rent, utilities and renter’s insurance • buyers: down payment, mortgage, property taxes, utilities and property insurance
• responsibility • renters: greater freedom to move, less responsibility for upkeep• buyers: greater sense of security and stability, freedom to remodel or redecorate
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Renting or Buying?Renter Buyer
Payments • Deposit• Monthly rent• Utilities • Renter’s insurance
• Down payment• Mortgage• Property taxes
Utilities • Insurance
Advantages • Greater freedom to move
• Less responsibility for upkeep
• Greater sense of security and stability
• Freedom to remodel or redecorate
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Rules for Smart Shoppers • Include:
• learn about the product and service
• shop around• watch for sales• be aware of hidden costs• read the label• consider the maintenance and warranty
• think before you buy
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COMPLETE THE CONSUMER SKILLS QUIZ ON VISION
References
• http://www‐rohan.sdsu.edu/~renglish/370/notes/chapt05/• http://www.managementstudyguide.com/consumer‐decision‐making‐process.htm• http://www.udel.edu/alex/chapt6.html• http://www.psychologytoday.com/basics/consumer‐behavior• http://www.consumerpsychologist.com/• http://texas4‐h.tamu.edu/files/2012/12/2012‐13_CDM_Best_Consumer_Decision.pdf• http://www.consumerreports.org/cro/index.htm• http://www.carfax.com/entry.cfx
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AcknowledgementProduction CoordinatorCaroline Huang‐Loggains
Brand ManagerMegan O’Quinn
Graphic DesignerMelody Rowell
Technical WriterJessica Odom
V.P. of Brand ManagementClayton Franklin
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Executive ProducerGordon W. Davis, Ph.D.
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