Consumer Behavior Chapter 8

Chapter 8
Decision Making
CONSUMER BEHAVIOR, 9e
Michael R. Solomon
12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall
8-1
Chapter Objectives
When you finish this chapter, you should understand why:
Consumer decision making is a central part

of consumer behavior, but the way we evaluate and choose products varies widely.
A decision is actually composed of a series

of stages that results in the selection of one product over competing options.
Decision making is not always rational.

8-2
Chapter Objectives (continued)

When you finish this chapter, you should understand why:
Our access to online sources is changing the

way we decide what to buy.
We often fall back on well-learned rules-ofthumb to make decisions.
Consumers rely upon different decision rules

when evaluating competing options.
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Figure 8.1 Stages in Consumer Decision Making
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Decision-Making Perspectives
Are consumers rational when they make

purchase decisions?
What is purchase momentum? What cognitive processing styles affect

consumer decision making?
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Figure 8.2 Continuum of Buying Decision Behavior
8-6
Steps in the Decision-Making Process

Problem recognition Information search Evaluation of alternatives Product choice
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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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Figure 8.3 Problem Recognition
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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 Determinants Motives Outcomes Involvement with purchase Making better purchase decisions Better purchase decisions Ongoing Search Involvement with product Building a bank of information for future use Increased impulse buying
8-11
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
8-12
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
8-13
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
8-14
Figure 8.5 Amount of Information Search and Product Knowledge
8-15
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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An Appeal to Social Risk
8-18
Discussion
What risky products have you considered

recently?
Which forms of risk were involved?
8-19
Alternatives
Evoked Set Consideration Set
8-20
Figure 8.7 Levels of Abstraction
8-21
Discussion
Using the levels of categorization tool,

design three levels of categorization for fast food restaurants:
What is the superordinate level? What choices are there for the basic level? What choices are there for the subordinate
level?
8-22
Strategic Implications of Product Categorization
Position a product Identify competitors Create an exemplar product Locate products in a store
8-23
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)
8-24
Evaluative Criteria
Evaluative criteria: dimensions used to judge

merits of competing options
Determinant attributes: features we use to

differentiate among our choices Criteria on which products differ carry more weight Marketers educate consumers about (or even invent) determinant attributes Pepsis freshness date stamps on cans
8-25
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
8-26
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
8-27
Cybermediaries
The Web delivers enormous amounts of

product information in seconds
Cybermediary: helps filter and organize

online market information Examples: Shopping.com, BizRate.com MySimon.com NextTag.com, PriceGrabber.com PriceSCAN.com
8-28
Heuristics: Mental Shortcuts
Heuristics: mental rules-of-thumb for

efficient decisions
8-29
Heuristics
Product Signals Market Beliefs Country of Origin
8-30
Choosing Familiar Brand Names
Zipfs 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
8-31
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
8-32
Table 8.4 Hypothetical Alternatives for a TV Set

Brand Ratings Attribute Size of screen Stereo broadcast capability Brand reputation Onscreen programming Cable-ready capability Sleep timer Importance Prime Wave Ranking 1 2 3 4 5 6 Excellent Poor Excellent Excellent Good Excellent Precision Excellent Excellent Excellent Poor Good Poor Kamashita Excellent Good Poor Poor Good good
8-33
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
8-34
Chapter Summary
Decision making is a central part of

consumer behavior and decisions are made in stages
Decision making is not always rational We use rules of thumb and decision rules to
make decisions more efficiently
8-35

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Chapter 8

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Consumer decision making is a central part

A decision is actually composed of a series

Decision making is not always rational.

Chapter Objectives (continued)

Our access to online sources is changing the

We often fall back on well-learned rules-ofthumb to make decisions.

Consumers rely upon different decision rules

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Figure 8.1 Stages in Consumer Decision Making

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Are consumers rational when they make

What is purchase momentum? What cognitive processing styles affect

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Figure 8.2 Continuum of Buying Decision Behavior

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Steps in the Decision-Making Process

Stage 1: Problem Recognition

Occurs when consumer sees difference

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Figure 8.3 Problem Recognition

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Stage 2: Information Search

The process by which we survey the

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Table 8.2 A Framework for Consumer Information Search

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Deliberate versus Accidental Search

Directed learning: existing product

Incidental learning: mere exposure over time

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Do Consumers Always Search Rationally?

Some consumers avoid external search,

Variety seeking: desire to choose new

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Biases in Decision-Making Process

Mental accounting: framing a problem in

Sunk-cost fallacy: We are reluctant to waste

Loss aversion: We emphasize losses more

Prospect theory: risk differs when we face

Figure 8.5 Amount of Information Search and Product Knowledge

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Minolta Understands Perceived Risk

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Figure 8.6 Five Types of Perceived Risk

An Appeal to Social Risk

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

What risky products have you considered

Which forms of risk were involved?

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Figure 8.7 Levels of Abstraction

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Using the levels of categorization tool,

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Strategic Implications of Product Categorization

12/20/10 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Product Choice: How Do We Decide?

Once we assemble and evaluate relevant