Individual
Decision Making
Chapter 9
Consumers as Problem Solvers
• Consumer purchase =
response to problem
• Decision-making process
– After realization that we want
to make a purchase, we go
through a series of steps in
order to make it
– Can seem automatic or like a
full-time job
– Complicated by consumer
hyper choice
9-2
Decision-making Process
Problem Recognition
Richard realizes that he
dislikes his B&W TV
Information Search
Richard surfs Web to learn
about TVs
Evaluation of Alternatives
Richard compares models
on reputation and features
Product Choice
Richard chooses a TV with
an appealing feature
Outcomes
Figure 9.1 (Abridged)
Richard brings home and
enjoys his TV
9-3
Decision-making Perspectives
• Rational perspective
• Behavioral influence perspective
• Experiential perspective
9-4
Types of Consumer Decisions
• Continuum of Decision Making
Figure 9.2
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Extended Problem Solving
• Consumer collects extensive information
– Internal and external search
• Careful evaluation of brand attributes
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Limited Problem Solving
• More straightforward/simple
• Simple decision rules to choose among
alternatives
– Cognitive shortcuts
9-7
Habitual Decision Making
• Automaticity:
Choices made with little/no conscious
effort
– Efficient decisions: minimal time/energy
• Challenge for marketers…
– Consumers must be convinced to “unfreeze”
their former habit and replace it with new one
9-8
Problem Recognition
• Occurs when consumer sees
difference between current state
and ideal state
• Need recognition: actual state
moves downward
– Running out of a product, buying a
deficient product, or creating new
needs
• Opportunity recognition: ideal state
moves upward
– Exposed to different/better quality
products (standard of comparison)
9-9
Activity
• Develop a list of products that you think are
generally associated with habitual, limited and
extended problem solving.
• How would you activate the problem recognition
for the following:
–
–
–
–
–
Toothbrush
Pizza
Health Insurance
Bikes
Exercise
9-10
Information Search
• Consumers need information to solve
problem
– We survey our environment for appropriate
data to make decision
• Pre purchase search vs. ongoing search
9-11
Internal vs. External Search
• Internal search
– Scanning memory to
assemble product alternative
information
• External search
– Obtaining information from
ads, retailers, catalogs,
friends, family, peoplewatching, Consumer
Reports, etc.
9-12
Deliberate vs. “Accidental” Search
Directed learning:
Existing product knowledge obtained from
previous information search or experience
of alternatives
• Incidental learning:
• Exposure over time to conditioned stimuli
and observations of others
9-13
Do Consumers Always Search
Rationally?
• Brand switching
– We select familiar brands, when
decision situation is ambiguous
or when there is little information
about competing brands
9-14
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
– Study: football ticket vs. storm
9-15
Biases in Decision-making Process
(Cont’d)
• Loss aversion:
We place more emphasis
on loss than on gain
– Gambling study
• Extraneous
characteristics of the
choice situation can
influence our selections
– “Beer on the beach” study
9-16
How Much Search Occurs?
• Search activity is greater when…
– Purchase is important
– There is a need to learn more about purchase
– Relevant info is easily obtained/utilized
– One is younger, is better-educated, and
enjoys shopping/fact-finding
– One is female (compared to male)
– One places greater value on own style/image
9-17
Perceived Risk
• Belief that product has
negative consequences
– Expensive, complex, hardto-understand products
– Product choice is visible
to others (risk of
embarrassment for wrong
choice)
• Risks can be objective
(physical danger) and
subjective (social
embarrassment)
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Evaluation of Alternatives
• Choosing a brand/product among
available alternatives requires much of the
effort that goes into a purchase decision
– Just think about how many brands or different
brand variations there are!
– Discussion:
Do you agree that having too many choices is
a bigger problem than not having enough
choices?
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Identifying Alternatives
• Extended problem solving = evaluation of
several brands
• Habitual decision = consider few/no brand
alternatives
9-20
Identifying Alternatives (Cont’d)
• Evoked set vs. consideration set
– We usually don’t seriously consider every
brand we know about
– In fact, we often include only a surprisingly
small number of alternatives in our evoked set
• Marketers must focus on getting their
brands in consumers’ evoked set
– We often do not give rejected brands a
second chance. Discussion: Why?
9-21
Product Categorization
• We evaluate products in terms of what we
already know about a (similar) product
• Evoked-set products usually share similar
features
– When faced with a new product, we refer to existing
product category knowledge to form new knowledge
• Marketers want to ensure that their products are
correctly grouped in knowledge structures
– Jell-O gelatin flavors for salads
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Levels of Categorization
Figure 9.7
Discussion: Diagram the three levels here for a health club!
9-23
Product Choice
• Selecting among alternatives
– 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)
9-24
Evaluative Criteria
• Determinant attributes: features we use to
differentiate among our choices
– Criteria on which products differ carry more
weight
– Marketers educate consumers about
determinant attributes
• Pepsi’s freshness date stamps on cans
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Heuristics: Mental Shortcuts
• Mental rules-of-thumb that
lead to a speedy decision
– Examples: higher price =
higher quality, buying the
same brand your mother
bought
IPARTY.COM
9-26
Relying on a Product Signal
• Observable product attributes that
communicate underlying qualities
– Clean and shiny car = good mechanical
condition
9-27
Country-of-Origin
• Overall, we tend to rate our
own country’s products more
favorably than do people
who live elsewhere
• Industrialized countries
make better products than
developing countries do
• Attachment to own vs. other
cultures
9-28
Brand Loyalty
• Repeat purchase behavior reflecting a
conscious decision to continue buying the same
brand
– Repeat purchase + positive attitude toward brand
– Emotional attachment and commitment often result
over time (via self-image and prior experiences)
Discussion:
How can retailer compete if we believe we can get the
same brands everywhere?
9-29