CUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVE
PART 3: Customer Decisions and Relationships
CHAPTER 8
Individual Customer
Decision Making
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1
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Conceptual Framework
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Individual Decision Making Process
Problem
Recognition
Buyer
Information
Search
Alternative
Evaluation
Purchase
Post-Purchase
Experience
User
Payer
UNDERSTANDING
CUSTOMER
BEHAVIOR
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2
Location and Cost of an Individual
Decision
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Individual consumption can occur in three
places:

Home
 Business organizations
 Public places
The values of the three customer roles
interplay, and trade-offs become integral to
the decision process
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3
Customer Decisions
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Decisions customers make in the
marketplace as buyers, payers, and users,
include:





Whether to purchase
What to purchase
When to purchase
From whom to purchase
How to pay for it
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4
Mental Budgeting
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Customers mentally set aside budgets for
product categories
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Customer Decision Process
Customer Behavior: A Managerial Perspective
Problem
Recognition
Post-purchase
Experience
PART 3
Information
Search
CHAPTER 8
Alternative
Evaluation
Purchases
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6
Step 1: Problem Recognition
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
A customer problem is any state of
deprivation, discomfort, or wanting
Problem recognition is a realization by the
customer that he or she needs to buy
something to get back to the normal state
of comfort physically and psychologically
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7
Stimuli for Problem Recognition
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Internal stimuli / Problem stimuli

Perceived states of physical or psychological
discomfort that causes problem recognition
External stimuli / Solution stimuli

Marketplace information that causes problem
recognition
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8
Four Situations for Problem
Recognition
Customer Behavior: A Managerial Perspective
PART 3
VIVID
LATENT
FAMILIAR
Stock
Depletion
Educational
Marketing
NOVEL
Life Stage
Change
New Product
Technology
CHAPTER 8
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9
Step 2: Information Search
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Three elements of the information-search
phase are:

Sources of information
 Search strategies
 Amount of search
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10
Awareness, Evoked, and
Consideration Sets
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Awareness Set
(All the brands in the
Awareness)
Evoked Set
(Brands recalled)
Brands NOT
recalled
Consideration Set
(Brands considered)
Brands NOT
considered
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11
Sources of Information for
Customers
Customer Behavior: A Managerial Perspective
MARKETER SOURCES
• Advertising
• Salespersons
• Product/service brochures
• Store displays
• Company web sites
PART 3
CHAPTER 8
NONMARKETER SOURCES
PERSONAL
• Friends and other acquaintances
• Past experience
INDEPENDENT SOURCES
• Public information (e.g., Consumer
Reports, Better Business Bureau, news
reports in media, government
publications, such as The Census of
Manufacturers)
• Product or service experts: (e.g., auto
critic, home appraiser, pharmacist, and
so on)
• Internet (bulletin boards)
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12
Low Cost of Information Search
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
The Internet

Democratization of information
The growth of Interactive Home Shopping
(IHS) is dependent on:

Selection
 Screening
 Reliability
 Product comparison
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13
Search Strategy
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
The pattern of information acquisition
customers utilize to solve their decision
problems

Customer decision strategies

Routine problem solving
 Extended problem solving
 Limited problem solving

Systematic vs. heuristic search strategies
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14
Systematic versus Heuristic Search
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Systematic search consists of a
comprehensive search and evaluation of
alternatives
Heuristics are quick rules of thumb and
shortcuts used to make decisions
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Strategies Used for Handling
Missing Information
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Interattribute inference
Evaluative consistency
Other-brand averaging
Negative cue
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16
Determinants of the Amount of
Search
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Perceived risk
Involvement
Familiarity
Expertise
Time pressure
Functional versus expressive nature of the
product or service
Information overload
Relative brand uncertainty
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Perceived Risk
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Performance risk
Social risk
Psychological risk
Financial risk
Obsolescence risk
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18
Involvement
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Purchase-decision involvement is the
degree of concern and caring that
customers bring to bear on the purchase
decision
Enduring involvement is on-going interest
in the product or service
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19
Illustrative Measures of Consumer
Involvement
Customer Behavior: A Managerial Perspective
PART 3
PRODUCT INVOLVEMENT OR IMPORTANCE:
This product is
Unimportant
Means a lot to me
Unappealing
Valuable
Unexciting
_______________
_______________
_______________
_______________
_______________
CHAPTER 8
Important
Means nothing to me*
Appealing
Worthless*
Exciting
ENDURING PRODUCT INVOLVEMENT: (Example: consumer involvement with cars)
•
•
•
•
Cars offer me relaxation and fun when life’s pressures build up.
I prefer to drive a car with a strong personality of its own.
To me, a car is nothing more than an appliance.*
I enjoy conversations about cars.
PURCHASE INVOLVEMENT:
• In choosing this product, I would not care at all/would care a lot about which brand, make, or model I buy.
• How important would it be for you to make a right choice of this product?
Not at all/Extremely Important
• It is not/it is a big deal if I make a mistake in choosing _____(the product name).*
*Reverse scored.
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20
Familiarity and Expertise
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
A Classification of Shopping Types on the Internet
Harris Interactive
Shopping Type
Description
% of Total
Online
Shoppers
1. eBivalent Newbies
Newest to the Internet; does not spend a lot online and likes
online shopping the least
5%
2. Hooked, Online and
Single
Likely to be young males; has been online the longest; banks,
invest, and ships online the most often
16%
3. Time-Sensitive
Materialists
Most interested in convenience and saving time; wants fast
check-out and one-stop shopping
17%
4. Brand Loyalists
Go directly to the site of the merchant they know; spend the
most online
19%
5. Hunter-Gatherers
Ages 30-49 with two children; utilize sites that compare and
provide analysis
20%
6. Clicks and Mortar
Group
Shops online but prefers to buy offline; concerned with online
privacy and security; visits shopping malls the most
23%
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21
Time Pressure
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Time is scarce due to:

Both spouses working
 Many customers employed in more than one
job
 Many customers re-enrolling in school
 New leisure activities enabled by technology
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22
Brand Uncertainty
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Relative brand uncertainty is the
uncertainty about which brand is best
among a set of brands
Individual brand uncertainty is the
uncertainty about what each brand offers
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23
Functional Versus Expressive
Nature of Products And Services
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Information Processing Mode (IPM)

Some people buy primarily for their physical
performance
Affective Choice Mode (ACM)

Some people buy primarily or significantly for
their social image or for their sensory
enjoyment
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24
Information Overload
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Customers are exposed to so much
information that they are unable to process
it to make a decision
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25
Step 3: Alternative Evaluation
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Choice Models

Compensatory
 Noncompensatory
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26
Use of the Compensatory Choice
Model by a Business Customer
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
VENDOR RATINGS
ATTRIBUTE
Quality
Fit with desired
performance
standards
Customer
support
Price
Total
WEIGHT
VENDOR 1
VENDOR 2
VENDOR 3
4
Average (2)
Excellent (4)
Poor (1)
3
Good (3)
Poor (1)
Good (3)
1
Poor (1)
Good (3)
Excellent (4)
Good (3)
Average (2)
Poor (1)
2
4(2) + 3(3) + 1(1) + 2(3) 4(4) + 3(1) + 1(3) + 2(2) 4(1) + 3(3) + 1(4) + 2(1)
= 24
= 26
= 19
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Noncompensatory Models
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Conjunctive model

The minimum cutoffs on all salient attributes are set
Disjunctive model

Entails trade-offs between aspects of choice alternatives
Lexicographic model

Attributes of alternatives are rank-ordered in terms of importance
Elimination by aspects model

Attributes of alternatives are rank-ordered in terms of
importance, and cutoff values are defined
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How and When Models Are Used
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Concepts





Processing by brand/supplier or by attribute
Comparative features of various choice
models
The two-stage choice process
Rapid heuristics
Satisficing
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Step 4: Purchase
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Choice Identification
Purchase Intent
Purchase Implementation
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30
Delay in Implementation
Customer Behavior: A Managerial Perspective
REASON
REASON
MEAN
IMPORTANCE
MEAN
IMPORTANCE
PART 3
CHAPTER 8
CUSTOMER
ROLE
CUSTOMER
ROLE
REASONS FOR DELAY
Time Pressure--To busy to devote the time
3.91
User, payer, buyer
Needed more information
3.43
User
Couldn’t afford at the time
3.19
Payer
Not sure if needed the item
2.75
User
Social and psychological risk if a wrong choice were made
Felt another product at home would do
2.70
2.70
User
User
Performance and financial risk if a wrong choice is made
2.65
User, payer
Expected price reduction or product modification in the near future
2.52
User, payer
Needed others’ consent
2.41
User, payer
Find shopping unpleasant
2.34
Buyer
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Delay in Implementation (cont’d)
Customer Behavior: A Managerial Perspective
PART 3
REASON
MEAN
IMPORTANCE
CHAPTER 8
CUSTOMER
ROLE
REASONS FOR DELAY CLOSURE
Decided on another alternative
3.84
User
Found the time
3.62
User, buyer
Need had become passing
3.51
User
Lower price became available
3.10
Payer
Tired of shopping further
2.70
Buyer
Found a good store
2.41
Buyer
Was able to justify the expense
2.32
Payer
Obtained the advice and consent I needed
2.14
User, payer
Due to good word-of-mouth
2.01
User
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32
Deviation From the Identified
Choice
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
The preferred brand may be out of stock
New in-store information may reopen the
evaluation process
Financing terms may render a purchase
infeasible
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33
Step 5: Postpurchase Experience
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Decision Confirmation
Experience Evaluation
Satisfaction/Dissatisfaction
Future Response: Exit, Voice, or Loyalty
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34
Measuring Satisfaction in Terms
of Expectations
Customer Behavior: A Managerial Perspective
How did we do? How was our:
PART 3
Fell Below
Expectations
Met
Expectations
CHAPTER 8
Exceeded
Expectations
Room appearance
Room cleanliness
Registration speed
Friendliness of staff
Room service promptness
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35
Determinants of Complaining
Customer Behavior: A Managerial Perspective
PART 3
CHAPTER 8
Dissatisfaction Salience
• Performance expectation gap
• Product/service importance
Attribution to the Market
• Failure controllable by the marketer
• Marketer likely to repeat the failure
• Redress is likely
Complainin
g Behavior
Personality Traits
• Aggressiveness
• Self-confidence
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36
Individual Customer Decision Making
and the Three Customer Roles
Customer Behavior: A Managerial Perspective
CONCEPTS
INDIVIDUAL
DECISION MAKER
PART 3
USER
PAYER
CHAPTER 8
BUYER
User in control of
buying role as well;
strong user values rule
over payer/buyer
values.
With someone else as
payer, users tend to
consumer more; also
user evaluation is less
stringent.
Role convergence
sometime causes
sacrifice in weak user
values
Users are the most
frequent problemrecognizers.
Buyer dissatisfaction
with service,
convenience and
personalization values
can cause problem
recognition. New
delivery channels serve
as solution stimuli to
cause problem
recognition by buyers.
Awareness of better
price value from
competitors causes
payer role problem
recognition.
DECISION PROCESS
Problem recognition
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37
Individual Customer Decision Making
and the Three Customer Roles (cont’d)
Customer Behavior: A Managerial Perspective
CONCEPTS
Information search
Search determinants:
Perceived risk
Involvement
Familiarity
Time pressure
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PART 3
USER
PAYER
CHAPTER 8
BUYER
Information pertaining
to user values is sought
Payer role seeks
information about
competitors’ prices.
Inadequate buyer
motivation to expend
search efforts constrains
user and payer desire for
more information.
User-felt risk causes
more information
search.
User involvement may
demand sacrifice in
buyer/payer values.
User familiarity enables
greater use of available
information.
Users seek time-saving
features in products/
services.
Payers willing to pay
more to avoid user
risks.
Buyers lean on trustworthy
sources.
Copyright © 1999 by Thomas Southwestern. All rights reserved.
Involved buyers do
extensive information
search.
Familiarity lulls buyers
into less search effort.
Time pressure affects
buyers the most who seek
efficient exchanges.
38
Individual Customer Decision Making
and the Three Customer Roles (cont’d)
Customer Behavior: A Managerial Perspective
CONCEPTS
Alternative evaluation
Decision models:
Compensatory
PART 3
USER
Users’ values most
important evaluation
criteria.
PAYER
CHAPTER 8
BUYER
For parity products (i.e.,
with user indifference),
payers seek to
maximize price value.
For parity products,
buyer values become
important criteria.
Payer value may be
exercised through use of
some noncompensatory
model.
To minimize cognitive
effort, buyers like to use
noncompensatory
model.
Users participate
actively.
Noncompensatory
One or the other role
may play a major role.
Functional/expressive
product
For expressive products,
users must participate in
evaluation.
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39
Individual Customer Decision Making
and the Three Customer Roles (cont’d)
Customer Behavior: A Managerial Perspective
CONCEPTS
PART 3
USER
Purchase
PAYER
Lack of agreement on
financing may hinder
purchase.
CHAPTER 8
BUYER
This stage is most relevant to
the buyer role.
Post-choice processes:
Buyer’s remorse/decision
confirmation
Buyer role subject to remorse;
seeks more favorable
information to ward decision
confirmation.
Experience evaluation
Product use experience by
the user role.
Satisfaction
Determined largely by
satisfaction of user values.
Exit, voice, loyalty
User satisfaction leads to
loyalty. Users spread wordof-mouth.
Loyalty simplifies buyer’s
task.
Complaint
User dissatisfaction
motivates complaints.
Buyer aggressiveness
determines if complaint will be
made.
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40