Consumer Decision Process

Your book covers six aspects of the extended consumer decision process

Situations Problem Recognition Information Search Alternative Evaluation and Selection Outlet Selection and Purchase Post purchase Processes

However, extended decision-making occurs only in those relatively raresituations when the consumer is highly involved in the purchase. Lowerlevels of purchase involvement produce limited or nominal decision-making, and the first chapter (on situations) describes the varioustypes of decisions and their relationship to involvement.

Situational Influence

Situational influence is defined as all those factors particular to a time and place that do notfollow from a knowledge of personal (the relatively stable or permanent attributes of theindividual) and stimulus attributes (the characteristics of the stimulus object), and that have ademonstrable and systematic effect on current behavior. In effect, it is like ourPOS, where the focus is on the context of the decision situation.

Note that transient characteristics of the individual such as mood,time pressure, and emotion are a part of the situation rather than apart of the individual. Also note that the situation may includeconsumption rituals (weddings, birthdays, parties) that I referred towhen we were talking about consumption subcultures and reference groupinfluence.

As you can see in Figure 13-1, this chapter talks about situations,situation characteristics, and marketing activity (the three boxes onthe left). Individual characteristics we have already talked about,and consumption responses are the next few chapters.

The consumer finds themselves in four situations – the communicationssituation where they receive information, the purchase situation, useof the product, and ultimately disposal. The question I have is whatcan we, as marketers, do about these situations? We have no control,

so we must anticipate situations and facilitate the consumers’inclination to purchase our product.

Communications situation – Are we alone or with others, in a goodmood or bad, in a hurry or have lots of time? All of theseaffect the degree to which we see and listen to marketingcommunications. Purchase situation – Are the kids along, are friends with you,what is your mood?Usage situation – When and how is the product used? How can weexpand the usage situations to increase the demand for ourproduct? Can we change the product in ways that will expandusage? Disposition situation – As marketers, we have only recently begunto consider disposal a part of our domain of influence. It isimportant not only in product design but also in package design(remember the focus group video where one lady was particularlyconcerned about packaging). This is an important environmentalissue.

Figure 13-1 – The situation interacts with marketing activity and theindividual to determine behavior.

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There are five key characteristics of situations that help determinethe situation’s impact on behavior – physical features, socialsurroundings, time perspective, task objectives, and antecedentstates.

Physical features – Your book’s discussion of physical featuresfocuses on the retail environment, which is the purchasesituation (but you should also consider physical features of thecommunications, use, and disposal situations). The sum of all thephysical features of a retail environment is called atmospherics(or servicescape when describing a service business such as ahospital, bank, or restaurant). Atmospherics includes décor,colors (think about when you might use hot colors such as red,

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and cool colors such as blue), aromas (department stores sprayscents into the store), background music (what is the impact offast versus slow music in a restaurant or bar), lighting (brightor subdued), and the configuration of merchandise displays. Theseelements are under the control of the retailer.

Social surroundings – Your book’s discussion of socialsurroundings focuses on the consumption process (but you shouldalso consider the impact of social surroundings on the otherthree situations). Depending on your heritage, you will preferdifferent types of food in situations where business associatesare present versus a visit by your parents. You wear differentclothes in different situations. Some activities involve socialsituations. Sometimes shopping is a social experience. Socialinfluence is a significant force acting on our behavior.

Temporal perspective – Time pressure has its most significantimpact on the purchase situation. If you’re under pressure, youwill spend less time in information search, use less information,evaluate fewer alternatives, and make quicker decisions. Timepressure increases brand loyalty. People will shop in fewerstores. People look for time convenience. They want high qualityproducts that are fast and easy to use.

Task definition – Are people buying for personal use or for agift? The nature of gifts varies by occasion. Wedding gifts tendto be utilitarian (durability, usefulness, need, and performance)while birthday gifts tend to be fun (enjoyable, unique, durable,performance). Also, the relationship between the individuals hasan impact on the nature of the gift (personal items for closerfriends). Gifts generally have an implied value, image, andfunctionality that imply the giver’s impression of the image andpersonality of the receiver. Gift giving produces anxiety becauseof this symbolic meaning.

Antecedent states – These are features of the individual such asmomentary moods or conditions. Moods are transient feeling states that aregenerally not tied to a specific event or object. Consumers actively managetheir moods, and often seek situations, activities, or objectsthat will alleviate negative moods or enhance positive ones. Thepurchase of products and services is one way consumers managetheir mood states. Momentary conditions reflect temporary states of beingsuch as being tired, being ill, having extra money, being broke,

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etc. (note that moods were states of mind, while momentaryconditions are states of being).

Your book does talk about ritual situations that are a set of interrelatedbehaviors that occur in a structured format, that have symbolic meaning, and that occur inresponse to socially defined occasions. By now you should realize that I thinkmany behaviors are built around ritual situations, consumptionrituals, social situations, group influence, consumption subcultures,scripts (from the chapter on memory), and related concepts.

So, what’s the marketing impact? Individuals don’t encountersituations randomly, but create many of the situations they face.Marketers can develop products, advertising, and segmentationstrategies based on the situations that individuals selecting variouslifestyles are likely to encounter. Your book talks about a 5-stepapproach for developing situation-based marketing strategies.

1. Use observational studies and focus groups to discover usagesituations that influence the consumption of the product.

2. Survey a large sample of consumers to better understand andquantify how the product is used and the benefits sought in theusage situation by each market segment.

3. Construct a person-situation segmentation matrix. Each cellcontains the key benefits sought (Table 13-2 illustrates this forsuntan lotion).

4. Evaluate each cell in terms of potential sales, price, cost toserve, competitor strength, etc.

5. Develop and implement a marketing strategy for those cells thatoffer sufficient profit potential.

Table 13-2 – Person-Situation segments for suntan lotions.

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Note that there are four usage situations (beach/boat, etc.) and foursegment groups (young children, etc.). Also note that the last columnlists the product features/benefits associated with each usagesituation, and the last row lists the features/benefits sought by eachmarket segment. This is a great exercise to try with other products –who are the potential markets, under what situations do they use theproduct, what benefits are they looking for, and what benefits can theproduct provide in each situation?

Problem Recognition

While the term consumer decision implies an individual carefullyevaluating the attributes of a set of products and rationallyselecting the one that solves a clearly recognized need for the leastcost, many consumer decision focus not on brand attributes but ratherthe feelings or emotions associated with acquiring and/or using thebrand, or with the environment in which the product is purchasedand/or used. These are referred to as attribute-based, emotion-based,and environment-based decisions.

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This chapter deals with how the consumer recognizes and reacts to aproblem, and much of this revolves around the level of purchaseinvolvement which is the level of concern for, or interest in, the purchase processtriggered by the need to consider a particular purchase. Purchase involvement is atemporary state, and is influenced by the interaction of theindividual, the product, and the situational characteristics(wow . . . POS . . . what a surprise). Note that purchase involvementis not the same as product involvement or enduring involvement, atopic we covered when talking about opinion leadership. For example, Ihave a great deal of product involvement in computer equipment andaccessories, but I generally have little purchase involvement becauseof my biases (which we could call brand loyalty and/or store loyalty).

There are three broad levels of decision making, depending oninvolvement – nominal, limited, and extended. As you can imagine,nominal decision making is where there is little purchase involvement,and there really isn’t any decision to make, you just buy theproduct/brand. I do like to point out that there are two quitedifferent extremes that explain nominal decision making.

Complete brand loyalty – at one point you may have considered anumber of brands, but you settled on the one you like and youalways purchase it. You are brand loyal, and it would bedifficult for a competitor to change your mind.Complete brand indifference – you may believe that all brands areabout the same, so you will pick up whatever is available withhaving to think about it.

Limited decision making involves internal and limited external search, fewalternatives, simple decision rules on a few attributes, and little postpurchase evaluation. Youput a little work into the decision, but not too much. Note that mostinformation used in the decision is internal, from your memory, andyou spend little time searching for more information, and little timein the decision making process.

As you could guess, extended decision making involves an extensive internaland external information search followed by a complex evaluation of multiple alternatives.

Problem recognition is the result of a discrepancy between a desired state and anactual state that is sufficient to arouse and activate the decision process. Of course, youshould recognize that it is not really the consumer’s actual statethat is important, but their perception of their actual state (people

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don’t always deal in reality, and it is perceptions that count inmarketing . . . perception is everything). The desired state is drivenby the desired life style. But to some extent, the current actualstate is also driven by the desired life style since it has drivenpast decisions. In other words, it is desired life style that got youwhere you are (subject to resource constraints), and desired lifestyle that is driving your current decisions and actions.

There may be a discrepancy or gap between desired and actual states,but two factors affect whether an individual will resolve thatdiscrepancy: (1) the magnitude of the discrepancy, and (2) therelative importance of the problem. Think about situations in yourlife where there is a large discrepancy between desired and actualstates, but it’s no big deal (at least at the moment), or situationswhere there is a small discrepancy but it is really important to you.How do you react and how hard to you work to solve the problem?

From a marketing perspective, you want to activate problem recognitionand show how your product solves the problem. So, you can change thedesired state (promote your product’s benefits), change the perceivedactual state (is your coffee really good tasting), or change theimportance (having a quality automobile tire is the most importantthing you can do to protect your family).

As you can imagine, virtually everything we have talked about affectsboth desired and actual states. Culture, subculture, social status,reference groups, household characteristics, financial status,financial expectations, previous decisions, individual development,emotions, motives, situation, normal depletion, product/brandperformance, government, consumer groups, availability of products . ..

Think back to Table 13-2 above. How would you identify the problemspeople have. Surveys and focus groups tend to take one of threeapproaches to problem identification.

Activity analysis – focus on a particular consumer activity, suchas preparing a meal, mowing the lawn, or hair care. Try to findout what problems people have when performing this activity.Product analysis – focus on the purchase or use of a particularproduct, such as using a computer, caring for the car, or usingthe refrigerator.

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Problem analysis – this starts with a list of problems and asksthe consumer to identify which activities, products, or brandsare associated with these problems.

In all cases you’re trying to understand the consumer, their dailyactivities, their problems, their needs . . . and trying to learn howyour product can make a positive contribution to people’s lives. Thatsounds like a lofty goal, but if you can accomplish it, you will besuccessful.

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Information Search

Many, perhaps most, consumer problems are resolved by the consumerusing only previously stored information (and we discussed that muchof that information comes from just living and being exposed tostimuli . . . much of that coming from conditioning and iconic rotelearning, none of which require any significant amount of thinking).This is the source of information for internal search.

External search looks to sources such as The opinions, attitudes, behaviors, and feelings of friends,neighbors, relatives, and increasingly, strangers contacted onthe internet.Professional information that is provided in pamphlets, articles,books, the internet, and personal contacts.Direct experiences with the product through inspection, trial, orobservation.Marketer generated information presented in advertisements, websites, displays, and by sales personnel.

Of course, deliberate external search can take place without theirbeing a problem to solve. We talked about those with enduringinvolvement with a product category. These people are alwayscollecting and evaluating information about product categories andbrands.

What kind of information does someone search for? They look forappropriate evaluative criteria, existence of alternatives, and theratings of each alternative on the evaluative criteria.

The appropriate evaluative criteria for the solution of a problem– Suppose you wanted to buy a new computer, but were unsure ofwhat features would meet your needs. You need information aboutthe appropriate evaluative criteria, and you would probably findthis by talking with friends, experts, and reading articles aboutcomputers. You might even look at marketing brochures, and searchthe internet.The existence of various alternative solutions – If, in thecomputer example, you didn’t know much about the what was

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available and where computers could be purchased, you would getinformation about both brands and stores. The performance level of each alternative solution on eachevaluative criterion – The potential brands and stores would becompared on each of the evaluative criteria. A later chaptertalks about how you take all of this comparative information andfinally make a decision.

How much external information search really takes place? Not a wholelot. Surveys of shopping behavior have shown a significant percent ofall durable purchases are made after visiting only one store. Thenumber of alternatives considered also shows a limited amount ofprepurchase search. While the number of alternative brands and/ormodels considered tends to increase as the price of the productincreases, for some product categories, such as watches, almost halfof the purchasers considered only one brand and one model. Anotherstudy found that 27 percent of the purchasers of major appliancesconsidered only one brand.

Seven separate studies found remarkable consistency in terms of thetotal external information search undertaken (see the followingtable). You could say that for major purchase, typically half thepeople are non-searchers, about 40 percent do limited search, and lessthan one-in-ten goes through an extensive information search process.

What does this tell you as a marketer? You had better get into theirheads before they have a problem and need information . . . becausethey are not going to search much for information when the problemarises.

What will affect the cost/benefit ratio for information search?

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The greater the number of alternatives available, the moreexternal search there is likely to be.

The higher the perceived range of prices, the more externalsearch.

The more product differentiation, the greater the search. People enjoy shopping for positive products (acquisition results

in positive reinforcement) and will search more, but don’t enjoyshopping for negative products (removal of an unpleasantcondition – rodent extermination, automobile repair) and will notengage in much search (do you agree with this?).

Middle income people search more than lower and upper incomepeople.

Those with higher education and occupation search more. Search is inversely related to age. New households search more than established households. The higher the perceived risk, either instrumental or symbolic,

the greater the information search. Perceived risk is high forproducts whose failure to perform as expected would result inhigh social cost (people may laugh at your choices), financialcost (didn’t get what you paid for), time cost (spend a lot oftime in repairs), effort cost (a computer that constantlycrashes), physical cost (harmful side effects).

Gift giving situations will increase information search.

Alternative Evaluation and Selection

It is important to understand consumers’ desired product benefits(their evaluative criteria) and the way in which they choose betweenproducts with differing combinations of benefits. Choice is a complexprocess, and our simplifications, while useful in managing andpredicting outcomes, are certainly not complete descriptions of theprocess. And our models may imply that consumers are more logical,structured, rational, and deliberate than they really are.

One way to look at choice is whether it is attribute-based or attitudebased. Attribute-based choice requires the knowledge of specific attributes at thetime the choice is made and involves attribute-by-attribute comparisons across brands.Attitude-based choice involves the use of general attitudes, summary impressions,

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intuitions, or heuristics, and no attribute-by-attribute comparisons are made at the time ofchoice.

Consider the following two processes a consumer might use to purchasean answering machine:

Process 1: The consumer remembers that the Casio his last roommatehad seemed to work well and looked "good," his parents had aToshiba that also worked well but was rather large and bulky, andhis old Samsung had not performed as well as he had expected. Hegoes to a store and gathers price, recording time, and ease ofremote access information on each of these brands. He mentallyranks each brand on these three attributes and his generalimpression of their quality. Based on these evaluations, he makesa choice.Process 2: The consumer remembers that the Casio his last roommatehad seemed to work well and looked "good," his parents had aToshiba that also worked well but was rather large and bulky, andhis old Samsung had not performed as well as he had expected. Atthe store, he sees that the Casio and Toshiba are about the sameprice and decides to buy the Casio.

Clearly, Process 1 is an attribute based choice process, and Process 2is an attitude based choice process. When would an attribute-basedchoice process be more likely? If an individual is motivated to makean optimal decision, if attribute-specific information is readilyavailable, and if time is available to make comparisons, thenattribute-based decisions are more likely. But there are lots of otherreasons/situations that would affect whether attitude-based orattribute-based decisions would dominate. Thus, marketers must provideinformation and experiences that produce a strong attitude-basedposition (for consumers making an attitude-based choice) and they mustprovide performance levels and supporting information that will resultin preference among those consumers making attribute-based choices.

Another general model is affective choice, where the evaluation of products ismore holistic and focuses on the way they will make the user feel as they are used. Neitherattribute- nor attitude-based approaches work in this case, since bothimply some sort of objective rationality. Affective choice is based onfeelings.

Speaking of rationality, we do need to consider the objectives of thedecision maker as they ponder a choice. Rational choice models assumethat the goal is to maximize the accuracy of the decision. However,sometimes the goal may be to minimize the cognitive effort requiredfor the decision (these people will use simpler choice rules, consider

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fewer alternatives, and evaluate fewer attributes). Sometimes you maywant to avoid negative emotions. Sometimes you may want to maximizethe ease with which the decision can be justified.

Your book has a section on evaluative criteria - the various dimensions,features, or benefits a consumer looks for in response to a specific problem. The marketermust determine which evaluative criteria are used (projectivetechniques are useful here), determine consumer’s judgments of brandperformance on specific evaluative criteria (the semanticdifferential), and determine the relative importance of evaluativecriteria (a constant sum scale can be used).

People aren’t necessarily skilled at making judgments about productattributes. Some features are difficult to judge (sound quality,durability). Consumers sometimes use surrogate indicators that areobservable characteristics that are used as indicators of hidden attributes. Such things asprice, brand, or country of origin are often surrogate indicators ofquality.

It is important for you to understand the decision rules used byconsumers in attribute-based choice situations. Recall that attributebased decisions involve the comparison of brands on the relevantevaluative criteria.

Despite the fact that the choice rules we describe are not precise representations of consumer decisions, they do enhance our understanding of how consumers make decisions and provide guidance formarketing strategy.

Suppose you have evaluated a particular model of each of the sixnotebook computer brands in your evoked set on six evaluativecriteria: price, weight, processor, battery life, after-sale supportand display quality. Further, suppose that each brand excels on oneattribute but falls short on one or more of the remaining attributes,as shown in Table 16-1 (on the following page).

Which brand would you select? The answer would depend on the decisionrule you utilize. Consumers use five decision rules: conjunctive,disjunctive, elimination-by-aspects, lexicographic, and compensatory.Consumers frequently use more than one rule to make a single decision.The most common instance of this is using a relatively simple rule toreduce the number of alternatives considered and then to apply a morecomplex rule to choose among the remaining options. An example would

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be eliminating from consideration all those apartments that are toofar from campus or that rent for more than $700 per month (conjunctivedecision rule). The choice from among the remaining apartments mightinvolve carefully trading-off among features such as convenience oflocation, price, presence of a pool, size of rooms, and so forth(compensatory rule).

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Table 16-1 Performance

The first four rules we will describe are noncompensatory rules. Thismeans that a high level of one attribute cannot offset a low level ofanother. In the apartment example, the consumer described would notconsider an apartment that was right next to campus if it cost morethan $700 per month. An excellent location cannot compensate for aninappropriate price. In contrast, the last rule is a compensatory rule,in which consumers average across attribute levels. This allows a highlevel of one value to offset a low value of another.

Finally note that the conjunctive and disjunctive decision rules my produce a set of acceptable alternatives, while the remaining rules generally produce a single best alternative.

Conjunctive Decision Rule

The conjunctive decision rule establishes minimum required performancestandards for each evaluative criterion and selects the first or allbrands that surpass these minimum standards. In essence, you wouldsay: "I'll consider all (or I'll buy the first) brands that are allright on the attributes I think are important." For example, assumethat the following represent your minimum standards for a notebookcomputer:

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Any brand of computer falling below any of these minimum standards(cutoff points) would be eliminated from further consideration.Referring to Table 16-1, we can see that four computers areeliminated-IBM, Gateway, Dell, and Toshiba. These are the computersthat failed to meet all the minimum standards. Under thesecircumstances, the two remaining brands may be equally satisfying. Or,the consumer may use another decision rule to select a single brandfrom these two alternatives.

Because individuals have limited ability to process information, theconjunctive rule is frequently used to reduce the size of theinformation processing task to some manageable level. It firsteliminates those alternatives that do not meet minimum standards. Thisis often done in the purchase of such products as homes, computers,and bicycles; in the rental of apartments; or the selection ofvacation options. A conjunctive rule is used to eliminate alternativesthat are out of a consumer's price range, outside the location pre-ferred, or that do not offer other desired features. Once alternativesnot providing these features are eliminated, another decision rule maybe used to make a brand choice among those alternatives that satisfythese minimum standards.

The conjunctive decision rule is commonly used in many low-involvementpurchases as well. In such a purchase, the consumer evaluates a set ofbrands one at a time and selects the first brand that meets all theminimum requirements.

If the conjunctive decision rule is used by a target market, it iscritical to surpass the consumers' minimum requirement on eachcriteria. Since the first brand the consumer evaluates that does so isoften purchased, extensive distribution and dominant shelf space areimportant. It is also necessary to understand how consumers "breakties" if the first satisfactory option is not chosen.

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Disjunctive Decision Rule

The disjunctive decision rule establishes a minimum level ofperformance for each important attribute (often a fairly high level).All brands that surpass the performance level for any key attribute areconsidered acceptable. Using this rule, you would say: "I'll considerall (or buy the first) brands that perform really well on anyattribute I consider to be important." Assume that you are using adisjunctive decision rule and the attribute cutoff points shown below:

You would find Gateway (price), Compaq (weight), and Dell (displayquality) to warrant further consideration (see Table 16-1). As withthe conjunctive decision rule, you might purchase the first brand youfind acceptable, use another decision rule to choose among the three,or add additional criteria to your list.

When the disjunctive decision rule is used by a target market, it iscritical to surpass the consumers' requirements on at least one of thekey criteria. This should be stressed in advertising messages and onthe product package. Since the first brand the consumer evaluates thatexceeds one of the requirements is often purchased, again extensivedistribution and dominant shelf space are important, as isunderstanding how consumers "break ties" if the first satisfactoryoption is not chosen.

Elimination-by-Aspects Decision Rule

The elimination-by-aspects rule requires the consumer to rank theevaluative criteria in terms of their importance and to establish acutoff point for each criterion. All brands are first considered onthe most important criterion. Those that do not surpass the cutoffpoint are dropped from consideration. If more than one brand passes

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the cutoff point, the process is repeated on those brands for thesecond most important criterion. This continues until only one brandremains. Thus, the consumer's logic is: "I want to buy the brand thathas a high level of an important attribute that other brands do nothave."

Consider the rank order and cutoff points shown below. What would youchoose using the elimination-by-aspects rule?

Price would eliminate IBM and Toshiba (see Table 16-1). Of thoseremaining, Compaq, HP, and Dell surpass the weight hurdle (Gateway iseliminated). Notice that Toshiba also exceeded the minimum weightrequirement but was not considered because it had been eliminated inthe initial consideration of price. Only Dell exceeds the thirdrequirement, display quality.

Using the elimination-by-aspects rule, we end up with a choice thathas all the desired features of all the other alternatives, plus onemore. In this case, Dell would be selected.

For a target market using the elimination-by-aspects rule, it iscritical to surpass the consumers' requirements on one more (in order)of the criteria used than the competition. This competitivesuperiority should be stressed in advertising messages and on theproduct package. Firms can also attempt to alter the relativeimportance that consumers assign to the evaluative criteria.

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Lexicographic Decision Rule

The lexicographic decision rule requires the consumer to rank thecriteria in order of importance. The consumer then selects the brandthat performs best on the most important attribute. If two or morebrands tie on this attribute, they are evaluated on the second mostimportant attribute. This continues through the attributes until onebrand outperforms the others. The consumer's thinking is somethinglike this: "I want to get the brand that does best on the attribute ofmost importance to me. If there is a tie, I'll break it by choosingthe one that does best on my second most important criterion."

The lexicographic decision rule is very similar to the elimination-by-aspects rule. The difference is that the lexicographic rule seeksmaximum performance at each stage while the elimination-by-aspectsseeks satisfactory performance at each stage. Thus, using thelexicographic rule and the data from the elimination-by-aspectsexample above would result in the selection of Gateway, because it hasthe best performance on the most important attribute. Had Gateway beenrated a 4 on price, it would be tied with Dell. Then, Dell would bechosen based on its superior weight rating.

When this rule is being used by a target market, the firm should tryto be superior to the competition on the key attribute. Thiscompetitive superiority should be emphasized in advertising. It isessential that the product at least equal the performance of all othercompetitors on the most important criteria. Outstanding performance onlesser criteria will not matter if a competitor is superior on themost important attribute. If a competitive advantage is not possibleon the most important feature, attention should be shifted to thesecond most important (assuming equal performance on the mostimportant one). If it is not possible to meet or beat the competitionon the key attribute, the firm must attempt to make another attributemore important.

The ad shown in Illustration 16-6 emphasizes the ability of thisColumbia parka to protect the wearer from bad weather. No otherattributes are mentioned. This ad is appropriate for those consumerswhose decision rules place primary importance on this attribute.

Compensatory Decision Rule

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The four previous rules are noncompensatory decision rules, since verygood performance on one evaluative criterion cannot compensate forpoor performance on another evaluative criterion. On occasion,consumers may wish to average out some very good features with someless attractive features of a product in determining overall brandpreference. Therefore, the compensatory decision rule states that thebrand that rates highest on the sum of the consumer's judgments of therelevant evaluative criteria will be chosen. This can be illustratedas:

This is the same as the multi attribute attitude model described inChapter 12. If you used the relative importance scores shown below,which brand would you choose using the compensatory rule?

Using this rule, Dell has the highest preference (see Table 16-1). Thecalculations for Dell are as follows:

RDell = 30(4) + 25(4) + 10(2) + 5(3) + 10(3) + 20(5)= 120 + 100 + 20 + 15 + 30 + 100= 385

Products and services targeting consumers likely to use a compensatory

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rule can offset relatively low performance on some features withrelatively high performance on others. However, it is important tohave a performance level at or near the competition on the moreimportant features since they receive more weight in the decision thando other attributes. Recall the description of the minivan purchasefrom the beginning of this section. This customer preferred most ofthe features of the Ford but bought the GM because Ford was very weakon one key attribute. However, the consumer did express a willingnessto change the decision had the price differential been greater. Thus,for compensatory decisions, the total mix of the relevant attributesmust be considered to be superior to those of the competition.

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Marketing Applications of Decision Rules

As shown below, each decision rule yields a somewhat different choice.Therefore, marketers must understand which decision rules are beingused by target buyers in order to position a product within thisdecision framework.

We cannot specify with precision which rules are used by consumers inwhich situations. However, research clearly indicates that people douse the rules. Low-involvement purchases generally involve relativelysimple decision rules (conjunctive, disjunctive, elimination-by-aspects, or lexicographic), since consumers will attempt to minimizethe mental "cost" of such decisions. High-involvement decisions andpurchases involving considerable perceived risk tend to increaseevaluation efforts and often may involve not only more complex rules(compensatory) but stages of decision making, with differentattributes being evaluated using different rules at each stage. Ofcourse, individual, product, and situational characteristics alsoinfluence the type of decision rule used.

A marketing manager must determine, for the market segment underconsideration, which is the most likely rule or combination of rulesand then develop appropriate marketing strategy.

Outlet Selection and Purchase

Selecting a retail outlet involves the same process as selecting abrand (problem recognition, information search, evaluate alternatives,and choice). This chapter describes the evaluative criteria used tochoose a retail outlet, consumer characteristics that influence the

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criteria used, and in-store characteristics that affect the amountsand brands purchased.

The chapter also uses the term retail outlet in a very generic sense.With the changes in the retail scene, it includes any source ofproducts or services. That is, retail stores as well as in-homeshopping such as telephone, mail, and computer. I would also includevending machines, kiosks, and any other place where the consumerplaces and order and receives a product or service (though I don’tthink your book mentions these sources) What else would you consideras a retail outlet?

Internet retailing is on the increase. High-income households dominateon-line shopping, with those earning over $50,000 accounting for 74percent of all Internet sales (compared to 47 percent of all retailsales). This will drop as more lower income families begin to use thischannel. The following table gives you some idea of the number ofhouseholds and their on-line shopping behavior.

What kinds of items do people purchase on-line?Convenience items: low-risk discretionary items. Internet sales will be most successful where huge selections and deep discounts are important and easy shipping is available. Examples are books,CDs, flowers, and event tickets.Researched items: high-information, big ticket planned purchases.Internet sales will be led by items with low style content and those for which "touch" is not important. Examples are leisure travel, computer hardware, consumer electronics, and appliances.Replenishment goods: moderate cost, high-frequency purchases.Items that are relatively expensive and easy to ship will be mostsuccessful. Examples include health care items such as vitamins,beauty aids, and gourmet foods.

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As you might expect, the largest percentage of sales will be in areassuch as computer hardware and consumer electronics, event tickets,videos, music, books, and software (by far the largest).

In 1998 less than a third of those using the internet shopped on it.The following table shows some of the major reasons.

Internet shoppers tend to have higher education, somewhat higherincomes, and to be white, male, and live in the northeast or west.Those under age 24 and over age 64 shop on-line less than the otherage groups.

The vast majority of retail sales take place in stores. In addition tothe traditional small specialty and general stores, and largerdepartment stores, we have seen the emergence of the category killersor superstores, and the small kiosks in malls, airports, and otherhigh traffic areas.

Earlier we were focusing on product choice followed by search for theretail outlet. However, for many consumers and/or products, store-choice precedes brand choice. I have a few stores that I consistentlyshop at and choose from among the brands they carry. I’m using thestore as the expert in brand choice.

Marketing strategy would be a focus on brand image and advertising forbrand-first decisions, and focus on distributing through key-outletsand point-of-purchase displays for outlet-first decisions.

A number of factors affect retail outlet selection.

Outlet image is one of the key factors. One study produced thefollowing nine affective dimensions of store image. These wouldprobably change for non-store outlets, but the concepts would besimilar.

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Of course, different groups of customers want different things fromvarious types of retail outlets. Department store images have becometoo diffuse to attract customers, and they have evolved intocollections of distinctive specialty stores or boutiques, each with asharply focused image keyed to a well-defined target market.

As I look at these dimensions of retail image, I am reminded that youcan’t have everything. It is impossible to be a very low cost, veryhigh service retail outlet. There are tradeoffs. A store must have aclearly defined target market, develop a clear image and strategy, andfocus its efforts.

Choice is also affected by retail outlet location and size. Theattractiveness of a store is directly proportional to its size (largerstores are more attractive because they tend to have largerselection). Attractiveness is inversely proportional to distance (ormore accurately, travel time). The longer it takes to get to a store,the less likely you are to shop there. Of course, the impact of sizeand distance depends on whether the consumer is buying conveniencegoods or shopping goods. For convenience goods (like food andincidentals) travel time is very important. For shopping goods (likefurniture and automobiles) size/selection is very important.

The perceived risk is a characteristic of the consumer that affectsretail outlet choice (see page 8 on the cost/benefit of informationsearch). Non-traditional outlets are inherently risky, so they musttake steps to minimize risks by providing excellent service, no-hasslereturn policies, brand name merchandise, warranties, etc.

Researchers like to classify consumers into shopping orientationcategories that emphasize certain activities or shopping motivations. One study

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identified seven commonly held psychographic-based shoppingorientations. Just out of curiosity, what type of people do you thinkhold each orientation?

Inactive Shoppers (15 percent) have extremely restricted lifestylesand shopping interests. Best characterized by their inactivity,Inactive Shoppers do not engage in outdoor or do-it-yourselfactivities except for working in the yard or garden. They do notexpress strong enjoyment or interest in shopping, nor are theyparticularly concerned about such shopping attributes as price,employee service, or product selection.Active Shoppers (12.8 percent) have demanding lifestyles and are"tough" shoppers. They engage in all forms of outdoor activitiesand are usually do-it-yourselfers. Actives enjoy "shoppingaround," and price is a major consideration in their search.Actives appear to shop more as an expression of their intenselifestyles rather than an interest in finding bargains.Therefore, these shoppers balance price with quality, fashion,and selection in their search for value.Service Shoppers (10 percent) demand a high level of in-store servicewhen shopping. They usually seek convenient stores with friendly,helpful employees, and they quickly become impatient if they haveto wait for a clerk to help them.Traditional Shoppers (14.1 percent) share Active Shoppers'preoccupation with outdoor activities, but not their enthusiasmfor shopping. They actively hike, camp, hunt, and fish, and aredo-it-yourselfers who often work on their cars. In general,though, Traditional Shoppers are not price sensitive nor do theyhave other strong shopper requirements.Dedicated Fringe Shoppers (8.8 percent) are heavy catalog shoppers. They are do-ityourselfers and are more likely than average to trynew products. They have almost a compulsion for being different. Dedicated Fringe Shoppers are not interested in extensive socializing. They have little interest in television and radio advertisements and exhibit limited brand and store loyalty.Price Shoppers (10.4 percent), as the name implies, are mostidentifiable by their extreme price consciousness. Price Shoppersare willing to undertake an extended search to meet their pricerequirements, and they rely heavily on all forms of advertisingto find the lowest prices.Transitional Shoppers (6.9 percent) seem to be consumers in earlier

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stages of the family life cycle who have not yet formalized theirlifestyle patterns and shopping values. They take an activeinterest in repairing and personalizing cars. Most participate ina variety of outdoor activities. They are more likely thanaverage to try new products. Transitional Shoppers exhibit littleinterest in shopping around for low prices. They are probably"eclectic shoppers" because they appear to make up their mindsquickly to buy products once they become interested.

There are a host of other factors that will affect brand choice,particularly those things that occur once the consumer is in the store. Point-of-purchasedisplays will have an impact. Price reductions and promotional dealsmay change the consumer’s choice. Atmospherics will influence theconsumer. Stockouts will clearly have an impact on brand choice.Finally, sales personnel themselves may influence the final brandchoice.

Postpurchase Processes, Satisfaction, and Commitment

From the first time a guest registers at a Ritz-Carlton hotel, every preference and special order isentered into a database accessible from all the chain's hotels. Employees carry special note cards on which guest comments and concerns are noted for subsequent entry into the database. Thus, the next time a customer checks into a Ritz-Carlton, the hotel will know if an iron should be in the room, if bed turn-down is desired, or if a particular type of room is preferred. The guest's needs can then be met without the guest having to make requests.

The Ritz-Carlton loyalty program is also customized. Most hotel programs provide points per stay that can be redeemed for upgrades, free nights, or other predetermined and limited prizes."When we recognize guests for their long stays or repeat business, we recognize them with something that's appropriate for them." Recognition awards are often chosen at a staff meetingheld at the start of each shift, where a list of guests and their preferences is reviewed. For example, if a guest who prefers a room with an ocean view is visiting for the fifth time and the staff sees that a deluxe room with that view is available, they will upgrade the guest. When the guest checks in, the registration clerk will give the upgrade with a thank you. However, "you should always tell the guest why he or she is being rewarded. That way a customer won't expectrewards every visit."

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Though rare only a few years ago, such customer loyalty programs arenow common in American firms. This chapter deals with everything thattakes place after the purchase, and focuses on satisfying customers,and developing committed customers.

A very common reaction after making a difficult, relatively permanentdecision is doubt or anxiety, referred to as postpurchase dissonance.The probability that a consumer experiences dissonance, as well as themagnitude of such dissonance is a function of

The degree of commitment or irrevocability of the decision. The easier it is to alter the decision, the less likely the consumer is to experiencedissonance.The importance of the decision to the consumer. The more important the decision, the more likely dissonance will result.The difficulty of choosing among the alternatives. The more difficult it is to select from among the alternatives, the more likely the experience and magnitude of dissonance. Decision difficulty is a function of the number of alternatives considered, the number of relevant attributes associated with each alternative, and the extent to which each alternative offers attributes not available with the other alternatives.The individual's tendency to experience anxiety. Some individuals have a highertendency to experience anxiety than do others. The higher the tendency to experience anxiety, the more likely the individual will experience postpurchase dissonance.

Dissonance occurs because making a relatively permanent commitment toa chosen alternative requires one to give up the attractive featuresof the unchosen alternative. This typically occurs in high-involvementsituations (nominal and limited decision making generally doesn’tproduct dissonance).

Consumers often search for information to validate their decisions.The heightened receptiveness to information after the purchase greatlyenhances the role that advertising and follow-up sales efforts canhave. They build consumer confidence.

A related concept is consumption guilt which occurs when some negativeemotions or guilt feelings are aroused by the use of a product or service.

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Your book has a brief section on product disposal. We know thatpackaging is a problem, but a number of products are harmful to theenvironment and need special handling for proper disposal.

Postpurchase evaluation and ultimate satisfaction are importantconcepts to marketers. Consumers may evaluate all aspects of theprepurchase process, the purchase itself, the final performance of theproduct, instruction manuals, customer service, and repair or warrantyservice. All of these things fold into what I call the total product.

Satisfaction depends upon the performance of the product (or totalproduct) relative to expectations. When I go to a fast food restaurantI don’t expect much in the way of service or product, that’s what Iget, and I’m generally satisfied. I really get committed to a productwhen I expect a lot and I get even better than expected. I’m committedto Hondas, McGuckins, Suzanne, and Moose Tracks.

For many products there are two dimensions to performance.Instrumental performance relates to the physical functioning of the product.Symbolic performance relates to aesthetic or image-enhancement performance.For example, durability of a sport coat is an aspect of instrumentalperformance, while styling represents symbolic performance. Your bookalso mentions affective performance which is the emotional response thatowning or using the product provides.

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If a consumer is dissatisfied, what do they do? One study of grocerypurchasers found that when there was a case in which one of theproducts they normally purchase was defective

25 percent of unsatisfactory purchases resulted in brandswitching

19 percent cause the shopper to stop buying the procducts 13 percent let to an in-store inspection of future purchases 3 percent produced complaints to the manufacturer 5 percent produced complaints to the retailer 35 percent resulted in the item being returned.

One of the other things people do when there is a problem or productfailure is to tell all of their friends, particularly if they areupset about the problem. Unfortunately, consumers often don’t complainto the manufacturer or retailer, so they don’t know there is aproblem. Firms need to anticipate dissatisfaction and remove thepotential cause before it occurs. It has been estimated that it costsonly one-fifth as much to retain an old customer as to obtain a newone.

The goal is to develop repeat purchases who are not only brand loyalbut committed customers. A committed customer has an emotionalattachment to the brand and likes the brand in a manner somewhatsimilar to a friendship. Customers use expressions such as I trust thisbrand, I like this outlet, and I believe in this firm to describe their commitment.

A new trend in marketing is relationship marketing, an attempt todevelop an ongoing, expanding exchange relationship with the customer.In many ways it seeks to mimic the relationships that existed betweenneighborhood stores and their customers many years ago.

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The material in this handout was extracted and synthesized by R. H. Taylor from the Hawkins, Best, andConey textbook, Consumer Behavior, McGraw-Hill. The purpose is to shorten the reading material overdecision making.

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