Post-Purchase Behavior

The Five stages of Decision Making

1. Problem Recognition

2. Information Search

3. Evaluation of Alternatives

4. Choice

5. Post-purchase

Customer Lifetime Value (CLV)

The potential revenue stream a consumer represents over their lifetime; it costs five time more to recruit a new customer than to maintain an existing one

The 80/20 Rule

A marketing principle proposing that 80% of a brand’s revenue typically comes from just 20% of its customer base

Word-of-Mouth (WOM)

Product information transmitted from individuals to individuals; it is highly credible and influences two-thirds of all sales, especially when consumers are unfamiliar with a product category

Product Extensions

Discovering new ways to use a product by observing post-purchase behavior; for example Arm & Hammer baking soda now has over 200 uses

Expectancy Disconfirmation Model

A model stating that satisfaction depends on the relationship between actual product performance and consumer expectations

Satisfaction

A positive evaluation of a purchase decision occurring when actual; performance matches expectations

Dissatisfaction

A negative evaluation occurring when actual performance falls below expectations

Customer Delight

Occurs when actual performance exceeds expectations

Why Delight is not a sustainable strategy

It requires underselling (leaving customers on the table) and is difficult to repeat because consumers adjust their expectations upward after the first experience

Post-Decision Dissonance

A feeling of anxiety or uncertainty over whether the correct decision was made(e.g. “Did I buy the right brand?”)

Strategies to reduce Dissonance

1. Make customers feel good (thank you notes, salesperson training) 2. Make customers feel confident (price protection, warranties, and easy return policies)

Post-Decision Regret

Occurs when a consumer knows for a fact they made the wrong decision after discovering a better, cheaper, or more likely alternative

Voice Response

Appealing directly to the retailer; this is the best outcome for the marketers as it offers a low-cost opportunity to fix the issue and retain the customer

Private Response

Engaging in negative word-of-mouth (e.g. Yelp reviews or telling friends);this is damaging due to negativity bias

Negativity Bias

The human tendency to weigh negative information more heavily than positive; it takes 11 positive reviews to counteract one negative one

Third-Party Response

Taking legal action or involving organizations like the better business beau; often happens when a firm “doubles down” on a mistake

Attribution Theory

The framework consumers use to determine who to blame for a product failure based on Stability, Locus of Control, and Controllability

Stability(Attribution Theory)

Whether a failure is one -off fluke(unstable) or a permeant problem with the brand (stable)

Locus of Control (Attribution Theory)

Weather the problem was internal(the consumer’s fault) or external (the marketer’s fault)

Controllability (Attribution theory)

Whether the marketer could have reasonably prevented the failure

Equity Theory

The belief that exchanges should be fair; consumers believe their inputs (costs) should equal their outputs (benefits) compared to others.

Capuchin Monkey Fairness Study

A famous study showing that monkeys will reject a cucumber reward if they see their partner receiving a "better" reward (grapes) for the same task.

Why Marketers care about Disposal

To understand reasons for replacement (faulty vs. desire for new features) and to manage the flow of goods into secondary markets.

Shaping Product Lifespan

Strategies to encourage earlier replacement, such as releasing new models (e.g., iPhones) or introducing new attributes like "smart" technology in fridges.

Secondary Markets

Consumer-to-Consumer (C2C) markets like eBay or flea markets; marketers often use buyback programs to limit these markets.

Environmental Sustainability in Disposal

Modern consumers increasingly factor a brand's environmental impact and packaging sustainability into their purchase decisions.