Lecture 7: Decision-making

What is consumer decision-making?

The process by which consumers evaluate and choose products based on various factors.

What factors influence consumer decision-making?

Factors include novelty, risk, importance of the decision, and consumer hyper choice.

consumer hyper choice

consumers have too many options- brands, features, prices, reviews, and variations — all competing for attention

- Too much choice = overwhelm consumers = confusion and decision fatigue.

- longer decision times or avoidance of making a decision altogether.

- Consumers may rely more on habits, heuristics (mental shortcuts), or brand loyalty to cope.

What are some shopping motives identified by Tauber (1972)?

Diversion, self-gratification, physical activity, communication, peer group attraction, status and authority, pleasure of bargaining.

What are the types of shopping identified by Arnold and Reynolds (2003)?

Adventure shopping, social shopping, gratification shopping, role shopping, value shopping, idea shopping.

personal motives to buy

- Role playing

- Diversion

- Self-gratification

- Learning about new trends

- Physical activity

- Sensory stimulation

social motives to buy

- Social experiences

- Communicating with others w/ similar interest

- Peer group attraction

- Status and authority

- Pleasure of bargaining

What is impulse buying?

A sudden urge to buy a product immediately, often with diminished concern for the consequences.

- emotional, not rational

factors affecting a customer's choice

Antecedent states: situational factors, time pressure, mood

Purchase environment: shopping experience, sales interactions

Post-purchase processes: customer satisfaction, product disposal, alternative markets

What characterizes low involvement decision-making?

- low-cost products

- frequently purchased

- familiar product class and brand

- routine response behaviour

What characterizes high involvement decision-making?

- more expensive

- infrequent purchases

- extensive thought, search and time given

- Extension problem-solving

strategies to increase involvement in a purchase:

- mass customisation

- link brand to hedonic needs

- use distinctive or novel ways of communicating the product

- use celeb endorsements

- let consumers make the message (user generated content)

What is mass customization in marketing?

Involving consumers in the development of the products they will consume.

hedonic needs

emotional and experiential desires that consumers seek to satisfy through pleasure, enjoyment, and sensory stimulation, rather than practical function

What is the consumer decision-making model based on?

The assumption that consumers seek to solve a problem or achieve a desired goal.

- consumers are viewed as logical rather than rational decision-makers

problem recognition

The perceived difference between ideal and actual state that motivates consumers to act

- realising that a product needs to be bought to solve problem

What are the two ways problems arise in consumer decision-making?

Need recognition (current possession malfunction) and opportunity recognition (desire for something new).

marketers role in problem creation

- Primary demand- encouraging consumers to use products regardless of the brand they choose

- Secondary demand- encouraging consumers to prefer one brand over another - competitive advantage

information search

-consumer is motivated to search for more information

- internal or external

- deliberate (actively seeking info) or accidental (passively absorbing info everyday)

What are the two types of information search in consumer behavior?

Internal (memory-based) and external (supplementing current knowledge).

Vogt and Fesenmaier (1988) - identified 5 classes of information need

- functional needs

- hedonic needs

- sign needs

- innovation needs (looking for something new + different)

- aesthetic needs

functional needs

- acquiring knowledge from experience and through stimuli such as advertising, to increase knowledge and reduce risk

o Act to educate a consumer about utility, attributes and applications

sign needs

- social and identity aspects of info search, what the product may say about us

aesthetic needs

-info is viewed as a stimulus to visual thinking, imagining the product and how it looks in your life

What is the evoked set in consumer decision-making?

Brands already known to the consumer.

What is the consideration set?

Brands from the evoked set that the consumer may consider buying.

inept set

brands the consumer has come across during search and previous experiences but not considering for this decision

inert set

includes brands not under consideration at all

product choice- selection

-likely to involve weeding out excess rather than searching for more alternatives

- When consumers must make a product choice from alternatives- they use several decision rules:

o Non-compensatory rules

o Compensatory rules

What is satisficing in decision-making?

Choosing a product deemed 'good enough' based on a threshold. e.g. price

What is maximizing in decision-making?

Considering all alternatives to seek the best option.

- Companies must identify which products fit these and target this when marketing

What are heuristics in consumer decision-making?

Mental shortcuts that simplify decision-making and speed up choices.

we develop market beliefs over time - common beliefs are:

o we can determine quality through price

o well-known brand names and products country of origin signal quality

- when we consistently purchase a brand over time, this pattern may be due to true brand loyalty or simply inertia because it's the easiest choice

Prediction Heuristics

Where consumers try to predict an outcome

- Availability heuristics

- representativeness heuristics

What is the availability heuristic?

Judging the likelihood of an event based on how easily similar events come to mind.

What is the representativeness heuristic?

Judging something based on its similarity to a known category.

persuasion heuristics

How consumers take short cuts when processing advertisers' messages

- consumers may follow consensus rule where majority opinion is used for guidance e.g. a trial that eludes to a certain brand

- expertise rule also used- endorsement can add value and quality to a brand

choice heuristics

allows us to reduce number of attributes to be considered for the possible alternative choices - geared toward reducing cognitive effort

- Consumers identify which attribute is most important e.g. price, and select brands with best value for money

compliance heuristics

those built around likelihood of choosing something based on complying with a request- scarcity = urgency to purchase e.g. Black Friday

What is anchoring in decision-making?

Overreliance on one piece of information to make a decision.

What is framing in consumer decision-making?

How the context of a choice influences decision-making.

What is the disconfirmation paradigm?

The relationship between pre-purchase expectations and actual product performance.

- cognitive dissonance- did you make the right choice?

What role do marketers play in problem creation?

Encouraging primary demand (using products) and secondary demand (preferring one brand over another).

What are post-purchase perceptions?

Consumers' thoughts about how well the product performed.

What does disconfirmation refer to?

The differences between expected and actual product performance. (Peters and Olsen, 2005)

How does satisfaction influence consumer behavior?

It leads to positive word of mouth.

What is cognitive dissonance in consumer behavior?

The feeling of uncertainty about whether the right choice was made.

What is disposition in consumer behavior?

Behaviors undertaken to divest oneself of undesired goods, services, ideas, and experiences.

Why is understanding disposition important for marketers?

It is a growth industry with practical implications for managers and insights into consumption behavior.

What characterizes packrats in terms of disposition?

They keep things, have difficulty disposing of items, and often donate possessions to find them a good home.

What defines purgers in terms of disposition?

They regularly assess the necessity of items and are willing to dispose of old products for efficiency.

- driven by need for efficiency

What are the two steps involved in the disposition process?

-Physical or spatial detachment

-detachment from meanings and emotions associated with the objects.

- disposition isn't always easy and quick

What are divestment rituals?

Rituals employed to:

- remove previous owners' meanings from second-hand items

-erase personal meanings when giving away items.

- overall gaol = clear meaning and emotional value before passing along

What did Lastovicka and Fernandez (2005) investigate?

The disposition of meaningful possessions, such as wedding dresses sold through garage sales and online auctions.

What is the significance of negative meanings in disposition? (L+F, 2005)

-Items may reflect a past undesired self, and divesting them can facilitate a transition towards a desired self.

L+F, 2005 research summary

- three disposition paths:

1 = disposing of negatively charged

2 = disposing of positively charged

3 = shared self. (buyer + seller have shared aspects = easier transition if seller believes the buyer will maintain the item's meanings)

What role does family play in consumer decision-making?

Family is the main socialising unit and has a massive impact on the economy. (Commuting + Gentry, 2000)

- research helps to target specific members

What is consumer socialisation

The process by which young people acquire skills, knowledge, and attitudes relevant to functioning as consumers. (Ward, 1974)

What are syncratic and autonomic decisions in family decision-making? (Davis and Rigaux, 1974)

Syncratic decisions are joint (e.g., mortgages), while autonomic decisions are made individually.

gendered product provinces

o Husband: cars, TVs, life insurance

o Wives: clothes, furniture, food

What are the three stages of consumer socialization?

Perpetual stage (ages 3-7)

Analytical stage (ages 7-11)

Reflective stage (ages 11-16).

What characterizes the perpetual stage of consumer socialization?

Children are oriented towards immediate and observable features of the marketplace.

- consumer knowledge often based on single dimension

- children are familiar w marketplace but don't understand concepts

What happens during the analytical stage of consumer socialization?

Children can focus on multiple product attributes

- children become more thoughtful in their choices.

- more flexible in approach to making decisions

What is the reflective stage of consumer socialization?

Children develop nuanced knowledge about marketplace concepts and grow in social awareness.

- can shift to more reflective way of thinking + reasoning

What is parental socialization style?

The constellation of attitudes toward the child that create an emotional climate in which parental behaviours are expressed (Darling and Steinberg, 1993)

Carlson and Grossbart (1988)

- attempted to group parent socialisation styles

o Used survey data from 499 mothers

o Not clear if they were focussing on one child, or asked to generalise their parenting style

- Identified a typology of socialisation styles- authoritarian, rigid controlling, neglecting, authoritative, permissive

What are the five parental styles identified in socialisation?

Authoritarian- expecting unquestioning obedience, and act as ultimate authority

Rigid controlling- same as above but limited emotional involvement

Neglecting- distant relationships, don't seek control over children

Authoritative- balance between parental and children's rights - evolves as they grow up

Permissive- allow children to express themselves freely, limited restraints- as long as they are safe

family communication patterns

"The frequency, type, and quality of communication that takes place amongst family members" (Carlson, Walsh, Laczniak and Grossbart, 1994)

o Dominated by the actions of parents

What is socio-orientation in family communication patterns?

Communication designed to produce deference and foster harmonious relationships.

What is concept-orientation in family communication patterns?

Communication that encourages children to develop their own skills and competence.

How do sibling relationships influence consumer socialization?

Siblings can impact social, emotional, and cognitive development

- Sanders, 2004 - sibling relationships = most enduring

What role do siblings play in children's consumption choices?

They offer product support, introduce products, and can influence brand choices through observation.