normative decision-making

characteristics of decision-making process

• there is more than one alternative in the market

• consumers need to make choices among alternatives

• consumers are always trying to choose alternatives they think are the best ones

judgements

evaluations/estimates regarding the likelihood that something will happen; does not require a decision

I think car A will be more reliable than car B is an example of a ____ (judgment / decision)

judegement

I chose car A over B is an example of a _____ (judgment / decision)

decision

the consumer decision process in order

• need recognition

• information search

• alternative evaluation

• purchase

• post purchase

problem recognition

occurs when consumer sees difference between current state and ideal state

opportunity recognition

ideal state moves upward

need recognition

actual state declines

problem recognition graph

information search

• search for available alternatives

• attributes of available alternative (quality, price, etc)

• search internally / externally

internal search

the process of recalling stored information from memory

external search

the process of collecting info from outside sources (media, internet, retailer)

influence of consumer’s prior expertise on search

moderately knowledgable consumers tend to search more than product experts and novices

types of perceived risk

• financial

• performance

• physical

• social

• psychological

what leads to search

• involvement - is the decision important to consumer’s self-concept/values

• perceived risk types

• ease of access to information

what determines search

• benefits - involvement, perceived risk

• cost - difficulty of gathering the info

to make informed decision….

consumers will gather as much data as needed ; we continue to search until costs exceed utility of information search

results of searching

• universal set

• retrieval set

• evoked set - actively considered during the choice process

• inept set - aware of, but considered unacceptable

• inert set - indifferent towards

decision rule

strategies used by consumers to guide decision making; sometimes use product characteristics to guide decisions

compensatory decision rule

selecting the best overall brand ; a positive score on one attribute can outweigh a negative score on another attribute

perceived risk

the subjective probability and severity of potential negative consequences associated with a purchase decision

performance risk

the risk that a product or service will not perform as expected

physical risk

the risk of physical harm or damage to oneself or others from using a product

financial risk

the risk of losing money or incurring financial losses associated with a purchase

social risk

the risk of social disapproval or embarrassment associated with using a product

psychological risk

the risk of loss of time, money, or effort associated with a purchase