Marketing Chapter 6,7,8

What is the consumer decision process?

The steps that consumers go through before, during, and after making purchases. marketers often find it difficult to determine how consumers make their purchasing decisions, so they break down the process into a series of steps and examine each individually.

this process is detailed as need recognition, information search, alternative evaluation, purchase and consumption, and finally post purchase.

Need recognition

when consumers recognize they have an unsatisfied need and they would like to go from their actual, needy state to a different, desired state. the greater the discrepancy between these two states, the greater the need recognition.

consumer needs can be classified as functional, psychological, or both.

Functional needs

pertains to the performance of a product or service. it depends on the specific needs of the purchaser. ex: if someone just needs a car with good cargo space, they might get a Toyota Highlander, but if they need a car with high speed, they’ll get a Dodge Challenger.

Psychological needs

pertains to the personal gratification consumers associate with a product and/or service.

successful marketing requires determining the correct balance of functional and psychological needs that best appeal to the firm’s target markets.

What is the main difference of Wants?

they are goods or services that are not necessarily needed but are desired.

Information Search

after a consumer recognizes a need, consumers search for information about the various options that exist to satisfy that need. the length and intensity of the search are based on the degree of perceived risk associated with purchasing the product or service.

regardless of the required search level, there are two key types of information search: internal and external.

there are factors that affect search processes such as, the perceived benefits versus perceived costs of search, the locus of control, and actual or perceived risk.

Internal Search for Information

the buyer examines their own memory and knowledge about the product or service gathered through past experiences.

for example, every time Lauren wants to eat salad for lunch, she and her friends go to Sweetgreen, but if she’s craving dessert, she heads straight to the Cheesecake Factory. in making these choices, she relies on her memory of past experiences when she has eaten at these restaurant chains.

External Search for Information

the buyer seeks information outside their personal knowledge base to help make the buying decision.

consumers might fill in their personal knowledge gaps by talking with friends, family, a salesperson, or they might seek out recommendations from their favorite influencers on YouTube, Instagram, or TikTok, commercials, reviews.

Perceived Benefits versus Perceived Costs of Search

is it worth the time and effort to search for information about a product or service?

for instance, most families spend a lot of time researching the housing market in their preferred area before they make a purchase because homes are a very expensive and important purchase with significant safety and enjoyment implications. they likely spend much less time researching which inexpensive dollhouse to buy for the youngest member of the family.

The Locus of Control

people who have an internal locus of control believe they have some control over the outcomes of their actions, in which case they generally engage in more search activities.

with an external locus of control, consumers believe that fate or other external factor control all outcomes.

Actual or Perceived Risk

five types of risk associated with purchase decisions can delay or discourage a purchase: performance, financial, social, physiological, and psychological. the higher the risk, the more likely the consumer is to engage in an extended search.

Performance risk

involves the perceived danger inherent in a poorly performing product or service.

Financial risk

risk associated with a monetary outlay and includes the initial cost of the purchase as well as the costs of using the item or service.

Social risk

involves the fears that consumers suffer when they worry others might not regard their purchases positively.

Physiological risk

also called safety risk, whereas performance risk involves what might happen if a product does not perform as expected, physiological (or safety) risk refers to the fear of an actual harm should the product not perform properly.

Psychological risk

risks associated with the way people will feel if the product or service does not convey the right image.

Alternative evaluation

after a consumer has recognized a problem and explored the possible options, they must sift through the choices available and evaluate the alternatives. this often occurs while the consumer is engaged in the process of information search. consumers forgo alternative evaluations altogether when buying habitual (convenience) products; you’ll rarely catch a loyal Pepsi drinker buying Coca-Cola.

Attribute sets

research has shown that a consumer’s mind organizes and categorizes alternatives to aid their decision process. universal sets, retrieval sets, and evoked sets.

Universal sets

includes all possible choices for a product category, but because it would be unwieldy for a person to recall all possible alternatives for every purchase decision, marketers tend to focus on only a subset of choices.

Retrieval sets

those brands or stores that can be readily brought forth from memory.

Evoked sets

which comprises the alternative brands or stores that the consumer states they would consider when making a purchase decision. if a firm can get its brand or store into a consumer’s evoked set, it has increased the likelihood of purchase and therefore reduced search time because the consumer will think specifically of that brand when considering choices.

Evaluative criteria

consists of salient, or important, attributes about a particular product. consumers use determinant attributes and consumer decision rules.

Determinant attributes

product or service features that are important to the buyer and on which competing brands or stores are perceived to differ. because many important and desirable criteria are equal among the various choices, consumers look for something special—a determinant attribute—to differentiate one brand or store from another.

determinant attributes may appear perfectly rational, such as health and nutrition claims offered by certain foods and beverages, or they may be subtler and more psychologically based, such as subtle stitching on the ruffled turtleneck sweater that Zendaya was wearing in an Instagram post.

Consumer decision rules

the set of criteria that consumers use consciously or subconsciously to quickly and efficiently select from among several alternatives. these rules are typically either compensatory or non-compensatory.

Compensatory decision rule

assumes that the consumer, when evaluating alternatives, trades off one characteristic against another, such that good characteristics compensate for bad characteristics.

multi-attribute model

a compensatory model of customer decision-making based on the notion that customers see a product as a collection of attributes or characteristics. the model uses a weighted average score based on the importance of various attributes and performance on those issues.

Noncompensatory decision rules

which they choose a product or service on the basis of one characteristic or one subset of a characteristic, regardless of the values of its other attributes.

Choice architecture

Various methods that marketers use to present different choices to consumers, which have a pertinent effect on their decision making. Methods include impulse products, nudge, default, and opt-in/opt-out system.

Impulse products

products that are purchased without planning, such as fragrances and cosmetics in a department store, magazine in supermarkets, and in-game upgrades in virtual games.

Default

an element of choice architecture (the environment) that marketers can use to impose some choices on consumers who fail to take any further action or actively opt for a different alternative.

Nudge

one element of the choice architecture (environment) that alters behavior in a predictable way but never forbids other behaviors or offers specific economic incentives

Opt-in/Opt-out systems

opt in is when marketers before can collect any information from consumers, but now they need to request and recieve consumer’s explict agreement to share this information.

opt out is when consumers engage in a dedicated effort to not share personal data each time they visit a website.

Purchase and Consumption

after alternative evaluation, customers are ready to buy. however, they don’t always patronize the store or purchase the brand or item on which they had originally decided. it may not be available at the retail store, for example. so retailers turn to the conversion rate to measure how well they have converted purchases intention into purchases. one method of measuring the conversion rate is the number of real or virtual abandoned carts in the retailer’s store or on its website.

Postpurchase

the final step of the consumer decision process is post-purchase behavior. marketers are particularly interested in postpurchase behavior because it entails actual rather than potential customers. satisfied customers, whom marketers hope to create, become loyal, purchase again, and spread positive word of mouth, so they are quite important. there are three possible postpurchase outcomes: customer satisfaction, postpurchase cognitive dissonance, and customer loyalty (or disloyalty).

Customer satisfaction

ensuring postpurchase satisfaction.

• building realistic expectations, not too high and not too low.

• demonstrate correct product use—improper usage can cause dissatisfaction

• stand behind the product or service by providing money-back guarantees and warranties.

• encourage customer feedback, which cuts down on negative word of mouth and help marketers adjust their offerings.

• periodically make contact with customers and thank them for their support.

Postpurchase Cognitive Dissonance

an internal conflict that arises from an inconsistency between two beliefs or between beliefs and behavior.

Customer Loyalty

in the postpurchase stage of the decision-making process, marketers such as Amazon attempt to solidify loyal relationships with their customers.

Undesirable Consumer Behavior

although firms want satisfied, loyal customers, sometimes they fail to attain them. passive consumers are those who don’t repeat purchase or recommend the product to others. more serious and potentially damaging, however, is negative consumer behavior such as negative word of mouth and rumors.

Factors influencing the consumer decision process

Psychological factors, Social factors, Situational factors, and elements of the marketing mix.

Psychological factors

a host of psychological factors such as motives (Maslow’s hierarchy of needs: physiological needs, safety needs, love needs, esteem needs, and self-actualization), attitudes (cognitive, affective, behavioral), perceptions, learning and memory, and lifestyle, affect the way people receive marketers’ messages.

Social factors

consists of the consumer’s family, reference groups, and culture.

Situational Factors

factors specific to the situation, also may overide or at least influence psychological and social issues. these situational factors are related to the purchase and sensory situation as well as to temporal state.