Chapter 9 Individual Decision Making
Individual Decision Making - Chapter 9
Page 1
Introduction to Individual Decision Making
Page 2
Decision Making Model
Problem Recognition
Information Search
Evaluation of Alternatives
Product Choice
Post Purchase Evaluation and Disposal
Page 3
Model Assumptions
Consumers are highly involved in consumption.
CAB Hierarchy of Effects: Cognitive, Affective, Behavioral
Rational Perspective:
Integrate information with existing knowledge.
Weigh pros and cons of alternatives.
Arrive at satisfactory decisions.
Reflection: Are all purchase decisions rational?
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Other Models of Decision-Making
Behavioral Influence Perspective: Low involvement leads to decisions based on environmental cues (e.g., sales).
Experiential Perspective: High involvement leads to decisions based on overall product appeal and feelings.
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Continuum of Buying Decisions
Nominal: Low cost, familiar brand, frequently purchased, low involvement.
Limited: Moderate cost, somewhat familiar, some thought, moderate involvement.
Extensive: Expensive, high risk, unfamiliar, high involvement.
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Consumer Outcomes
Habitual: Minimal search, based on past behavior.
Limited: Some search, considers past experience, uses heuristics.
Extended: Significant internal and external search and evaluation.
Page 7
Problem Recognition
Occurs when consumers perceive a gap between current and ideal states.
Need Recognition: Actual state declines.
Opportunity Recognition: Ideal state improves.
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Types of Search
Internal Search: Memory recall of product alternatives.
External Search: Information from ads, retailers, friends, etc.
Directed Learning: Knowledge from previous searches or experiences.
Incidental Learning: Exposure to stimuli over time.
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Factors Influencing Search Activity
Importance of purchase.
Need for more information.
Accessibility of relevant information.
Demographics: Younger, better-educated, female shoppers tend to search more.
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Evaluation of Alternatives
Evoked Set vs. Consideration Set: Limited brands considered seriously.
Importance for marketers to be included in consumers' evoked set.
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Evaluation Criteria
Determinant Attributes: Features that differentiate choices.
Marketers educate consumers on these attributes.
Evaluative Criteria: Dimensions for judging competing options.
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Selecting Among Alternatives
Decision rules can vary in complexity.
Influenced by prior experience, information at purchase, and brand beliefs.
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Influences on Evaluation
Comparison shopping sites.
Online reviews and suggestions based on past searches.
Page 14
Behavioral Economic Theories
Focus on human aspects of decision-making.
Nudge Theory: Subtle prompts to influence decisions.
Page 15
Mental Accounting & Decision Making
Framing decisions in terms of gains/losses.
Sunk-Cost Fallacy: Reluctance to waste resources already invested.
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Prospect Theory & Decision Making
Risk perception varies between gains and losses.
Loss Aversion: Greater emphasis on losses than equivalent gains.
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Heuristics: Mental Shortcuts
Quick decision-making rules that can lead to poor choices.
Formed through personal or observed experiences.
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Common Heuristics
Product signals (e.g., appearance, price).
Brand perceptions (e.g., global brands, store size).
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Country of Origin
Influences consumer perceptions based on product category and ethnocentrism.
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Choosing Familiar Brand Names
Zipf’s Law: Preference for leading brands.
Dominant brands can be significantly more profitable.
Page 21
Buying Out of Habit or Loyalty
Brand loyalty vs. habitual buying.
Factors influencing repeat purchases and brand switching.
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Decision Rules Guiding Consumer Behavior
Noncompensatory: Reject based on important attributes.
Compensatory: Shortfalls can be offset by other attributes.
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Example of Decision Making
Evaluating whether to proceed with a plan based on conditions (e.g., snow conditions for skiing).
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Post Purchase Satisfaction & Disposal
Satisfaction based on expectations.
Disposal options: recycle, refurbish, donate, repurpose, garbage.