Share your findings from the VALS Lifestyle-Based Marketing research project assigned last week.
Consumer Decision Making
This week we’ll consider the issues that surface before, during, and after a buying decision is made.
Making the Right Choice: Five Basic Steps
Consumer decision making can be divided into five basic components, which allow us to examine how marketers can influence the consumer along the way.
Step One: Recognize/Identify the Problem or Lack of Something
Marketers like to think of consumer decision-making as “problem solving”. Consumers often compare their current state of being to some desired state. If a big enough discrepancy is found, and several alternatives are available, the consumer is typically propelled into a decision-making process.
The problem is detected because of some kind of stimulus. The stimulus motivates a response.
Decisions are required when we have options. If we didn’t have options, we’d probably live very simplified lives.
Discuss a recent time when you felt a problem—a discrepancy between your current state and a desired one—which led to making a decision as a consumer. How did you first become aware of the problem?
What are the advantages of having options?
What are the disadvantages of having options?
Would you prefer to have more or fewer options? Why?
What are some of the other ways that trigger this sense of discrepancy? Can marketers create wants and needs?
Step Two: Collect Information or Data about Alternative Solutions
Once a problem is identified, the consumer collects information about ways to eliminate the problem and ease the discomfort it causes.
An internal search involves simply thinking about prior purchase experiences and evaluating them as good or bad.
An external search includes referring to the media, guides, friends, and experts, as well as going shopping.
Information filtering is what happens when a person sorts through all the data and determines what is relevant to the process.
A person considering an expensive purchase will likely devote more time to these searches than someone who is considering an inexpensive purchase.
Perceived risk is the risk that we believe exists in the purchase of goods or services from a specific retailer, whether or not that risk actually exists.
- Monetary. Is there a higher value than cost?
- Functional. Does it work as expected?
- Physical. Are there harm or safety concerns related to its use?
- Social. Will this be harmful to my way of life?
- Psychological. Does this purchase reflect my self-image?
What do marketers do to get considered during this information collection and filtering?
Discuss a time you took a risk when purchasing something new.
How do marketers allay our fears due to perceived risk?
Step Three: Review/Evaluate the Alternatives
This step consists of three sub-steps:
- Figure out the standards or guidelines on which to base a decision.
- Determine the importance of each standard.
- Rank the alternatives.
Comparison shopping is the process whereby a consumer gathers information about a particular product/service for comparison before purchasing it.
When have you done some extensive comparison shopping?
Where did you get your information? What standards did you measure each option against?
How can brand equity create shortcuts for this process?
Have you used any technology to help you compare the specific characteristics of each option?
Step Four: Choose the Best Alternative
The consumer’s job at this stage is to:
- compare the total benefits of each option
- choose the most value-added solution
The marketer’s job at this stage is to:
- create campaigns that differentiate the options
- identify and emphasize the large gap between the buyer’s “as is” and “could be”
Steve Jobs on “Think Different” – Internal Meeting Sept. 23, 1997
1997. Steve Jobs in shorts, relaxed, during internal meeting with Apple executives and managers, just a few weeks after his return to Apple, speaks briefly about planned changes in company (pipeline, products, distribution changes) and then presents first informations about planned “Think Different” campaign, now legendary and iconic… Samples of TV commercial, outdoor, posters, and press ads.
Step Five: Evaluate the Decision or Purchase
After making a purchase, the consumer will usually compare their expectations with their usage results. Their evaluation will influence any future consumer actions.
- If our expectation is met, we may buy again.
- If our expectation is not met, we may find a replacement item.
- If our expectation is exceeded, we may become brand-loyal.
Types of Decision Making
We can further understand the decision-making process by dividing the activity into three types:
- Rational: logical thinking, including a review of pros and cons, and deliberate risk assessment; analytical
- Behavioral: learned, habitual, and automatic responses; involves the behavioral learning concept of punishments and rewards; includes impulse buys
- Experiential: considers the overall experience, and involves many aspects of the consumer’s values, beliefs, and domestic and global views
Consumer Effort Expended
Consumer behaviorists describe the various levels of effort expended by consumers in decision-making as follows:
Routine or habitual decision making is essentially on auto-pilot. Buying milk typically doesn’t require much thought.
- Purchase Time Limit: frequent
- Cost: low
- Search effort: minimal
Limited decision making involves some thought, but relies on rules-of-thumb we’ve learned or borrowed from others. When we buy everyday clothes we have some things we tend to check for.
- Purchase Time Limit: periodic
- Cost: moderate
- Search effort: moderate
Extensive decision making happens when we weigh the pros and cons, along with analyzing perceived risks and benefits. This are the big-ticket items, such as choosing a college.
- Purchase Time Limit: infrequent
- Cost: high
- Search effort: high
Consumers often behave in certain patterns with regard to their purchases.
Heuristics are mental generalizations that help us make decisions more quickly, otherwise known as rules-of-thumb.
Consumers with an inertia habit frequently buy the same brand because it takes little to no energy. Any competitor that makes the purchase of their product even easier may win over this customer.
Ethnocentrism occurs when a consumer prefers to keep consumption choices that belong and relate specifically to their own culture.
Do you recognize any of these market habits in your typical decision-making process?
Marketing Psychology Tricks
Gail Tom illustrates some ways that marketers influence the consumer decision-making process:
Work on completing your Consumer Diary Presentation for next week.