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Chapter 9: Decision Making - Coggle Diagram
Chapter 9: Decision Making
9-1 The three categories of consumer decision making are cognitive, habitual, and affective
What’s Your problem?
Richard’s decision represented his response to a problem. In fact every consumer decision we make is a response to a problem.
Hyperchoice
Given the range of problems we all confront in our lives, clearly it is difficult to apply a onesize-fits-all explanation to the complexities of consumer behavior.
This condition of consumer hyperchoice forces us to make repeated decisions that may drain psychological energy while decreasing our abilities to make smart choices.
Researchers now realize that decision makers actually possess a repertoire of strategies. If the dieter knows he will be chowing down at a big BBQ tomorrow, he may decide to skip that tempting candy bar today.
Self-regulation
A person’s efforts to change or maintain his or her actions over time, whether these involve dieting, living on a budget, or training to run a marathon, involve careful planning that is a form of self-regulation.
These “if-then” plans or implementation intentions may dictate how much weight we give to different kinds of information (emotional or cognitive), a timetable to carry out a decision, or even how we will deal with disruptive influences that might interfere with our plans (like a bossy salesperson who tries to steer us to a different choice).
In some cases, this involves some creative tinkering with the facts.
These applications provide a feedback loop to help with self-regulation.
Research shows that our ability to self-regulate declines as the day goes on. The Morning Morality Effect shows that people are more likely to cheat, lie, or even commit fraud in the afternoon than in the morning.
Scientists know that the part of the brain they call the executive control center that we use for important decision making, including moral judgments, can be worn down or distracted even by simple tasks like memorizing numbers.
9-2 A cognitive purchase decision is the outcome of a series of stages that results in the selection of one product over competing options.
Cognitive Decision Making
Traditionally, consumer researchers approached decision making from a rational perspective.
Steps in the Cognitive Decision-Making process
Step 1: problem recognition
Problem recognition occurs at what Ford terms the upper funnel, when we experience a significant difference between our current state of affairs and some state we desire.
Step 2: information Search
Once a consumer recognizes a problem, he or she needs the 411 to solve it. Information search is the process by which we survey the environment for appropriate data to make a reasonable decision.
Step 3: evaluate alternatives
We call the alternatives a consumer knows about the evoked set and the ones he or she seriously considers the consideration set.
For obvious reasons, a marketer who finds that his brand is not in his target market’s evoked set has cause to worry.
For marketers, a consumer’s reluctance to give a rejected product a second chance underscores the importance of ensuring that it performs well from the time the company introduces it.
Step 4: product Choice
Once we assemble and evaluate the relevant options in a category, eventually we have to choose one. Experts call this spiral of complexity feature creep.
Why don’t companies avoid this problem? One reason is that we often assume the more features the better. It’s only when we get the product home that we realize the virtue of simplicity.
Step 5: postpurchase evaluation
Postpurchase evaluation closes the loop; it occurs when we experience the product or service we selected and decide whether it meets (or maybe even exceeds) our expectations.
Neuromarketing
Neuromarketing uses functional magnetic resonance imaging (or fMRI), a brain-scanning device that tracks blood flow as we perform mental tasks to take an up-close look at how our brains respond to marketing messages and product design features.
A product’s visual design is often the first piece of product information that is perceived by consumers and it is key in creating initial impressions, sustaining interest and signaling an owner’s identity to others.
In our research, we extend these social psychological principles to the study of visual product design.
9-3: The way information about a product choice is framed can prime a decision even when the consumer is unaware of this influence
Brand:
All brands are basically the same. generic products are just name brands sold under a different label at a lower price.
The best brands are the ones that are purchased the most. When in doubt, a national brand is always a safe bet.
Store:
Specialty stores are great places to familiarize yourself with the best brands; but once you figure out what you want, it’s cheaper to buy it at a discount outlet.
A store’s character is reflected in its window displays.
Salespeople in specialty stores are more knowledgeable than other sales personnel. Larger stores offer better prices than small stores. Locally owned stores give the best service.
A store that offers a good value on one of its products probably offers good values on all of its items.
Credit and return policies are most lenient at large department stores.
Stores that have just opened usually charge attractive prices.
Prices/Discounts/Sales:
Sales are typically run to get rid of slow-moving merchandise.
Stores that are constantly having sales don’t really save you money.
Within a given store, higher prices generally indicate higher quality.
Advertising and Sales Promotion :
“Hard-sell” advertising is associated with low-quality products.
Items tied to “giveaways” are not a good value (even with the freebie).
Coupons represent real savings for customers because they are not offered by the store. When you buy heavily advertised products, you are paying for the label, not for higher quality.
Product/Packaging:
Largest-sized containers are almost always cheaper per unit than smaller sizes.
New products are more expensive when they’re first introduced; prices tend to settle down as time goes by.
In general, synthetic goods are lower in quality than goods made of naturals materials. It’s advisable to stay away from products when they are new to the market; it usually takes the manufacturer a little time to work the bugs out.
9-4: We often rely on rules-of-thumb to make routine decisions
Habitual decision making describes the choices we make with little or no conscious effort.
Many purchase decisions are so routine we may not realize we’ve made them until we look in our shopping carts!
Decisions we make on the basis of little conscious thought may seem dangerous or at best stupid, this process actually is quite efficient in many cases.
When a person buys the same brand over and over, does this mean it’s just a habit or is he or she truly loyal to that product? The answer is, it depends: In some cases, the explanation really is just inertia, which means that it involves less effort to throw a familiar packageinto the cart.
Brand loyalty is a totally different story. This describes a pattern of repeat purchasing behavior that involves a conscious decision to continue buying the same brand.
9-5 Marketers often need to understand consumers’ behavior rather than a consumer’s behavior
Collective Decision Making
Marketers often need to understand consumers’ behavior rather than a consumer’s behavior.
In this section we examine collective decision-making situations in which more than one person chooses the products or services that multiple consumers use
Why do we lump together big corporations and small families? One important similarity is that in both cases individuals or groups play a number of specific roles when they choose products or services for their organizational unit.
Depending on the decision, the choice may include some or all of the group members, and different group members play important roles in what can be a complicated process. These roles include the following:
Initiator—The person who brings up the idea or identifies a need.
Gatekeeper—The person who conducts the information search and controls the flow of information available to the group. In organizational contexts, the gatekeeper identifies possible vendors and products for the rest of the group to consider.
Influencer—The person who tries to sway the outcome of the decision. Some people may be more motivated than others to get involved, and participants also possess different amounts of power to get their point across.
User—The person who actually consumes the product or service.
Buyer—The person who actually makes the purchase. The buyer may or may not actually use the product.
9-6 The decision-making process differs when people choose what to buy on behalf of an organization rather than for personal use.
B2B Decision Making
The decision-making process differs when people choose what to buy on behalf of an organization rather than for personal use.
How Does B2B Decision Making Compare to Consumer Decision Making
Let’s summarize the major differences between organizational and industrial purchase decisions versus individual consumer decisions:
The purchase decisions that companies make frequently involve many people, including those who do the actual buying, those who directly or indirectly influence this decision, and the employees who will actually use the product or service.
Impulse buying is rare (industrial buyers do not suddenly get an “urge to splurge” on lead pipe or silicon chips). Because buyers are professionals, they base their decisions on past experience and they carefully weigh alternatives.
B2B marketing often emphasizes personal selling more than advertising or other forms of promotion. Dealing with organizational buyers typically requires more faceto-face contact than when marketers sell to end consumers
Organizations and companies often use precise technical specifications that require a lot of knowledge about the product category.
Decisions often are risky, especially in the sense that a buyer’s career may ride on his judgment.
The dollar volume of purchases is often substantial; it dwarfs most individual consumers’ grocery bills or mortgage payments. One hundred to 250 organizational customers typically account for more than half of a supplier’s sales volume, which gives the buyers a lot of influence over the supplier
The classic buyclass theory of purchasing divides organizational buying decisions into three types that range from the least to the most complex. Three decision-making dimensions describe the purchasing strategies of an organizational buyer:
1 The level of information he or she must gather prior to the decision.
2 The seriousness with which he or she must consider all possible alternatives.
3 The degree to which he or she is familiar with the purchase.
In practice, these three dimensions relate to how much cognitive effort the buyer expends when he decides. Three types of “buyclasses,” or strategies determined by these dimensions, encompass most organizational decision situations.
A new task involves extensive problem solving. Because the company hasn’t made a similar decision already, there is often a serious risk that the product won’t perform as it should or that it will be too costly.
A straight rebuy is a habitual decision. It’s an automatic choice, as when an inventory level reaches a preestablished reorder point.
A modified rebuy situation involves limited decision making. It occurs when an organization wants to repurchase a product or service but also wants to make some minor modifications.
B2B E- Comerce
Business-to-business (B2B) e-commerce refers to Internet interactions between two or more businesses or organizations. This includes exchanges of information, products, services, or payments.
The Web revolutionized the way companies communicate with other firms and even the way they share information with their own people.
The majority of B2B companies, even those that until recently relied heavily on “old-school” techniques such as cold calls and mailed newsletters, use social media to connect with customers and business partners
Prediction Markets
A prediction market is one of the hottest trends in organizational decision-making techniques. This approach asserts that groups of people with knowledge about an industry are, collectively, better predictors of the future than are any of them as individuals
Prediction markets are one element of crowdsourcing, which describes the growing practice of soliciting ideas for new products and even advertising campaigns from a user community.
9-7 Members of a family unit play different roles and have different amounts of influence when the family makes purchase decisions.
How Families Decide
Families make two basic types of decisions:
1 In a consensual purchase decision members agree on the desired purchase; they disagree only in terms of how they will make it happen. In these circumstances, the family will most likely engage in problem solving and consider alternatives until they find a way to satisfy everyone in the group
2 In an accommodative purchase decision however, group members have different preferences or priorities and can’t agree on a purchase that satisfies everyone’s needs. It is here that they use bargaining, coercion, and compromise to achieve agreement on what to buy or who gets to use it.
Some specific factors that determine how much family decision conflict there will be include:
Interpersonal need—(a person’s level of investment in the group)
Product involvement and utility—(the degree to which a person will use the product to satisfy a need)
Responsibility—(for procurement, maintenance, payment, and so on)
Power—(or the degree to which one family member exerts influence over the others)
The following decision-making patterns, which realtors frequently observe when a couple decides on a new house, illustrate how couples use heuristics:
The couple defines their areas of common preference on obvious, objective dimensions rather than subtler, hard-to-define cues.
The couple negotiates a system of task specialization in which each is responsible for certain duties or decision areas and does not intrude on the other’s “turf.”
The likelihood of one partner conceding to the wishes of the other depends on how passionately each person desires a specific outcome.
Conflict occurs when there is incomplete correspondence in family members’ needs and preferences.
The Intimate Corporation : Family Decision Making
Members of a family unit play different roles and have different amounts of influence when the family makes purchase decisions
The decision process within a household unit resembles a business conference. Certain matters go on the table for discussion, different members advocate different actions based on their differing priorities and agendas, and there may be power struggles to rival any tale of corporate intrigue
The Wife
As women continue to work outside the home in great number, their influence on household purchase decisions grows accordingly. The number of women who are their families’ sole or primary breadwinner also has soared, to 40 percent today from 11 percent in 1960
Of course women pay a price for this enhanced role. Working mothers often struggle with what one researcher calls the juggling lifestyle: a frenzied, guilt-ridden compromise between conflicting cultural ideals of motherhood and professionalism
The Husband
As we’ve seen, women’s roles within the family decision-making unit are changing, but so are those of men
Group Shopping
Social shopping is an emerging form of e-commerce that allows an online shopper to simulate the experience of shopping with others in a brick-and-mortar store.
New technologies allow a consumer to “try on” a garment via an avatar and also to access feedback from others in his or her social network either prior to or after deciding on a purchase