Decision Making
8-1
Decision-Making Perspectives
• Are consumers rational when they make purchase decisions?
• What is purchase momentum?
• What cognitive processing styles affect consumer decision making?
8-2
Figure 8.2 Continuum of
Buying Decision Behavior
8-3
Steps in the Decision-Making
Process
Problem recognition
Information search
Evaluation of alternatives
Product choice
8-4
Stage 1: Problem Recognition
• Occurs when consumer sees difference between current state and ideal
state
• Need recognition: actual state declines
• Opportunity recognition: ideal state moves upward
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Figure 8.3 Problem Recognition
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Stage 2: Information Search
• The process by which we survey the environment for appropriate
data to make a reasonable decision
• Prepurchase or ongoing search
• Internal or external search
• Online search
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Table 8.2 A Framework for
Consumer Information Search
Prepurchase versus Ongoing Search
Prepurchase Search Ongoing Search
Determinants Involvement with Involvement with product
purchase
Motives Making better purchase Building a bank of
decisions information for future use
Outcomes Better purchase Increased impulse buying
decisions
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8
Deliberate versus “Accidental”
Search
• Directed learning: existing product knowledge obtained from
previous information search or experience of alternatives
• Incidental learning: mere exposure over time to conditioned stimuli
and observations of others
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Do Consumers Always Search
Rationally?
• Some consumers avoid external search, especially with minimal time
to do so and with durable goods (e.g. autos)
• Symbolic items require more external search
• Brand switching: we select familiar brands when decision situation is
ambiguous
• Variety seeking: desire to choose new alternatives over more familiar
ones
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Biases in Decision-Making Process
• Mental accounting: framing a problem in terms of gains/losses
influences our decisions
• Sunk-cost fallacy: We are reluctant to waste something we have paid
for
• Loss aversion: We emphasize losses more than gains
• Prospect theory: risk differs when we face gains versus losses
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Figure 8.6 Five Types of Perceived
Risk
Monetary risk
Functional risk
Physical risk
Social risk
Psychological risk
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1
2
Alternatives
Evoked Set
Consideration Set
8-13
Strategic Implications
of Product Categorization
• Position a product
• Identify competitors
• Create an exemplar product
• Locate products in a store
8-14
Product Choice: How Do We Decide?
• Once we assemble and evaluate relevant options from a category, we
must choose among them
• Decision rules for product choice can be very simple or very
complicated
• Prior experience with (similar) product
• Present information at time of purchase
• Beliefs about brands (from advertising)
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Evaluative Criteria
• Evaluative criteria: dimensions used to judge merits of competing
options
• Determinant attributes: features we use to differentiate among our
choices
• Criteria on which products differ carry more weight
• Marketers educate consumers about (or even invent) determinant attributes
• Pepsi’s freshness date stamps on cans
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Heuristics
Product Signals
Market Beliefs
Country of Origin
8-17
Choosing Familiar Brand Names
• Zipf’s Law: our tendency to prefer a number one brand to the
competition
• Consumer inertia: the tendency to buy a brand out of habit merely
because it requires less effort
• Brand loyalty: repeat purchasing behavior that reflects a conscious
decision to continue buying the same brand
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Noncompensatory Decision Rules
• Lexicographic rule: consumers select the brand that is the best on the
most important attribute
• Elimination-by-aspects rule: the buyer also evaluates brands on the
most important attribute
• Conjunctive rule: entails processing by brand
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Compensatory Decision Rules
• Simple additive rule: the consumer merely chooses the alternative
that has the largest number of positive attributes
• Weighted additive rule: the consumer also takes into account the
relative importance of positively rated attributes, essentially
multiplying brand ratings by importance weights
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