Consumer Behavior: Buying, Having, and
Being
Thirteenth Edition, Global Edition
Chapter 8
Decision Making
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Learning Objectives
8.1 The three categories of consumer decision-making are
cognitive, habitual, and affective.
8.2 A cognitive purchase decision is the outcome of a series
of stages that results in the selection of one product over
competing options.
8.3 We often rely on rules-of-thumb to make decisions.
8.4 The way information about a product choice is framed
can prime a decision even when the consumer is unaware
of this influence.
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Learning Objective 8.1
The three categories of consumer decision-making are
cognitive, habitual, and affective.
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8.1 Problem?
• Consumer hyperchoice
– Repeated decisions
– Decrease abilities
• Constructive processing
– Evaluate effort required
– Tailor the amount of cognitive “effort”
• Mental budget
– Helps to estimate
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Figure 8.1 Three Types of Decision-
Making
Figure 8.1 The Three “Buckets” of Consumer Decision Making
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Learning Objective 8.2
A cognitive purchase decision is the outcome of a series of
stages that results in the selection of one product over
competing options.
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8.2.1 Steps in the Decision-
Making Process
• Problem recognition
• Information search
• Evaluation of alternatives
• Product choice
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Consumer Decision Making
Figure 8.2 Stages in Consumer Decision Making
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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 9.3 Problem Recognition
Figure 9.3 Problem Recognition: Shifts in Actual or Ideal States Does
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Stage 2: Information Search
The process by which we survey the environment for
appropriate data to make a reasonable decision.
Types Description/Suitability
of Information
Search
Prepurchase done after recognizing a need before making the actual purchase of
product, especially for infrequently or rarely bought product.
Ongoing done with or without intention to purchase, merely to stay updated or just
enjoy browsing product information, commonly carried out by shopaholics
who cannot resist shopping all the time.
Selective knowledgeable consumers who have a better sense of what information is
relevant to their decision making will efficiently focus only on selective
information.
Deliberate conscious and intentional effort to gain product information from personal
experience or various sources, where consumers are cautious and
unhurried.
Accidental mere exposure to product information or observations of other consumers’
actions, where consumers hardly take any effort or are effortless.
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Figure 9.4 Amount of Information
Search and Product Knowledge
Figure 9.4 The Relationship Between Amount of Information Search and
Product Knowledge
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Step 3: Evaluate Alternatives
• Evoked Set
• Consideration Set
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For Reflection (1 of 4)
• Is it a problem that consumers have too many choices?
Would it be better to have less choices? How does it
affect consumer decision-making?
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Product Choice
Step 4: Product choice
• Feature creep - proliferation of gizmos is counterproductive
– Philips Electronics found that at least half of the products buyers
return have nothing wrong with them; consumers simply couldn’t
understand how to use them! What’s worse, on average the buyer
spent only 20 minutes trying to figure out how to use the product
and then gave up.
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Product Choice
Step 5: Postpurchase evaluation - occurs when we experience the
product or service we selected and decide whether it meets (or maybe
even exceeds) our expectations.
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8.2.2 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.
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8.2.2 Neuromarketing
When researchers monitored brain scans of 67 people who
took a blind taste test of Coca-Cola and Pepsi, each soft
drink lit up the brain’s reward system. The participants were
evenly split as to which drink they preferred—even though
three out of four participants said they preferred Coke. When
told they were drinking Coke, the regions of the brain that
control memory lit up, and this activation drowned out the
area that simply reacts to taste cues. In this case, Coke’s
strong brand identity trumped the sensations coming from
respondents’ taste receptors.
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8.2.3 Online Decision Making
• Cybermediary
• Intelligent agents
• Search engines
• Search engine
optimization
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How Do We Put Products Into
Categories?
• When consumers process product information, they don’t do it in a
vacuum. They evaluate its attributes in terms of what they already
know about the item or other similar products.
• Hybrid products - feature characteristics from two distinct domains.
– the crossover utility vehicle (CUV) that mixes a passenger car and
a sport utility vehicle (SUV)
– “cronut” craze (a combination croissant and donut) that started
with a New York bakery and made its leap to national stardom
courtesy of Dunkin’ Donuts.
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Figure 8.5 Levels of Categorization
Knowledge structure - refers to a set of beliefs and the way we
organize these beliefs in our minds.
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For Reflection (2 of 4)
• Define the three levels of product categorization the
chapter describes. Diagram these levels for a health club.
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8.3 Habitual Decision Making
• describes the choices we make with little or no conscious
effort.
• Inertia - it involves less effort to throw a familiar package
into the cart
• Brand loyalty - describes a pattern of repeat purchasing
behavior that involves a conscious decision to continue
buying the same brand.
• Locate products in a store
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Priming and Nudging
• Researchers continue to identify factors that bias our decisions, and
many of these are factors that operate beneath the level of conscious
awareness.
• Framing — how we pose the question to people or what exactly we
ask them to do. For example, people hate losing things more than they
like getting things; economists call this tendency loss aversion.
• Priming — Cues in the environment that make us more likely to react
in a certain way even though we’re unaware of these influences.
• Nudge — a deliberate change by an organization that intends to
modify behavior—can result in dramatic effects.
– A simple “nudge” that changes how people act is to switch from
asking consumers to “opt in” to a program to asking them to “opt
out” of a program if they don’t want to participate.
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For Reflection (3 of 4)
• Think of some of the common country of origin effects
(e.g., watches, wine). Which ones affect your consumer
choices? What could brands from other countries do to
compete such effects?
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Learning Objective 8.3
We often rely on rules-of-thumb to make routine decisions.
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8.3.1 Heuristics
• Covariation - infers hidden dimensions of products from attributes we
observe
– For instance, someone selling a used car will try to make the car
look clean because cleanliness may be associated with reliability.
• Country of Origin - often a determinant attribute in the decision-making
process.
– Consumers think of Switzerland for precision in watches, Italy for
leather goods, and France for wine.
• Familiar brand names
• Higher prices
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Affective Decision Making
• Affect describes the experience of emotionally laden states, but the nature of
these experiences' ranges from evaluations, to moods, to full-blown emotions.
• Evaluations are valanced (i.e., positive or negative) reactions to events and
objects that are not accompanied by high levels of physiological arousal.
– For example, when a consumers evaluates a movie as being positive or
negative, this usually involves some degree of affect accompanied by low
levels of arousal.
• Moods involve temporary positive or negative affective states accompanied by
moderate levels of arousal.
• Emotions such as happiness, anger, and fear tend to be more intense and
often relate to a specific triggering event such as receiving an awesome gift.
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Positive and Negative Affect
Positive Affect
• Happiness e.g., visiting Disneyland (younger people more likely to associate happiness
with excitement), e.g., joining Taichi (older people associate with feelings of calm &
peace).
Negative Affect
• Although we may assume that marketers want to make us happy all the time, that’s
hardly the case:
• Sad e.g., only free to the day after mega sales day in your favorite boutique.
• Angry e.g., sign petition against cruelty over animals.
• Disgust e.g., feel yucky over oily food by sticking out tongue.
• Envy e.g., willing to pay more for iPhone to set them apart from other cell phone users.
• Guilt e.g., include disastrous pictures to provoke guilt.
• Embarrassment e.g., when purchasing a hair-lice shampoo.
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How Social Media Tap
Into Our Emotions
• A lot of our social media activity involves
expressing both positive or
negative affects (evaluation, mood or
emotion) or even emoticons to convey
how we feel. Alert marketers
can exploit consumer social media to
their advantage to push sales:
• E.g., Jell-O brand by Kraft unveiled a
‘Mood Monitor’ on Twitter in which it will
randomly send coupons to users it finds
who type in a emoticon.
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Collective Decision Making
• situations in which more than one person chooses the products or services that multiple
consumers use.
• 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.
Roles include:
o Initiator—The person who brings up the idea or identifies a need.
o 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.
o 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.
o Buyer—The person who actually makes the purchase. The buyer may or may not
actually use the product.
o User—The person who actually consumes the product or service.
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Family Decision Making
• Members of a family unit play different roles and have different amounts of
influence when the family makes purchase decisions.
• group members assume different roles just as purchasing agents, engineers,
account executives, and others do within a company.
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How Family Decide
Consensual Accommodative
• Family members agree on • Family members have
the desired purchase, differing only different preferences or priorities, and
in terms of how it will be achieved. they cannot agree on a purchase
• Family members will most to satisfy everyone’s need.
likely engage in problem solving • Family members will use
and consider alternatives until bargaining, coercion and compromise
they find a way to satisfy everyone to achieve agreement on what to
in the family. buy or who gets to use it.
E.g. Get a pet - some members voice E.g. Choice of TV channel -
concerns about who will take care of requires bargaining, coercion
pet, so solution is to schedule each & compromise among members
members to specific duties to achieve an agreement
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How Family Decide
• Decisions create conflict among family members
• Conflict also occurs if individuals have strong opinions about good and bad alternatives.
Interpersonal need Product Responsibility Power
involvement and
utility
A person’s level Degree to which People likely to have Degree to
of investment in a person will use disagreements abut a which one
the group. the product to satisfy decision that require family member
a need. long exerts influence
term consequences over the others.
and commitments.
E.g. A teenager may E.g. A mother who is a E.g. A live-in E.g. Father
care more about devoted coffee drinker maid, who will (being only
what his family buys will be more interested procure, maintain, breadwinner of
for the house than to buy a new pay, etc. the maid in family), eldest child
another who lives coffeemaker than will the long term. (being
in boarding school. her teenage child most favourite
who drink lots of coke child).
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Decision Maker in a Family
• Marketers need to figure out who makes the buying decisions in a family because this
information tells them who to target and whether they need to reach both spouses to
influence a choice
• Researchers pay special attention to which spouse plays the role of the family financial
officer (FFO)—the individual who keeps track of the family’s bills and decides how to
spend any surplus funds.
• Joint Decision Makers (Both Spouse)
– i. Synoptic ideal
– Ideally plea for the husband and wife to act as joint decision makers. Together they
thoughtfully weigh alternatives, assign one another well defined roles (task
specialization) and calmly make mutually beneficial consumer decision.
– ii. Autonomic decision
– Traditionally, men often have sole responsibility to select a masculine product
(e.g., car) while women decide on feminine product (e.g., the decorating choices).
– iii. Syncretic decision
– As the couple’s educational level increases, they are more likely to make decisions
together (e.g., vacation, homes, electrical appliances, furniture, etc.)
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Decision Maker in a Family
• The Wife
• The Husband
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8.3.2 Artificial Intelligence
• AI applications revolutionize how consumers interact with
products
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8.3.2 Artificial Intelligence
• Outdoor brand The North Face partners with IBM’s Watson
AI platform to use natural conversation and a dialogue-
based recommendation engine to help users of the brand’s
site pick out the jacket that best fits their needs. A
customer simply tells the platform when and where they’d
like to use the jacket, and then answers additional
questions to refine the results.
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8.3.2 Artificial Intelligence
• KFC China teamed up with the huge Chinese search
engine Baidu to develop AI-enabled facial recognition
checkout. It predicts what menu items customers will order
based upon their age, gender, and mood. Over time, the AI
will rec- ognize repeat customers and offer them what they
ordered on prior visits. Thus a younger male might get a
recommendation for a crispy chicken hamburger, while the
AI will suggest porridge and soybean milk to a women in
her 50s (wow, auto-mated gender stereotyping?)
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8.3.2 Artificial Intelligence
• West Elm uses an AI application to generate
recommendations for specific furnishing products it sells
based upon what a shopper pins to a Pinterest Board. The
company also is able to upsell (encouraging customers to
buy additional items) due to the suggestions.
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8.4 Price Psychology
• Prices determine the value of a product and can inform the
customer how useful it is. The price therefore has two
functions, a utility and an information function (Mittelstaedt,
2019)
• Concepts of pricing policy:
– Price interest
– Price affordability
– Value for money
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Price-Demand Function
• The price-sales function describes that with rising prices,
demand decreases.
• The more expensive a product becomes, the less demand
there is for it.
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Price-Quality Rule
• The price-quality rule is nothing more than a rule of thumb,
which says that a high price is an indicator of better quality.
• A high price is thus understood by the customer as a
certain signal to which expectations are linked.
• The customer expects a high price to be matched by a
corresponding quality
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The Effect of The Last Digit
• From a psychological point of view, there are certainly
reasons for a company to use broken prices
– Impact
– Drop-off effect
– Attention and memory effects
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The Effect of The Last Digit
Example: With the number 2499.99€, the customer may
remember mainly the first two digits and neglect the 99er
digits, so when constructing from memory. The remembered
number may be between 2400 and 2499. It always makes
sense to use 99 numbers, because there is no situation
where the number is remembered more than it actually is.
Whether or not the customer applies this effect is mainly
determined by his reference price. If the prices of the
products are close together, the customer pays more
attention to the first figure
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