ADM 2320 Lecture Notes - Lecture 4: Headon, Marketing Strategy, Dell

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28 Jun 2018

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Consumer Decision Process

When consumers recognize they have an unsatisfied need and want to shift from their needy

state to a different desired state

•

Greater the difference between the states, greater the need recognition will be

•

Functional needs –pertains to the performance of product or service

•

Psychological needs –pertain to the personal gratification consumers associate with a product

or service

•

Associate the need for recognition with power and status

▪

Emotions regarding the product

▪

Remind the consumers based on the season - Christmas, Halloween, Easter

▪

Strategies:

•

Need recognition

Based on degree of perceived risk and costs associated with it

•

Internal search for information - when the buyer examines his/her own memory and

knowledge about the product or service through past experiences

•

External search for information - when the buyer seeks information outside his/her personal

knowledge base to help make the buying decision

•

Think more when buying expensive things like automobiles - important purchase

with significant safety implications

□

Little time spent researching when buying a plastic toy car for a kid

□

Perceived benefits vs. perceived costs of search

▪

Internal locus of control - when consumers believe they have some control over

the outcomes of their actions, in which they generally engage in more search

activities

□

External locus of control - when consumers believe they that fate or other

external factors control all outcomes

□

Locus of control

▪

Actual and perceived risk

▪

Factors Affecting consumers' search process

•

Search information

The Consumer Decision Process:

Psychological

Social

Situational

Factors Influencing consumer Buying

decisions:

Extended problem solving

Limited Problem solving

Involvement of consumer /buying decisions:

Internal Search for Information - search the memory and knowledge of the service/product

External Search for Information - outside his/her personal knowledge to help make decision

4 - Consumer Behavior

Saturday, 30 September, 2017

11:56 PM

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Types of risks may delay or discourage purchase decision

□

E.g. brad's car breaks down on the day he is going to take his girlfriend out

for a drive to show of his car



Performance risk - involves the perceived inherent in a poorly performing product

or service

□

E.g. car manufacturers realize extended warranties help alleviate financial

risk because post-purchase repair costs



Financial risk - risk associated with a monetary outlay and includes the initial cost

of the purchase of using the item or service

□

E.g. Brad looked up reviews and asked his friends which sports car would

good because he wants people to perceive his choice as a really good one.



Psychological risk - associated with how people will feel if the product or service

does not convey the right image

□

e.g. because brad wants best car for his money, he searches carefully

on the internet for reviews and talks to his friends who own shopping

sports cars before he starts shopping

◊

Specialty goods/services - products of services toward which the customer

shows a strong preference and for which she will expend considerable effort

to search for the best suppliers



e.g. brad goes from one store to another trying on sneakers and

comparing alternatives and chatting with the sales people

◊

Shopping goods/services - for which consumers will spend time comparing

the alternatives



Purchased with very little thought

◊

e.g. bread, milk, soap

◊

Convenience goods/services - for which the consumers are not willing to

spend any effort to evaluate prior to purchase



Type of product or service

□

Actual and perceived risk

▪

Consumers spend most time searching specialty and shopping goods. Perception of

consumers differentiates which goods or services is or is not convenience good. e.g.

haircuts for men and women.

Provide a lot of information - both online and offline - simple and readily available

▪

Feedback of previous customers - reviews

▪

Guarantee/warranty

▪

Highlight information

▪

Make it memorable - e.g. head-on - balm for headaches

▪

Provide information about every parts -educate the consumer

□

Customization allowed for the products - e.g. DELL

▪

Provide comparative information

▪

Strategies:

•

Sift through choices available and evaluate alternatives

•

Occurs in the process of information search

•

Evaluative criteria - consists of a set of salient, or important attributes about a particular

problem`

•

e.g. When buying ipod - considering features, selling prices, color, popularity of different

brands

•

To simplify decision process - determinant attributes

•

Determinant attributes - product or service features that are important to the buyer and on

which competing brands or stores are perceived to differ

•

Evoke set - when you think of a product and the set of companies that come to your mind

•

Consideration set - only those that the consumer is considering

•

Evoke Set

Consideration set

DELL

Acer

Asus

Lenovo

Example

•

Compensatory decision rule- when the consumer is evaluating alternatives and trades

off one characteristic against another, such that good characteristic compensates for the

▪

Consumer decision rules - set of criteria that consumers use consciously or subconsciously to

quickly and efficiently select from among several alternatives

•

Evaluating alternatives

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Document Summary

Internal search for information - search the memory and knowledge of the service/product. External search for information - outside his/her personal knowledge to help make decision. When consumers recognize they have an unsatisfied need and want to shift from their needy state to a different desired state. Greater the difference between the states, greater the need recognition will be. Functional needs pertains to the performance of product or service. Psychological needs pertain to the personal gratification consumers associate with a product or service. Associate the need for recognition with power and status. Remind the consumers based on the season - christmas, halloween, easter. Based on degree of perceived risk and costs associated with it. Internal search for information - when the buyer examines his/her own memory and knowledge about the product or service through past experiences. External search for information - when the buyer seeks information outside his/her personal knowledge base to help make the buying decision.

Related Questions

Which of the following statements is true of postpurchase behavior?

Consumers tend to increase dissonance by justifying their purchase decision.

Consumers expect certain outcomes from a product after making a purchase.

Marketers encourage customers to have doubts even after they purchase a product.

Communication with consumers does not help in reducing cognitive dissonance.

Which of the following statements is true of nonmarketing-controlled information sources?

It is monitored anonymously by marketers acting as nonmarketing agents to promote their product.

It includes Internet forums and other forms of public sources of information.

It is biased towards a specific product because it originates with marketers promoting that product.

It includes mass media advertising like television, and newspaper advertising.

Which of the following statements is true of the factors determining the level of consumer involvement?

Involvement is not related to consumer interests.

Consumers are not involved when the perceived risk in purchasing a product is high.

Involvement decreases as the social visibility of a product increases.

Consumers become less involved in the purchase of a familiar product.

Which of the following is an individual characteristic that influences a person's buying decisions?

Culture

Gender

Learning

In the consumer decision making process, _____ uses informationâeither based on past interactions or collected through external sourcesâto instantaneously customize the customer experience.

Proactive personalization

Contextual innovation

Journey innovation

Selective exposure

During an external information search, a consumer is most likely to enlarge his search and consider more alternative brands when:

	a.	the product or service to be bought is a frequently purchased, low-cost item.
	b.	the perceived risk of the product or service to be purchased increases.
	c.	the consumer is confident of making a purchase decision with the information at hand.
	d.	the consumer is knowledgeable and well informed about a potential purchase.

Motivation

QUESTION 26

Age 65 has come to be considered the onset of old age in the U.S. because:

	a.	This is when most older adults find their abilities diminishing
	b.	At age 65, physical appearance makes it evident that a person is old
	c.	This is the age identified in Social Security and Medicare at the time these were enacted
	d.	This is the age at which life expectancy diminishes most rapidly

1 points

QUESTION 27

The concept of "dependency ratios" has been criticized because:

		Individual differences in needs as well as differences in aging and activity choices make it difficult to ascertain which generation depends on which other generations.
		Very few older adults ever rely on younger individuals for support and assistance
		The most dependent generation may well be young adults
		It is common knowledge that older adults are dependent on younger individuals

1 points

QUESTION 28

Which of the following is the most accurate statement about the purpose of theory in understanding aging?

	a.	Theories attempt to explai what we observe in empirical research or practice
	b.	A goal is to consolidate practice around a simple set of principles
	c.	Theories resolve disputes about the nature of reality and definitions of aging
	d.	The most important purpose is to reduce apparently complex phenomena to a few basic factors

1 points

QUESTION 29

Explanations that focus on the situations and problems that accumulate during the life span and cannot be understood separate from developmental experiences are considered to reflect:

	a.	The aged
	b.	Aging
	c.	Age
	d.	The meaning of life

1 points

QUESTION 30

Early theories of aging, described later life as a:

	a.	Problem
	b.	normal, welcomed stage of life
	c.	rare and unique process
	d.	Too idiosyncratic for generalized description

1 points

QUESTION 31

Theories that explain aging as resulting from the accumulation of "insults" from the environment, which eventually reach a level incompatible with life are labeled:

	a.	Sociocultural theories
	b.	Selective optimization with compensation
	c.	Model of Human Occupation
	d.	Stochastic theories

1 points

QUESTION 32

Psychological theories of aging seek to explain

	a.	Reasons for the emergence of mental disorders in late life
	b.	Why older individuals are likely to be pessimistic
	c.	Relationships among older and younger individuals
	d.	The multiple changes in individual behavior in late life

1 points

QUESTION 33

It is now believed that neurological theories of aging that focus on decline in neurological functioning may be:

	a.	Too optimistic
	b.	Lacking in clarity
	c.	Too pessimistic
	d.	Too limited

1 points

QUESTION 34

In the theory of Selective Optimization with Compensation, "optimization" refers to the idea that:

	a.	People engage in behaviors that augment or enrich their general reserves and maximize their chosen life courses
	b.	People make efforts in middle age to accumulate needed resources to ensure successful aging
	c.	Changing biological and psychological factors that enhance the abilities of older adults in memory and problem solving
	d.	Political initiatives that reduce stigma associated with later life

1 points

QUESTION 35

Mrs. Adams, an 87 year-old widow, has begun to distance herself from some of her extended family members. At the same time, she spends increasing time with her adult children, grandchildren, and some of her close neighbors. This would be an example of:

	a.	The Model of Human Occupation
	b.	Evolutionary Theory
	c.	Cognition and Aging theories
	d.	Socioemotional Selectivity Theory

1 points

QUESTION 36

A theory of particular relevance to occupational and physical therapy is:

	a.	Theory of Free Radicals
	b.	Systems theory of motor control
	c.	Stochastic theories
	d.

1 points

QUESTION 37

Theory is important to therapeutic decisions as a way to:

	a.	Reduce the therapist's need to address individual differences
	b.	Guide decisions about evaluation and intervention
	c.	Minimize the idea of complexity in understanding older adults
	d.	Clearly identify the specific evaluation instruments to be used

ADM 2320 Lecture Notes - Lecture 4: Headon, Marketing Strategy, Dell

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