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Chapter 4

Chapter 4 - How and Why We Buy.docx

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Business Administration
Course Code
BUS 343
Jason Ho

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Marketing Chapter 4: How and Why We Buy 1. Decisions, Decisions The Consumer Decision-Making Process The focus of the marketing concept is to satisfy consumers wants and needs. - To accomplish this goal, first marketers need to appreciate what those wants and needs are. - Marketers recognize that consumer decision making is an ongoing process its much more than what happens at the moment a consumer forks over the cash and in turn receives a good or service. - Marketers also need to know how and when people consumer their products. - Marketers need to understand the many factors that influence each of these steps in the consumer behaviour process internal factors unique to each of us, situational factors at the time of purchase and the social influences of people around us. Not All Decisions Are the Same Decision makers actually employ a set of approaches that range from painstaking analysis to pure whim, depending on the importance of what they are buying and how much effort they choose to put into the decision. - Researchers find it convenient to think in terms of an effort continuum that is anchored on one end by habitual decision making and at the other end by extended problem solving. o When consumers engage in extended problem solving, they carefully go through these steps: problem recognition, information search, evaluation of alternatives, product choice and post-purchase evaluation. o When making habitual decisions, consumers make little or no conscious effort. - Many decisions fall somewhere in the middle and are characterized by limited problem solving, which means that consumers do some work to make the decision but not a great deal. - As a rule, consumers are more involved in the decision-making process for products that they think are risky in some way. o Perceived risk also can play a role when consumers think that making a bad choice will result in embarrassment or social rejection. o When perceived risk is low, consumers experience a small amount of involvement in the decision-making process. In low-involvement situations, the consumers decision is often a response to environmental cues. Under these circumstances, managers must concentrate on how a product is displayed to influence the decision maker at the time of purchase. o For high-involvement purchases, consumers are more likely to carefully process all the available information and to have thought about the decision well before they buy them. The consequences of the purchase are important and risky, especially because a bad decision may result in significant financial losses, aggravation or embarrassment. Managers must start to reduce perceived risk by educating the consumer about why their product is the best choice well in advance of the time that the person is ready to make a decision. Step 1: Problem Recognition Although most problem recognition occurs spontaneously or when a true need arises, marketers often develop creative advertising messages that stimulate consumers to recognize that their current state just doesnt equal their desired state. Step 2: Information Search Once a consumer recognizes their problem, they need adequate information to resolve it. The Internet as a Search Tool Increasingly, consumers use the Internet to search for information about products. - Search engines help consumers locate useful information. - The problem for marketers is that consumers seldom follow up on more than a page or two of results they get from the searches. o This has led marketers to develop sophisticated search marketing techniques. With search engine optimization, marketers first find what key words consumers use most in their searches. Then they edit their sites content or HTML to increase its relevance to those key words. The search engine company charges marketers to display sponsored search ads. - Comparison shopping agents enable consumers to view both positive and negative feedback about the product and the online retailer from other consumers o Consumers also search out other consumers opinions and experience through networking Web sites. Behavioural Targeting During information search, the marketers goal is to make the information consumers want and need about their product easily accessible. - The challenge today is in getting the right message to the right consumer. o One answer to this challenge is behavioural targeting; with todays technology it has become fairly easy for marketers to tailor the ads consumers see to Web sites theyve visited. Step 3: Evaluation of Alternatives There are two components to this stage of the decision-making process. - (1) A consumer armed with information identifies a small number of products in which he or she is interested. - (2) He or she narrows down the choices by first deciding which of the possibilities are feasible and then comparing the pros and cons of each remaining option. Consumers have to look more systematically at each of the possibilities and identify the important characteristics that they will use to decide among them. - Marketers often play a role in educating consumers about which product characteristics they should use as evaluative criteria usually they will conveniently emphasize the dimensions in which their product excels. Step 4: Product Choice Consumers often rely on decision guidelines when they weigh the merits of competing brand claims that companies make. - Example of a heuristic: Price = Quality so many people willingly buy the more expensive brand because they assume if it costs more, it must be better. - The most common heuristic is brand loyalty. - Another heuristic is based on country-of-origin. o Consumers assume that a product has certain characteristics if it comes from a certain country. o Sometimes a marketer wants to encourage a country association even when none exists. Step 5: Post-Purchase Evaluation The evaluation of the product results in a level of consumer satisfaction/dissatisfaction. When consumers buy a product, they have some expectations of product quality. - Consumers tend to assess product quality by comparing what they have bought to a pre-existing performance standard.
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