Insights into Consumer Decision Making II Professor West

Insights into Consumer Decision Making II

Professor West

Agenda

Discuss textbook case on Starbucks

Starbucks Success

What can we learn from Starbucks?

What is the key to Starbucks success?

How should they leverage their strong brand in response to growing competition?

Different forms of decision making

Marketing Implications

What are the marketing implications for the firm, and its competitors when consumers are engaging in: Cognitive decision making Experiential decision making Habitual decision making

The Decision Sequence

Consumers face the problem of what to buy and where to buy it. Outlet first, brand second Brand first, outlet second Simultaneous

What determines the order?

Planned vs Unplanned

Two-thirds of supermarket decisions and nearly three-quarters of all mass merchandise decisions are made in-store. This points to the crucial role of the retail

environment, including store layout, POP displays and promotions, atmospheric elements (lighting, music, scents)

Post-decision Effects

Post-decision Effects

What causes post-decision dissonance? The degree of commitment or irrevocability of

the decision Importance and decision difficulty Perceive risk associated with the decision

How can it be effectively managed?

Product Usage

Why do marketers care about how or whether a product is used?

What can be done to help?

Determinants of Customer Satisfaction

Customer Satisfaction

How do consumers evaluate product performance? Performance is evaluated relative to our

expectations.

Customer Satisfaction

What do we know about how this process occurs? Assimilation – There is a reluctance to

acknowledge discrepancies between expectations and performance via rationalization and attribution

Contrast – There is a tendency to exaggerate sizable discrepancies, a phenomenon known as reactance

Assimilation & Contrast

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Assimilation Contrast10

Favorable 9Performance 8

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6 ExpectationUnfavorable 5 Performance 4

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Satisfaction & Dissatisfaction

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Elation

Betrayal

10

Favorable 9Performance 8

7

6 ExpectationUnfavorable 5 Performance 4

3 2 1 0

Customer Satisfaction

Satisfaction influences repeat buying Positive post-consumption evaluations are

essential for retaining customers

The likelihood that customers will remain loyal depends on their level of satisfaction

Customer Satisfaction

It shapes word of mouth Consumers often talk about their

consumption experiences A firm’s ability to satisfy customers will affect

its success in retaining current customers as well as recruiting new ones

Customer Dissatisfaction

Focus on Retention

We said on day one that the goal of studying consumer behavior was to better understand how to acquire, satisfy, and retain our customers...

An important lesson marketers have learned is that it is much less costly to retain existing customer than it is to acquire new ones…which makes customer satisfaction paramount!

Costs & Revenues Over Time

Customer Satisfaction

Implications for Competitive Strategy Monitor satisfaction levels Encourage dissatisfied customers to voice

their concerns Have a recovery system in place to address

customer concerns It is important to set realistic expectations and

strive to exceed them

Influencing Expectations

Where do consumer expectations come from?

How can the firm influence them?

Next Time

Read Chapters 8 – 10, 11 (pp 278 - 298, 303 -

304, 333 - 345, 369 - 376, 401 - 411)