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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
Zon
e o
f Tole
ran
ce
Assimilation Contrast10
Favorable 9Performance 8
7
6 ExpectationUnfavorable 5 Performance 4
3 2 1
0
Satisfaction & Dissatisfaction
Zon
e o
f Tole
ran
ce
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)
