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LEARNING OBJECTIVES

Learning Objectives

How do firms adjust their product lines to changing market conditions?

Why are brands valuable to firms?

How do firms implement different branding strategies?

How do a product’s packaging and label contribute to a firm’s overall strategy?

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Prius 09

1,000,000 units sold and demand still growing

Introducing 9 new models by 2011

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The Consumer Decision Process

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Adding Value: H.O.G. Heaven

How does Harley Davidson add value?

Who is a typical Harley owner?

Harley Davidson Website

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Need Recognition

Functional needsFunctional needs

Psychological needsPsychological needs

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“It’s hard to find your litter box if you can’t smell it”

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Search for Information

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Factors Affecting Consumers’ Search Process

PerceivedBenefits

PerceivedBenefits

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The Locus of Control

Internal Locus of Control = more search

activities

Internal Locus of Control = more search

activities

External Locus of Control = Fate, external factors

External Locus of Control = Fate, external factors

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Actual or Perceived Risk

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Type of Product or Service

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Evaluation of Alternatives: Attribute Sets

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Evaluation of Alternatives: Evaluate Criteria

What are some of the features of a vacation that would be in your

evaluative criteria?

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Evaluation of Alternatives:Consumer Decision Rules

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Evaluation of Alternatives: Decision Heuristics

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Purchase and Consumption

Ritual consumption

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Post-purchase:Customer Satisfaction

Build realistic expectationsDemonstrate correct product use

Provide money back guaranteeEncourage feedback

Customer contact

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Post-purchase: Dissonance

Firm’s attempt to reduce dissonance by reinforcing the decision

Thank you letters, congratulations letters, quality ratings

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Factors Influencing the Consumer Decision Process

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Psychological Factors: Motives

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Psychological Factors: Attitude

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Psychological Factors: Perception

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Psychological Factors: Learning and Lifestyle

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Social Factors: Family

Decision makers Influencers

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Social Factors: Reference Groups

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Reference Group

GEICO Commercial

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Social Factors: Culture

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Situational Factors

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Involvement and Consumer Buying Decisions

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Types of Buying Decisions

• Limited Problem Solving• Habitual Decision Making• Extended Problem

Solving• Impulse Buying

Skittles Commercial

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Check Yourself

1. What are the types of needs suggested by Maslow’s Hierarchy of Needs?

2. Which social factors likely have the most influence on:

a. The purchase of a new outfit for going out dancing?

b. The choice of a college to attend?

3. List some of the tactics stores can use to influence consumers’ decision processes.

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Check Yourself

1. Name the five stages in the consumer decision process.

2. What differences mark the way a highly involved versus a less involved consumer likely looks at the information provided in an advertisement?

3. What is the difference between compensatory and non-compensatory decision rules?

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Check Yourself

1. How do low versus high involvement consumers process information in an advertisement?

2. What is the difference between extended versus limited problem solving?

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Glossary

An attitude is a person’s enduring evaluation of his or her feelings about and behavioral tendencies toward an object or idea.

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Glossary

Consumer decision rules are the set of criteria that consumers use consciously or subconsciously to quickly and efficiently select from among several alternatives.

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Glossary

Determinant attributes are product or service features that are important to the buyer and on which competing brands or stores are perceived to differ.

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Glossary

Evaluative criteria consist of a set of salient, or important, attributes about a particular product.

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Glossary

A consumer’s evoked set comprises the alternative brands or stores that the consumer states he or she would consider when making a purchase decision.

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Glossary

Extended problem solving occurs during a purchase decision that calls for a lot of effort and time.

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Glossary

Functional needs pertain to the performance of a product or service.

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Glossary

Habitual decision making describes a purchase decision process in which consumers engage little conscious effort.

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Glossary

Impulse buying is a buying decision made by customers on the spot when they see the merchandise.

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Glossary

Involvement is the consumer’s degree of interest in the product or service.

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Glossary

Limited problem solving occurs during a purchase decision that calls for, at most, a moderate amount of effort and time.

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Glossary

Psychological needs pertain to the personal gratification consumers associate with a product and/or service.

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Glossary

Retrieval sets are the brands or stores that can be readily brought forth from memory.

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Glossary

Ritual consumption is a pattern of behaviors tied to life events that affect what and how we consume.

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Glossary

Shopping goods/services are products or services for which consumers will spend time comparing alternatives.

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Glossary

Situational factors are factors specific to the situation.

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Glossary

Specialty goods/services are products or services toward which the customer shows a strong preference and for which he or she will expend considerable effort to search for the best suppliers.

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Glossary

Universal sets include all possible choices for a product category.

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