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Professor Smith, Head of the Department of marketing at the University of Manitoba's I.H. Asper School of Business will be on hand to share his expertise on consumer decision making. He'll provide insight on the influences and barriers to consumer decision making that consumers of housing face, and discuss mistakes that salespeople make in the selling process. Take with you a better understanding of the entire consumer decision-making process and tips to spark consumer decision-making.
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Understanding Consumer Decision
MakingManitoba Home Builders Association
2013 Housing Forum
November 6, 2013
Malcolm C. Smith, Ph.D.Department of Marketing
I.H. Asper School of BusinessUniversity of Manitoba
Agenda
• Exercise• Types of decisions• Involvement• Easy/quick decisions• Complex decisions• Implications for you• Questions
Think about something you have bought lately that was a fast decision.–What was it that you bought?– Describe the purchase process:
• When did you decide to buy it?• How did you realize you needed it?• Describe the actions you took when buying it.• How and when did you evaluate the product?• Why was it a fast decision?
Think about something you have bought lately that took a lot of time to make the decision.–What was it that you bought?– Describe the purchase process:
• When did you decide to buy it?• How did you realize you needed it?• Describe the actions you took when buying it.• How and when did you evaluate the product?• Why was it a slower decision?
Involvement
• Purchases vary in the level of consumer involvement
• The level of involvement with a purchase is often determined by the amount of risk involved
• The higher the risk, the more the consumer is involved with the purchase
Types of Risk
• Financial• Social• Ego• Safety
Types of Decisions
Decisions can be classified according to the “effort” a consumer puts into the decision1. Low-Involvement Decisions– Fast, little searching for information
2. High-Involvement Decisions– Slow, much searching for information
These types of decisions are on a continuum Low-Involvement High-Involvement Decisions Decisions
Low Involvement Decisions
• Low risk• Few external influences from others• Evaluation takes place after the
purchase• Strengths of one feature do not make
up for weaknesses in other features
Extended Decision Making
• Usually occurs under high involvement
• Also known as “complex” decision making
• Consumers are motivated to process information and critically evaluate it to reduce risk
Steps in Extended Decision Making
Problem Recognition
Information Search
Evaluation of Alternatives
Purchase
Post-Purchase Evaluation
Step 1: Problem Recognition
• Also known as “Need Arousal”• Occurs when there is a gap between
the consumer’s desired (or ideal) situation and the consumer’s actual situation
• The gap must be strong enough for the consumer to proceed with the decision-making process
Step 1: Problem Recognition
• How will this happen?– Consumers runs out of the product– Consumer’s needs/values/attitudes
change• E.g., children, work promotion
– Advertising can suggest a new “ideal”
Steps in Extended Decision Making
Problem Recognition
Information Search
Step 2: Information Search
• Search from various sources– Internal Sources– External Sources• Biased• Unbiased
• Do we maximize every decision?• Cost-Benefit trade-off– How long will the search last?– How much will the search cost?
Steps in Extended Decision Making
Problem Recognition
Information Search
Evaluation of Alternatives
Step 3: Evaluation of Alternatives
• Two sets of brand alternatives:– Awareness Set– Unawareness Set
• Three subsets in the Awareness Set:– Inept Set– Inert Set– Evoked Set
Awareness Set Unawareness Set
Inept Set Inert Set Evoked Set
Sets of Alternatives
Awareness Set Unawareness Set
Inept Set Inert Set Evoked Set
Sets of Alternatives
Step 3: Evaluation of Alternatives cont’d
• Consumers use evaluative criteria to help make a decision– Based on product features
• Compensatory evaluation is used– Strengths of one feature make up (or compensate) for weaknesses in other attributes• “I didn’t get feature A, but that’s OK since I
am getting feature B”
Steps in Extended Decision Making
Problem Recognition
Information Search
Evaluation of Alternatives
Purchase
Step 4: Purchase
• Two parts to the Purchase phase– Purchase decision• “I will buy brand A”
– Purchase act • “Where will I buy it?”• “When will I buy it?”• “How will I pay for it?”
Steps in Extended Decision Making
Problem Recognition
Information Search
Evaluation of Alternatives
Purchase
Post-Purchase Evaluation
Step 5: Post-Purchase Evaluation
• Post-purchase doubt– Cognitive Dissonance– Sometimes consumers search for more
information– Sometimes consumers ignore new
information
• Result is customer satisfaction or dissatisfaction
• Leads to feedback to previous steps for future decisions
Feedback in Extended Decision Making
Problem Recognition
Information Search
Evaluation of Alternatives
Purchase
Post-Purchase Evaluation
Feedback
• Problem Recognition– Did I correctly define the problem?
• Information Search– Did I use the correct information sources?– Did I use enough sources?
Feedback
• Evaluation of Alternatives– Did I use the correct evaluative criteria (features)?– Did I assess the evaluative criteria correctly?
• Purchase– Did I purchase at the right time?– Did I purchase from the right place?
Who Buys?
Decision Making Unit (DMU):• Initiator• Influencer• Decider• Buyer• User
(Gatekeeper plays an indirect role in the DMU)
How can you use this information?
Implications
• Understand the needs and wants of your consumers
• You are offering a solution to a problem• 3 levels of a product:– Tangible product– Core product– Augmented product
Implications
• Understand who plays what role in the Decision Making Unit
• Understand where the consumer is in the decision making process
• Reduce post-purchase doubt
Questions?
