Topic 7 Consumer Information Acquisition and Processing

 

To make purchasing decisions, consumers acquire and process information from the web, friends and neighbours and their own experiences with products. Acquiring information means that consumer must gather information from various sources based on their need. 

Consumer Information Acquisition 

Consumers must acquire information before they can process it. The role of information acquisition in consumer decision making is shown in Figure 7.1

 

		Search for Additional Information
CONSUMER’S ENVIRONMENT (1)	Acquisition of Information (External)	Information is Perceived	Brand Evaluation	Purchase and Consumption
			Acquisition of Information (Internal	Past Experience
		Retention in Memory

Consumers must acquire information before they can process it and the information is acquired from their environment - from advertisement, salespeople, word of mouth communication with friends and neighbours impartial sources such as Consumer Reports etc. Consumers uses four different processes for acquiring such external information, with each process being related to the consumers involvement with the product.

Retention in Memory - from consumptions and past experiences information are retained in memory which can assist in future information search.

 

 

Table 7.1 – Processes for Acquiring External Information

Acquisition Process	Type of Involvement
1.      Directed ongoing search 2.      Directed purchase-specific search 3.      Non-directed purchase-specific search  4.      Passive Acquisition	1.      Enduring Involvement 2.      Situational Involvement, prior knowledge 3.      Situational Involvement, little prior knowledge 4.      Low Involvement

Ongoing Search – Characterize the consumer with enduring involvement in the product. For example the computer buff who subscribes to computer magazines is aware of a wide variety of opinion.

Directed Purchase-Specific Search – This type of search is characteristic of the consumer with situational involvement who collects information when making a purchase decision. Example a consumer who wants to buy a mini-van might visit the dealers or ask friends who owns a mini-van.

Non-directed Purchase-Specific Search – This type of search is most often done by a consumer who needs general information. For example a consumer may need a new computer but is unsure what kind of computer she is looking for. 

Passive Acquisition of Information – The minimal search characterizes the un-involved consumer. Information is acquired in passing, with little effort on the consumer’s part.

Determinants of Information Search

Several factors encourage consumers to actively acquire more information, whether the process is active or passive.

1. High Consumer Involvement – The higher the level of involvement, the greater the amount of information acquired.
2. High Perceived Risk – The higher the perceived risk in purchasing, the greater the amount of information search. When risks are high, consumers normally search for more information.
3. Product Uncertainty – The more uncertain the consumer is about brand choice, the greater the product search.
4. Little product knowledge and experience – Consumers with less knowledge of these products were more likely to search for more information.
5. Clear Goals – Information search is likely to be greater when consumers have clear goals.
6. Less Time Pressure – Time pressure to make a decision discourages information search.
7. High Price – The higher the price, the greater the information search.
8. More Product Difference – Searching for information has a higher pay-off when substantial differences exist between brands.
9. Cost-effectiveness of Information Search – Another determinant of information search is its cost factor.

SOURCES OF INFORMATION 

Marketer Controlled	Personal	Non-Personal
	·         Salespeople ·         Telemarketing ·         Trade Show ·         email	·         Media Advertising ·         In-store display ·         Sales Promotions ·         Packaging ·         Internet Advertising
Non-Marketer Controlled
	·         Word of Mouth ·         Professional Advice ·         Experience from Consumption ·         Chat rooms	·         Publicity ·         Neutral Sources (e.g. Consumer Reports) ·         Infomediaries ·         BOTS

 BOTS, or Internet robots, are applications designed for simple, repetitive jobs

Amount of Information Search

Despite consumers’ reasons for undertaking a search for information, their amount of information search for all but the most expensive products in very limited. In subscribing to principles of cognitive economy, consumers often consider the search for additional information not worth the time and effort involved. 

Limits of Information Acquisition

Some consumer advocates and government agencies assume that consumers should be supplied with as much information as possible to permit a comparison of brand alternatives. The same assumption underlies economic theory; Optimal choice requires access to information on all alternatives. 

The realities, however is that consumer rarely seek all of the available information. They find the cost of search and the complexity of processing just too great to attempt to consider all brand alternatives. Therefore, more information is not necessarily better. In fact, too much information may create information overload; that is confusion in the decision task, resulting in an ineffective decision.

 

INFORMATION ACQUISITION FOR UTILITARIAN VERSUS HEDONIC PRODUCTS

 

In earlier topics we saw that consumers can view products as primarily utilitarian, as serving some functional purpose, or hedonic, as creating pleasure and encouraging fantasy. The nature of information acquisition is likely to differ in each case. 

Table 7.2 Information Acquisition for Hedonic vs. Utilitarian Products

Hedonic Products	Utilitarian Product
1.      Sensory Stimuli dominates 2.      Ongoing Information Search 3.      Personal Sources most important 4.      Symbols and Imagery most effective	1.      Product Attribute Information dominates 2.      Purchase Specific Information Search 3.      Non personal sources most important 4.      Product Information most effective

 

STRATEGIC IMPLICATIONS OF INFORMATION ACQUISITION

 

The way consumers acquire information has direct implications for marketing strategy. Such implications depends on the type of search (active or passive), the type of product (utilitarian and hedonic), and the cost of information search to the consumer.

Table 7.3 Strategic Implications of Passive vs. Active Information Search

Passive Information Search	Active Information Search
1.      Use Repetitive Advertisement 2.      Use TV 3.      Emphasis Price Promotion 4.      Emphasis in-store marketing Stimuli	1.      Vary message content frequently 2.      Use Print 3.      Emphasize Advertising 4.      Emphasize Marketing before entering shop

 

 Type of Information Search: Passive versus Active

 

If the information is in a low-involvement category, marketers realize that consumers acquire information passively, and marketers must support such passive receipt of information. 

Example: Introducing new product, they might use repeat advertising on TV to establish sufficient level of awareness. Television is the best medium to ensure passive acquisition because consumers’ exposure to TV commercial does not require information search. 

Type of Product: Hedonic vs. Utilitarian

The distinction between hedonic and utilitarian products has a direct bearing on the type of information that marketers convey. 

Information for hedonic products is likely to be conveyed through symbols and imagery, whereas information for utilitarian products is more likely to rely on the written words.

Cost of Information Acquisition

There are different costs of information searches.

Opportunity Cost of spending time searching on the web. Sloe internet access and lengthy delays in downloading software cost the searchers time.

Monetary Cost – Consumer may have to pay fees to download or obtain information.

Psychological costs – frustrations for not getting the right information and possible delays. 

Marketers can avoid above costs by providing faster channels of communications etc... Broadband search engines, affiliations and partnerships etc. 

CONSUMER INFORMATION PROCESSING MODEL

Once information is acquired, consumers must process it. Marketers are interested in information processing because it determines which information consumers remember and how this information is used.

 

 

Short-term memory which acts as a filter to determine the information consumer stores and information consumer ignores.

Selective Retention – States that only the most important and relevant information to the brand decision will be stored in long-term memory. 

Involvement and Information Processing

 

The way consumers’ process information depends largely on their level of involvement with the product decision. 

When consumers are involved in a product, they actively search for information and analyze it to assess alternative brands effectively. For low-involvement products, consumers are more likely to receive and process information passively. 

Table 7.4 High- vs. Low-Involvement Information Processing

High Involvement	Low-Involvement
1.      Active Processing 2.      Extensive Brand evaluation 3.      Additional Information seeking is likely 4.      Rely more on product information	1.      Passive Processing 2.      Minimal Brand Evaluation 3.      Additional Information seeking is likely 4.      Rely more on past experience

 

Memory Processing

In both the high – and low – involvement cases, processing information requires that;

1. Information is filtered through short-term memory
2. It is stored in long-term memory
3. It is retrieved for purposes of brand evaluation 

Information is filtered through short-term memory

When consumers perceive information, they briefly evaluate it in short-term memory to determine whether to store it in long-term memory or to filter it out as unimportant or undesirable information. 

Consumers decide whether to retain information or to filter it out by relating it to information they already have stored in memory. If the information is important they store it. 

It is stored in long-term memory

Information in long-term memory is stored as images that reflect our memory of past events (episodic memory) or as words and sentences that reflect facts and concepts we remember (semantic memory). 

Consumers’ memories of brands are in the form of both words and images. The “Nike” may evoke other ideas such as “Just Do It” and physical exertion during sports. It may also evoke images learned from advertising and from past experiences. 

It is retrieved for purposes of brand evaluation

Once consumers filter information through short-term memory and store in long-term memory it is available for retrieval. When retrieving information from long-term memory, consumers briefly store it in short-term memory and use it to evaluate brands. 

Factors Encouraging Retrieval

Activation, Placement and Transfer. 

Activate – e.g. “Nike” would activate various nodes associated with the word. (Athletes wearing Nike sport products.).

Placement – which other nodes consumers will connect the activated node.

Transfer – Retrieve from long-term memory to short-term memory. This information is important in making decision.

Factors Inhibiting Retrieval

Forgetting, Interference, Inconsistency. 

Forgetting – the inability to retrieve information from long-term memory.

Interference – occurs when related information node blocks the recall of the relevant information.

Inconsistency – the information delivered to the consumer can also inhibit activation or retrieval of a brand.

 

 

BRAND EVALUATION

Information on Brands comes from many sources. As a result consumers need a set of guidelines or decision rules for evaluating brands. These decision rules are the information-processing strategies consumers use in evaluating brands; 

Consumers use a variety of strategies, depending on;

• the level of involvement with the brand
• the amount of knowledge about the brand
• Information new?
• Information stored in memory? 

Evaluative versus Non-evaluative Processing

Evaluative Strategies – require the organization of information about alternative brands.

Non-evaluative Strategies – involve the use of a simple decision rule to avoid the necessity of evaluating brands. 

 

 

Category-Based versus Attribute-Specific Processing 

Evaluative strategies can be divided into category-based strategies and attribute-specific strategies.

 

Category-based strategy – involves evaluation of a brand as a totality rather than on specific attributes. Such brand evaluation requires development of a schema for the brand so that consumers can retrieve a set of associations as a whole for long-term memory. 

Attribute-specific strategy – requires comparison of each brand alternative on specific attributes such as quick service, good taste, or nice atmosphere; then consumers decide which brand to choose. 

Compensatory versus Non-compensatory Processing – The use of attributes specific evaluation. 

Compensatory evaluation – Consumers can evaluate brands one at a time across a range of attributes. 

Non-compensatory evaluation – evaluate specific across the range of brands being considered. 

Table 7.5 - Non-compensatory Processing Strategies

	NEC	Toshiba	Compaq	IBM
Processing speed Storage Capacity Keyboard/Display	2 6 7	7 6 5	7 4 3	5 6 7
Conjunctive Processing NEC is eliminated because of poor rating on processing speed Compaq is eliminated because of poor rating on keyboard/display & storage capacity Select between Toshiba & IBM
Lexicographic Processing Assume most important attributes are listed in same order as in table above Toshiba and Compaq are tied for first. Go to next most important attributes and select Toshiba on this basis

 

INFORMATION PROCESSING FOR UTILITARIAN VERSUS HEDONIC PRODUCTS 

Information acquisition, information processing, varies depending on whether the product is regarded primarily as utilitarian or hedonic. 

Information Retrieval - Information retrieved from long-term memory differs depending on whether the product is viewed as functional or pleasure seeking and emotive. Information for utilitarian products is likely to be based on actual experiences and past events. 

Information for hedonic products may be based on past experiences, but they may also be based on fantasy.

Brand Evaluation – The processing strategies used to evaluate brands also differ for utilitarian versus hedonic products. Consumers evaluating utilitarian products are likely to use attributes-specific strategies. Product information is sought to allow consumer to evaluate a brand’s performance. 

Consumers are likely to evaluate hedonic products by category-based strategies that are as a totality rather than a particular product attributes. 

STRATEGIC IMPLICATIONS OF INFORMATION PROCESSING 

There are two key components of information processing;

Storing information in memory and Evaluating brands. 

Memory Processes – A primary objective of advertising strategy is to ensure that consumers retain the message in the memory. Repetition….of messages 

Brand Evaluation - The manner by which consumers evaluate brands also has strategic implications. A more involved consumer requires the marketers to develop a message closely related to consumer needs. 

SOCIETAL IMPLICATIONS OF INFORMATION PROCESSING 

Consumers have the right to adequate information to give them the capability to make reasonable decisions. Societal issues emerge in this regard; 

1. Should consumers be given more information?
2. Do consumers sometimes use poor strategies to process complex brand information?

Evidence of less efficient information processing among younger and older consumers particularly on the web. 

More of Less Information – Studies have found that for some product categories - more information increases consumers’ confusion and leads to less efficient choices. 

Governments are taking an increasingly activist view that consumers need additional information. E.g. Medicines, drugs etc….  There are compelling reasons to support this trend. Reasons being; 

1. Consumers use such information and therefore it is important
2. When consumer uses this type of information, they often make more efficient purchase 

Compensatory or Non compensatory Processing?

Studies have found that in selecting information, most consumers used only two or three criteria despite the full availability of information.

Age Related Information Processing – Sufficient evidence of reduced processing capacities among the very young and the very old raises some serious societal issues.

 

Students are encouraged to read more into the topic to enhance knowledge in this area.

 

Source: Henry Assael (2005) Consumer Bahaviour A Strategic Approach (Biztantra)