Topic 2 Complex Decision Making

PURCHASE AND CONSUMPTION

The process where consumers involved in detailed and comprehensive information gathering and brand evaluation among different or alternative products and service available in a particular market before a purchasing decision is made to satisfy a particular need.

Nature: Consumers are more involved with the product or product is more important to the consumer

CONDITIONS FOR COMPLEX DECISION MAKING

Nature of product offered by the market.

The process by which consumers make purchasing decisions must be understood to develop strategic applications. Consumer decision making is not a single process. Consumer are faced with complex decision making when the product is import to consumers.

Premium priced products

• Consumers’ Consumption Risk Exposure level (High risk products)
• Level of product operating complexity
• Consumers’ social class/status and personal ego

New products  

Time Poverty (adequate time for extensive information search and processing)

Availability of adequate product information to evaluate alternative brands

Consumer’s ability to process available information. 

FIVE PHASE COMPLEX DECISION MAKING MODEL/CYCLE

 

Need Arousal	Consumer Information Processing	Brand Evaluation	Purchase	Post Purchase Evaluation
				Feedback

 

Research on decision making has identified five phases in the decision process.

 

 

 

Five Phase in Decision Process	Complex Decision Making
Problem Recognition	Need Arousal
Search for Information	Consumer Information Processing
Evaluation for Alternatives	Brand Evaluation
Choice	Purchase
Outcome of the Choice	Post Purchase Evaluation

 

 

Need Arousal - a drive to satisfy a future goal from a unfulfilled current need.

Need recognition - shapes the benefits consumers seek in a brand and brand attitudes.

Need Arousal: a drive to satisfy a future goal from a unfulfilled current need. Need recognition shapes the benefits consumers seek in a brand and brand attitudes.

Desired benefits and brand attitudes determine the consumer’s Psychological set (the perception of the consumer towards various brands prior to seeking and processing information.

Inputs Variables – Need Arousal

Internal
Consumer’s past experiences   Characteristics   Motives	Need Recognition	Consumer’s Psychological Set
External	Current Situation	Benefits sought
Environmental Influences   Past marketing stimuli	Motivation to Act	Brand Attitude
	Desired Goal

 

Examples of Input Variables

·         Consumers’ Past Experiences	Rob inherited his parent’s old Toyota truck. He got married to Linda and decided to continue using the truck because from experience, this old truck has served them well and Rob and Linda expect same to continue.(Expectations) Any deviations from these expectation may or might cause them to consider alternative models.
·         Consumers Characteristics	Demographics, Lifestyles and Personalities has an impact on the choices made
·         Consumers Motives	Motives are general drives that direct a consumer’s behaviour toward attaining his or her needs. The greater the disparity between a consumer’s current situation and desired goals, the greater the motivational drive to act to satisfy consumer needs.
·         Environmental Influences	Consumers purchase and use many products in a social setting. The purchase of a car is frequently a family decision, and normally members of the family have an influence in the decision making.
·         Past Marketing Stimuli	Past information about brand characteristics and prices will also affect consumers’ needs

 Need Arousal Fundamentals: Theories of Need

 

Hierarchy of Five Needs (Abraham Maslow)

Consumers are motivated to act by first satisfying the lowest level of needs before the next higher level needs becomes activated.

 

Utilitarian vs. Hedonic Needs

Utilitarian – Motivation to satisfy a particular unsatisfied utility or benefit through a specific function of a product or product performance associated with actual consumption. Satisfaction is determined by the degree to which the product meets the satisfaction of the consumer.

Hedonic- More experiential and consumer seek to achieve pleasure from the product (more driven by emotion or desire to appear masculine or feminine. Show social status, wealth, pride, prestige etc...) Involves the use of a product to fulfil fantasies and satisfy emotions, such as pleasurable experiences and emotion. Advertisers’ attempts to fulfil Hedonic consumers through emotional themes while Utilitarian through product information.

 

The Consumer's Psychological Set

 

H. Assael (2005) The consumer's psychological set is his or her state of mind at the time needs are recognized and motives are aroused. In the context  of consumer decision making, the consumer's psychological set is directed to brand, product, or store evaluations. The psychological set is made up of two components; Benefit sought and Brand attitude.

 

Benefits Sought (Criteria) - What important factors is the consumer looking for? Is the truck you planning to buy economical. reliable, safe and can do the job you expect it to do?

 

H. Assael (2005) The distinction between Hedonic and Utilitarian needs also applies to benefits and goal objects. Hedonic needs will lead to defining pleasure-orientated benefits and goal objects in satisfying these needs. The relationships between needs, motives, benefits, and goal objects for both utilitarian and hedonic needs are provided below.

 

Needs	Motivation	Benefit Sought	Goal Objects
Utilitarian: Adequate transport	Drive to Act to meet needs	Economy	Gas mileage, Service Cost, Sticker price
Hedonic: Pleasure in driving	Drive to act to meet needs	Good feeling behind the wheel	Purring engine. Smell of the car and smooth riding

Assael (2005)  Brand Attitudes - are consumers' predispositions to evaluate a brand favourably. They are represented by three factors; Beliefs about brands, Evaluation of brands, and the tendency to act. The assumption is that these components operate in sequence as follows;

1. Beliefs are formed about the brand that influence
2. Attitudes toward the brand, which then influence.
3. An intention to buy or not to buy.

If brand beliefs result in positive attitudes, there is a greater chance the consumer will buy the brand.

 

Consumer Information Search and Processing.

Stimulus Exposure – Once a need is recognised, consumers are more likely to search for and process information relevant to that need. 

	Search for additional Information
Needs Arousal	Stimulus Exposure	Selectivity	Perception of Stimuli
			Memory

 Perception of Stimuli – Is the process by which consumers select, organize and interpret stimuli to make sense of them. Stimuli are more likely to be perceived when they;

• Conform to consumers’ past experiences.
• Conform to consumers’ current beliefs about a brand
• Are not too complex
• Are believable
• Relate to set of current needs
• Do not produce excessive fears and anxieties

Memory – Retained information is stored in consumers’ memory, which is composed of past information and experiences. This information can be recalled for future use

Search for Additional Information – When consumers do not have enough information to make adequate decisions, they search for additional information through reports, journals, product magazines or other people that have use the products.

Brand Evaluation - Based on selected and retained information to evaluate brands a consumer prefers the brand that will give the most satisfaction based on the benefits sought.

Brand Association - When discussing brand association. consumers must develop a priority of desired benefits and relates a brand's characteristics to these benefits. Let us look at the example of a care in order of importance; Economical, Safety, Service dependability, Performance, Comfort and Style.

Expected Satisfaction

Consumers develop a set of expectations based on the degree to which a brand or product satisfies the benefits consumers desires. Example; the brand that comes closest to satisfying the most important benefits is expected to provide the most satisfaction.

Purchase Decision

Purchase decisions are primarily based on the results of the brand evaluation process.

Intention to buy based on brand selection and perceived expected benefits

Actual Purchase

No Purchase

The time lag between intention and purchase is likely to be greater in complex decision making because of the greater number of actions required for a purchase to take place.

Example:

Store selection is important (require decision of its own).Where to purchase a dress or suit may be more critical than what brand to buy. Negotiations to get the best terms etc.....

Product versus Services Consumption

Products are tangible entities and Services are intangible. Services can be produced and consumed simultaneously such as Airline Industry

Post Purchase Evaluation

Fulfilment of the consumer’s ultimate needs are evaluated in the process of product consumption.

Purchase vs. Consuming - It is important to distinguish between purchase and consumption for three reasons:-

1. Product may be purchase by one person and consume by another. Here the consumer not the purchaser determines product satisfaction.)
2. The purchase depends on consumer expectations of the degree to which brands are likely to satisfy needs. Consumption determines whether these expectations are confirmed.
3. Consumer’s post-purchase evaluation determines whether the brand is likely to be repurchased

Satisfaction vs. Dissatisfaction – Satisfaction occurs when consumer expectations are met or exceeded and the purchase decision is reinforced (Repurchase takes place)

Dissatisfaction results when consumer expectations are not met.

 Purchase and Post purchase Evaluation

(1) Need Arousal	(2) Consumer Information Processing	(3) Brand Evaluation	(4) Intention To Buy	(5) No Purchase
				(6)   Instrumental Action
		(9) Feedback	(8) Post Purchase Evaluation	(7) Purchase

 

Post- Purchase Dissonance

Negative consequences of a purchase decision and ultimate dissatisfaction in consumption or insecurity in consumption.

Complex Decision Making and Store Choices

Consumers also make decisions regarding the stores in which they shop. Frequently consumers’ choice of store comes first and influences their choice of brand. Similarly we often make a brand decision in the store when we shop for appliances or electronics.

A Model of Store Choice - There are many factors that would make a consumer decide on store choices; Location, Store attributes, Accessibility, Images, Stock Availability etc.

Need Arousal	Information Processing	Brand Evaluation
Purchasing Needs   Shopping Needs		Store Attributes   Store Images
Post Purchase Evaluation		Store Choices

 

Store Choice and Brand Choice

• When store loyalty is high - the shop has the desired product
• When brand loyalty is low - No strong loyalty to any brand
• When brand information is inadequate - less or no information is available

 

Source: Henry Assael (2005) Consumer Behaviour A Strategic Approach