Decision Making (Presentable) (CB) by Group.pptx

This is how to do the decision making based on how the customer preceive tha products or services

1. Choosing and Using Products Related to Decision Making Gregorius Turang Calvin Liando

2. Consumers As Problem Solvers A consumer purchase is a response to a problem. Steps in the decision process: (1) Problem recognition (2) Information search (3) Evaluation of alternatives (4) Product choice Amount of effort put into a purchase decision differs with each purchase.

3. Stages in Consumer Decision Making

4. Illustrating the Decision-Making Process This ad by the U.S. Postal Service presents a problem, illustrates the decision-making process, and offers a solution.

5. Decision-making Perspectives Rational perspective Purchase momentum Constructive processing Behavioral influence perspective Experiential perspective

6. Types of Consumer Decisions Extended Problem Solving: Corresponds to traditional decision-making perspective Limited Problem Solving: People use simple decision rules to choose among alternatives Habitual Decision Making: Choices made with little to no conscious effort Automaticity: Characteristic of choices made with minimal effort and without conscious control

7. Problem Recognition Problem recognition: Occurs whenever the consumer sees a significant difference between his or her current state of affairs and some desired or ideal state Need recognition: The quality of the consumer ’ s actual state moves downward Opportunity recognition: The consumer ’ s ideal state moves upward Primary demand: Consumers are encouraged to use a product or service regardless of the brand they choose Secondary demand: Consumers are encouraged to use a specific brand – can only occur if primary demand exists

8. Information Search Types of Information Search: Prepurchase search: Consumer recognizes a need and then searches the marketplace for specific information Ongoing search: Browsing for fun or staying up-to-date on what ’ s happening in the market Internal Versus External Search: Internal search: Scanning our own memory banks for information about product alternatives External search: Obtaining product information from advertisements, friends, or by observing others

9. Internal vs. External Search Internal search Scanning memory to assemble product alternative information External search Obtaining information from ads, retailers, catalogs, friends, family, people-watching, Consumer Reports , etc.

10. Silent Commerce Enables transactions/information gathering without intervention by consumers or managers Smart products RFID tag stores information and has an antenna to communicate with computer network Discussion: silent commerce has the potential to automate many of our decisions Do you see any downsides to this trend?

11. Other Types of Information Search Deliberate Versus “Accidental” Search: Directed Learning: Results from existing knowledge from previous active acquisition of information Incidental Learning: Passive acquisition of information through exposure to advertising, packaging, and sales promotion activities The Economics of Information: Approach that assumes consumers will gather as much data as needed to make a decision Utility: Rewards of continued search Variety Seeking: Desire to choose new alternatives over familiar ones

12. 9- 12 Do Consumers Always Search Rationally? Some consumers tend to avoid external search, especially with minimal time to do so and with durable goods (e.g. autos) Symbolic items = more external search High perceived risk

13. Do Consumers Always Search Rationally? (Cont’d) Brand switching Variety seeking: unpredictability can be rewarding to consumers When in good mood or little stimulation elsewhere (sensory-specific satiety) We select familiar brands, when decision situation is ambiguous or when there is little information about competing brands

14. Biases in the Decision-Making Process Mental Accounting: Decisions are influenced by the way a problem is posed (framing) Sunk-cost fallacy: Having paid for something makes the consumer reluctant to waste it Loss Aversion: People place more emphasis on loss than gain Prospect Theory: A descriptive model of how people make choices that finds that utility is a function of gains and losses

15. How Much Search Occurs? Search activity is greater when… Purchase is important There is a need to learn more about purchase Relevant info is easily obtained/utilized One is younger, is better-educated, and enjoys shopping/fact-finding One is female (compared to male) One places greater value on own style/image

16. Perceived Risk Belief that product has negative consequences Expensive, complex, hard- to-understand products Product choice is visible to others (risk of embarrassment for wrong choice) Risks can be objective (physical danger) and subjective (social embarrassment)

17. Evaluation of Alternatives Choosing a brand/product among available alternatives requires much of the effort that goes into a purchase decision Just think about how many brands or different brand variations there are! Discussion: Do you agree that having too many choices is a bigger problem than not having enough choices? Is it possible to have too much of a good thing?

18. “ Buy Button” in Your Brain Neuromarketing f.M.R.I. used to measure consumers’ reactions to various products/services DaimlerChrysler confirmed that sports cars activated reward center in male brains Coke’s strong brand identity was actually displayed as unique in f.M.R.I. studies What we say and how our brain reacts can be two different things!

19. Identifying Alternatives Extended problem solving = evaluation of several brands Occurs when choice conflicts arouse negative emotions (involving difficult trade-offs) Habitual decision = consider few/no brand alternatives

20. Identifying Alternatives (Cont’d) Evoked set vs. consideration set We usually don’t seriously consider every brand we know about In fact, we often include only a surprisingly small number of alternatives in our evoked set Marketers must focus on getting their brands in consumers’ evoked set We often do not give rejected brands a second chance. Discussion: Why?

21. Product Categorization We evaluate products in terms of what we already know about a (similar) product Evoked-set products usually share similar features When faced with a new product, we refer to existing product category knowledge to form new knowledge Marketers want to ensure that their products are correctly grouped in knowledge structures Jell-O gelatin flavors for salads

22. Thank You For Your Attention 9- 22