Understanding Consumer
Decision Making
Manitoba Home Builders Association
2013 Housing Forum
November 6, 2013
Malcolm C. S...
Agenda
•
•
•
•
•
•
•

Exercise
Types of decisions
Involvement
Easy/quick decisions
Complex decisions
Implications for you
...
Think about something you have bought
lately that was a fast decision.
– What was it that you bought?
– Describe the purch...
Think about something you have bought
lately that took a lot of time to make the
decision.
– What was it that you bought?
...
Involvement
• Purchases vary in the level of consumer
involvement
• The level of involvement with a purchase is
often dete...
Types of Risk

•
•
•
•

Financial
Social
Ego
Safety
Types of Decisions
Decisions can be classified according to the
“effort” a consumer puts into the decision
1. Low-Involvem...
Low Involvement Decisions
•
•
•
•

Low risk
Few external influences from others
Evaluation takes place after the purchase
...
Extended Decision Making
• Usually occurs under high involvement
• Also known as “complex” decision making
• Consumers are...
Steps in Extended Decision Making
Problem
Recognition
Information
Search
Evaluation of
Alternatives
Purchase
Post-Purchase...
Step 1: Problem Recognition
• Also known as “Need Arousal”
• Occurs when there is a gap between the
consumer’s desired (or...
Step 1: Problem Recognition
• How will this happen?
– Consumers runs out of the product
– Consumer’s needs/values/attitude...
Steps in Extended Decision Making
Problem
Recognition
Information
Search
Step 2: Information Search
• Search from various sources
– Internal Sources
– External Sources
• Biased
• Unbiased

• Do w...
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...
Sets of Alternatives
Awareness Set

Inept Set

Inert Set

Unawareness Set

Evoked Set
Sets of Alternatives
Awareness Set

Inept Set

Inert Set

Unawareness Set

Evoked Set
Step 3: Evaluation of Alternatives
cont’d
• Consumers use evaluative criteria to help
make a decision
– Based on product f...
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 wil...
Steps in Extended Decision Making
Problem
Recognition
Information
Search
Evaluation of
Alternatives
Purchase
Post-Purchase...
Step 5: Post-Purchase Evaluation
• Post-purchase doubt
– Cognitive Dissonance
– Sometimes consumers search for more
inform...
Feedback in Extended
Decision Making
Problem
Recognition
Information
Search
Evaluation of
Alternatives
Purchase
Post-Purch...
Feedback
• Problem Recognition
– Did I correctly define the problem?

• Information Search
– Did I use the correct informa...
Feedback
• Evaluation of Alternatives
– Did I use the correct evaluative criteria (features)?
– Did I assess the evaluativ...
Who Buys?
Decision Making Unit (DMU):
• Initiator
• Influencer
• Decider
• Buyer
• User

(Gatekeeper plays an indirect rol...
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...
Implications
• Understand who plays what role in the
Decision Making Unit
• Understand where the consumer is in the
decisi...
Questions?
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Understanding Consumer Decision Making: Dr. Malcolm Smith, I.H. Asper School of Business

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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 Making: Dr. Malcolm Smith, I.H. Asper School of Business

  1. 1. Understanding Consumer Decision Making Manitoba Home Builders Association 2013 Housing Forum November 6, 2013 Malcolm C. Smith, Ph.D. Department of Marketing I.H. Asper School of Business University of Manitoba
  2. 2. Agenda • • • • • • • Exercise Types of decisions Involvement Easy/quick decisions Complex decisions Implications for you Questions
  3. 3. 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?
  4. 4. 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?
  5. 5. 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
  6. 6. Types of Risk • • • • Financial Social Ego Safety
  7. 7. Types of Decisions Decisions can be classified according to the “effort” a consumer puts into the decision 1. 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 Decisions High-Involvement Decisions
  8. 8. 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
  9. 9. 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
  10. 10. Steps in Extended Decision Making Problem Recognition Information Search Evaluation of Alternatives Purchase Post-Purchase Evaluation
  11. 11. 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 decisionmaking process
  12. 12. 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”
  13. 13. Steps in Extended Decision Making Problem Recognition Information Search
  14. 14. 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?
  15. 15. Steps in Extended Decision Making Problem Recognition Information Search Evaluation of Alternatives
  16. 16. 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
  17. 17. Sets of Alternatives Awareness Set Inept Set Inert Set Unawareness Set Evoked Set
  18. 18. Sets of Alternatives Awareness Set Inept Set Inert Set Unawareness Set Evoked Set
  19. 19. 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”
  20. 20. Steps in Extended Decision Making Problem Recognition Information Search Evaluation of Alternatives Purchase
  21. 21. 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?”
  22. 22. Steps in Extended Decision Making Problem Recognition Information Search Evaluation of Alternatives Purchase Post-Purchase Evaluation
  23. 23. 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
  24. 24. Feedback in Extended Decision Making Problem Recognition Information Search Evaluation of Alternatives Purchase Post-Purchase Evaluation
  25. 25. Feedback • Problem Recognition – Did I correctly define the problem? • Information Search – Did I use the correct information sources? – Did I use enough sources?
  26. 26. 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?
  27. 27. Who Buys? Decision Making Unit (DMU): • Initiator • Influencer • Decider • Buyer • User (Gatekeeper plays an indirect role in the DMU)
  28. 28. How can you use this information?
  29. 29. 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
  30. 30. 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
  31. 31. Questions?

×