Cb 2 Cdp Process

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Cb 2 Cdp Process

  1. 1. The Consumer Decision Process Dr. Rohit Vishal Kumar Xavier Institute of Social Service From the book: “Consumer Behaviour” 10/e R.D. Blackwell, P.W. Miniard and J.N. Engel Covers Chapters: 3, 4, 5, and 6
  2. 2. The Consumer Decision Process <ul><li>Also known as the EKB (Engell, Kollat and Blackwell) Model </li></ul><ul><li>Seven major stages of consumption </li></ul>Need Recognition Search for Information Pre-Purchase Evaluation of Alternatives Purchase Consumption Post Consumption Evaluation Divestment
  3. 3. How the CDP Model is Used? <ul><li>Identify relationships between variables that affect consumer decisions </li></ul><ul><li>Identify topics for additional research </li></ul><ul><li>Develop and Implement Marketing Mix Strategies </li></ul>
  4. 4. Factors influencing the Process: <ul><li>Individual Factors: </li></ul><ul><ul><li>Demographics & Psychographics </li></ul></ul><ul><ul><li>Personality </li></ul></ul><ul><ul><li>Consumer Resources </li></ul></ul><ul><ul><li>Motivation </li></ul></ul><ul><ul><li>Knowledge </li></ul></ul><ul><ul><li>Emotions </li></ul></ul><ul><li>Environmental Influences </li></ul><ul><ul><li>Culture, Sub-Culture and Social Class </li></ul></ul><ul><ul><li>Family </li></ul></ul><ul><ul><li>Group Influences </li></ul></ul><ul><ul><li>Situational Behaviours </li></ul></ul><ul><li>Psychological Influences </li></ul><ul><ul><li>Information Processing </li></ul></ul><ul><ul><li>Perception and Learning </li></ul></ul><ul><ul><li>Attitude and Behaviour Change </li></ul></ul>      
  5. 5. Types of Decision Process (1/2) <ul><li>Extended Problem Solving (EPS) </li></ul><ul><ul><li>The decision process is detailed and rigorous </li></ul></ul><ul><ul><li>Time taken is extremely long </li></ul></ul><ul><ul><li>All 7 stages of CDP are likely to be followed </li></ul></ul><ul><li>Midrange Problem Solving (MPS) </li></ul><ul><ul><li>The decision process is detailed but not so rigorous </li></ul></ul><ul><ul><li>Time taken is fairly long </li></ul></ul><ul><ul><li>All 7 stages of CDP may not be followed </li></ul></ul><ul><li>Limited Problem Solving (LPS) </li></ul><ul><ul><li>The decision process is quick </li></ul></ul><ul><ul><li>Time taken is short </li></ul></ul><ul><ul><li>All 7 stages of CDP are likely not to be followed </li></ul></ul>Personal Involvement Risk of Product Purchase High Medium Low EPS MPS LPS
  6. 6. Types of Decision Process (2/2) <ul><li>Habitual Decision Making: </li></ul><ul><ul><li>Brand Loyalty </li></ul></ul><ul><ul><ul><li>High involvement with the brand </li></ul></ul></ul><ul><ul><ul><li>No incentive to change until compelling evidences dictate otherwise </li></ul></ul></ul><ul><ul><li>Inertia </li></ul></ul><ul><ul><ul><li>Low involvement with product / brand </li></ul></ul></ul><ul><ul><ul><li>Purchase is habitual in nature </li></ul></ul></ul><ul><ul><ul><li>Change can occur with little incentive </li></ul></ul></ul><ul><li>Impulse Purchase </li></ul><ul><ul><li>Sudden and spontaneous desire to act accompanied by urgency </li></ul></ul><ul><ul><li>State of psychological disequilibrium </li></ul></ul><ul><ul><li>Minimal Objective Evaluation, emotions dominate </li></ul></ul><ul><ul><li>A lack of regard for consequences </li></ul></ul><ul><li>Variety Seeking </li></ul><ul><ul><li>Seeking change / excitement for no known cause </li></ul></ul><ul><ul><li>Extremely brand disloyal </li></ul></ul>
  7. 7. Stage 1: Need Recognition
  8. 8. What is need recognition? <ul><li>Need recognition occurs when there is a discrepancy between the actual state (consumer’s current situation) and desired state (the situation the consumer wants to be in) </li></ul><ul><li>Importance of Need Recognition </li></ul><ul><ul><li>Reveals market segment with unsatisfied desires </li></ul></ul><ul><ul><li>Reveals barriers to success </li></ul></ul><ul><ul><li>Provides the starting point for a new business </li></ul></ul><ul><li>Types of Need Recognition </li></ul><ul><ul><li>Generic Need Recognition: </li></ul></ul><ul><ul><ul><li>Occurs when the need for an entire product family is stimulated </li></ul></ul></ul><ul><ul><ul><li>EG: Need to have milk or milk products </li></ul></ul></ul><ul><ul><li>Selective Need Recognition: </li></ul></ul><ul><ul><ul><li>Occurs when the need for a specific brand within a product category (selective demand) is stimulated </li></ul></ul></ul><ul><ul><ul><li>EG: Will have Amul’s Toned Milk </li></ul></ul></ul>
  9. 9. Stage 2: Search for Information
  10. 10. What is Search? <ul><li>Search represents the motivated activation of knowledge stored in memory or acquisition of information from the environment about potential need satisfiers </li></ul><ul><li>Types of Search Process: </li></ul><ul><ul><li>Internal Search: </li></ul></ul><ul><ul><ul><li>When memory is searched for a solution to the problem </li></ul></ul></ul><ul><ul><ul><li>If internal search fails, external search is undertaken </li></ul></ul></ul><ul><ul><li>External Search: </li></ul></ul><ul><ul><ul><li>Occurs when we collect information from the marketplace </li></ul></ul></ul><ul><ul><ul><li>Pre-Purchase Search </li></ul></ul></ul><ul><ul><ul><ul><li>When the external search is motivated by an upcoming purchase decision </li></ul></ul></ul></ul><ul><ul><ul><li>On-Going Search </li></ul></ul></ul><ul><ul><ul><ul><li>Information is acquired on a relatively regular basis regardless of purchase need </li></ul></ul></ul></ul>
  11. 11. Conducting External Search <ul><li>External Search Set: </li></ul><ul><ul><li>Those choice alternatives that a consumer gathers information during pre-purchase search </li></ul></ul><ul><li>Apply a Funnel Search Strategy </li></ul>Total Set Awareness Set Consideration Set Choice Set Decision Retrieval Set
  12. 12. Where we get Information? <ul><li>Personal Source </li></ul><ul><ul><li>Opinion Leaders </li></ul></ul><ul><ul><li>Sales Personnel </li></ul></ul><ul><ul><li>Other Shoppers </li></ul></ul><ul><ul><li>Family & Friends </li></ul></ul><ul><ul><li>Co-Workers & Colleagues </li></ul></ul><ul><li>Impersonal Source </li></ul><ul><ul><li>Product Labels </li></ul></ul><ul><ul><li>Store Signage </li></ul></ul><ul><ul><li>Point-of-Purchase Materials </li></ul></ul><ul><ul><li>Internet Forums </li></ul></ul><ul><ul><li>Advertising </li></ul></ul><ul><ul><li>Catalogues </li></ul></ul><ul><ul><li>Magazines </li></ul></ul><ul><ul><li>Television and Radio </li></ul></ul><ul><ul><li>Websites </li></ul></ul>
  13. 13. Stage 3: Pre-Purchase Evaluation
  14. 14. Evaluation of Alternatives <ul><li>From Retrieval Set, a consumer narrows down his choice by evaluating alternatives before purchase </li></ul><ul><li>Evaluation Strategies: </li></ul><ul><ul><li>Relying on pre-existing evaluation </li></ul></ul><ul><ul><ul><li>Occurs when consumer already have information stored in their memory </li></ul></ul></ul><ul><ul><ul><li>Branding very important in developing pre-existing evaluation </li></ul></ul></ul><ul><ul><li>Construction of new evaluation </li></ul></ul><ul><ul><ul><li>Categorization Process: </li></ul></ul></ul><ul><ul><ul><ul><li>Evaluation of choice alternatives depends on particular category to which it is assigned </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Brand Extension is a strategy under the categorization process </li></ul></ul></ul></ul><ul><ul><ul><li>Piecemeal Process: </li></ul></ul></ul><ul><ul><ul><ul><li>A evaluation is derived from consideration of alternatives advantages and disadvantages along important product dimensions </li></ul></ul></ul></ul>
  15. 15. Piecemeal Process <ul><li>Products are broken down into set of features </li></ul><ul><li>Feature by feature comparison takes place </li></ul><ul><li>The minimum acceptable feature performance is known as a “cut-off” </li></ul><ul><li>Is of two types: </li></ul><ul><ul><li>Non-Compensatory Strategy </li></ul></ul><ul><ul><ul><li>Lexicographical Strategy </li></ul></ul></ul><ul><ul><ul><li>Elimination by Aspect Strategy </li></ul></ul></ul><ul><ul><ul><li>Conjunctive Strategy </li></ul></ul></ul><ul><ul><li>Compensatory Strategies </li></ul></ul><ul><ul><ul><li>Simple Additives </li></ul></ul></ul><ul><ul><ul><li>Weighted Additives </li></ul></ul></ul>
  16. 16. Lexicographical Strategy <ul><li>Attribute Importance Brand A Brand B Brand C Brand D </li></ul><ul><li>Taste 1 5 5 4 5 </li></ul><ul><li>Price 2 4 3 5 2 </li></ul><ul><li>Nutrition 3 3 3 1 5 </li></ul><ul><li>Convenience 4 2 3 3 5 </li></ul>1: Poor 2: Fair 3: Good 4: Very Good 5: Excellent <ul><li>Brands are compared on the most important attribute </li></ul><ul><li>If one brand is perceived superior on this attribute the brand is selected </li></ul><ul><li>Else the next most important attribute is taken up </li></ul><ul><li>1 st Comparison : On Taste { A, B, D } </li></ul><ul><li>2 nd Comparison : On Price { A } </li></ul>
  17. 17. Elimination by Aspect Strategy <ul><li>Attribute Importance Brand A Brand B Brand C Brand D </li></ul><ul><li>Taste 1 5 5 4 5 </li></ul><ul><li>Price 2 4 3 5 2 </li></ul><ul><li>Nutrition 3 3 3 1 5 </li></ul><ul><li>Convenience 4 2 3 3 5 </li></ul>1: Poor 2: Fair 3: Good 4: Very Good 5: Excellent <ul><li>Brands are compared on the most important attribute </li></ul><ul><li>If one brand is perceived superior on this attribute the brand is selected </li></ul><ul><li>Else minimum acceptable cut-offs are imposed and the process repeated </li></ul><ul><li>Suppose the minimum acceptable cutoff Taste is “Very Good” and on Price it is “Excellent” </li></ul><ul><li>1 st Comparison : On Taste { A, B, C, D } </li></ul><ul><li>2 nd Comparison : On Price { C } </li></ul>
  18. 18. Conjunctive Strategy <ul><li>Attribute Importance Brand A Brand B Brand C Brand D </li></ul><ul><li>Taste 1 5 5 4 5 </li></ul><ul><li>Price 2 4 3 5 2 </li></ul><ul><li>Nutrition 3 3 3 1 5 </li></ul><ul><li>Convenience 4 2 3 3 5 </li></ul>1: Poor 2: Fair 3: Good 4: Very Good 5: Excellent <ul><li>Minimum acceptable cut-offs are imposed on all attributes </li></ul><ul><li>Brand failing to meet the cutoff are rejected </li></ul><ul><li>Suppose the minimum acceptable cutoff on all attributes is “Good” </li></ul><ul><li>1 st Comparison : { B } </li></ul>
  19. 19. Simple Additive Strategy <ul><li>Attribute Importance Brand A Brand B Brand C Brand D </li></ul><ul><li>Taste 1 5 5 4 5 </li></ul><ul><li>Price 2 4 3 5 2 </li></ul><ul><li>Nutrition 3 3 3 1 5 </li></ul><ul><li>Convenience 4 2 3 3 5 </li></ul>1: Poor 2: Fair 3: Good 4: Very Good 5: Excellent <ul><li>Attribute ranks are added up and the brand with the highest rating selected </li></ul><ul><li>Brand A : 14 </li></ul><ul><li>Brand B : 14 </li></ul><ul><li>Brand C : 13 </li></ul><ul><li>Brand D : 17 </li></ul>
  20. 20. Weighted Additive Strategy <ul><li>Attribute Importance Brand A Brand B Brand C Brand D </li></ul><ul><li>Taste 1 5 5 4 5 </li></ul><ul><li>Price 2 4 3 5 2 </li></ul><ul><li>Nutrition 3 3 3 1 5 </li></ul><ul><li>Convenience 4 2 3 3 5 </li></ul>1: Poor 2: Fair 3: Good 4: Very Good 5: Excellent <ul><li>Attribute ranks are weighted with importance added up and the brand with the highest rating selected </li></ul><ul><li>This process is similar to multi-attribute modeling </li></ul><ul><li>Brand A : (1x5 + 2x4 + 3x3 + 4x2) / (1+ 2 + 3 + 4) = 3.00 </li></ul><ul><li>Brand B : (1x5 + 2x3 + 3x3 + 4x3) / (1+ 2 + 3 + 4) = 3.20 </li></ul><ul><li>Brand C : (1x4 + 2x5 + 3x1 + 4x3) / (1+ 2 + 3 + 4) = 2.90 </li></ul><ul><li>Brand D : (1x5 + 2x2 + 3x5 + 4x5) / (1+ 2 + 3 + 4) = 4.40 </li></ul>
  21. 21. How good are we at evaluation? <ul><li>Pathetic at rational evaluation of products </li></ul><ul><li>Largely we tend to equate quality with price </li></ul><ul><li>Lack of knowledge is the prime culprit </li></ul><ul><li>Marketers can modify “cues” / “signals” by advertising or promotions </li></ul>
  22. 22. Exercise <ul><li>Groups to Present: A and B </li></ul><ul><li>Have a Power-Point presentation ready (4-5 pages) </li></ul><ul><li>The groups would be called to present in the class </li></ul><ul><li>Evaluation will be out of 15 marks </li></ul>Question A Interview three students and identify three recent instances when they engaged in Extended, Midrange and Limited Problem Solving. What factors were common to decision making? Question B What sources of information would be used by students while making the purchase of the following items: Laptops, Scooty or Motorcycles and Valentine Day Cards. Are there individual differences. How can the Valentine Day Card Manufacturer bridge these differences. [Interview 3-5 students to get the answers]
  23. 23. Stage 4: Purchase
  24. 24. Purchase Decisions <ul><li>Whether to Buy ? </li></ul><ul><ul><li>“To buy or not to buy” – that is the question </li></ul></ul><ul><li>When to Buy ? </li></ul><ul><ul><li>Occasion of purchase </li></ul></ul><ul><li>What to Buy ? </li></ul><ul><ul><li>Product type and Brand </li></ul></ul><ul><li>Where to Buy ? </li></ul><ul><ul><li>Retail and Store Decisions </li></ul></ul><ul><li>How to Buy ? </li></ul><ul><ul><li>Payment related decisions </li></ul></ul>
  25. 25. Types of Purchase <ul><li>Fully Planned Purchase </li></ul><ul><ul><li>Both the product and the brand are chosen in advance </li></ul></ul><ul><li>Partially Planned Purchase </li></ul><ul><ul><li>Intent to buy the product exists but brand choice is deferred until shopping </li></ul></ul><ul><li>Unplanned Purchase </li></ul><ul><ul><li>Both the product and brand are chosen at the point of sale </li></ul></ul><ul><ul><li>Mostly impulse purchase </li></ul></ul><ul><ul><li>Need triggered by point of purchase display </li></ul></ul><ul><ul><li>Accounts for 54% – 68% of items purchased in USA </li></ul></ul>
  26. 26. Why People Shop? <ul><li>Personal Motive </li></ul><ul><ul><li>Role Playing </li></ul></ul><ul><ul><li>Diversion </li></ul></ul><ul><ul><li>Self Gratification </li></ul></ul><ul><ul><li>Learning about new trends </li></ul></ul><ul><ul><li>Physical Activity </li></ul></ul><ul><ul><li>Sensory Stimulation </li></ul></ul><ul><li>Social Motive </li></ul><ul><ul><li>Social Experience outside home </li></ul></ul><ul><ul><li>Peer Group attraction </li></ul></ul><ul><ul><li>Status and Authority </li></ul></ul><ul><ul><li>Pleasure of Bargaining </li></ul></ul>
  27. 27. The Retail Store Choice (1/3) <ul><li>Store Image: </li></ul><ul><ul><li>The overall perception of a store </li></ul></ul><ul><li>Determinants of a Retail Success / Failure </li></ul><ul><ul><li>Location </li></ul></ul><ul><ul><ul><li>Perceived vs. actual time taken to reach store </li></ul></ul></ul><ul><ul><ul><li>Ease of parking </li></ul></ul></ul><ul><ul><ul><li>Quality and Presentation of Merchandising </li></ul></ul></ul><ul><ul><ul><li>Checkout Procedures </li></ul></ul></ul><ul><ul><li>Nature and Depth of Assortment </li></ul></ul><ul><ul><ul><li>Depth, Breadth and Quality of Assortment </li></ul></ul></ul><ul><ul><li>Price </li></ul></ul><ul><ul><ul><li>Importance of price depends on the nature of buyers </li></ul></ul></ul><ul><ul><ul><li>Customers may think of price as “total price” in terms of all retail activities </li></ul></ul></ul><ul><ul><ul><li>Consumers react to short term change in price </li></ul></ul></ul>
  28. 28. The Retail Store Choice (2/3) <ul><li>Determinants of a Retail Success / Failure (Contd…) </li></ul><ul><ul><li>Advertising and Promotion </li></ul></ul><ul><ul><ul><li>Image Advertising: </li></ul></ul></ul><ul><ul><ul><ul><li>used to form store level expectation </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Big Bazar – “isse sasta aur accha kuch nahin” </li></ul></ul></ul></ul><ul><ul><ul><li>Information Advertising </li></ul></ul></ul><ul><ul><ul><ul><li>Used to form product level expectation </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Big Bazar – Buy products Rs. 500 and 5 kg Atta free </li></ul></ul></ul></ul><ul><ul><li>Sales Personnel </li></ul></ul><ul><ul><ul><li>The interaction point between the consumer and the company </li></ul></ul></ul><ul><ul><ul><li>Perceived knowledge and expertise </li></ul></ul></ul><ul><ul><ul><li>Perceived trustworthiness </li></ul></ul></ul><ul><ul><ul><li>Customer Knowledge </li></ul></ul></ul><ul><ul><ul><li>Adaptability </li></ul></ul></ul>“ In Service Marketing Sales Personnel Play a Key Role” The interaction between a sales personnel and the customer is known as sales encounter or service dramaturgy
  29. 29. The Retail Store Choice (3/3) <ul><li>Determinants of a Retail Success / Failure (Contd…) </li></ul><ul><ul><li>Services Offered </li></ul></ul><ul><ul><ul><li>Self Service, Ease of Merchandise Return </li></ul></ul></ul><ul><ul><ul><li>Home Delivery, Credit System etc. </li></ul></ul></ul><ul><ul><li>Physical store Attributes </li></ul></ul><ul><ul><ul><li>Color, Layout, Washrooms, Ambience, Music etc. of the store </li></ul></ul></ul><ul><ul><ul><li>Also referred to as “store atmospherics” </li></ul></ul></ul><ul><ul><ul><li>Creates a “gestalt” for store recognition </li></ul></ul></ul><ul><ul><li>Store Clientele </li></ul></ul><ul><ul><ul><li>What kind of people patronize the store </li></ul></ul></ul><ul><ul><li>POP Material: </li></ul></ul><ul><ul><ul><li>Old Methods still popular – pop, banner, festoons etc. </li></ul></ul></ul><ul><ul><ul><li>E-Theatre, d-POP, Computer Enhanced Merchandising, Digital Self Service </li></ul></ul></ul><ul><ul><li>Customer Logistics </li></ul></ul><ul><ul><ul><li>Is the speed and ease with which customers move through retail and shopping process </li></ul></ul></ul><ul><ul><ul><li>Focuses on in-store experience of shopping and checking-out </li></ul></ul></ul>
  30. 30. Types of Retailing <ul><li>Changing Retail Landscape: </li></ul><ul><ul><li>Location Based Retailing: </li></ul></ul><ul><ul><ul><li>Value Oriented Retailing </li></ul></ul></ul><ul><ul><ul><ul><li>Hyper-markets : Typically greater than 1,50,000 sq. ft. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Category Killer : Hyper-markets with restricted product line </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Big-Box Stores : Hyper-markets selling to wholesale purchasers </li></ul></ul></ul></ul><ul><ul><ul><li>Shopping Malls </li></ul></ul></ul><ul><ul><ul><li>Mom-n-Pop Stores ( Kirana stores) </li></ul></ul></ul><ul><ul><li>Direct Marketing: </li></ul></ul><ul><ul><ul><li>Refers to strategies used to reach customers outside the store </li></ul></ul></ul><ul><ul><ul><ul><li>Direct Selling : face-to-face contact between sales person and customer away from a store </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Catalog Selling : Sales using mail based catalog system (Burlington) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Tele-Marketing : Sales using telephones. Inbound Telemarketing refers to use of a toll-free number to place orders directly </li></ul></ul></ul></ul><ul><ul><ul><li>Internet Based Marketing </li></ul></ul></ul>
  31. 31. What People Spend in Purchase <ul><li>Money Budget </li></ul><ul><ul><li>Consumers spend money for purchase </li></ul></ul><ul><li>Time Budgets </li></ul><ul><ul><li>Consumer Spend Time during purchase </li></ul></ul><ul><ul><ul><li>Paid Time: is the time for you get paid i.e. office hours </li></ul></ul></ul><ul><ul><ul><li>Discretionary Time: is the leisure time </li></ul></ul></ul><ul><ul><ul><li>Non-Discretionary Time: is the obligated time </li></ul></ul></ul><ul><ul><ul><ul><li>Physical Obligation: spend on taking care of self needs (sleep, hair cut etc) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Social Obligation : spend on socialization </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Moral Obligation : spend on ethical aspects </li></ul></ul></ul></ul><ul><ul><ul><li>How consumers use time is referred to as their “time-style” </li></ul></ul></ul><ul><li>Cognitive Budgets </li></ul><ul><ul><li>Consumers are exposed to a lot of stimulus during shopping </li></ul></ul><ul><ul><li>Can lead to limited attention span </li></ul></ul>
  32. 32. Stage 5: Consumption
  33. 33. What is Consumption? <ul><li>Consumption is the act of using the acquired product </li></ul><ul><li>Market segmented in to 2 types on the basis of consumption: </li></ul><ul><ul><li>Non User </li></ul></ul><ul><ul><li>User </li></ul></ul><ul><ul><ul><li>When is the product consumed? </li></ul></ul></ul><ul><ul><ul><li>Where is the product consumed </li></ul></ul></ul><ul><ul><ul><li>How is the product consumed? </li></ul></ul></ul><ul><ul><ul><li>How much of the product is consumed? </li></ul></ul></ul>
  34. 34. When does Consumption Occur? <ul><li>Refers to the time of consumption </li></ul><ul><li>Consumption and Purchase need not occur simultaneously </li></ul><ul><li>Consumption occurs with reference to: </li></ul><ul><ul><li>Time of the day </li></ul></ul><ul><ul><ul><li>I eat egg only at breakfast </li></ul></ul></ul><ul><ul><li>Occasion or Celebration </li></ul></ul><ul><ul><ul><li>Mutton is consumed every Sunday </li></ul></ul></ul><ul><ul><li>Season </li></ul></ul><ul><ul><ul><li>Mango’s are consumed during summer </li></ul></ul></ul><ul><ul><li>Norms </li></ul></ul><ul><ul><ul><li>Suit and Tie are expected dress of an executive </li></ul></ul></ul><ul><ul><li>Without any reason (“Compulsive Consumption”) </li></ul></ul><ul><li>Estimated 10% of product purchased is not consumed </li></ul>
  35. 35. Where does Consumption Occur? <ul><li>Sales are sensitive to the place of consumption </li></ul><ul><li>In-home consumption </li></ul><ul><li>Out-of-home consumption </li></ul><ul><ul><li>Typically more of any product is consumed out-of-home </li></ul></ul>
  36. 36. How is the Product Consumed? <ul><li>A product can be consumed in many ways </li></ul><ul><li>Straight Consumption: </li></ul><ul><ul><li>Product is consumed without any modification </li></ul></ul><ul><ul><li>EG: Rice consumed at Dinner </li></ul></ul><ul><li>Modified Consumption: </li></ul><ul><ul><li>Product is consumed with some modification </li></ul></ul><ul><ul><li>EG: Rice is mixed with mutton to create Biryani </li></ul></ul><ul><li>Ingredient Consumption: </li></ul><ul><ul><li>Product is consumed after using it as an ingredient in another product </li></ul></ul><ul><ul><li>EG: Rice is crushed to make a new product Dosa </li></ul></ul><ul><li>Innovative Consumption: </li></ul><ul><ul><li>Product is consumed in an entirely new way </li></ul></ul><ul><ul><li>EG: Washing Machines are used to make lassi at Dhabas in Punjab </li></ul></ul>Increasing Consumption is a key strategy in Igor Ansoff’s Product-Market Strategy Matrix
  37. 37. How much is consumed? <ul><li>Consumption depends on various factors </li></ul><ul><ul><li>Judgment about the container in which the product is consumed </li></ul></ul><ul><ul><li>Judgment about how much will be needed in the future </li></ul></ul><ul><ul><li>Presentation of the product </li></ul></ul><ul><ul><li>Sensory aspects of the product </li></ul></ul><ul><li>Markets can be segmented on how much is consumed: </li></ul><ul><ul><li>Heavy Users </li></ul></ul><ul><ul><li>Medium Users </li></ul></ul><ul><ul><li>Light Users </li></ul></ul>
  38. 38. Stage 6: Post Consumption Evaluation
  39. 39. What is it? <ul><li>Post consumption evaluation (PCE) refers to the experiences, feelings and satisfactions that a consumer feels after or during the consumption of a product or a service </li></ul><ul><li>PCE normally starts simultaneously with the consumption </li></ul><ul><ul><li>May be formed even when the product is not consumed fully </li></ul></ul>
  40. 40. Post Purchase Dissonance <ul><li>Refers to the doubts that the consumer has – regarding the correctness of purchase – after the purchase has been made </li></ul><ul><li>The intensity of dissonance is governed by: </li></ul><ul><ul><li>The degree of commitment of the decision </li></ul></ul><ul><ul><li>The importance of decision to the consumer </li></ul></ul><ul><ul><li>The difficulty of choosing amongst the alternatives </li></ul></ul><ul><ul><li>The individuals normal tendency to experience anxiety </li></ul></ul><ul><li>Post Purchase Dissonance occurs because </li></ul><ul><ul><li>No product can offer everything that a consumer wants </li></ul></ul><ul><ul><li>Consumers have to choose between alternatives </li></ul></ul><ul><ul><li>Some trade-off is involved in purchase </li></ul></ul><ul><li>“Consumption Guilt” </li></ul><ul><ul><li>a related aspect in which the consumer feels guilty after making a purchase </li></ul></ul>
  41. 41. Consumer Satisfaction <ul><li>Refers to whether the consumption of the product meet the expectation from the product or not: </li></ul><ul><li>Product Performance >> Customer Expectation : Delight </li></ul><ul><li>Product Performance > Customer Expectation : Pleasure </li></ul><ul><li>Product Performance = Customer Expectation : Satisfaction </li></ul><ul><li>Product Performance < Customer Expectation : Dissatisfaction </li></ul><ul><li>Product Performance << Customer Expectation : Divorce </li></ul><ul><li>Divorce can lead to: </li></ul><ul><ul><li>Regret: </li></ul></ul><ul><ul><ul><li>Occurs when consumer believes that alternative course of action was a better choice </li></ul></ul></ul><ul><ul><li>Rage: </li></ul></ul><ul><ul><ul><li>Occurs when consumer are extremely upset </li></ul></ul></ul>
  42. 42. Why is Satisfaction Important ? <ul><li>It influences Repeat Buying </li></ul><ul><li>It shapes word-of-mouth communications </li></ul><ul><li>It converts satisfied user to brand promoters </li></ul><ul><li>Satisfaction lowers consumers price sensitivity </li></ul><ul><li>Dissatisfaction can lead to complaints and lawsuits </li></ul><ul><li>It ultimately affects shareholder value </li></ul>
  43. 43. Reasons for Dissatisfaction <ul><li>Core Service Failure : 44% </li></ul><ul><ul><li>Mistakes, billing errors etc that harm a consumer </li></ul></ul><ul><li>Service Encounter Failure: 34% </li></ul><ul><ul><li>Inability of service employees to deal with customers properly </li></ul></ul><ul><li>Price Failure: 30% </li></ul><ul><ul><li>High price, price increase, unfair trade practices, deceptive pricing </li></ul></ul><ul><li>Inconvenience: 21% </li></ul><ul><ul><li>Inconvenient locations, hours of operation, waiting time etc. </li></ul></ul><ul><li>Response to Service Failure: 17% </li></ul><ul><ul><li>Failure to respond, negative response etc </li></ul></ul><ul><li>Ethical Problems: 7% </li></ul><ul><ul><li>Dishonest behaviour, unsafe and unhealthy practices etc </li></ul></ul>
  44. 44. Dissatisfaction Responses <ul><li>Take No Action: </li></ul><ul><ul><li>Less favorable attitude </li></ul></ul><ul><li>Take Action: </li></ul><ul><ul><li>Complaint to store or manufacturer </li></ul></ul><ul><ul><li>Stop Buying the brand </li></ul></ul><ul><ul><li>Warn Friends and relatives </li></ul></ul><ul><ul><li>Complaint to private or governmental agencies </li></ul></ul><ul><ul><li>Initiate Legal Action </li></ul></ul>Damages caused by dissatisfaction can be controlled by: Relationship Marketing & Consumer Loyalty Programs
  45. 45. Stage 7: Divestment
  46. 46. Divestment <ul><li>Package Divestment: </li></ul><ul><ul><li>Store for future use </li></ul></ul><ul><ul><li>Use for Original Purpose </li></ul></ul><ul><ul><li>Use for New Purpose </li></ul></ul><ul><ul><li>Throw away as garbage or litter </li></ul></ul><ul><li>Product Divestment: </li></ul><ul><ul><li>Recycle </li></ul></ul><ul><ul><li>Throw away as garbage or litter </li></ul></ul><ul><ul><li>Exchange or trade-in </li></ul></ul><ul><ul><li>Sell to end user, middlemen </li></ul></ul><ul><ul><li>Give away as gift </li></ul></ul>
  47. 47. Exercise <ul><li>Groups to Present C and D </li></ul><ul><li>Have a Power-Point presentation ready (4-5 pages) </li></ul><ul><li>The group would be called to present in the class </li></ul><ul><li>Evaluation will be out of 15 marks </li></ul>Question C Visit two retail stores selling the same type of merchandise and prepare a presentation on their use of POP displays. Explain reasons for difference if any Question D Design a consumer loyalty program for a restaurant of your choice. Explain how it will help reduce dissonance and dissatisfaction

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