Evaluation and decision making [compatibility mode]


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Decision making inh Buyer Behaviour

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Evaluation and decision making [compatibility mode]

  1. 1. The MAANZ MXpress ProgramBuyer Behaviour ‐ Evaluation and Decision MakingDr Brian MongerCopyright June 2013.This Power Point program and the associated documents remain the intellectual property and thecopyright of the author and of The Marketing Association of Australia and New Zealand Inc. Thesenotes may be used only for personal study and not in any education or training program. Persons and/orcorporations wishing to use these notes for any other purpose should contact MAANZ for written permission.
  2. 2. MAANZ International• MAANZ International, is a Not for Profit, internet based professional and educational institute which has operated for over 25 years.• MAANZ International offers Professional Memberships;• Marketing Courses (Formal and Short)• And Marketing Publications• www.marketing.org.au 2
  3. 3. Dr. Brian Monger• Brian Monger is the CEO of MAANZ International and a Professional marketer and consultant with over 40 years experience.Marketing In Black and White 3
  4. 4. Outline• A decision is the selection of an action from two or morealternative choices.• Decisions are usually made without stopping to think abouthow we make them, and about what is involved in the decision-making itself.• In order for a person to make a decision, there must be choicesof alternatives available.• Not all buyer behaviour requires the buyer to make a decision(e.g. which brand of bank from which to withdraw money).4
  5. 5. Economic Model(of Decision Making)• Under this model, the buyer makes rational decisions.• To behave rationally in the economic sense, a buyer would:a) Have to be aware of all available product alternatives;b) Would have to be capable of correctly ranking eachalternative in terms of its benefits and its disadvantages; and• c) Would have to be able to identify the one best alternative.5
  6. 6. Economic Model• The economic man model is somewhat unrealistic for thefollowing reasons:a) People are limited by their existing skills, habits, and reflexes;b) b) People are limited by their existing values and goals; andc) c) People are limited by the extent of their knowledge.6
  7. 7. Passive Model• The buyer is basically depicted as submissive to the self-serving interests and promotional efforts of marketers.• Buyers are perceived as impulsive and irrational purchasers,ready to yield to the arms and aims of marketers.7
  8. 8. Cognitive Model• The buyer is depicted as a thinking problem solver.• The cognitive model focuses on the processes by which buyersseek and evaluate information about selected brands and retailoutlets.• Buyers are viewed as information-processing systems.• Preference formation strategy is an "other-based" strategywhere the buyer allows another person - a trusted friend or anexpert retail salesperson - to establish preferences for them.8
  9. 9. Emotional Model• When is comes to certain purchases or possessions, deepfeelings or emotions are likely to be highly involving.• When a buyer makes what is basically an emotional purchasedecision, less emphasis tends to be placed on searching forpre-purchase information – rather “Go For It" is theapproach.9
  10. 10. A Model of Buyer Decision MakingInput• The input component draws upon these external influencesthat provide information or influence a buyers product-relatedvalues, attitudes, and behaviour.• The firms marketing activities are a direct attempt to reach,inform, and persuade buyers to buy and use its products.• The impact of a firms marketing efforts is governed by thebuyers perception of these efforts.10
  11. 11. Process• The process component of the model is concerned with howbuyers make decisions.• Psychological field - represents the internal influences -motivation, perception, learning, personality, and attitudes -that affect buyers’ decision-making processes.• Buyers are influenced only by risk that they perceive.11
  12. 12. Decision Strategies• Buyers use a variety of decision strategies, heuristics orinformation-processing strategies.• Buyer decision rules are procedures used by buyers tofacilitate brand choices:• Compensatory decision rules• Non-compensatory decision rules• Conjunctive decision rule• Disjunctive decision rule• Lexicographic decision rule• Elimination by Aspect12
  13. 13. 131. Conjunctive Select all (or any or first) brands that surpass a minimumlevel on each relevant evaluative criterion2. Disjunctive Select all (or any or first) brands that surpass a satisfactorylevel on any relevant evaluative criterion.3. Elimination-by-aspects Rank the evaluative criteria in terms of importance, andestablish satisfactory levels for each. Start with the mostimportant attribute, and eliminate all brands that do notmeet the satisfactory level. Continue through the attributesin order of importance until only one brand is left.4. Lexicographic Rank the evaluative criteria in terms of importance. Startwith the most important criterion and select the brand thatscores highest on that dimension. If two or more brands tie,continue through the attributes in order of importance untilone of the remaining brands outperforms the others.5. Compensatory Select the brand that provides the highest total score whenthe performance ratings for all the relevant attributes areadded together (with or without importance weights) foreach brand.Table 1 Decision rules used by buyers
  14. 14. Incomplete Information or Non-comparable Alternatives• Incomplete information or non-comparable alternatives maylead buyers to adopt:• Delay – likely for high risk decisions• Ignore – continue with the current decision rule• Change – use a decision strategy better suited to the missinginformation• Infer – that is ‘construct’ the missing information.14
  15. 15. Decision Factors• Research has shown that buyers develop a choice strategybased on both individual and contextual factors (complexity,information organisation and time constraints).• Lifestyles as a buyer decision strategy. An expressed choiceof lifestyle (simple, exciting, conforming etc) will influencedecisions• Purchasing decisions are a series of decisions.• Consumption vision or the mental trying out of differentalternatives may influence purchase decisions.15
  16. 16. Cognitive and Personal Biases in Decision Making• Biases are present in all human decision making processes,calling into question the correctness of a decision. Below is alist of some of the more common cognitive biases.• Selective search for evidence - We tend to be willing togather facts that support certain conclusions but disregardother facts that support different conclusions.• Premature termination of search for evidence - We tend toaccept the first alternative that looks like it might work.• Conservatism and inertia - Unwillingness to change thoughtpatterns that we have used in the past in the face of newcircumstances.16
  17. 17. Cognitive and Personal Biases in Decision Making• Experiential limitations - Unwillingness or inability to lookbeyond the scope of our past experiences; rejection of theunfamiliar.• Selective perception - We actively screen-out information thatwe do not think is salient.• Wishful thinking or optimism - We tend to want to see thingsin a positive light and this can distort our perception andthinking.• Recency - We tend to place more attention on more recentinformation and either ignore or forget more distantinformation.17
  18. 18. Cognitive and Personal Biases in Decision Making• Repetition bias - A willingness to believe what we have beentold most often and by the greatest number of different ofsources.• Anchoring - Decisions are unduly influenced by initialinformation that shapes our view of subsequent information.• Group think - Peer pressure to conform to the opinions heldby the group.• Source credibility bias - We reject something if we have abias against the person, organisation, or group to which theperson belongs: We are inclined to accept a statement bysomeone we like.18
  19. 19. Cognitive and Personal Biases in Decision Making• Incremental decision making and escalating commitment -We look at a decision as a small step in a process and thistends to perpetuate a series of similar decisions. This can becontrasted with zero-based decision making.• Inconsistency - The unwillingness to apply the same decisioncriteria in similar situations.• Attribution asymmetry - We tend to attribute our success toour abilities and talents, but we attribute our failures to badluck and external factors. We attribute others success to goodluck, and their failures to their mistakes.19
  20. 20. Cognitive and Personal Biases in Decision Making• Role fulfilment - We conform to the decision makingexpectations that others have of someone in our position.• Underestimating uncertainty and the illusion of control -We tend to underestimate future uncertainty because we tendto believe we have more control over events than we really do.• Faulty generalisations - In order to simplify an extremelycomplex world, we tend to group things and people. Thesesimplifying generalisations can bias decision makingprocesses.• Ascription of causality - We tend to ascribe causation evenwhen the evidence only suggests correlation.20
  21. 21. Store Choice ‐ Shopper Types• Studies of shoppers motivations have led some researchers toprofile consumers by their orientation to shopping, and then todetermine the characteristics of these shopper types.21
  22. 22. Typing by Value Orientation• Four types of shoppers can be identified (Stone1993):•• The economic buyer is oriented to shopping efficiency andvalue.• The personalising buyer forms strong personal attachmentswith store employees as a substitute for social contract. Moreintimate stores are preferred.• The ethical buyer is small-business oriented and wants tohelp out local store merchants, particularly the "little guy."• The apathetic buyer does not like to shop. Convenience isparamount to minimise the time and trouble of shopping.22
  23. 23. Typing by Level of Information Search• Shopper types can also be identified by level of informationsearch in shopping.• Constructive shoppers spend the most time searching forinformation compared to other shopper groups. They also visitretail outlets more often.• Surrogate shoppers leave the shopping to others in thehousehold.• Preparatory shoppers are more likely to engage in out-of-store information search (reading magazines, talking tofriends).• Routinised shoppers know in advance what they want andspend the least amount of time searching for information.23
  24. 24. Brand Choice and Store Choice• The model of store choice assumes that consumers select astore first and then determine the value proposition to bepurchased within the store.• Frequently, the reverse happens: a buyer decides on aparticular brand and then selects the store based on the chosenbrand.24
  25. 25. Under What Circumstances Is Brand Choice Likely To Influence Store Choice?• When brand loyalty is high.• A buyer who wants to buy a particular brand of clothing andknows of several stores that carry the line will select the storebased on the desired brand.•• When store loyalty is low.• A buyer with no strong preference for a particular store islikely to select one based on the items needed. Low storeloyalty gives the buyer a wider range of product assortmentsince shopping is not restricted to the brands carried by onestore.25
  26. 26. Under What Circumstances Is Brand Choice Likely To Influence Store Choice?• When value proposition information is adequate.• Buyers who have experience with a value proposition andsufficient value proposition information do not need to rely onsales personnel for assistance. Choice is less likely to dependon store characteristics.• When value proposition involvement and perceived riskare high.• If a value proposition is important to the buyer, the purchasedecision is likely to be pre-planned rather than made in thestore. Frequently, consumers associate such valuepropositions with high financial, performance, or social risk.Under these circumstances, brand choice may drive storechoice.26
  27. 27. Criteria for Store Selection• When store choice precedes brand choice an importantdeterminant of store choice is the match between theimportance consumers place on store attributes and the imagethey have of the store.27
  28. 28. Criteria for Store Selection• 1. general store characteristics (reputation in community,number of stores);• 2. physical characteristics of the store (decor, cleanliness,checkout service);• 3. convenience of reaching the store from the buyerslocation (time required, parking);• 4. products offered (variety, dependability, quality);• 5. prices charged by the store (value, special sales);• 6. store personnel (courteous, friendly, helpful);• 7. advertising by the store (informative, appealing,believable);• 8. friends perception of the store (well-known, liked,recommended). 28
  29. 29. Output• First purchase and repeat purchase is the two main formsof purchasing behaviour.• Trial is the exploratory phase of purchases behaviour in whichbuyers attempt to evaluate a product through direct use.• Trial is not always feasible - e.g. for big-ticket items - durablegoods - buyer moves from evaluation directly to long-termcommitment.• Repeat -When a trial is satisfactory, buyers are likely to repeatthe purchase.29
  30. 30. Beyond the Decision: Using andPossessing• A broader perspective of buyer behaviour might view choiceas the beginning of a consumption process, not merely the endof buyer decision-making efforts.• Choice is input into a process of establishing a consumptionset and a consuming style.• The output of this process could include such things ascreating a lifestyle, creating a personality or sense of self,playing roles, surviving, being an individual, belonging to agroup, expressing oneself, signalling membership, and/orentertaining oneself.• . 30
  31. 31. • For more information about MAANZ International and articles about Marketing, visit:• www.marketing.org.au• http://smartamarketing.wordpress.com• http://smartamarketing2.wordpress.com• .  http://www.linkedin.com/groups/MAANZ‐SmartaMarketing‐Group‐2650856/about• Email: info@marketing.org.au• Link to this site ‐ ‐ http://www.slideshare.net/bmonger for further presentationsMarketing In Black and White 31
  32. 32. 32ENDMAANZ MXPress Program