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Problem Solving Presentation Ppt

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Task: Define extensive problem solving, limited problem solving, and routinized response behaviour. What are the differences among the three decision-making approaches? What type of decision process would you expect most consumers to follow in their first purchase of a new product or brand in each of the following areas: (a) chewing gum, (b) sugar, (c) men’s aftershave lotion, (d) carpeting, (e) paper towels, (f) a cellular telephone, and (g) a luxury car? Explain your answers

Problem Solving Presentation Ppt

  1. 1. Buyer Behaviour and Problem Solving
  2. 2. Overview 1. Introduction  Nicosia Model 2. Problem Solving  Howard-Sheth Model  Routinized (Habitual)  Engel-Blackwell-Miniard Model  Limited 8. Decision processes of most  Extended consumers when initially 3. Consumer Behaviour and purchasing specific products: Product Life Cycle  Chewing gum, Sugar and Paper Towels  Men’s Aftershave Lotion and Carpeting 4. Characteristics of Consumer  Marketing Research on Carpeting Problem Solving Approaches  Luxury Cars 5. Characteristics of Routinized  Mobile Phones (Habitual) vs. Complex  Marketing Research on Mobile Phones 6. Strategic Implication 9. Conclusion 7. Different Decision Making 10. References Models
  3. 3. Introduction  Some purchase decisions are more important than others and the amount of effort we put into each differs.  Sometimes the decision-making process is done almost automatically; we seem to make snap judgements based on very little information.  At other times, reaching a purchase decision begins to resemble a full-time job. A person may spend literally days or weeks thinking about an important purchase such as a new home, even to the point of obsession.  This process implies that steps in decision-making should be carefully studied by marketing managers in order to understand how information is obtained, how beliefs are formed, and what product choice criteria are specified by consumers. Source: Solomon, Bamossy, and Askegaard,1999.
  4. 4. Introduction cont.  The consumer decision process represents a road map of consumers’ minds that marketers and managers can use to help guide product mix, communication, and sales strategies. Stages in Consumer Decision Making (CDM) Problem recognition Information search Evaluation of alternatives Product choice Outcomes Source: Blackwell, Miniard and Engel, 2006; Solomon, 2007.
  5. 5. Routinized (Habitual) Problem Solving (RPS)  This is when consumers buy a brand they have purchased before, it usually involves little or no information seeking and is performed quickly.  Consumers are brand-loyal and tend to buy in a habitual, automatic, and unconscious way.  It is far more likely that repeat purchases will be made on the basis of habits or routines that enable the consumer to cope more effectively with life pressures. Source: Loudon & Della Bitta, 1993; Blackwell, Miniard and Engel, 2001.
  6. 6. Limited Problem Solving (LPS)  Usually, it also involves internal and limited external search, few alternatives, simple decision rules on a few attributes, and little post- purchase evaluation.  In general, limited decision making involves recognising a problem, for which there are several possible solutions.  There is an internal and limited amount of external search. Source: Solomon, Bamossy, and Askegaard,1999; Hawkins et al, 2004.
  7. 7. Extended Problem Solving (EPS)  Is usually initiated by motive that is fairly central to the self-concept, and the eventual decision is perceived to carry a fair degree of risk.  The consumer tries to collect as much information as possible, both from memory (internal search) and from outside sources (external research).  At this level, the consumer needs a great deal of information to establish a set of criteria on which to judge specific brands and a correspondingly large amount of information concerning each of the brands to be considered. Source: Solomon, Bamossy, and Askegaard,1999; Peter et al, 1999.
  8. 8. Consumer Behaviour and Product Life Cycle  Extensive problem solving: this usually happens at the introductory stage of the product life cycle. However, it may also happen at later stages among consumers who have just been exposed to the brand.  Limited problem solving: this second stage in consumer decision making happens mostly at the growth stage of the product life cycle. As consumers develop their knowledge about the brand and start to know a few more brands well.  Routine problem solving: this final stage is usually found at the maturity level of the product life cycle. As consumers appear to buy on impulse since they have well-developed their knowledge towards the available brands. Source: Loudon & Della Bitta, 1993; Blackwell, Miniard and Engel, 2001; Foxall, Goldsmith, and Brown,1998.
  9. 9. Characteristics of Consumer Problem Solving Approaches Routinized Limited Extensive Problem Solving Problem Solving Problem Solving Purchase Involvement Low Medium High Level Problem Recognition Automatic Semi-Automatic Complex Information Search and Minimal Limited Extensive Evaluation Purchasing Orientation Convenience Mixed Shopping Post-Purchase Processes Very Limited Limited Complex Habit Inertia to Purchase Loyalty if Satisfied Brand Loyalty Brand Switching if Complaint if Dissatisfied Dissatisfied Source: Loudon & Della Bitta, 1993.
  10. 10. Characteristics of Routinized (Habitual) vs. Complex Routinized Decision Making Complex Decision Making (Habitual)  Little or no information processing  Extensive information processing  Frequently purchased products  Infrequently purchased products  Lower-priced products  Higher-priced products  Low level of consumer involvement  High level of consumer involvement  Non-compensatory decision rules  Compensatory decision rules Limited decision solving rests in between these two decisions, also considered as a midrange problem solving that neither is complicated not so easy to be done. Source: Assael, 1998.
  11. 11. Characteristics of Routinized (Habitual) vs. Complex cont. Source: Assael, 1998.
  12. 12. Strategic Implications Routinized Decision Making Complex Decision Making  Extensive Distribution  Selective distribution  Few services requirements  Service often required  Sales promotions is important  Sales promotion unimportant  Personal selling of minimal role  Important personal selling role  Advertising used for reminder  Advertising used to provide effect information  Greater price sensitivity  Less price sensitivity Source: Assael, 1998.
  13. 13. Different Decision Making Models  When reviewing the literature, it can be noted that there are various decision making models.  Such as:  Nicosia Model  Howard-Sheth Model  These two models are especially important in this category due to their nature in which the consumer is being analysed as a system with the incentive as the input and the behaviour as the output.  Engel-Blackwell-Miniard Model  This model considers the single consumer as being a structure with outputs that respond to inputs. Source: Loudon & Della Bitta, 1993; Blackwell, Miniard and Engel, 2001.
  14. 14. Nicosia’s Model Field 1: From the Source of the Message to the consumers attitude Field 2: Search for and evaluation of search means-end(s) relation(s) (Pre- Sub-Field 2: action field ) Sub-Field 1: Message Company’s Exposure Consumers ATTITUDE Attitude Attitude (Pre- disposition) Search FEEDBACK EXPERIENCE Evaluation Field 4: The feedback Consumption MOTIVATION Decision PURCHASING BEHAVIOUR Field 3: The act of purchase Source: Nicosia, 1966; Rau and Samiee, 1981; Foxall , 1980.
  15. 15. Howard-Sheth Model Inputs Perceptual Constructs Learning Constructs Outputs Stimulus Display Significative Intention Purchase a) Quality b) Price Overt Confidence c) Distinctiveness Search Intention d) Service e) Availability Attitude Attitude Symbolic Stimulus a) Quality Ambiguity b) Price Brand c) Distinctiveness Comprehension d) Service e) Availability Choice Brand Motives Attention Social Criteria Comprehension a) Family b) Reference Group Attention Perceptual Satisfaction c)Social Class Bias Information Flow Feedback Flow Source: Howard and Sheth, 1961; Hunt, Pappas, 1972; Rau and Samiee, 1981; Foxall , 1980.
  16. 16. Engel-Blackwell-Miniard Model Need recognition Environmental influences: Culture Internal Search Social Class Exposure Personal Influences Search Family Situation Pre-purchase Attention evaluation of Stimuli Marketing services Dominated Individual Non- Comprehension Memory Differences: Marketing Purchase Consumer Dominated Resources Acceptance Motivation and Consumption evolvement Personal Influences Knowledge Retention Attributes Post Consumption Evaluation Personality, values External Search and life style Dissatisfaction Satisfaction Divestment Source: Blackwell, Miniard and Engel, 2001; Rau and Samiee, 1981; Foxall , 1980.
  17. 17. Decision processes of most consumers when initially purchasing specific products Chewing Gum Sugar Paper Towels Carpeting Men’s Aftershave Lotion Luxury Cars Mobile Phones
  18. 18. Chewing Gum, Sugar and Paper Towels as RPS A large number of product experiences can lead to routinized response behaviour, especially for products such as chewing gum, sugar and paper towels.  Low Purchase involvement.  Frequently purchased and low cost products.  Choices are automatic with minimal conscious effort.  Low cognitive effort in which few possibilities are considered.  Buy a particular brand out of habit or convenience.  Previous behaviour guides future behaviour.  Products purchased with little or no planning or information search.  Risks of making a wrong choice and the associated benefits are low to the consumer. Marketers: Building brand awareness and trying to become top of mind is crucial in order to be included in the limited set of brands that a consumer is willing to consider, to retain brand loyalty and to enhance brand switching. Source: Pelsmacker, 2007;Vaughn, 1986; Solomon, 2004 and 2006; Arnould et al., 2004; Loudon & Della Bitta, 1993; Gbadamosi, 2009.
  19. 19. Men’s Aftershave Lotion and Carpeting as LPS  LPS is the type of assessment consumers most likely engage in when purchasing these products.  It covers the middle ground between nominal and extended decision making.  Considered to be of lower level of complexity than EPS and as illustrated by Harold Kassarjian consumers usually ‘’muddle through’’ in this stage.  Choice of buying a new aftershave lotion or a new carpet follows usually a simple rule of buying a brand that is recognized, buy the cheapest brand or why not try a new product.  Products involved in LPS are usually those that arouse mild interest and curiosity, which could be the case of aftershave lotion that requires a slight more involvement that a chewing gum, sugar or paper towels.  Engaging in these type of purchases takes place when a customer is already familiar with the product class and merely wants to adjust his information or fill in new gaps revealed by internal search. Source: Hawkins et al., 2004; Horton, 1984; Blackwell, Miniard and Engel, 2001; Blyth, 1997; Assael, 1998.
  20. 20. Marketing Research on Carpeting  Objective:  To find out the nature of the process that consumers usually engage in when buying carpets.  Methodology:  An interview was conducted with a Carpet Right shop manager.  Analysis Methodology:  Data was summarized with key points highlighted.
  21. 21. Marketing Research on Carpeting cont.  Analysis of Findings:  The process depends purely on the consumer him/her-self.  Some spend hours, some days and others weeks.  The participant did state that the majority of consumers nowadays engage in a little search and usually their decision is an in-store one.  The confirmation that customers are hugely influenced by store displays and promotions.  Findings Conclusion:  Further research needs to be conducted.  However, the facts above additionally illustrate that carpeting is a limited problem solving decision, that hold the characteristics of LPS.
  22. 22. Luxury Cars as EPS  Factors determining high involvement:  Price which is certainly an expensive one for luxury cars  Infrequency of purchase  Carries major symbolic meanings  Social visibility, which is a key factor in determining whether the product is an EPS or not, since these products are linked heavily to the conspicuous consumption theory  Level of risk is also a key point for high involvement products. The more risk associated with the purchase, the more thought goes into the decision- making process.  There is a reduction of risk through brand awareness and high perceptions of quality Source: Elliot and Percy, 2007; Blyth, 1997; Kleber, 2006.
  23. 23. Luxury Cars as EPS cont.  From the findings of a qualitative study on luxury car purchasing in the USA, it can be seen that there is an inconsistency of interactions when purchasing a luxury car, as opposed to other luxury goods.  It is ideal for companies to handle the transaction as not selling a car, but rather selling a brand. This provides for higher brand value and loyalty from the consumer, and reduces the associated risks for this luxury item.  “For the purchase of new cars, more than 70% of people considered visiting” (Elliot and Percy 2007, p.7) more than one car dealer preceding to purchase. Source: Elliot and Percy, 2007; Blyth, 1997; Kleber, 2006.
  24. 24. Mobile Phone as EPS  Buying a Mobile phone is a confusing process for individuals who are always presented by a stunning display of handsets with new features that were not available even weeks ago.  Buying a car is usually a full-time job, whereas purchasing a phone is a part- time job to most people; mobile phones and further considered to be high involvement types of products, in terms of:  Price  Frequency of purchase  Symbolic meaning  Social visibility  Time commitment  Technical complexity  Level of risk is also a key point for high involvement products. The more risk associated with the purchase, the more thought goes into the decision- making process. Source: Elliot and Percy, 2007; Blyth, 1997.
  25. 25. Marketing Research on Mobile Phones  Objective:  Mobile phones are considered to be the most controversial product among the other product categories. The researchers have decided to launch a survey in order to establish with today's consumer, what process is usually engage with the purchasing of mobile phones.  Methodology:  An online Survey conducted over the period of one week, with approx. 60 respondents.  Analysis Methodology:  Data was converted and extracted from the online survey results into an Excel spread sheet and analysed using graphs. Source: www. kwiksurveys.com.
  26. 26. Marketing Research on Mobile Phones  Analysis of Findings:  Question one: Do you do research before buying a mobile phone? 100% 80% 60% 40% 20% 0% Yes No  79% of the respondents have confirmed that they engage into some type of research before buying a mobile phone.
  27. 27. Marketing Research on Mobile Phones cont.  Question two: Where do you look to for information when purchasing a mobile phone? 70% 60% 50% 40% 30% 20% 10% 0%  The majority agreed that their core source of information before buying a phone is online research (61%), compared to the second highest source being Word of Mouth (14%).
  28. 28. Marketing Research on Mobile Phones cont.  Question three: On average, how much time do you spend researching until buying a mobile phone? 40% 35% 30% 25% 1-3 Days 1 Week 20% 2 Weeks or more 15% 10% 5% 0% 1-3 Days 1 Week 2 Weeks or more  Two weeks or more is the most preferred time consumers (39%) usually engage in when deciding to buy a mobile handset.
  29. 29. Marketing Research on Mobile Phones cont.  Findings Conclusion:  The degree of sophistication and complexity this product carries, made the researchers emphasize on it: Why Mobile Phones as an EPS process:  The product has a high involvement, one that is not cheap and is infrequently bought.  The majority of consumers do engage in some type of research, mainly online research which is a characteristic of EPS.  The Time spent in buying the product takes usually more than 2 weeks, which only says that this product is special to people and it is the intangible associations consumers are buying, rather than the handset it self.
  30. 30. Marketing Research on Mobile Phones cont.  Findings Conclusion cont.: What transformed this product into a controversial one:  Brands are the only elements that could interfere in this process, having a defined purpose of driving customers towards their products, convincing them that their product is the best choice and thinking on the behalf of them. Further, this encourages the purchaser to only complete one step of the CDM model, which is the actual purchase.  In general purchasing a mobile phone can be seen as an EPS, at least until now; but this could be criticized by some individuals, since they consider that the ever-growing role of brands is transforming this market into a less complicated one.
  31. 31. Conclusion  Routinized (Habitual,) Limited and Extensive Problem Solving Decisions are theories that are hard to implement to all products, since the buying process is purely related to the consumer himself and the past belief of being able to understand the whole buying process of the consumer who was considered as a rational and cognitive individual, is now discarded.  Products that carry a high involvement level and those which are linked to the conspicuous consumption theory which is to purchase in order to enhance the social position are those that might carry a high level of risk thus, being of extensive nature. Source: Earl and Kemp, 1999.
  32. 32. Conclusion Cont.  The CDM process also has implications for marketers as they need to design strategies in such a way that the consumer perceives a product's features or benefits as providing an answer to a perceived problem and felt needs. Hence marketing strategies need to adapt both creatively and strategically to the different decision processes and models.  The individual's complicated process of buying is the real reason why marketing started; and it's crucial for marketers to constantly understand their customer's growing demands in order to serve them in the best way bearing that each product and consumer is different than the other. Source: Earl and Kemp, 1999.
  33. 33. Problem Solved! Any Questions?
  34. 34. References  Arnould, E.J., Price, L.L. and Zinkhan, G.M. (2004) Consumers, 2nd ed., McGraw-Hill, Boston, MA, pp. 229-86.  Assael, H.(1998)Consumer Behavior and Marketing Action. 6th ed. Cincinatti, Ohio: South-Western  Blackwell, R., D., Miniard, P., W. and Engel, J., F. (2006) Consumer Behaviour. 10th edition. Singapore: Thomson South-Western.  Blackwell, R. D., Miniard, P. W. and Engel, J. F. (2001), Consumer Behavior, 9th ed. Harcourt. College Publishers, Fort Worth, TX.  Blyth, J. (1997)The Essence of Consumer Behaviour. Essex, England: Prentice Hall.  de Pelsmacker, P., Geuens, M. and Van den Bergh, J. (2007) Marketing Communications. 3rd ed. Essex, England: FT Prentice Hall.  Earl, P. and Kemp, S. (1999) The Elgar Consumer Companion to consumer research and economic psychology. Cheltenham: Elgar.
  35. 35. References  Foxall, G.R. (1980) Consumer behaviour: A Practical Guide. Routeledge: London.  Foxall, G. R., Goldsmith, R. E. and Brown, S.(1998) Consumer Psychology for Marketing. 2nd ed. Oxford: Thomson.  Gbadamosi, A. (2009) Cognitive dissonance The implicit explication in low-income consumers’ shopping behaviour for “low-involvement” grocery products . [Online] Available from http://www.emeraldinsight.com [Accessed 22nd February 2010].  Hawkins, D. et al. (2004)Consumer behaviour: Building Marketing Strategy. 9th edition. New York: McGraw-Hill.  Horton, R. L.(1984), Buyer Behavior: A Decision-Making Approach, Columbus, Ohio, C.E. Meril Pub.  Hunt, S.D. and Pappas, J.L. (1972) A Crucial Test for the Howard-Sheth Model of Buyer Behavior. Journal of Marketing Research, Vol. 9, No. 3 (Aug), pp. 346-348.
  36. 36. References  Loudon, D. L. and Della Bitta, A., J. (1993)Consumer Behavior. 4th ed. Singapore: McGraw-Hill.  Nicosia, F.M. (1966) Consumer Decision Process: Marketing and Advertising Implications. Prentice Hall: New Jersey.  Online Survey creation (2010) [Online] Available at: www.kwiksurveys.com [ Accessed 19th February 2010].  Peter, J. P. et al. (1999) Consumer Behaviour and Marketing Strategy. Berkshire: McGraw-Hill.  Pictures & Graphic Design: all found using Google images.  Punj, G. & Staelin, R.(1983) A model of consumer search behaviour for new automobiles. Journal of Consumer Research [Online] 9, 366-80. Available at: http://www.emeraldinsight.com [Accessed 22nd February 2010].  Rau,P. and Samiee, S. (1981) Models of Consumer Behaviour: The State of the Art. Journal of the Academy of Marketing Science,Vol. 9 (3) pp. 300-316.
  37. 37. References  Schiffman, L. G. and Kanuk, L. L. (2007)Consumer Behavior. 9th ed. New Jersey: Pearson.  Solomon,M.,Bamossy, G. and Askegaard,S. (1999) Consumer Behaviour A European Perspective. 4th ed. New Jersy: Prentice Hall Inc.  Solomon, M. R. (2007)Consumer Behavior: Buying, Having, and Being. 7th ed. FT/Prentice Hall.  Solomon, M.R. (2004)Consumer Behavior: Buying, Having, and Being, 6th ed., Pearson Education, Upper Saddle River, NJ.  Vaughn, R. (1986) How advertising works: a planning model revisited. Journal of Advertising Research, (February/March) pp. 57-66.

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