Chapters 9&10: Decision

Making and Buying, Using,

Disposing.
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Table of Contents:

What’s Your Problem?

Hyperchoice: Too Much of a Good Thing!
Self-Regulation
Cognitive Decision Making
Steps in the Cognitive Decision-Making
Chapter 9: Process
Decision Neuromarketing
Making Online Decision Making
How Do We Put Products into Categories?
Habitual Decision Making
Heuristics: Mental Shortcuts
AI: Who’s Calling the Shots?
Priming and Nudging
Chapter Situational Effects on Consumer Behavior
10: The Consumption Situation
Buying,
Using and The Shopping Experience
Disposing Mood
When the Going Gets Tough, the Tough Go
 Shopping
E-Commerce: Clicks versus Bricks
Digital Currency
Retailing As Theater
Store Image
In-Store Decision Making
Spontaneous Shopping
The Salesperson: A Lead Role in the Play
Ownership and the Sharing Economy
Postpurchase Satisfaction and Disposal
Postpurchase Satisfaction
Product Disposal
Recycling and the Underground Economy

What’s Your Problem?

 Every consumer decision we make is a response to a problem.

 Our needs range from simple physiological priorities (such as quenching thirst) to
abstract intellectual (choosing a college major) or aesthetic quandaries (what to
wear to the upcoming date).
 We make some decisions thoughtfully and rationally as we carefully weigh the
pros and cons of different choices purchase
 In other cases we let our emotions guide us to one choice over another as we react
to a problem with enthusiasm, joy, or even disgust.
 Purchase momentum occurs when our initial impulse purchases actually increase
the likelihood that we will buy even more

Hyperchoice: Too Much of a Good Thing!

 Ironically, for many of us one of our biggest problems is not having too few
choices, but rather too many.
 Consumer hyperchoice: forces us to make repeated decisions that may drain
psychological energy while decreasing our abilities to make smart choices. For
example, many girls have experienced the feelings of selecting favorite lipstick
color that suit ourselves over many many other shades outhere
 Decision makers actually possess a repertoire of strategies.
 Constructive processing argues that we evaluate the effort we’ll need to make a
particular choice and then tailor the amount of cognitive “effort” we expend to get
the job done.
  When the task requires a well-thought-out, rational approach, we’ll invest the
brainpower to do it. Otherwise, we look for shortcuts such as “just do what I
usually do,” or perhaps we make “gut” decisions based on our emotional
reactions.
 Mental budget that helps us to estimate what we will consume over time so that
we can regulate what we do in the present.

Self-Regulation
 Each of us fights a constant battle to control our desires, whether these involve
splurging on expensive clothes or treating ourselves to fattening snacks. Many
factors, both internal (for example, will-power) and external (for example, peer
pressure), help to determine whether or when we give in.
 Self-regulation: A person’s efforts to change or maintain his or her actions over
time, whether these involve dieting, living on a budget, or training to run a
marathon, involve careful planning
 Two types of motivation: (1) Promotion motivation encourages people to focus
on hopes and aspirations, while (2) Prevention motivation instead focuses on
responsibilities and duties as it prompts people to think about avoiding something
negative.
 In recent years, researchers and marketers have become more aware of the role
they can play in changing consumer behavior by helping people to regulate their
own actions. Such as phone app for dieters or perhaps a wearable computing
device like the Fitbit that tells you how many steps you take in a day

Cognitive Decision Making

Steps in the Cognitive Decision-Making
 (1) Problem recognition, (2) Information search, (3) Evaluation of alternatives, and
(4) Product choice, (5) Post Purchase evaluation.

Step 1: Problem Recognition

 We experience a significant difference between our current state of affairs and
some state we desire.
 A problem arises in one of two ways: need recognition and opportunity
recognition

Step 2: Information Search

 Once a consumer recognizes a problem, he or she needs the information to solve
it.
 Information search: we survey the environment for appropriate data to make a
reasonable decision.
  Consumer might recognize a need and then search the marketplace for specific
information which is called prepurchase search.
 In today's world, there are thousands of platforms available to help consumers
with searching for information. Such as Google, Youtube, Tiktok, Instagram,...

Step 3: Evaluate Alternatives

 We call the alternatives a consumer knows about the evoked set and the ones he
or she seriously considers the consideration set.
 A marketer who finds that his brand is not in his target market’s evoked set has
cause to worry.

Step 4: Product Choice

 Once we assemble and evaluate the relevant options in a category, eventually we
have to choose one.
 Our choices range from simple and quick strategies to complicated processes that
require a lot of attention and cognitive processing.
 When the consumers eventually must make a product choice from among
alternatives, they use one of several decision rules. Noncompensatory rules
eliminate alternatives that are deficient on any of the criteria we’ve chosen.
Compensatory rules, which we are more likely to apply in high-involvement
situations, allow us to consider each alternative’s good and bad points more
carefully to arrive at the overall best choice

Step 5: Postpurchase Evaluation

 Postpurchase evaluation closes the loop; it occurs when we experience the product
or service we selected and decide whether it meets (or maybe even exceeds) our
expectations.
 In the process called social scoring, both customers and service providers
increasingly rate one another’s performance.
 Example: Every time a user uses a service like Shopee or Grab, they receive a
rating.
 This new transparency may disrupt not only the service economy—it also can
obliterate the traditional power disparity between buyer and seller.

Neuromarketing
 Neuromarketing uses fMRI to take an up-close look at how our brains
respond to marketing messages and product design features.
 Scientists know that specific regions of the brain light up in these scans to show
increased blood flow when a person does specific activities like recognizes a
face, hears a song, makes a decision, or senses deception.
  In a research of brain scans between Coca-Cola and Pepsi, Coke’s strong
brand identity trumped the sensations coming from respondents’ taste
receptors.

Online Decision Making

Cybermediary describes a website or app that helps to filter and organize online
market information
 Directories and portals, such as Yahoo! or The Knot, are general services that tie
together a large variety of different sites.
 Forums, fan clubs, and user groups offer product-related discussions to help
customers
 Intelligent agents are sophisticated software programs that use collaborative
filtering technologies to learn from past user behavior to recommend new
purchases.
 Google is the search engine that conducts information search.
 Search engine optimization (SEO) is the procedures companies use to design
the content of websites and increase traffic.
 Long tail‘s basic idea is that businesses no longer need to rely solely on big
hits to find profits.

How Do We Put Products into Categories?

 Consumers cognitively represent product information in a knowledge
structure.

 Hybrid products are products that feature characteristics from two distinct
domains.
Strategic Implications of Product Categorization
 Position a Product: the orange juice industry tried to reposition orange juice as a
drink people can enjoy all day long.
 Identify Competitors. We’re often faced with choices between non comparable
categories, when we can create an overlapping category that encompasses both
items, the process is easier.
 Create an Exemplar Product. The characteristics of category exemplars tend to
exert a disproportionate influence on how people think of the category in general.
 Locate Products in a Store. A frozen dog food that pet owners had to thaw and
cook before they served it to Fido failed in the market, partly because people could
not adapt to the idea of buying dog food in the “frozen foods for people” section of
their grocery stores.

Evaluative Criteria
 Evaluative criteria are the dimensions we use to judge the merits of
competing options.
 Determinant attributes are the features we actually use to differentiate among
our choices.

The Power of Authenticity

 Consumers today often want to know just where the things they buy came
from.
 So, product authenticity increasingly has become a determinant attribute.

Decision Rules
 Compensatory rule allows a product to make up for its shortcomings on one
dimension by excelling on another.
 There are two basic types of compensatory rules:
1. The simple additive rule
2. A weighted additive rule
 Noncompensatory rule: if an option doesn’t suit us in one dimension, we just
reject it.
 Lexicographic rule: “select the brand that is the best on the most important
attribute.”
 The elimination-by-aspects rule: buyer also evaluates brands on the most
important attribute.
 Conjunctive rule: As with the elimination-by-aspects procedure, the decision
maker establishes cut-offs for each attribute.

Habitual Decision Making:

- Habitual decision making refers to choices made with little conscious effort.
- These decisions are often routine and made without realizing it.
- One example of habitual decision making is snap judgments. Despite their name, these
choices has beên proven to be surprisingly accurate
Heuristics: Mental Shortcuts
- Mental shortcuts, or heuristics, are used to simplify choices.
- These shortcuts range from general rules-of-thumb to specific
- Many decisions are made automatically in our daily lives.
- Inertia and brand loyalty are 2 familiar areas in marketing that are heavily linked to
heuristics. The two of which can lead to repeat purchasing behavior. However, only
inertia can be a manifestation of heuristics because it does not require a conscious
effort from consumers like brand loyalty.

- Another concept associated with heuristics is bounded rationality, which refers to

making decisions that are "good enough" rather than maximizing outcomes.
- Sometimes these shortcuts may not be in our best interests, but the perceived
convenience of which may be enough to convince us to act on them regardless.
- Market beliefs, such as all brands being the same, can also influence decision
making. These beliefs include assumptions about brands, stores, prices, advertising,
and products.

AI: Who's Calling the Shots?

AI applications will revolutionize how consumers interact with products as they
are coming to the call center. AI personal shoppers can help their customers to decide
what to buy by diagnosing a caller’s personality and match him or her with a compatible
chatbot.

Priming and Nudging

The way information about a product choice is framed (how physical cues
“prime” us) can prime a decision even when the consumer is unaware of this influence.
=> This sensations are called context effects
It's a matter of framing, or how we pose the question to people or what exactly we
ask them to do. For example, people hate losing things more than they like getting
things; this tendency is called loss aversion.
How the value of a decision depends on gains or losses. Principles of mental
accounting relate to the way we frame the question as well as external issues that
shouldn’t influence our choices, but do anyway. If we’ve paid for something, we’re more
reluctant to waste it. Researchers call this decision-making bias the sunk-cost fallacy.
This explains the way organizations frame their messages can exert a big influence
on consumer behavior. And prime is important in this process as being a stimulus that
encourages people to focus on some specific aspect of their lives
A nudge - a deliberate change by an organization that intends to modify behavior -
can result in dramatic effects.
Situational Effects on Consumer Behavior
Many factors at the time of purchase dramatically influence the consumer’s
decision making process.
The Consumption Situation
In the world of consumption, buyers, sellers, products, and our emotions are
intertwined. Smart marketers capitalize on these connections to influence our purchasing
decisions.

A study used a technique called the day reconstruction method to track these
changes as our moods change radically during the day, so at different times we might be
more or less interested in what a marketer offers.
In addition to product and usage context relationships, a person's situational self-
image, or the role they assume, strongly influences their consumption choices. For
instance, when trying to impress a date as the "man-about-town," they may splurge on
champagne and flowers, but in a casual hangout with friends as "one of the boys," they'd
opt for more modest options like beer.
If we systematically identify important usage situations, we can tailor market
segmentation strategies to ensure that our offerings meet the specific needs these
situations create.
A consumer’s physical and social environment affects his or her motives to use a
product, as well as how he or she will evaluate the item. Important cues include his or her
immediate environment as well as the amount and type of other consumers who are there
as well.
Temporal Factors
Time is one of our most precious resources. We talk about “making time” or
“spending time,” and we frequently remind others that “time is money”. Time is a
precious resource often equated with money. When we have the luxury of time, we're
more deliberate in our purchasing decisions. Even the most careful shopper may rush on
Christmas Eve to grab a last-minute gift. This principle extends to online marketing,
where email open rates vary by the time of day.
Time is an economic resource, and we allocate it to various activities to maximize
our satisfaction. People have different time allocation patterns, an individual's timestyle is
shaped by their unique priorities.
Our experience of time is subjective; our immediate priorities and needs
determine how quickly time flies. It’s important for marketers to understand
psychological time because we’re more likely to be in a consuming mood at certain
times than we are at others.
A study examined how the timestyles of a group of U.S. women influenced their
consumption choices. The researchers identified four dimensions of time: (1) the social
dimension refers to individuals’ categorization of time as either “time for me” or “time
with/for others”; (2) the temporal orientation dimension depicts the relative significance
individuals attach to past, present, or future; (3) the planning orientation dimension
alludes to different time management styles varying on a continuum from analytic to
spontaneous; and (4) the polychronic orientation dimension distinguishes between people
who prefer to do one thing at a time from those who have multitasking timestyles.
Researchers identified four time dimensions: social (personal vs. with others),
temporal orientation (past, present, future), the planning orientation dimension (analytic
to spontaneous), and polychronic preference (single-tasking vs. multitasking).
=> Researchers identified a set of five metaphors: Time is a pressure cooker, a
map, a mirror, a river, a feast.
The psychological dimension of time - how we actually experience it - is an
important factor in queuing theory. we assume that something must be pretty good if we
have to wait for it, the negative feelings that long waits arouse can quickly turn people
off. On the other hand, recent research shows that consumers tend to buy more if they
have to wait longer in line.

The Shopping Experience

The information a store’s layout, website, or salespeople provides strongly
influences a purchase decision.
That’s why design thinking is popular as its focus on creating products, services,
and stores align with how customers live and use them, rather than just being
aesthetically pleasing. This approach emphasizes that managers must break out of their
box and see things from the consumer's viewpoint, leading to the current buzzword:
the “customer journey”.
This methodology encourages brands to meticulously map each customer
interaction, regardless of location or significance. The customer journey spans from
awareness to purchase, and successful brands create a seamless experience by connecting
and enhancing every touchpoint.

In- Store decision making

  The store environment exerts a strong influence on many purchases despite our
efforts pre selling through advertisement. “store displays are one of the major
information sources they use to decide what clothing to buy”.
 The influence ís even stronger when it comes to food: two out of every three
supermarket purchases while they walk through the aisles
 Customers typically decide beforehand on an amount they plan to spend, but then
they have an additional amount in mind (slack) they are willing to spend on
unplanned purchases - mental budget (in-store slack and itemized portion )
 Sell sweets at eye level, midway along aisles, where shoppers’ attention lingers
longest.
• Use the ends of aisles to generate big revenues—endcap displays account for 45
percent of soft drink sales.
• Use freestanding displays toward the rear of the supermarket and on the left side
of aisles. Shoppers tend to move through a store in a counterclockwise direction
and they are more likely to choose items from shelves to their left.
• Sprinkle the same product throughout the store, rather than grouping it in one
spot to boost sales through repetitive exposure.
• Group ingredients for a meal in one spot.
• Post health-related information on kiosks and shelf tags to link groceries to good
health in shoppers’ minds, even though only 23 percent of them say they always
look for nutritional information on labels.

Shopping apps and In Store tech

 Mobile shopping apps on smartphones provide imaginative new ways for retailers
to guide shoppers through the experience, as they do everything for you: locate
merchandise, identify the nearest restroom in a mall, or scout out sales,..also
provide a solution to the major hassles like long checkout times and incompetent
sales associates.
share a coupon with a shopper’s phone as he or she browses in the aisle
the augmented reality (AR) and virtual reality (VR) platforms promise to turn the
shopping experience into an interactive playground.
hold her phone over the box to bring up a model who shares tips about how to
apply makeup

Spontaneous Shopping
These 2 process explain why a customer decides to buy:
 He or she engages in unplanned buying ( unfamilar with the store’s layout then
recognizes a new need while in the store ).
 He or she engages in impulse buying: sudden, unresistable urge
  Stores places impulse item near the checkout section to create the urge and places
regulabought items in narrower aisle allowing the carts to speed through.

Point-of-Purchase Stimuli: Point-of-purchase (POP) stimuli the promotional materials

that are deployed in stores or other outlets to influence consumers’ decisions at the time
products are purchased
 Well-designed in-store display boosts impulse purchases by as much as 10
percent.
 point-of-purchase (POP) stimuli: elaborate product display or demonstration, a
coupon-dispensing machine, or an employee who gives out free samples of a new
cookie in the grocery.
 Product packaging play a key role in marketing mix.
Pepsi changed the look of its can, and before that its bottles,
only 10 times. Now the company switches designs every few weeks. It’s also
testing cans that spray an aroma when you open one to match the flavor of the
drink,
such as a wild cherry scent misting from a Wild Cherry Pepsi can.
Huggies’ Henry the Hippo hand soap bottles have a light that flashes for 20
seconds to show children how long they should wash their hands.

The Salesperson: A Lead Role in the Play

 The salesperson is one of the most important players in the retailing drama.
every interaction involves a trade of value
 Sales person advice makes the shopper’s choice easier.
 Factors that help to define a salesperson’s role (and effectiveness) are his or
her age, appearance, educational level, and motivation to sell
 more effective salespersons usually know their customers’ traits and
preferences
 The ability to be adaptable is especially vital depending on the degrees of
assertiveness to vary.

Ownership and the Sharing Economy

  The growth of a “sharing economy” changes how many consumers think
about buying rather than renting products.
 when people buy products: They no longer want to buy them
 sharing economy, or what is sometimes called collaborative
consumption: people rent what they need rather than buying it.
 They gravitate toward platforms like Omni, that give users a way to rent
out their stuff such as such as suitcases and sporting equipment that would
otherwise sit unused in their garages.
 Zipcars, Snapfood,
 technology that dramatically lowers transaction costs, so that it’s much
easier to share assets and track them
 Online payment systems make it easy to exchange money. Social networks
create communities and build trust among strangers who can access each
other’s histories. Sellers can make money from assets they don’t use much;
 it’s not just ease of use that explains the rise of the sharing economy. We
also can point to a change in attitudes toward ownership, especially among
younger consumer
 “overconsumption is putting our planet at risk, and half say they could
happily live without most of the items they own”
 many people appreciate the intimacy of exchanging items with “real
people” rather than getting them from big companies.
 That’s one reason the notion of doing business with other consumers rather
than with companies goes by the name P2P commerce (peer-to-peer).

Postpurchase Satisfaction and Disposal

Consumer satisfaction/ dissatisfaction-obviously play a big role in our future
behavior.We evaluate the things we buy as we use them and integrate them into our daily
consumption activities

Postpurchase Satisfaction:
-Satisfaction or dissatisfaction is more than a reaction to how well a product or
service performs. According to the expectancy disconfirmation model, we form
beliefs about product performance based on our prior experience with the product
or communications about the product that imply a certain level of quality.
-When something performs the way we thought it would, we may not think much about
it. If it fails to live up to expectations, this may create negative feelings. However, if
performance happens to exceed our expectations, we’re happy campers.

Product Disposal
-Product disposal is also an important element of consumer behavior. Because we do
form strong attachments to some products, it can be painful to get rid of them.
For example, a person who is a big Coca-Cola fan is more likely to recycle a Coke can
than a Pepsi can.
- In many cases we acquire a new product even though the old one still functions—that’s
one of the hallmarks of our materialistic society. Some reasons to replace an item include
a desire for new features, a change in the individual’s environment, or a change in the
person’s role or self-image

Recycling and the Underground Economy

-We live in a throwaway society, which creates problems for the environment and also
results in a great deal of unfortunate waste. This pragmatic dimension outweighed
general attitudes toward recycling and the environment in predicting one’s intention to
recycle. Of course, one way to ease the pain is to reward consumers for recycling.
The H&M chain sponsors a Garment Recycling Program; customers can bring any
garment from any brand in any condition into an H&M store. For every bag of clothes
donated, H&M gives customers a 15 percent discount on the next item they buy.
-Although traditional marketers don’t pay much attention to used-product sellers, factors
such as concern about the environment, demands for quality, and cost and fashion
consciousness make these “secondary” markets more important.The new trend of
recommerce shows that many consumers want to squeeze more value out of their
possessions by selling or trading them.