Consumer Behavior Midterm

In which situations will customers tend to Satisfice? Optimize?

- Satisficing decision making, a term coined in the 1950s by the economist Herbert Simon, is the process whereby consumers settle for an alternative that is "good enough" or that passes some acceptable threshold. In such cases, there may be a more optimal alternative available that additional research could uncover. However, the decision maker feels that the added benefit does not warrant the added cost of the search. Consider the difference between buying and renting a vacation home. Consumers buying a vacation home are more likely to try to optimize their decision making—the cost will be far more significant than if they were renting, and the satisfaction or dissatisfaction from a good or bad choice will extend much further into the future. As a result, they tend to take more time to make their decision, they seek out more advice, they do more research on housing prices in the area, and they may even spend time in the area to experience what life might be like there. The recommendation to "rent before you buy" captures the importance of the decision being made. Contrast that with renting a vacation place for a week. While consumers may still do a great deal of research—it is still relatively high-involvement decision making—they are more likely to end that search when they find an alternative that seems to meet their standards, rather than continuing to search every website for all possible alternatives. And while they will consider cost and location, there is less of a need to get the decision exactly right. In the end, satisficers are willing to expend the time and energy needed to make a good choice as opposed to the far greater time and energy needed to make the best choice. Factors that influence whether a consumer uses an optimizing versus satisficing decision-making process are some of the same ones that drive whether a process entails high or low involvement. As a general rule, the greater the expense (a car, a house, an insurance plan), the more likely consumers will try to optimize. Similarly, the greater the variance in quality and price, the more likely they will seek to optimize, whereas when all alternatives are pretty much the same, the benefit of additional search efforts may be negligible. Finally, the length of product or service usage may be a factor. For instance, it's far more important to get one's choice of university exactly right than to choose the perfect week-long adult education class. Interestingly, the optimizing versus satisficing distinction often varies from person to person. Independent of the product category or type of decision, some consumers are more likely to optimize and some more likely to satisfice, and they may do so across the bulk of their purchase decisions. Indeed, most of us can think of a friend or family member who overanalyzes seemingly simple purchases, as well as someone who settles on the choice of a product with far too little deliberation. Being on either extreme, however, can be detrimental to the buyer. The person who regularly brings an optimizing strategy to her choice of sandwich for lunch or her choice of a movie from Netflix is probably spending more time on these endeavors than they rationally warrant. Similarly, the person who employs a satisficing strategy to his choice of a house or a new car likely would benefit, both in terms of satisfaction experienced and value obtained, from a more exhaustive consideration of the available alternatives. Again, the optimizer/satisficer distinction should affect a company's go-to-market strategies. When selling shampoo to target customers who believe that all shampoos are pretty much the same, companies can expect them to satisfice. As a result, a firm should make its product easy to find, give it a large amount of shelf space, design colorful packaging to make the item stand out from the offerings around it, and give it an affordable price. Target customers who believe that there are large differences among shampoos, however, are more likely to try to choose the best. Therefore, marketers may wish to advertise heavily to convey their product's superiority, highlight the economic and social costs of a bad choice, and price the product at a point that suggests quality.

What is Purchase Involvement? Product Involvement? What is the difference?

- We define purchase involvement as the level of concern for, or interest in, the purchase process triggered by the need to consider a particular purchase. Thus, purchase involvement is a temporary state of an individual or household. It is influenced by the interaction of individual, product, and situational characteristics. - Note that purchase involvement is not the same as product involvement or enduring involvement. A consumer may be very involved with a brand (Starbucks or Dodge) or a product category (coffee or cars) and yet have a very low level of involvement with a particular purchase of that product because of brand loyalty, time pressures, or other reasons. For example, think of your favorite brand of soft drink or other beverage. You may be quite loyal to that brand, think it is superior to other brands, and have strong, favorable feelings about it. However, when you want a soft drink, you probably just buy your preferred brand without much thought. - Or a consumer may have a rather low level of involvement with a product (school supplies or automobile tires) but have a high level of purchase involvement because he or she desires to set an example for a child, impress a friend who is on the shopping trip, or save money.

Market segments/Segmentation

-A market segment is a portion of a larger market whose needs differ somewhat from the larger market. Since a market segment has unique needs, a firm that develops a total product focused solely on the needs of that segment will be able to meet the segment's desires better than a firm whose product or service attempts to meet the needs of multiple segments. -Behavioral targeting, in which consumers' online activity is tracked and specific banner ads are delivered based on that activity, is another example of how technology is making individualized communication increasingly cost-effective. Market segmentation involves four steps: 1. Identifying product-related need sets. 2. Grouping customers with similar need sets. 3. Describing each group. 4. Selecting an attractive segment(s) to serve.

Brand image

-Brand image refers to the schematic memory of a brand. It contains the target market's interpretation of the product's attributes, benefits, usage situations, users, and manufacturer/marketer characteristics. It is what people think of and feel when they hear or see a brand name. It is, in essence, the set of associations consumers have learned about the brand.67 Company image and store image are similar except that they apply to companies and stores rather than brands. The importance of branding and brand image can be seen in the fact that products that have traditionally been unbranded such as water, apples, and meat are increasingly being branded. Consider the meat industry. It must deal with a number of issues, not the least of which is that many consumers see meat as difficult and time-consuming to prepare. As one industry expert said: A lot of consumers don't have the time and expertise to take a raw roast and cook it for six to eight hours, so what we have to do in this industry is understand that and do something about it.

Customer value

-Customer value is the difference between all the benefits derived from a total product and all the costs of acquiring those benefits. It is critical that a firm consider value from the customer's perspective. Ziploc's TableTops failed because consumers felt the benefit of being semi-disposable did not outweigh the cost of the product itself or the guilt they felt about eventually throwing it away. Thus, marketing strategy seeks to provide the customer with more value than the competition while still producing a profit for the firm.

What is a market analysis? What are the key components?

-Market analysis requires a thorough understanding of the consumption process of potential customers; the organization's own capabilities; the capabilities of current and future competitors; and the economic, physical, and technological environment in which these elements will interact.

Need sets. What are some ways Marketers use to describe customers with similar need sets?

-Marketing strategy is basically the answer to the question, How will we provide superior customer value to our target market? The answer to this question requires the formulation of a consistent marketing mix. The marketing mix is the product, price, communications, distribution, and services provided to the target market. It is the combination of these elements that meets customer needs and provides customer value. For example, in the chapter opener, we see that Starbucks creates value through a combination of products, service, and a superior experience.

What are the key areas for application of Consumer Behavior?

-Social marketing is the application of marketing strategies and tactics to alter or create behaviors that have a positive effect on the targeted individuals or society as a whole.6 Social marketing has been used in attempts to reduce smoking, to increase the percentage of children receiving their vaccinations in a timely manner, to encourage environmentally sound behaviors such as recycling, to reduce behaviors potentially leading to AIDS, to enhance support of charities, to reduce drug use, and to support many other important causes.

Product Positioning

-The most basic outcome of a firm's marketing strategy is its product position—an image of the product or brand in the consumer's mind relative to competing products and brands. This image consists of a set of beliefs, pictorial representations, and feelings about the product or brand. It does not require purchase or use for it to develop. It is determined by communications about the brand from the firm and other sources, as well as by direct experience with it. Most marketing firms specify the product position they want their brands to have and measure these positions on an ongoing basis. This is because a brand whose position matches the desired position of a target market is likely to be purchased when a need for that product arises.

Total product

-This entire set of characteristics is often referred to as the total product. The total product is presented to the target market, which is consistently engaged in processing information and making decisions designed to maintain or enhance its lifestyle (individuals and households) or performance (businesses and other organizations). -What is the total product? Clearly, it is much more than food and beverages. It also involves an experience. Increasingly, marketers sell experiences as much as or more than actual products and services. An "experience" occurs when a company intentionally creates a memorable event for customers. While products and services are to a large extent external to the customer, an experience is largely internal to each customer. The experience exists in the mind of an individual who has been engaged on an emotional, physical, intellectual, or even spiritual level.

What is Consumer Behavior? What are its key aspects?

-the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. KEY ASPECTS- 1.) Consumer behavior is a complex, multidimensional process. Consumer decisions often involve numerous steps and are influenced by a host of factors including demographics, lifestyle, and cultural values. Consumer decisions are further complicated when the needs and wants of multiple individuals or groups are considered, as when families must make decisions about where to eat for dinner or where to go on vacation. 2.) Successful marketing decisions by firms, nonprofit organizations, and regulatory agencies require an understanding of the processes underlying consumer behavior. This relates to understanding theories about when and why consumers act in certain ways. Whether they realize it or not, organizations are making decisions every day based on explicit or implicit assumptions about what processes drive consumer behavior. 3.) Successful marketing decisions require organizations to collect information about the specific consumers involved in the marketing decision at hand. Consumer decisions are heavily influenced by situation and product category. Thus, consumer research is necessary to understand how specific consumers will behave in a specific situation for a given product category. 4.)Marketing practices designed to influence consumer behavior involve ethical issues that affect the firm, the individual, and society. The issues are not always obvious and many times involve trade-offs at different levels. The fast-food industry is currently dealing with such issues. While their products are highly desirable to many consumers in terms of taste and affordability, they also tend to be high in calories, fat, and sodium. These health-related issues have gotten the attention of government and consumer groups.

Activity/Problem analysis

Activity and Product Analysis Activity analysis focuses on a particular activity, such as preparing dinner, maintaining the lawn, or swimming. Then, surveys or focus groups (see Appendix A) attempt to determine what problems consumers encounter during the performance of the activity. For example, a shampoo company could use such an approach to develop products specifically for the hair-related problems associated with swimming in chlorinated pools. Product analysis is similar to activity analysis but examines the purchase or use of a particular product or brand. Thus, consumers may be asked about problems associated with using their mountain bikes or laptop computers. Problem Analysis Problem analysis is different in that it starts with a problem and asks respondents to indicate which activities, products, or brands are associated with (or perhaps could eliminate) those problems. For example, a study dealing with packaging problems could include questions such as: packages are hard to open. Packages of are hard to reseal. Packages of don't fit on the shelf. Packages of waste too many resources.

Actual/Desired states

An actual state is the way an individual perceives his or her feelings and situation to be at the present time. A desired state is the way an individual wants to feel or be at the present time. For example, you probably don't want to be bored on Friday night. If you find yourself alone and becoming bored, you would treat this as a problem because your actual state (being bored) and your desired state (being pleasantly occupied) are different. You could then choose to watch a television program, rent a video, call a friend, go out, or take a wide array of other actions. The kind of action taken by consumers in response to a recognized problem relates directly to the problem's importance to the consumer, the situation, and the dissatisfaction or inconvenience created by the problem. Without recognition of a problem, there is no need for a decision. This condition is shown in Figure 14-2, when there is no discrepancy between the consumer's desired state (what the consumer would like) and the actual state (what the consumer perceives as already existing). Thus, if Friday night arrives and you find yourself engrossed in a novel, your desire to be pleasantly occupied (desired state) and your condition of enjoying a novel would be consistent, and you would have no reason to search for other activities.

Awareness/Consideration/Choice sets (pg. 31)

Anna next enters the evaluation of alternatives part of the pre-purchase phase. As she considers which car to buy, she conceivably could choose from the total set of alternatives in the marketplace: a selection of all possible options, no matter how obscure or ill-suited to her needs (such as a minivan designed to seat eight, when Anna is a single female). More realistically, however, she likely hones in on an awareness set—that subset of alternatives that she knows and has heard of. As she receives feedback from her friends, does her research, and takes into account her own preferences and liking for various vehicles, Anna pares the list down to a consideration set—offerings that meet her initial buying criteria and that she will consider in more detail. This eventually leads to a choice set—strong contenders for purchase—and ultimately to the decision to buy a specific car (see Exhibit 5). EXHIBIT 5 Buying an Automobile: From Total Set to Decision

Under what conditions should the firm attempt to trigger generic problem recognition? Under what conditions should it not?

Approaches to Activating Problem Recognition How can a firm influence problem recognition? Recall that problem recognition is a function of the (1) importance and (2) magnitude of a discrepancy between the desired state and an existing state. Thus, a firm can attempt to influence the size of the discrepancy by altering the desired state or perceptions of the existing state. Or the firm can attempt to influence perceptions of the importance of an existing discrepancy. Many marketing efforts attempt to influence the desired state; that is, marketers often advertise the benefits their products will provide, hoping that these benefits will become desired by consumers. The Maui Jim ad in Illustration 14-7 attempts to influence the desired state by showing just how good the product can make you look. It is also possible to influence perceptions of the existing state through advertisements. Many personal care and social products take this approach. "Even your best friend won't tell you ..." or "Kim is a great worker but this coffee ..." are examples of messages designed to generate concern about an existing state. The desired states are assumed to be fresh breath and good coffee. These messages are designed to cause individuals to question if their existing state coincides with this desired state.

Suppressing Problem Recognition

As we have seen, competition, consumer organizations, and governmental agencies occasionally introduce information in the marketplace that triggers problem recognition that particular marketers would prefer to avoid. The American tobacco industry has made strenuous attempts to minimize consumer recognition of the health problems associated with cigarette smoking. For example, a Newport cigarette advertisement showed a happy, laughing couple under the headline "Alive with pleasure." This could easily be interpreted as an attempt to minimize any problem recognition caused by the mandatory warning at the bottom of the advertisement: "Warning: The Surgeon General has determined that cigarette smoking is dangerous to your health." Obviously, marketers do not want their current customers to recognize problems with their brands. Effective quality control and distribution (limited out-of-stock situations) are important in this effort. Packages and package inserts that assure the consumer of the wisdom of his or her purchase are also common.

If some customers optimize for a given product category, will all? If some are high-involvement for a given product category, will all be? Why or why not?

As with cognitive versus emotional purchases, savvy marketers adapt their selling strategies to consumers' involvement levels. For high-involvement purchases, some companies tout their easy-return policies or offer guarantees to reduce the consumer's perceived risk of purchase. Other companies encourage consumers to "shop around" or provide consumers with comparisons between the company's product and that of the competition, as shown in the ad in Exhibit 4, which makes it easy for consumers to compare the features of their current rewards card against those of VentureOne. Some companies might even encourage consumers to make price comparisons. Think of Progressive Insurance's strategy of showing customers not only its own prices but also those of its competitors, even when a competitor offers a lower price. At first, this may seem counterproductive, until one realizes that insurance often is a high-involvement decision in which more than just price is considered. Progressive is betting that even when a competitor has a slightly lower price, Progressive's level of service and coverage will encourage consumers to choose it. Strategies for low-involvement purchases, in contrast, may include making the offering readily available, as when stores place gum, candy, and magazines in checkout aisles or online retailers suggest "products you may also like" while a repeat consumer is logged in. Alternatively, low-involvement purchases may require a simple rationale for the purchase of the product. Think of Snuggie's "the blanket with sleeves" slogan, which implies that blankets without sleeves are somehow deeply flawed. Such purchases may also call for an attempt to differentiate the product from what might otherwise be an undifferentiated set of alternatives. The slogans "Our chewing gum has flavor crystals!," used by Ice Breakers, and "The Coldest Tasting Beer in the World," used by Coors, are apt examples.

Behavioral Targeting

Behavioral targeting is another form of targeting that is based not on what people say but what they actually do online. Specifically, behavioral targeting involves tracking consumer click patterns on a website and using that information to decide on banner ad placement.40 Pepsi used behavioral targeting to promote Aquafina to consumers interested in healthy lifestyles. Online behavioral tracking helped them determine which consumers were the "healthy lifestyles" consumers, and then ads for Aquafina were delivered to those consumers across over 4,000 websites. The result was a 300 percent greater click-through rate for the targeted Aquafina campaign compared to their previous nontargeted campaigns. Again, the perceived relevance of the message to the target audience is a key factor to the success of behavioral targeting.41 Concerns over privacy and transparency are driving efforts at industry self-regulation, which could or already do include "no-tracking lists" and privacy browsing features.

What are the types of nominal decision making? How do they differ?

Brand Loyal Purchases At one time, you may have been highly involved in selecting a brand of toothpaste and, in response, used an extensive decision-making process. Having selected Aim as a result of this process, you may now purchase it without further consideration, even though using the best available toothpaste is still important to you. Thus, you are committed to Aim because you believe it best meets your overall needs and you have formed an emotional attachment to it (you like it). You are brand loyal. It will be very difficult for a competitor to gain your patronage. In this example, you have a fairly high degree of product involvement but a low degree of purchase involvement because of your brand loyalty. Should you encounter a challenge to the superiority of Aim, perhaps through a news article, you would most likely engage in a high-involvement decision process before changing brands. Repeat Purchases In contrast, you may believe that all ketchup is about the same and you may not attach much importance to the product category or purchase. Having tried Del Monte and found it satisfactory, you now purchase it whenever you need ketchup. Thus, you are a repeat purchaser of Del Monte ketchup, but you are not committed to it. Should you encounter a challenge to the wisdom of buying Del Monte the next time you need ketchup, perhaps because of a point-of-sale price discount, you would probably engage in only a limited decision process before deciding on which brand to purchase.

Brand equity

Brand equity is the value consumers assign to a brand above and beyond the functional characteristics of the product. For example, many people pay a significant premium for Bayer aspirin relative to store brands of aspirin although they are chemically identical. Brand equity is nearly synonymous with the reputation of the brand. However, the term equity implies economic value. Thus, brands with "good" reputations have the potential for high levels of brand equity, whereas unknown brands or brands with weak or negative reputations do not. The outcomes of brand equity include increased market share, decreased consumer price sensitivity, and enhanced marketing efficiency. Brand equity is based on the product position of the brand. A consumer who believes that a brand delivers superior performance, is exciting to use, and is produced by a company with appropriate social values is likely to be willing to pay a premium for the brand, to go to extra trouble to locate and buy it, to recommend it to others, to forgive a mistake or product flaw, or to otherwise engage in behaviors that benefit the firm that markets the brand. Thus, one source of economic value from a positive brand image results from consumers' behaviors toward existing items with that brand name.

Brand Leverage

Brand leverage, often termed family branding, brand extensions, or umbrella branding, refers to marketers capitalizing on brand equity by using an existing brand name for new products.86 If done correctly, consumers will assign some of the characteristics of the existing brand to the new product carrying that name. Relatively recent brand extensions include Starbucks ice cream, Listerine breath strips, and Campbell's tomato juice. However, stimulus generalization does not occur just because two products have the same brand name. There must be a connection between the products. Pace is finally leveraging its brand equity beyond salsas by extending its name into related products such as refried beans, taco sauces, and bean dip. According to Pace's brand manager: We feel we have the ability to expand into Mexican meals, it's just now about choosing the right products and aligning with what consumers are making. Successful brand leverage generally requires that the original brand have a strong positive image and that the new product fit with the original product on at least one of four dimensions: 1. Complement. The two products are used together. 2. Substitute. The new product can be used instead of the original. 3. Transfer. Consumers see the new product as requiring the same manufacturing skills as the original. 4. Image. The new product shares a key image component with the original.

In/Active problems

Consumer problems may be either active or inactive. An active problem is one the consumer is aware of or will become aware of in the normal course of events. An inactive problem is one of which the consumer is not aware. As this example indicates, active and inactive problems require different marketing strategies. Active problems require the marketer only to convince consumers that its brand is the superior solution. Consumers are already aware of the problem. In contrast, inactive problems require the marketer to convince consumers that they have the problem and that the marketer's brand is a superior solution to the problem. This is a much more difficult task.

What do customers DO under conditions of High Involvement that is different from Low Involvement?

First consider high-involvement purchases—anything from a wedding gown or a dishwasher to a car or a house. The buyer is fully engaged, the decision making tends to be effortful, the time frame tends to be relatively long, and the consequences of making a good versus a bad choice tend to be significant and visible. For a purchase that is largely cognitive, such as buying a widescreen television, a consumer may research the various makes and models on the market, visit several retailers to see which has the best prices, talk to friends to get their recommendations, and scan the newspaper for temporary price promotions. The process may consume many hours over several weeks or months and involve winnowing down a list of choices to one or two alternatives. Similarly, for a purchase that is largely emotional, such as buying a dress for a high school prom, a consumer also may visit many stores, get feedback from friends and relatives, and make sure that the dress chosen is distinctive enough that it does not match another prom-goer's dress. In both these cases, and in many purchase decisions in general, high involvement stems from factors such as expense, the risk inherent in making a bad choice, and uncertainty around which alternative is best. In contrast, low-involvement purchases tend to require far less effort; they often happen quickly, and they are perceived as having far lower risk. For most people, purchasing gum in a convenience store, buying a soda with lunch, or extending a monthly fitness club membership would entail low involvement. This low involvement could be due to any one of several factors. Perhaps it is due to cost—the price is so small that the purchase does not warrant careful and elaborate consideration. Or it could be routine—long ago, the consumer decided which paper towels were preferred or which gym best met his or her needs, and now the decision to repurchase is automatic. Or maybe the available alternatives are largely similar—the person has come to believe that all gasoline is the same product and chooses a gas station based solely on price and convenience. Interestingly, whether a purchase fosters high or low involvement can change over time. Consider the level of involvement when someone buys automobile insurance for the first time. The buyer may consider several vendors, wrestle with how large a deductible to accept, question how much coverage to take on, and compare prices of different insurers. For many people, the purchase is a highly involved, highly cognitive decision. Roll the clock forward one year, however, and consider the renewal of that insurance policy. Assuming no surprises occurred in the past year (such as an accident that greatly increased the policy's price), many buyers will simply renew the policy and be done with it—a decidedly low-involvement purchase. In fact, it usually takes a dramatic change—a move to a new state or the addition of a junior driver to the policy—for a customer to once again engage in an effortful assessment of insurance policies. Similarly, the level of involvement can vary by consumer, even when the product type is held constant. An advertisement from several years ago depicted a 20-something woman laboring over the choice of a Valentine's Day card for her significant other, checking dozens of cards to find the perfect one that expressed her feelings precisely. Her not-so-perfect significant other, on the other hand, mindlessly grabbed a Valentine's Day card from a small rack at the checkout counter of a convenience store where he happened to be buying beer. Same product category, yet two very different levels of involvement.

Generic problem recognition

Generic problem recognition involves a discrepancy that a variety of brands within a product category can reduce. Generally, a firm will attempt to influence generic problem recognition when the problem is latent or of low importance and one of the following conditions exists: It is early in the product life cycle. The firm has a high percentage of the market. External search after problem recognition is apt to be limited. It is an industrywide cooperative effort. Telephone sales programs often attempt to arouse problem recognition, in part because the salesperson can then limit external search to one brand. Advertising for food-related cooperatives such as milk, beef, and pork frequently focuses on generic problem recognition.

Prompting the next purchase during the post-purchase phase

If a company has managed the pre-purchase and purchase phases well (and has a little luck), the consumer buys the product or service. But, quite often, the company's work is not done. In the post-purchase phase, a consumer's liking for the purchased product and loyalty to the company that sold it are by no means guaranteed. Buyers might be disappointed if the offering doesn't fulfill their expectations, or they might think they made a mistake if they hear other consumers rave about an alternative product. This dreaded condition, known as buyer's remorse, can arise particularly when people have spent a great deal of money for a product. Marketers care about managing the post-purchase phase because consumers who are happy with their purchases are more likely to buy again and spread positive word-of-mouth to others. Those who aren't happy might return the product or cancel the service, complain to the company, or warn others against purchasing the product or service. Consider a product that requires after-purchase care to retain its appeal, such as a finely made sweater or a mahogany. dining table. Often a firm will recommend the type of care required to get the most out of that product, such as how to best clean the sweater or how often and with what products to polish the dining table. By recommending (and sometimes even monitoring) types and levels of after-sale care, companies can increase consumers' satisfaction with their purchases. At other times, firms may want to ameliorate bad experiences. Generous return policies and lengthy warranty periods often engender consumer appreciation, and repair policies that offer a loaner product during the repair period alleviate a major concern for many consumers. In the post-purchase phase, a business may also anticipate—and prompt—the next purchase of the same product. For instance, to encourage consumers to replace products or renew services, companies sometimes add special features that indicate when it's time to buy again. Some toothbrushes and razors include a color indicator that fades with every use, indicating when the item needs to be replaced. Publishers send renewal notices to readers months before their magazine subscriptions expire. Similarly, an enterprise may encourage purchase of its other product offerings. For example, an insurance firm may offer consumers a significant discount to induce them to consolidate their home, car, and boat insurance with that one provider. Finally, companies must consider how consumers will eventually dispose of products in the post-purchase phase. This is especially important for products that can be difficult to dispose of, perhaps because they are big and bulky or because they can damage the environment. That is why mattress retailers typically offer to take away the mattress being replaced, while many car-battery retailers remove and dispose of the old battery. Hewlett Packard, for example, has arranged for Staples and Walmart to accept printer cartridges that consumers drop off for recycling, and it also provides mailing labels for a mail-in recycling program. By making it easier for consumers to dispose of products in a convenient or environmentally responsible way, companies can further encourage brand loyalty. The specific dynamics within the pre-purchase, purchase, and post-purchase phases of the buying process vary widely across people, across products, across time, and across contexts. So while there is wide variance, these dynamics do exist in some form, and marketers must consider them if they hope to sell to their company's chosen customers. For example, the dynamics may vary depending on the type of shopper—whether they are habitual shoppers, consumers who seek high-value deals, customers who love variety, or shoppers who tend to use a high involvement decision-making process (see Exhibit 6). A deeper understanding of these dynamics can help companies better match their selling process to consumers' decision-making process. A failure at any phase in the process—whether at pre-purchase, purchase, or post-purchase—can result in the loss of sales and future sales.

What do we mean by Compensatory and Non-Compensatory decision making? What is the difference?

In some cases, consumers consider (or attempt to consider) all of the attributes that are relevant, making trade-offs between those attributes. This process is called compensatory decision making because a product's shortcomings on a particular attribute, such as a price that is high, can be compensated for by its strengths on another attribute, such as exceptional styling, which results in a product that consumers still find desirable. For some individuals, the purchase of the early Apple iPhone resulted from a compensatory decision-making process. Even though these consumers may have had concerns about various features of the product, including faulty WiFi connections, poor battery life, and a high purchase price, they were so delighted with the usability, sleekness, and novelty of the device that they were willing to buy it. In other cases, consumers may consider some, but not all, of a product's attributes, ignoring potential tradeoffs between those attributes. This process is termed noncompensatory decision making because a product's failure to reach an acceptable threshold on one attribute cannot be compensated for by high performance on another attribute. For many individuals, the choice of an airline flight represents a noncompensatory decision. When flying from Boston to San Francisco, for instance, some travelers may only consider nonstop flights. Even if a flight with a stop in Chicago is $500 cheaper, the traveler may not consider it because it does not meet the threshold of being a nonstop flight. As a result, while there may be 30 flights between Boston and San Francisco on a given day, such consumers may consider only the four flights that meet the required nonstop criterion. One factor that drives compensatory versus noncompensatory decision making is the size of the choice set. If there are a limited number of choices—such as three restaurants in a small town—it is not too difficult to consider all the alternatives on all the relevant attributes. However, if there are many choices—such as where to go on one's honeymoon—it becomes difficult and time-consuming to be exhaustive in one's decision making. As a result, the happy couple may reduce the number of alternatives under consideration by establishing some noncompensatory thresholds: The destination must be in a warm climate, on the water, and within a five-hour plane ride. A second factor that drives the use of compensatory versus noncompensatory decision making is the importance of the various attributes to the consumer. If one attribute dominates all others, no form of compensatory decision making may produce a result that is superior to a noncompensatory process. To illustrate, if a traveler truly abhors missing flight connections, consideration of only nonstop flights may be a perfectly acceptable criterion that leads to the best decision for that traveler. Finally, resource availability may play a role. If consumers have the time, patience, and access to product information, they may employ compensatory decision making. When deciding in April which Boston Red Sox baseball game to take their family of four to in August, parents may engage in a careful and complete assessment that takes into account the preferred day of the week, time of day, opposing team, seat location, and price. But if approached at 2 p.m. on August 15 by a work colleague who offers four Red Sox tickets for later that day, a person may consider far fewer tradeoffs, and the decision may hinge simply on whether he and his family are free then.

What are the three types of decision making? What are the differences in the three processes?

Nominal decision making, sometimes referred to as habitual decision making, in effect involves no decision per se. As Figure 14-1 indicates, a problem is recognized, internal search (long-term memory) provides a single preferred solution (brand), that brand is purchased, and an evaluation occurs only if the brand fails to perform as expected. Nominal decisions occur when there is very low involvement with the purchase. A completely nominal decision does not even include consideration of the "do not purchase" alternative. For example, you might notice that you are nearly out of Aim toothpaste and resolve to purchase some the next time you are at the store. You don't even consider not replacing the toothpaste or purchasing another brand. At the store, you scan the shelf for Aim and pick it up without considering alternative brands, its price, or other potentially relevant factors. Nominal decisions can be broken into two distinct categories: brand loyal decisions and repeat purchase decisions. Limited decision making involves internal and limited external search, few alternatives, simple decision rules on a few attributes, and little postpurchase evaluation. It covers the middle ground between nominal decision making and extended decision making. In its simplest form (lowest level of purchase involvement), limited decision making is similar to nominal decision making. For example, while in a store you may notice a point-of-purchase display for Jell-O and pick up two boxes without seeking information beyond your memory that "Jell-O tastes good" or "Gee, I haven't had Jell-O in a long time." In addition, you may have considered no other alternative except possibly a very limited examination of a "do not buy" option. Or you may have a decision rule that you buy the cheapest brand of instant coffee available. When you run low on coffee (problem recognition), you simply examine coffee prices the next time you are in the store and select the cheapest brand. Limited decision making also occurs in response to some emotional or situational needs. For example, you may decide to purchase a new brand or product because you are bored with the current, otherwise satisfactory, brand. This decision might involve evaluating only the newness or novelty of the available alternatives.5 Or you might evaluate a purchase in terms of the actual or anticipated behavior of others. For example, you might order or refrain from ordering wine with a meal depending on the observed or expected orders of your dinner companions. In general, limited decision making involves recognizing a problem for which there are several possible solutions. There is internal and a limited amount of external search. extended decision making involves an extensive internal and external information search followed by a complex evaluation of multiple alternatives and significant postpurchase evaluation. It is the response to a high level of purchase involvement. After the purchase, doubt about its correctness is likely and a thorough evaluation of the purchase takes place. Relatively few consumer decisions reach this level of complexity. However, products such as homes, personal computers, and complex recreational items such as home theatre systems are frequently purchased via extended decision making. Even decisions that are heavily emotional may involve substantial cognitive effort. For example, a consumer may agonize over a decision to take a ski trip or visit parents even though the needs being met and the criteria being evaluated are largely emotions or feelings rather than attributes per se, and are therefore typically fewer in number with less external information available.

Internal/External/Ongoing search. When will each occur?

Once a problem is recognized, relevant information from long-term memory is used to determine such things as (1) if a satisfactory solution is known, (2) what the characteristics of potential solutions are, and (3) what appropriate ways exist to compare solutions. This is internal search. If a resolution is not reached through internal search, then the search process is focused on external information relevant to solving the problem. This is external search, which can involve independent sources, personal sources, marketer-based information, and product experience.2 It is important to note that even in extended decision making with extensive external search, the initial internal search generally produces a set of guides (e.g., must-have attributes) or decision constraints (e.g., maximum price that can be paid) that limit and guide external search. Search has benefits such as finding a lower price or getting higher quality. However, search has costs that tend to limit the amount of search even for very important decisions. That is, information search involves mental as well as physical activities that consumers must perform that take time, energy, and money.

Perceptual mapping

Perceptual mapping offers marketing managers a useful technique for measuring and developing a product's position. Perceptual mapping takes consumers' perceptions of how similar various brands or products are to each other and relates these perceptions to product attributes.

Product positioning

Product positioning is a decision by a marketer to try to achieve a defined brand image relative to competition within a market segment. That is, marketers decide that they want the members of a market segment to think and feel in a certain way about a brand relative to competing brands. The term product positioning is most commonly applied to decisions concerning brands, but it is also used to describe the same decisions for stores, companies, and product categories. Product positioning has a major impact on the long-term success of the brand, presuming the firm can create the desired position in the minds of consumers. A key issue in positioning relates to the need for brands to create product positions that differentiate them from competitors in ways that are meaningful to consumers.70 A brand that fails to differentiate itself from competitors (stimulus discrimination) will generally find it difficult to generate consumer interest and sales. The terms product position and brand image are often used interchangeably. In general, however, product position involves an explicit reference to a brand's image relative to another brand or the overall industry. It is characterized by statements such as "HP printers are the most reliable printers available." Brand image generally considers the firm's image without a direct comparison to a competitor. It is characterized by statements such as "HP printers are extremely reliable."

Repositioning

Product repositioning refers to a deliberate decision to significantly alter the way the market views a product. This could involve its level of performance, the feelings it evokes, the situations in which it should be used, or even who uses it. Illustration 9-8 shows a firm's efforts to reposition its brand in the minds of its target customers. Other recent repositioning efforts include the following: H&R Block is moving from being a tax preparation specialist to "the accessible provider of financial services to Middle America." Infiniti is attempting to move from a diffuse luxury car image to a "new brand image that is about performance." Hyundai is attempting to move from a low-price image to one that is "refined and elegant. Repositioning can be very difficult and costly, requiring consumers to unlearn old associations and replace them with new ones.79 This can take years to accomplish. In the auto industry, it is estimated that repositioning can take up to 10 years. According to one industry expert, "People's perceptions change very slowly."80 Repositioning may also require drastic action. For example, Hardee's was able to reverse plummeting sales only after completely walking away from the thin patties common in fast-food hamburgers and focusing exclusively on its now signature Thickburger made from Black Angus beef.81 Sometimes companies will even change their brand name to allow a fresh start. For example, when Bell Atlantic and GTE Wireless merged, they changed their name to Verizon.

Search Engine Optimization

Search engine optimization (SEO) involves techniques designed to ensure that a company's web pages "are accessible to search engines and focused in ways that help improve the chances they will be found."43 SEO strategies are critical to Internet search success. One estimate is that the top five spots on a Google search can be worth $50 to $100 million per year depending on the industry and company. A recent report found that searching for the generic keyword "home repair" did not get Home Depot in the top 10 listings. Rather, it came in at number 16 (and on page 2) behind such brands as Lowe's, This Old House, and BobVila.com. The problem, according to one expert, is that Home Depot failed to place key "category-defining keywords [such as 'home repair'] in the URLs."44 This is in line with our earlier discussion of the critical nature of generic terms in the consumer Internet search process. SEO relates to what is termed "organic" or natural search results. Paid or "sponsored" listings are also available through programs such as Google's Adword program, in which companies pay for "sponsored" listings for specific search terms.

What factors make a segment attractive to serve?

Segment size Segment growth rate Competitor strength Customer satisfaction with existing products Fit with company image Fit with company objectives Fit with company resources Distribution available Investment required Stability/predictability Cost to serve Sustainable advantage available Communications channels available Risk Segment profitability

Selective Problem Recognition

Selective problem recognition involves a discrepancy that only one brand can solve. The ad shown in Illustration 14-6 is focused on creating selective problem recognition. Firms attempt to cause selective problem recognition to gain or maintain market share, whereas increasing generic problem recognition generally results in an expansion of the total market.

Evaluative Criteria

Suppose you are provided with money to purchase a laptop computer, perhaps as a graduation present. Assuming you have not been in the market for a computer recently, your first thought would probably be, "What features do I want in a computer?" You would then engage in internal search to determine the features or characteristics required to meet your needs. These desired characteristics are your evaluative criteria. If you have had limited experience with computers, you might also engage in external search to learn which characteristics a good computer should have. You could check with friends, read reviews in PC Magazine online, talk with sales personnel, visit computer websites, post questions on an online discussion board, or personally inspect several computers. Illustration 15-1 shows an example of how a company is trying to focus consumers toward an attribute on which it excels but that consumers may not automatically have in mind when selecting a brand.

Evoked/Inert/Inept sets

The inert set is composed of those brands consumers are aware of and view in a neutral manner. These are brands that might be seen as acceptable by consumers if their favorite alternative is not available. These are also brands for which consumers will be open to positive information although they will not be actively seeking it out. The inept set is composed of those brands consumers are aware of and view negatively. These brands are ones for which consumers will generally not process or accept positive information even if readily available. Page 522 The evoked set (also called the consideration set) is composed of those brands or products one will evaluate for the solution of a particular consumer problem.5 Note that while evoked sets are frequently composed of brands from a single product category (brands of cereals or computers), this need not be the case because substitute products can also play a role.6 For example, one landscaping company found that consumers often view landscaping as a "home improvement decision." As a consequence, their landscaping services often compete with other home improvement products such as interior decorating instead of, or in addition to, other landscaping services. In addition, the evoked set or consideration set often varies with the usage situation. For example, pancakes may only be in a consumer's consideration set for weekend breakfast situations because they are too inconvenient for busy weekday mornings. Companies will often try to expand the usage situations for their products in various ways, as we saw in Chapter 13. In this example, premade frozen pancakes that are toaster-ready may be a way to get pancakes into the weekday breakfast consideration set.7 Finally, note that if a consumer does not have an evoked set or lacks confidence that his or her evoked set is adequate, that consumer will probably engage in external search to learn about additional alternatives. In addition, consumers may also learn about additional acceptable brands as an incidental aspect of moving through the decision process. Thus, an important outcome of information search is the development of a complete evoked set.