Thursday, August 28, 2014

Chapter 7: Consumer Decision Making



CONSUMER BEHAVIOR AND MARKETING STRATEGY
by
J. Paul Peter & Jerry C. Olson
Fifth Edition
Irwin McGrawhill Companies
Copyright 1999 
United States

Buying a Set of Dishes
In mid september Barbara decided to host a dinner party for 10 people on October 17. She immediately called and invited all the guests. But now she had a problem: She didn’t have enough dishes to serve 10 people. Actually Barbara had two sets of dishes Wedgwood stoneware and Lenox china but several pieces of the stoneware had broken over the years and she had only seven place settings of the china. Barbara decided she had to buy some new dishes. Given her budget restrictions, Barbara decided to replace the missing pieces of stoneware would be less expensive than the china.
That Friday Barbara called several department stores, only to discover that none of them had her pattern in stock. In fact, they said it would take from two to six months to get the dishes and the Wedgwood would probably discontinue the pattern soon. Barbara decided to order the someware and borrow dishes for the party. First, though she would check with her husband.
Barbara’s husband was not very enthuastic. He thought replacing the stoneware might be more expensive than buying a complete set of new dishes, especially with the sales at the department stores: and he noted that a six month wait was also a high cost. Besides, their old stoneware was chipped and scratched. But Barbara argued that at the sale prices, it might be better to replace the missing stoneware or to add three place setting to the china. Barbara developed a complex plan to take all of these factors into consideration. She decided that if finishing her set of china cost $200 or less than the stoneware replacements, she would buy three place settings of china. If a new set of stoneware cost $100 or less than replacing the missing stoneware, she would buy the new set of stoneware dishes. But if these two alternative actions were more expensive, she would order the replacement pieces for her Wedgwood stoneware.
When she called stores to check sale prices, Barbara learned that the sales offered 25 percent off all dishes in stock. She also learned that one store was selling a service for eight of Chinese porcelain for $100. At that price, she could buy two sets (a service for 16) for less than any of her other options would cost. She decided to buy the Chinese porcelain if she liked it.
On Saturday morning Barbara’s mother in law called, and Barbara reviewed the situation with her. Barbara’s mother in law said to forget the Chinese porcelain because it is too fragile either bone china or stoneware is much stronger. She also told Barbara about a factory outlet that had a large inventory and very low prices, but she had forgotten the name. Barbara decided to go back to her previous plan but to check out the factory outlet too.
Barbara began to visit department stores. She learned from one salesperson that porcelain and bone china are equally strong and both are stronger than stoneware. She also discovered that ordering the replacement Wedgwood would cost several hundred dollars and could take up to 12 months.
Barbara saw an Imari stoneware pattern she liked that was on sale and within her budget. She decided to check with the factory outlet to see whether it had the Imari pattern because she might be able to save a lot of money buying at the outlet. If the price was low enough, it might be worth the hour and a half round trip drive.
Barbara found the number of the outlet and called it. She learned it did not have the Imari pattern in stock and an order would take two months. However it did have many other patterns. Although the outlet could not quote prices over the phone, Barbara was told that many people drive a considerable distance to shop there. Now Barbara was in a quandary. She could probably save considerable money by going to the outlet, but it was a long drive and she couldn’t go until the weekend. But by then the department store might be sold out of the Imari pattern she liked. And there was a chance that she wouldn’t find anything she liked at the outlet. However the outlet did have a large inventory, so she probably would find an acceptable pattern. Barbara decided to check out the Chinese porcelain and buy it if she liked it. Otherwise, she would drive to the outlet on the weekend and buy something.
On Wednesday Barbara went to the department store to examine the Chinese porcelain. Although it was pretty, it came only in a delicate flower pattern, which she did not like. She decided to drive to the outlet right away. If it didn’t have anything she liked, she could go back to the department store and buy the Imari Pattern.
Barbara drove 45 minutes to the outlet. It had a huge inventory at much lower prices than the department store. However, none of the stoneware had the oriental pattern she wanted. So she telephoned the department store to see whether it still had the Imari pattern. It did, but it didn’t have the 10 place settings left. Perhaps this disappointment led Barbara to ask once again if the outlet had the Imari pattern. She was surprised to find that it did have the pattern in stock, and even better, it was on sale for 25 percent off the already low price. Unfortunately, the dishes were at the warehouse and couldn’t be picked up for 7 to 10 days. Barbara was pleased to find a complete set of the dishes she liked best at an acceptable price. Her only worry was that the dinner party was exactly 10 days away. She decided to order the Imari dishes and take the chance that they would be there on time (They were…and the dinner party was a great success.)
Source: Adapted from Barbara Hayes-Roth, “Opportunities in Consumer Behavior, “In Advances in Consumer Research, vol.9, ed. Andrew A. Mitchell (Ann Arbor, MI: Association for Consumer Research, 1982) pp.132-35.
This example describes a complex npurchase process that involves making several decisions. A decision involves a choice “between two or more alternative actions [or behaviors]. “Decisions always require choices between different behaviors. For instance, after examining the products in a vending machine, Joe chooses a Snickers candy bar instead of a package Reese’s Pieces. His choice was between the alternative actions of buying Snickers versus buying Reese’s Pieces. Jill is trying to  decide whether to see a particular movie. Her choice is really between the set of behaviors involved in attending the movie versus the behaviors involved in staying home (or going bowling, or whether behavioral alternatives she was considering). In sum, even though marketers often refer to choices between objects (products, brand, stores), consumers actually are choosing between alternative behaviors that concern those objects.
Marketers are particularly interested in consumers purchase behaviors, especially their choices of which brands to buy. Given the marketing orientation of this text, we emphasize consumers purchase choices (“Should I buy Levi’s or Wrangler jeans?”). It must be recognized, however, that consumers also make many decisions about non-purchase behaviors, especially their choices of which brands to buy. Given the marketing orientation of this text, we emphasize consumer purchase choices (“Should I buy Levi’s or Wrangler jeans?). It must be recognized however that consumers also make many decisions about non-purchase behaviors. Sometimes these nonpurchase choices can influence consumers purchase decisions (deciding to go for a walk or watch TV may expose consumers to marketing information about products). Sometimes these other behaviors are the targets of marketing strategies “ Core down to our store this afternoon for free coffee and doughnuts.” Our analyses of purchase decisions can be generalized to these non-purchase choices.
As shown in our model of consumer decision making in Exhibit 7.1, all aspects of affect and cognition are involved in consumer decision making, including the knowledge, meanings, and beliefs activated from memory and the attention and comprehension processes involved in interpreting new information in the environment. The key process involved in interpreting new information in the environment. The key process in consumer decision making, however is the integration process by which knowledge is combined to evaluate two or more alternative behaviors and select one. The outcome of this integration process is a choice represented cognitively as a behavioral intention (BI). As you learned in the previous chapter, a behavioral intention is a plan (sometimes called a decision plan) to engage in some behavior.
We assume all voluntary behaviors are based on the intentions produced when consumers consciously choose from among alternative actions. Thus decision making processes occur even for impulsive purchases that seem to underlie fads (see Highlight 7.1). This does not mean however that a conscious decision making processes necessarily occurs each time a purchase behavior is performed. Some voluntary behaviors become habitual. They are based on intentions stored in memory that were formed by a past decision making process. When activated these previously formed intentions or decision plans automatically influence behavior; additional decision making processes may not be necessary. Finally some behaviors are not voluntary and are affected largely by environmental factors. For instance, product displays and aisle placements dictate how consumers move through stores. Decision making is not relevant in such cases.
Exhibit 7.1
A Cognitive Processing Model of Consumer Decision Making
Exposure to environmental information

Interpretation processes

Attention Comprehension

New knowledge, meanings and beliefs
Memory
Integration Processes
Stored knowledge, meanings, and beliefs
Attitudes and intentions Decision making

Behavior


In this chapter we view consumer decision making as a problem solving process. We begin with a general discussion of this perspective. Then we identify and describe the key elements in a problem solving approach. Next we discuss the problem solving processes involved in purchase decisions. We identify three levels of problem solving effort and describe several influences on problem solving activities. We conclude by identifying several implications of consumer problem solving for marketing strategy.
Highlight 7.1
Decision Making Processes In Fads
Why do so many people suddenly buy lava lamps, take melatonin, or get their eyebrows pierced seemingly all the same time? Understanding how fads start up and end requires an understanding of consumers decisions underlying fad behavior.
Economists are bothered by fads, given their assumption that consumer behavior is basically rational. The rationality assumption is hard to reconcile with the herd behavior that drives the inflated stock prices for favored companies of the moment or the popularity of some pop singing groups (the Spice Girls were widly popular in 1997).
The world of fashion is a good place to find faddish behavior: What are the latest fashion fads on your college campus? Fads occur even in medicine: For many years doctors did tonsillectomies almost routinely, but now that operation is out favor. Fadlike behavior even occurs in the animal kingdom. Consider how territorial creatures such as birds flock together in nesting or feeding grounds as latecomers copy the actions of early arrivals. The females of some species seem to select mates by imitation. A male that has mated with one or two females may find himself in high demand by other females.
A theory of fads proposed in 1992 suggests that people tend to imitate the actions of others when forced to make choices based on limited information about what is best, or what is appropriate. These uncertain situations may spawn a “chain reaction or cascade of imitation” among consumers that fuels the fad. Many purchase situations do involve a lot of uncertainty, such as new styles of clothing, music, furniture or automobiles. Consumers seem to decide whether to buy such products by integrating their knowledge about the value of certain choice alternative (which may be minimal), with their observations of what other consumers are choosing. Even if some consumers feel like saying “no” to a new product, a few “yes” responses by others may be enough to override their personal feelings and induce them to purchase and use the product. In turn, their “yes” behaviors can influence others to do the same, thus contributing to the cascade of imitation that fuels of a fad.
Although fads are very difficult to predict, they can create major marketing opportunities for a company. Consider the popularity of sports utility vehicles among suburban car buyers. However fads tend to be fragile, so if a number of people begin to say “no”, the fad may end rather quickly (this may be occuring  with sports utility vehicles). What fads currently are prevalent (or dying) in your area?
Source: David, “Why People Often Act Like Sheep: The Theory of Fads, “Fortune, October 14, 1996, pp.49, 52.
Decision Making as Problem Solving
In treating consumer decision making as problem solving, we assume consumers have goals (desired consequences or values in a means end chain) that they seek to achieve or satisfy. A consumer perceives a “problem” because the desired consequences have not been attained (“I’am hungry. I need a reliable car. I want to lose weight.”). Consumers make decisions about which behaviors to perform to achieve their goals and thus “solve the problem.” In this sense, then, consumer decision making is a goal directed, problem solving process.
As the opening example illustrates, consumer problem solving is actually a continous stream of interactions among environmental factors, cognitive and affective processes and behavioral actions. Researchers can divide this stream into separate stages and subprocesses to simplify analysis and facilitate understanding. Exhibit 7.2 presents one such model of problem solving that identifies five basic stages or subprocesses. The first stage involves problem recognition. In the opening example, Barbara’s plan to host a dinner party made her aware of a problem she needed a set of dishes for 10 people. The next stage of the problem solving processes involve searching alternative solutions. (Barbara called and visited stores, talked to sales people and discussed the purchase with her mother in law). At the next stage alternatives are evaluated and the most desirable action is chosen. (Barbara evaluated dishes as she found them during her search. In the end she decided formed a behavioral intention to buy the Imari pattern at the factory outlet). In the next stage purchase the choice/intention is carried out. (Barbara  ordered the dishes and then returned a few days later to pay for them and pick them up.) Finally, the purchased product is used and the consumer may reevaluate the wisdom of the decision. (Apparantly Barbara was quite satisfied with the dishes and with her problem solving process.)
Exhibit 7.2
A Generic Model of Problem Solving
Problem recognition
Perceived difference between ideal and actual state of affairs.
Search for alternative solutions
Seek relevant information about potential solutions to the problem for external environment, or activate knowledge from memory.
Evaluations of alternatives
Evaluate or judge competing alternatives in terms of salient beliefs about relevant consequences and combine this knowledge to make a choice.
Purchase
Buy the chosen alternative.
Post-purchase use and reevaluation of chosen alternative
Use the chosen alternative and evaluate it again in light of its performance.
Source: There are many sources for this general model. See James Engel and Roger D. Blackwell, Consumer Behavior, 4th ed. (Hinsdale, IL:Dryden Press, 1982).
In summary this basic model identifies severalimportant activities involved in problem solving, beginning with problem recognition which activates of the initial motivation to engage in problem solving. Other activities include searching for information relevant to the problem, evaluating alternative actions and choosing an action.
However, for several reasons, the generic model often provides an imperfect account of actual problem solving processes such as those in the opening example. One reason is that actual Consumer problem solving seldom proceeds in the linier sequence portrayed in the generic model. For instance, Barbara evaluated alternative dishes as soon as she found them; she did not wait until she found all the alternatives.
Second, as emphasized in Our Wheel of Consumer Analysis (refer to Exhibit 2.3), actual problem solving processes involve multiple, continuous interactions among consumers cognitive processes, their behaviors and aspects of the physical and social environment. Such interactions occurred throughout Barbara‘s problem solving process. For instance, her cognition (beliefs) changed as a function of environmental information her behaviors led her to: First her mother in Law said Chinese porcelain is fragile but later a salesperson is said it is quite strong. These complex interactions are not easily handled by the generic model.
Third, most problem solving processes actually involve multiple problems and multiple decisions. Consider the number of separate decisions. Barbara made during the two weeks of her problem solving process: Should I go to the department store? Should I drive to the factory outlet? When should I go? Should I get the Chinese porcelain? Actual problem solving processes ussually involve several choices that produce multiple behavioral intentions. Each intention is a step in an overall decision plan. The decision plan produces a sequence of purposive behaviors that consumers perform to achieve their desired goals (go to the department store, find the dishes section, look at Chinese porcelain). The generic model implies that consumer problem solving involves one decision, typically brand choices, but this is seldom the case.
Our cognitive processing model of consumer decision making shown in Exhibit 7.1, is flexible enough to account for the nonlinier, continuous flow of interactions among behaviors, environments and cognition's; and for the multiple decisions that occur in actual consumer problem solving episodes. Moreover, it can help us understand how consumer process information during the important problem solving stages of problem recognition, search information and evaluation of alternatives. Before using this model to analyze actual consumer decisions, however, we must discuss several elements of problem solving.
Elements of Problem Solving
In this section we describe three basic elements of problem solving problem representation, integration processes and decision plans. Later we discuss how they operate In consumer decision making.
Problem Representation
When faced with a choice, consumers must interpret or represent various aspects of the decision problem. This problem representation may include (1) an end goal, (2) a set of sub goals organized into a goal hierarchy (3) relevant product knowledge and (4) a set of simple rules or heuristics by which consumers search for, evaluate and integrate this knowledge to make a choice. A problem representation serves as a decision frame a perspective or frame of reference through which the decision maker views the problem and the alternatives to be evaluated.
Often consumers initial problem representations are not clear or well developed (Barbara’s wasn’t). Neither are they fixed. In fact, the components of a problem representation often change during the decision making process, as was true in the opening example. Marketers sometimes try to influence how consumers represent or frame a purchase choice. For instance, consumers might be portrayed in advertisements as representing and then trying to solve a purchase problem in a particular way. Salespeople also try to influence consumers problem representations by suggesting end goals (buy life insurance to assure your children’s college education), imparting product knowledge (this special flash eliminates red eyes in the pictures), or suggesting choice rules (the more expensive coat is of higher quality).
The basic consequences, needs, or values that consumers want to achieve or satisfy are called end goals. They provide the focus for the entire problem solving process. Some end goals represent more concrete, tangible consequences; other end goals are more abstract. For instance, a purchase decision to replace a bulb for a flashlight probably involves the simple end goal of obtaining a bulb that lights up a simple functional consequence. Other product choices involve more abstract end goals such as desired psychosocial consequences of a product some consumers want to serve a wine that indicate their good taste to their guests. Finally,  end goals such as instrumental and terminal values are even more abstract and general consumer might choose a car that makes them feel powerful or enhances their self esteem. End goals also vary in evaluation. Some consumer decisions are oriented toward positive, desirable end goals, while others are focused on negative end goals aversive consequences the consumer wishes to avoid.
Some end goals (e.g, being happy) are so general and broad that they cannot be directly acted on by consumers. For instance, most consumers cannot specify the decision plan of specific actions that will yield the best restaurant or avoid a “lemon” of a car. When consumers try to solve problems involving abstract end goals, they break down the general goal into several more specific subgoals. The end goal and its subgoals are a goal hierarchy. Forming a goal hierarchy is analogous to decomposing a complex problem into a series of rimpler subproblems, each of which can be dealt with separately. For instance, buying a new car requires at least one trip to a showroom, which generates the subproblems of which dealer(s) to visit and when to go shopping. Usually the consumer can generate a solution to the overall problem by solving the simpler subproblems in order.
Consumer’s relevant knowledge in memory about the choice domain is an important element in problem solving. Some knowledge may be acquired by interpreting information encountered in the environment during the problem solving process. For instance, in the opening example, Barbara learned a lot about porcelain, factory locations, and price rangers for dishes. Other relevant knowledge may be activated from memory for use in integration processes. The relevance of knowledge is determined by its means end linkages to the currently active and goal. Parts of the activated knowledge may be combined in the integration processes by which consumers evaluate alternative behaviors (form A act) and choose among them (form BI). Two types of knowledge are particularly important in problem solving choice alternatives and choice criteria.
Exhibit 7.3
Forming a Consideration Set of Brand Choice Alternatives
All brands in product class
Unknown brands
Familiar brands

Brands found
Evoked set

Brands found
 through
(brands activated
Uncalled
accidentally
Intentional search
from memory)
Brands

Consideration set



of brand choice



alternatives




Choice alternatives are the alternative behaviors that consumers consider in the problem solving process. For purchase decisions, the choice alternatives are the different product classes, product forms, brands, or models the consumer considers buying. For other types of decisions, the choice alternatives might be different stores to visit, times of the day or week to go shopping, or methods of payment (cash, check, or credit card). Given their limited time, energy and cognitive capacity, consumers seldom consider every possible choice alternative. Usually only a subset of all possible alternatives called the consideration set is evaluated.
Exhibit 7.3 illustrates how manageable consideration set of brands can be constructed during the problem solving process. Some of the brands in the consideration set may be activated directly from memory;  this group is called the evoked set. For highly familiar decisions, consumers may not consider any brands beyond those in the evoked set. If consumers are confident they already know the important choice alternatives, they are not likely to search for additional ones. In other decisions, choice alternatives may be found through intentional search activities such as reading Consumer Reports, talking to knowledgeable friends, or finding brands while shopping. Finally consumers may learn of still other choice alternatives through accidental exposure to information in the environment, such as overhearing a conversation about a new brand, new store, or sale. In the opening case, Barbara learned about the factory outlet from her mother in law, essentially by accident. However the choice alternatives are generated, consumers form a consideration set of possible purchase options to be evaluated in the decision making process.
To be successful, a brand must be included in the consideration sets of at least some consumers. Consider that Kali Klena, marketing manager at Kellogg, flew from Milwankee to Chicago even through a one way flight costs between $34 and $186 and can take as long as three hours, including checkin time and transportation to and from the airports. Another choice alternative, the Amtrak train, takes half that time and costs only $19. Ms Klena didn’t take the rain because…well… she never thanks of taking the train. The train never entered her consideration set. 
Marketers therefore develop strategies to increase the likelihood that a brand will be activated from consumer memories and included in their evoked sets of choice alternatives. The activation potential of a brand will be activated from consumers memories and included in their evoked sets of choice alternatives. The activation potential of a brand, sometimes called its top of mind awareness, is influenced by many factors. One is the amount of past experience consumers have had  in purchasing and using the brand. Consumers are much more likely to think of (activate) brands that they have used before. For this reason, popular brands with higher market shares have a distinct advantage. Because they are used by more consumers, these brands  are more likely to be activated from memory and included in more consumers consideration sets. This increase the brands probability of purchase, which in turn increases their activation potential and so on. In contrast, unfamiliar and low market share brands are at a disadvantage because they are much less likely to be activated in consumers evoked sets and thereby be considered as choice alternatives.
One marketing strategy to increase the activation potential of brand is the repetitive and costly advertising campaigns devised by marketers of cigarettes, beer, soft drinks, and toothpaste (among others). The heavy expenditures may be worthwhile because brands with high top of mind awareness are more likely to be included in the evoked set of choice alternatives that “come to mind” during problem solving processes.
Finally a company’s distribution strategy can influence whether a brand is in consumers consideration sets. Consider food products, for which an estimated 65 percent of decisions are made in the store. A key for marketing strategy for such products is making sure the product is always on the shelf. This enhances the likelihood that consumers will encounter the brand at the time of the decision, which increases its chances of entering consumers consideration sets and thus the probability of purchase.
Package design can influence both the consideration set and the choice decision. Package design can catch the consumers attention in the store and increase the probability of considering the product further. Packaging also communicate important information such as ingredients, the products ease of use, and overall value which may be integrated in the consumers decision process.
As we described in Chapter 6, consumers evaluations of the choice alternatives in the consideration set are based on their beliefs about the consequences of buying those products or brands. The specific consequences that are used to evaluate and choose among choice alternatives are called choice criteria. Virtually any type of product related consequence can become a choice criterion in a brand choice decision, including salient beliefs about functional consequences (product performance), psychosocial consequences (admiration of friends) or value consequences (a sense of achievement or self-esteem). For most decisions, consumers probably have beliefs stored in memory about some of the choice alternatives in their consideration sets. If additional knowledge is desired consumers may form a subgoal of obtaining information about those choice alternatives. In the opening case, Barbara engaged in a substantial amount of intentional search to identify possible choice alternatives and form beliefs about appropriate choice criteria.
The probability that product knowledge is activated and used in the evaluation process is influenced strongly by the means and relevance of that knowledge to the goal or subgoal being considered. For instance, if the dominant end goal is self esteem, then beliefs about product consequences that are perceived as helping to achieve self-esteem are most likely to be used as choice criteria. Differences in the purchase context such as buying a sweater for your self versus buying one as gift may activate different end goals (being perceived as stylish versus being perceived as generous). These end goals (being perceived as stylish versus being perceived as generous). These end goals, in turn, may activate different choice criteria (fashionable design versus looks like it cost a lot).
As we discussed in earlier chapters, marketers often place prominent stimuli in the immediate decision environment to activate certain choice criteria from consumers memories. For instance, special price tags activate beliefs about price consequences (saving money). Prominent labels on food packages, such as “sugar-free” or “low sodium,”enhance the likelihood that the consequences associated with those attributes (good health) will be used as choice criteria. Finally salespeople often emphasize certain product benefits in their sales pitches,which increases the likelihood that beliefs about those consequences will be used as choice criteria.
Not every activated belief about product or brand consequences is necessarily used as a choice criterion. Only discriminant consequences-consequences that are perceived to differ across choice alternatives can be used as choice criteria. Beliefs about common or very similar consequences of the choice alternatives do not discriminate between alternative actions. To present an obvious example, if all the soft drinks in a vending machine contain caffeine, the consequences of caffeine (stimulation) cannot be used as a choice criterion for deciding which brand to buy. However, if a different set of choice alternatives (brands that vary in caffeine content) is being considered, caffeine content might be a choice criterion. This is an important point. The choice criteria that are relevant (activated) for a decision depend, in part, on the particular set of choice alternatives under consideration. Highlight 7.2 discusses other influences on choice criteria that are used in the decision making process.
Highlight 7.2
Choice Criteria for “Gross Shoppers” and “Swing Shoppers”
Consumers do not always appear to be consistent in their use of choice criteria to make purchase decisions. For instance, an executive who owns a fancy BMW automobile might buy gas at a discount service station. A person might buy an expensive sweater at a boutique but purchase jeans Kmart. This polarization between buying some items at high priced, status oriented stores and other items at mass volume, discount merchandisers is called “cross shopping“ or “swing shopping.” Cross shopping means a confident career woman would think nothing of pairing an inexpensive Lands End blouse with a $225 Hermes scarf.
Cross shoppers treat price and quality differently in making their purchase decisions. Many people developed a taste for quality in the 1980s and even though price became a more important choice criterion in the 1990s, they were unwilling to completely give up the quality they wanted. Thus consumers who cut back on dining at expensive restaurants might indulge them selves at the grocery store with a high quality, expensive jam, mustard, or olive oil. According to consultant Judith Langer, “Consumers have cut back on so many big things that they feel a need for small treats.”
During the 1980s, consumers became more knowledgeable, savvy and discerning in their judgments about product quality, price, and value. More of them wonder why they should pay $25 for a turtleneck at Banana Republic that they could buy at Lands End for $15. Cross shopping consumers look to value as the key choice criterion, which they interpret as the desired level of quality at the best price. Often, the level of desired level of quality at the best price. Often the level of desired quality varies from one product to another the cross shopping sweater buyer does not feel compelled to wear the highers quality jeans. Cross shoppers may vary their choice criteria from one product to another as they make purchase decisions. Thus, a cross shopper might buy the inexpensive store brand of paper towel and the expensive national brand of orange juice. In part, cross shopping has contributed to the growing demand for private or store label brands, which had a 19.7 percent market share of grocery products in 1993 up from 15,3 percent 1988.
As the cross shopping phenomenon grows, marketers must remember that consumers use choice criteria in ways that make sense to them. The problem for marketers is to understand the various meanings of choice criteria from one purchase decision to another.
Source: Kathleen Deveny and Eben Shapiro, “Stingy When Selecting Grocery Basics, Consumers Still Splurge on Fancy Foods,” The Wall Street Journal, August 10, 1933, pp. B1, B8; Gretchen Morgenson, “Here Come the Cross-Shoppers, “Forbes, December 7, 1992, pp.90-101; Chad Rubel, “Price, Quality Important for Private Label Goods,”Marketing News, January 2 1995, p.24.
Consumers choice criteria also vary in evaluation. Some choice criteria are perceived as positive, desireable consequences and elicit positive affective responses. Other choice criteria, such as price, may be thought about in negative terms as unpleasant consequences or perceived risks to be avoided. To avoid rejection, marketers may try to reduce perceived risk by assuring consumers of product quality or by offering warranties and guarantees. Consumers tend to reject choice alternatives perceived to have negative consequences unless they also have several positive consequences. For example, many Americans treat caffeine as a negative choice criterion. The popularity of this choice criterion was influenced by basic changes in societal values about health and by 7Ups no caffeine marketing strategy “Never had it, never will.”Other soift drink manufacturers responded to consumers increasing use of this negative choice criterion by introducing their own brands of caffeine free soft drinks. Consumers who perceive that a choice involves both positive and negative consequences may be motivated to search for information to resolve the conflict between the benefits and risks of the decision.
Integration Processes
The integration processes involved in problem solving perform two essential tasks: The choice alternatives must be evaluated in terms of the choice criteria and then one of the alternatives must be chosen. Two types of integration procedures can account for these evaluation and choice processes: formal integration strategies and simpler procedures called heuristics.
Exhibit 7.4 presents several formal models of the integration processes involved in evaluating and choosing among choice alternatives. The key distinction is between compensatory and noncomponensatory approaches.
Compensatory integration processes combine all the salient beliefs about the consequences of the choice  alternatives to form an overall evaluation or attitude (A act) toward each behavioral alternative. The multiattribute attitude model (A act= A bi ei) is a compensatory model, so called because a negative consequence (expensive) can be compensated for or balanced by a positive consequence (high status). It is important to recognize that consumers do not necessarily integrate large numbers of beliefs in their evaluation processes. In fact, given their limited cognitive capacity, the number of choice criteria consumers can consider at one time may be quite restricted, perhaps as few as one or two. Although the multiattribute attitude model accounts for how the choice alternatives are evaluated, it does not specify how the consumer chooses which behavior to perform. Most marketers assume consumers select the alternative with the most positive A act. Other choice rules are possible, however. For instance, consumers might choose the first alternative they find with a positive A act.
Several types of noncompensatory integration processes are also described in Exhibit 7.4 They are noncompensatory because the salient beliefs about the positive and negative consequences of the choice alternatives do not balance or compensate for each other. For example, applying the conjunctive choice rule requires that an alternative be rejected if any one of its consquences does not surpass a minimum threshold level of acceptability. Thus, Edie might reject a particular model of Reebok aerobic shoe if it has one negative consequence (too expensive), even though it has several other positive consequences (good support, comfortable, stylish colors). As another example, applying a lexicographic integration strategy might require a consideration of only one choice criterion, which makes a compensatory process impossible. Tina might evaluate a pair of dress shoes favorably and buy them because they are superior to the other alternatives on the most important consequence (the color matches her outfit exactly), whereas other, even unfavorable consequences are not considered (not desirable and slightly uncomfortable).
Research suggests consumers do not seem to follow any single rule or strategy in evaluating and choosing from among alternatives. For one thing, they probably do not have sufficient cognitive capacity to simultinously integrate several beliefs about many alternatives. Compensatory integration processes are especially likely to exceed cognitive capacity limits. Moreover many problem solving tasks do not involve a single choice to which a single integration rule could be applied. Instead, consumers make multiple choices in most purchase situations (choices of information sources to examine, stores to visit, product forms or brands to buy, methods of payment). Each choice is a separate subproblem that requires separate integration processes.
Exhibit 7.4
Formal Models of Information Integration Processes in Choice
Compensatory processes

Multiattribute model
A perceived weakness or negative evaluation on one criterion can be compensated for by a positive evaluation on another criterion. Separate evaluations for each choice criterion are combined (added or averaged) to form an overall evaluation of each alternative. Then the highest rated alternative is chosen.
Noncompensatory processes

Conjunctive
Consumer establishes a minimum acceptable level for each choice criterion. Accept an alternative only if every criterion equals or esceeds the minimum cutoff level.
Disjunctive
Consumer establishes acceptable standards for each criterion. Accept an alternative only if every criterion equals or exceeds the minimun cutoff level.
Lexicographic
Consumer ranks choice criteria from most to least important. Choose the best alternative on the most important criterion. If tie occurs, select best alternative on second most important criterion and so on.
Elimination by aspects
Consumer establishes minimum cutoffs for each choice criterion. Select one criterion and eliminate all alternatives that do not exceed the cutoff level. Continue eliminating alternatives until one alternative remains. Choose it.
Combination processes
Mix of compensatory and noncompensatory processes combined or “constructed” on the spot to adapt to environmental factors.
Source: Adapted from James R. Bettman, An Information Processing Theory of Consumer Choice, copy right 1979, Addison Wesley Publishing Co., Inc. Reading, Massachussetts. Reprinted with permission of the publisher.
Rather than a single integration strategy, consumers are likely to use a combination of processes in many problem solving situations. A noncompensatory strategy might be used to quickly reduce the choice alternativee to manageable number by rejecting those that lack one or two key criteria (a conjunctive strategy). For example, Bill might reject all restaurants that do not have a salad bar. Then the remaining brands in his consideration set (perhaps only two or three restaurants) could be evaluated on several choice criteria (price level, variety, atmosphere) using a more sterenous compensatory strategy.
Another issue is whether consumers have complete integration rules stored in memory ready to be activated and applied to the relevant product beliefs. Current research suggests instead that most integration processes are constructed at the time they are needed to fit the current situation. This suggests that rather than following fixed strategies, consumers integration processes are relatively simple, very flexible and easily adapted to varying decision situations. These simple integration “rules” are called heuristics.
Basically, heuristics are simple “if ….,then…..” productions that connect an event with an appropriate action. Because they are applied to only a few bits and pieces of knowledge at a time, heuristics are highly adaptive to specific environmental situations and are not likely to exceed cognitive capacity limits. Heuristics may be stored in memory like miniature scripts that are applied fairly automatically to information encountered in the environment. Or they may be constructed on the spot in response to the immediate environment.
Exhibit 7.5 presents examples of three types of heuristics that are particularly important in problem solving. Search heuristics are simple procedures for seeking information relevant to a goal.Some consumers have a simple search rule for buying any small durable product such as a radio or a kitchen appliance read the product tests in Consumer Reports. Evaluation heuristics are procedures for evaluating and weighting beliefs in terms of the current goal being addressed in the problem solving process. Dieting consumers may have a heuristics that identifies the most important choice criteria for food few calories and the resulting consequences of losing weight. Choice heuristics are simple procedures for comparing evaluations of alternative you bought last time if it was satisfactory; another is to rely on an experts advice.
Decision Plan
The process of identifying, evaluating and choosing among alternatives during problem solving produces a decision plan made up of one or more behavioral intentions. Decision plans vary in their specificity and complexity. Specific decision plans concern intentions to perform particular behaviors in highly defined situations: “This afternoon Jim intends to go to Penney’s and buy a blue cotton sweater to go with his new slacks. “Other decision plans involve rather general intentions: “Paula intends to shop for a new car sometime soon. “Some decision plans contain a simple intention to perform a single behavior: “Andy intends to buy a large tube of Aim toothpaste. “In contrast, more complex decision plans involve a set of intentions to perform a series of behaviors. “Val intends to go Bloomingdale’s and Macy’s, browse through their sportswear departments and look for a lightweight jacket.”
Exhibit 7.5
Example of Consumer Heuristics
Search heuristics
Examples
Store selection
If you are buying stereo equipment always go to Sam’s Hi-fi
Sources of information
If you want to know which alternatives are worth searching for read the test reports in Consumer Reports
Source credibility
If a magazine accepts advertisements from the tested products don’t believe its product tests.
Evaluation heuristics
Examples
Key criteria
If comparing processed foods, Examine sodium contest
Negative criteria
If a salient consequence is negative (high sodium content), give this choice criterion extra weight in the integration process.
Significant differences
If alternatives are similar on a salient consequence (all low sodium), ignore that choice criterion.
Choice heuristics
Examples
For familiar, frequently purchased products:
If choosing among familiar products,,,,
Work best
Choose the product that you think work best that provides the best level of performance on the most relevant functional consequences.
Affect referral
Choose the alternative you like the best (select the alternative with most favorable attitude).
Bought last
Select the alternative you used last, if was satisfactory.
Important person
Choose the alternative that some “important” person (spouse, child, friend) likes
Price-based rule
Buy the least expensive alternative (or buy the most expensive, depending on your beliefs about the relationship of price to product quality).
Promotion rule
Choose an alternative for which you have a coupon or that you can get at a price reduction (seasonal sale, promotional rebate, special price reduction).
For new, unfamiliar products:
If choosing among unfamiliar products…
Wait and see
Don’t buy any software until someone you know has used it for at least a month and recommends it. Don’t buy a new car (computer etc.) until the second model year.
Expert consultant
Find an expert or more knowledgable person, have him or her evaluate the alternatives in terms of your goals, then buy the alternative the expert selects.
Source: Adapted from “An Examination of Consumer Decision Making for a Common Repeat Purchase Product,”by Wayne D. Hoyer, in Journal of Consumer Research, December 1984, pp. 822-29. Reprinted by permission of the publisher, University of Chicago.
Having a decision plan increases the likelihood that the intended behaviors will be performed. However, as we discussed in Chapter 6, behavioral intentions are not always carried out. For instance, a purchase intention may be blocked or modified if environmental circumtances make it difficult for the decision plan to be accomplished. Perhaps the problem solving process will recycle and a new decision plan might be developed. “Andy found that the store was sold out of large tubes of Aim, so he decided to buy two medium sized tubes. “Sometimes unaticipated events identify additional choice alternatives or change consumers beliefs about appropriate choice criteria; this could lead to a revised decision plan: “While reading the paper, Val learned that Saks was having a 25 percent off sale on light weight jackets, so she decided to shop there first instead of Bloomingdale’s.
Problem-Solving Processes in Purchase Decisions
The amount of cognitive and behavioral effort consumers put into their problem solving processes is highly variable. Problem solving effort varies from virtually none (a decision plan is activated from memory and is carried out automatically) to very extensive. For convenience, marketers have divided this continum into three levels of problem solving activity: extensive, limited, and routine or habitual.
Relatively few consumer choice problems require extensive decision making, Extensive decision making usually involves a substantial amount of search behavior required to identify choice alternatives and learn the appropriate choice criteria with which to evaluate them. Extensive decision making also involves multiple choice decisions and substantial cognitive and behavioral effort. Finally it is likely to take rather long periods such as Barbara’s decision to buy new dishes in the opening exampler or purchasing your first stereo system.
Many consumers choice problems require limited decision making. The amount of Problem Solvinf effort in limited decision making ranges from low to moderate. Compared to extensive decision making, limited decision making involves less search for information. Fewer choice alternatives are considered and less integration processing is required. Choices involving limited decision making usually are carried out fairly quickly, with moderate levels of cognitive and behavioral effort.
For still other problems, consumer choice behavior is habitual or routine, Routinized choice behavior such as buying another Pepsi from the vending machine down the hall or purchasing a package of gum at the checkout counter occurs relatively automatically with little or no apparent cognitive processing. Compared to the other levels, routinized choice behavior requires very little cognitive capacity or conscious control. Basically a previously learned decision plan is activated from memory and is carried out relatively automatically to produce behavior.
The amount effort consumers exert in problem solving tends to decrease over times as they learn more about a product and gain experience in making decisions. With repeated decisions, product and brand knowledge becomes organized into means end structures and becomes more clearly related to consumers goals. Consumers also learn new productions and heuristics, which become organized into scripts or decision plans stored in memory. When activated, these heuristics and decision scripts automatically affect purchase related behaviors. Running down to the convenience store for a loaf of bread or stopping to fill upp the car’s tank at a favorite gas station are well developed decision plans that require little cognitive effort.
As another example of routinized choice behavior, consider the study of 120 consumers who were observed shopping and buying laundry detergent in three chain grocery stores. Most consumers examined very few packages of detergent. In fact, 72 percent of the consumers looked at only one package and only 11 percent looked at more than two. An even lower number of packages were physically picked up 83 percent of the consumers picked up only one package and only 4 percent picked up more than two. Obviously most of these consumers were not engaged in much in store problem solving activity for this product.
Finally consumers took an average of 13 seconds after they entered the aisle to make their detergent choices. Given that the detergent section spans an entire aisle and that several seconds were required to walk to the appropriate area, it is obvious the typical consumer is making an extremely quick choice that involves minimal cognitive and behavioral effort. The majority of consumers in this study were engaged in routinized choice behavior. They were merely carrying out a simple decision plan, for example, find the large size of Tide and buy it.
Influences on Consumers Problem Solving Activities
The level of consumers problem solving effort in making brand purchase decisions is influenced by environmental factors as well as the cognitive (knowledge) and affective responses activated during the problem solving process. We discuss three aspects of this activated knowledge and affect that have direct effects on problem solving: (1) consumers goals: (2) their knowledge about choice alternatives and choice criteria, as well as heuristics for using this knowledge; and (3) their level of involvement. Following the discussion of these affective and cognitive factors, we examine several environmental influences on consumer problem solving.
Effects of End Goals
The particular end goals consumers are striving to achieve have a powerful effect on the problem solving processes. Exhibit 7.6 presents five broad end goals that lead to quite different problem solving processes. For instance, consumers who have an optimizing end goal are likely to expend substantial effort searching for the best possible alternative. In contrast, consumers with a satisfaction/maintenance end goal are likely to engage in minimal search behavior. In yet other decisions, consumers may have conflicting end goals that must be resolved in the problem solving processes.
In general marketers have relatively little direct influence over consumers abstract end goals, such as basic values. However, marketers can try to influence less abstract end goals, such as desired functional or psychosocial consequences, through promotional strategies. Perhaps the major implication for marketers is to identify the dominant goals in consumers problem representations and design product and promotion strategies that link product attributes to those goals.
Effects of Goal Hierarchies
Consumers goal hierarchies for a problem have a powerful influence on problem solving processes. If consumers have a well defined goal hierarchy stored in memory, it may be activated and the associated decision plan carried out automatically. Even if a complete decision plan is not available, a general goal hierarchy provides a useful structure for developing an effective decision plan without a great deal of problem solving effort.
Exhibit 7.6
Types of Purchase End Goals and Related Problem Solving Processes
Dominant End Goal
Basic Purchase Motivation
Examples
Optimize satisfaction
Seek maximum positive consequences
Buy dinner at the best restaurant in town
Prevention
Avoid potential unpleasant consequences
Buy rust proofing for a new car
Resolve conflict
Seek satisfactory balance of positive and negative consequences
Buy a moderately expensive car of very good quality
Escape
Reduce or escape from current aversive circumtances
Buy a shampoo to get rid of dandruff
Maintenance
Maintain satisfaction of basic need with minimal effort
Buy bread at the nearest convenience store
Sources: Adapted from Geraldine Fennell, “Motivation Research Revisited,” Journal of Advertising Research, June 1975, pp. 23-28; and J. Paul Peter and Lawarence X. Tarpey, Sr., “A Comparative Analysis of Three Consumer Decision Strategies, “Journal of Consumer Research, June 1975, pp.29-37.
In contrast, consumers who have little past experience will not have well developed goal hierarchies. Their problem solving is likely to proceed haltingly, by trial and error. Consider first time buyers of relatively important products such as stereos, sports equipmemnt, cars, and houses. These consumers must construct a goal hierarchy (a series of subgoals that seem related to the end goal) and develop a decision plan to achieve each subgoal (as Barbara had to in the opening example). In these types of decisions, marketers are likely to find confused or frustrated consumers who use general “strategies” such as wandering around various stores in a mall hoping to accidentally run into something that will satisfy their end goals.
Another reason for browsing without a specific decision plan in mind is that the consumer feels involved with a particular product class or form and likes to associate with it. Consumers who are very interested in music may enjoy browsing in record shops. Some consumers are involved with a particular store or set of stores in a mall or a shopping area in town. Perhaps the atmosphere of these stores is exciting and stimulating and this provides part of the attractions. In sum, browsing can and usually does serve multiple goals, needs and values for different consumers.
Effects of Involvement and Knowledge
Consumers problem solving processes are greatly affected by the amount of product knowledge they have acquired through their past experiences and by their level of involvement with the product and/or the choice process. The activated knowledge about goals, choice alternatives and choice criteria and heuristics affects consumers ability to create an affective decision plan. Consumers involvement with the product or decision affects their motivation to engage in the problem solving process. Exhibit 7.7 summarize how different combinations of product knowledge and involvement influence specific elements of consumers problem representations and the overall problem solving process. Marketers should determine the levels of knowledge and involvement of their target customers and develop strategies consistent with the types of problem solving described in Exhibit 7.7. Highlight 7.3 describes how Procter & Gamble responded to consumers who engaged in routinized problem solving (low knowledge and involvement) because of too many choices.
Environmental Effects
Environmental factors can affect consumer decision making by interpreting or disrupting the ongoing flow of the problem solving processes. Four types of disruptive events or interrupts have been identified. First, interrupts can occur when unexpected information (inconsistent with established knowledge structures) is encountered in the environment. For instance, carrying out a decision plan or script may be interrupted when you unexpectedly find that aspects of the physical or social environment have changed a store has been remodeled and departments have been moved around, a rejected brand now has a new attribute, or your friends now favor a different night spot. These environmental interrupts may cause the consumer to take conscious control of the problem solving processes, identify a new end goal, develop a new goal hierarchy and construct a different decision plan. A 1997 strike at United Parcel Service (UPS) created a dramatic interrupt for many businesses. As many as 90 million parcels were not picked up from small retailers and manufacturers during the 15 day strike. Many UPS customers vowed to diversity their shipping business in the future and the U.S. Postal Service and Federal Express were able to capture some of UPSs customers.
Second prominent environmental stimuli can interrupt a problem solving process. Many marketing strategies are intended to interrupt consumers ongoing problem solving. For instance, a large in store display for Oreo cookies, “as advertised” shelf tags, or the announcement of a sales promotions (“Attention Kmart Shoppers. In aisle 3B we are offering…”) may interrupt an ongoing problem solving process as well as activate new knowledge or goals from memory.
Third, affective states such as moods (feeling bored) and physiological events (feeling hungry, sleepy, or thirsty) can interrupt an ongoing problem solving process. For instance, feeling tired during a shopping trip might activate new goals and start a different problem solving process (find a comfortable place to sit down and have a soda pop or cup coffee). Getting into a bad mood can terminate a problem solving process.
Fourth, conflicts that arise during the course of purchase decision making can interrupt the problem solving process. Goal conflict occurs when consumers recognize the presence of incompatible goals. Goal conflict may occur when consumers discover that alternatives cannot be found to satisfy incompatible goals. For instance, Susan may experience an approach-approach conflict in choosing between a new camera and a new stereo receiver because each products leads to a desirable goal (creativity and relaxation, respectively) but neither product can satisfy both goals. Avoidance-avoidance conflicts occur when consumers choose between two alternatives with different negative consequences. For instance, Sam is trying to decide whether to buy a new suit. He doesn’t want to be embarrased by continuing to wear his old suit, but he doesn’t want to spend money on a new one, either. Finally, approach – avoidance conflicts occur when consumers consider both the positive and negative consequences of a purchase or action. For instance, Paul is trying to decide about a new personal cassette player that is on sale for a very low price (positive outcome), but he is afraid the quality may be low (negative outcome). Highlight 7.4 describes goal conflict in a common decision. 
Exhibit 7.7
Effects of Involvement and Product Knowledge on Consumer Problem Solving Processes
Problem representation:
Low involvement, low knowledge:
Low involvement, high knowledge:
Basic motivation:
Choose adequate product at minimum effort
Choose satisfactory product with reasonable effort
End Goal:
Obtain desired functional consequence
Obtain desired functional consequences
Goal hierarchy:
Simple hierarchy; Unclear, ill-defined subgoals; uncertainty about goals
Simple hierarchy; Clear, well-defined subgoals; Certainty about goals
Consideration set:
Very few choice alternatives known or considered
Several alternatives known;few considered
Choice criteria:
A few concrete attribute are used
A few moderately abstract attributes are used
Decision heuristics:
Use a few simple search and decision heuristics
Use a few search and decision heuristics
Decision process:
Routinized or very limited problem solving
Limited (low) problem solving
 
Problem representation:
High involvement, high knowledge:
High involvement, low knowledge:
Basic motivation:
Choose “best” product; “optimize” satisfaction
Choose “best” product
End Goal:
Obtain desired value satisfaction
Obtain psychological consequences or value
Goal hierarchy:
More complex hierarchy; Clear, well-defined subgoals; Certainty about goals
Unclear-ill defined subgoals; construct hierarchy
Consideration set:
Several alternatives known and considered
Few choice alternatives known initially; several considered
Choice criteria:
Wide range of relevant product knowledge is available for use
Unclear about important choice criteria
Decision heuristics:
Use many search and decisions heuristics
Use many search and decision heuristics
Decision process:
Limited (moderate) problem solving
Extensive (or very limited) problem solving  
Highlight 7.3
P&G’s Simplifying Solutions to the Proliferation of Consumer Choice
Years ago more people took their time while shopping, browsing among the merchandise and deliberating about their choices; but consumer decision making changed. Browsing time in 1996 was down by 25 percent over 1991. On an average grocery shopping trip in 1996, consumers spent an average of just 21 minutes to buy 18 of the approximinately 30,000 items available in a supermarket. Many consumers do not bother to check the prices they just want to buy the same products at the same prices each week.
Perhaps these habitual decision making processes are reactions to the proliferation of choices they face in the supermarkets and elsewhere. In addition to the many brands in each product category, it seems that each brand comes in dozens of model variations and sizes. Each of these choice alternatives is being marketed with promotions, advertising, package design and so forth. In the late 1980s, Procter and Gamble perhaps the top consumer goods company in the world made as many as 50 price changes per day across 110 brands offered 440 sales promotions each year and constantly tinkered with the package size, color and content. “We were [consumers],”admitted P&G president and COO, Durk Jager.
With this recognition, P&G began to overhaul many of its sales and marketing activities. By 1997 P&G had eliminated 25 percent of its products by selling off some brands (Lava soap and Aleve pain reliever) and cutting the number of alternatives in its other products lines. For instance, P&G halved the variations of Head & Shoulders shampoo from 30 to 15. When P&G learned that most mothers did not want boy and girl diapers, it began selling only unisex diapers. The simplification process will continue. By 2000 P&G intends to cut another 20 percent of its products.
Why did P&G take such seemingly drastic action? According to Jager. “Consumers were drowning in far too many products.” Although consumers may like variety, “too much meaningless variety” is not good. Offering too many choices complicates consumer decision making and might backfire on a company. A company that simplifies consumers decision making may create substantial goodwill and greater sales.
Sources: Raju Narisetti, “P&G. Seeing Shoppers Were Being Confused, Overhauls Marketing,”The Wall Street Journal, January 15, 1997, pp. A1, A8. Reprinted by permission of The Wall Street Journal, copyright 1997 Dow Jones & Company, Inc. All Rights Reserved Worldwide.


Fifth, the effects of interrupts on consumers problem solving processes depend on how consumers interpret (comprehend) the interrupting event. In general, consumers tend to resume an interrupted problem solving task, especially if it is important or involoving. In other cases, however an interrupting event can change the problem solving process. For instance, an interrupt events (such as learning about a new product attribute) might activate knowledge structures that suggest new decision criteria. In other cases, a choice heuristic might be activated by the interrupt (a friend recommends a brand and you decide to take her advice.) Finally, an especially strong interrupt, such as losing your job, might block the current problem solving process (choosing a new car) and the process might not resume again. In sum, the effects of interrupts depend on how they are interpreted by the consumer. For instance, is your hunger severe enough to stop shopping for a new suit, or can you skip lunch today? Does this new brand of styling mousse seem worth trying, or should you ignore it? Do you care that your friend thinks these shoes are ridiculcus?

Highlight 7.4

Goal Conflict during Decision Making

Lots of American consumers will not put up a real Christmas tree, even if given a free one. Many consumers cite the convenience of artificial trees, whereas some claim to like fake trees better. Others worry about fire with a real tree, or the mess of needles dropping onto the carpet, or the problems created by disposing of the tree in the landfill. Such consumers are now the majority in the United States. Gallup estimated that 38.8 million consumers put up artificial trees in 1993, compared to 35.4 million who bought real trees.

During the decision process a considerable number of consumers experience conflict in trying to balance the reasons for and against using a fake tree as compared to a real tree. In one household the husband felt a strong aversion to cutting down a tree for only a week or two of enjoyment, but his wife fondly remembered her childhood when her family went out to cut a real Christmas tree. As a compromise, they now own an expensive, realistics artificial trees and experience no conflict. Singer John Prine leaves one up year round in his Nashiville home.

In some cases, the conflict over what to buy is so severe it leads to decision gridlock. About one third of Americans did not put up a tree in 1993, at least some  because they could not make a satisfactory decision. One woman always bought real trees when she was young, but now that she is an environmental activist, she feels decision conflict. She agrees “there’s room for agricultural production of Christmas trees, “but she is worried about cluttering the landfills with discarded trees. At the same time, she has “hard time with fake things.” It is easier to have no tree at all.
Other consumers resolve their decision conflict by buying a live Christmas tree with root ball wrapped in burlap. But live trees can he kept indoors for only a few days and are tricky to plant successfully. After several years of losing trees, one consumer gave up and now puts lights on a six foot tall houseplant.
The conflict some consumers experience is deciding to buy a real or artificial Christmas tree is not unique. Many other consumer decisions involve similar conflicts and uncertainties.
Source: Bob Ortega, “In Christmas Trees, Vinyl Wins Out over Pine, “The Wall Street Journal, December 21, 1993, pp. B1, B8. Reprinted by permission of The Wall Street Journal, copyright 1993 Dow Jones & Company, Inc. All Rights Reserved Worldwide.

Implications for Marketing Strategy
To develop effective marketing strategies, marketers need to know the type of problem solving processes their customers use to make purchase decisions. As shown in Exhibit 7.7, these processes can vary widely. Marketers that target several consumer  segments, each with different problem solving processes, may have to develop multiple strategies to influence the different decision outcomes. In the following sections we consider some general implications for marketing strategies for routinized choice behavior and limited and extensive decision making.


Routinized Choice Behavior

Much consumer choice behavior is routinized. When consumers think they know all they need to know about a product category, they are not motivated to search for new information. Their choice behavior is based on a learned decision plan stored in memory. In such cases, the appropriate market strategy depends on the strength of the brands position in the market.

Marketers established brands with substantial market shares must maintain their brands in the evoked sets of a significant segment of consumers. Because consumers in this situation engage in little or no search, marketers have minimal opportunities to interject their brands into consumers consideration sets during problem solving. Thus it is important that a brand be included in the choice alternatives activated at the beginning of the problem solving process. In general, the more automatic the choice behavior becomes, the more difficult it is for marketers to interrupt and influence the choice.

Marketers of new brands or brands with a low market share must somehow interrupt consumers automatic problem solving processes. They may develop strategies of producing prominent environmental stimuli such as large or unusual store displays, create strong package graphiccs that stand out on the shelf, give away free samples, or run sales promotions (buy one, get one free). Such strategies are intended to catch consumers attention and interrupt their routine choice behaviors. The goal is to jolt consumers into a more conscious and controlled level of limited decision making that includes the new brand in the consideration set.

Finally, maketers of leading brands such as Doritos snack chips, Snickers candy bars, Budweiser beer, and IBM computers may want consumers to follow a routine choice process. Because these brands already have a high market share, they are in the evoked sets of many buyers. It is important for these marketers to avoid marketing related environmental interrupts such as stockouts, which could jolt consumners into a limited decision making process and lead them to try a competitors brand. One critical aspect of the overall marketing strategy for such brands is an efficient distribution system to keep the brands fullly stocked and available (in a prominent shelf/display position) whenever consumers are in a choice situation. Frito Lay manufactirer of Fritos, Ruffles potato chips and many other snacks products, has developed a superb distribution system partly for this reason. Marketers of industrial products attempt to make their buyers decision making processes more routine by computerizing and automating the order process.


Limited Decision Making

Most consumer decisions involve limited problem solving effort. Because most consumers already have a lot of information about the product from previous experiences, the basic marketing strategy here is to make additional pieces of information available to consumers when and where they need them. Advertisements to increase top of mind awareness may help get a brand into the evoked set of choice alternatives at the beginning of the decision process. This is important because most consumers are not likely to search extensively for other alternatives. Moreover, it is critical that the brand is perceived to prosses the few key choice criteria used in the evaluation process. Advertisements that capture the attention of the consumer and communicate favorable beliefs about salient attributes and consequences of the brand may be able to create that knowledge. Finally,  because consumers are giving some conscious thought to the decision, successful interrupts are not as difficult as they are with routinized problem solving. Marketing may try to design a store environment that stimulates impulsive purchases, a type of limited decision making.

Extensive Decision Making

Compared to more common routinized choices and limited decision making, relatively few consumer decisions involve extensive problem solving. However, when consumers do engage in extensive decision making, marketers must recognize and satisfy their special needs for information. In extensive decision making situations where their knowledge is low, consumers need information about everything including which end goals are important, how to organize goal hierarchies, which choice alternatives are relevant, what choice criteria are appropriate and soo on. Motivated consumers may seek such information from many sources. For instance, a 1997 survey by Wirthlin Worldwide, a marketing research firm, found that over two thirds of consumers who were planning variations sought advice from family and friends about one third consulted travel guide books and 27 percent spoke with travel agents. About 11 percent got information from travel channels on spoke with travel agents. About 11 percent got information from travel channels on TV and 17 percent found relevant information through the Internet. Marketers should strive to make the necessary information available in a format and at a level that consumers can understand and use in the problem solving process. Highlight 7.5 describes how some companies provide special information to consumers who are buying new cars.
Because consumers intentionally seek product information during extensive decision making, interrupting their problem solving processes with a brand promotion is relatively easy. Informational displays at the point of purchase for instance, displays of mattresses that are cut apart to show construction details or presentations by salespeople can be effective sources of information. Complex sales materials such as brochures and product specifications may be effective, along with high information advertisements. Consumers in extensive problem solving situations will attend to relevant information and they are motivated to comprehend it. Marketers may take advantage of the information receptivity of consumers by offering free samples, coupons, or easy trial (take it home and try it for a couple of days) to help consumers gain knowledge about their brands.
Highlight 7.5
Simplifying the Car Buying Process
Buying a new car usually involves haggling with a salesperson over prices and options. Many consumers find this process uncomfortable, even offensive. Fortunately, there are alternatives that reduce or eliminate the aversive consequences of negotiating with an auto dealer. For example, Car Bargains will solicit blind price bids from five dealerships in the consumers area. Within two weeks, the consumer receives a packet with price quotes from each dealer including a detailed print out outlining the prices compared to the dealers invoice price. Armed with this information, the consumer can visit the dealers and arrange for the purchase of the car. Consumers still must do some negotiation, but they are better prepared for the haggling process.
Another service eliminates all the negative consequences of negotiating with the dealer. AutoAdvisor in Seattle will negotiate the lowest price with a local dealer on the consumers behalf and will order the car. The consumers has only to pickup that car at the local dealer. The fee depends on how quickly the consumer needs the car. The cost is around $600 to get the car within a week and about $350 if the consumer can wait six to eight weeks for a car from the factory.
Consumers who use the services of Consumers Automotive can avoid all contact with a dealer. Consumers Automotive consults with each customer about the detailed specifications of the car desired, including colors and interrior options. This firm promises to deliver that exact vehicle to tho consumers doorstep for a free ranging from $195 to $395 depending on the price of the car.
Or you could buy a new or usedcar entirely through the Internet. You can dial up Dealer Net (http://www.dealernet.com/) and check your car of choice say, a Ford Explorer. Perhaps you would want to compare it  to a Jeep Cherokee or a Nissan Pathfinder on fuel economy, price and safety. You could check the current price by ongoing to Edmund Publication (http://edmund.com/edweb/). When you are ready to order, contact Auto By Tel is a free service; other buying services are available, but they may charge a fee. You place your order and a few days later a dealer will call offering you the car you specified at a fixed amount over the invoice price. Wasn’t that easy?
By removing some of the vfrustating aspects of car buying, especially negotiating about price, these services are becoming more popular. By one estimate, 11 percent of new car buyers in 1992 used such a service, accounting for more than 500,000 cars. Could this approach spread to other typs of purchases?
Sources: Amy Dunkin, “Car Buying for Those Who Hate to Haggle,”Business Week, August 30, 1993, pp.86-87; Alex Taylor III, “How to Buy a Car on the Internet,”Fortune , March 4, 1996, pp.164-68.

Back To
Buying a Set of Dishes
In this chapter we examined a number of concepts that can help us understand Barbara’s problem solving process. Her decision to buy dishes involved fairly extensive problem solving activities, including a substantial amount of search behavior and quite a bit of cognitive activity in evaluating alternative actions. As you review her decisions note that her choice alternatives and choice criteria were greatly influenced by the information she came across in the environment because she had relatively little knowledge about dishes stored in memory. Her goal hierarchy and decision plan were constructed through trial and error during the problem solving process. This example was shows the importance of the continuous, reciprocal interactions among affect and cognitioan, behavior, environment and marketing strategy. Many limiteda decision making processes are also like this, although less complex. In contrast, habitual choice behavior involves little or no problem solving. Because the decisions were made in the past and stored in memory purchase behaviors are generated automatically when the decision plan is activated. Thus environmental factors have less chance to interrupt and influence the purchase process.

Summary
In this chapter we examined consumers decision making processes as they choose between alternative behaviors. Our primary focus was on purchase choices of products and brands. We treated decision making as a problem solving process in which the consumers cognitive representation of the problem is key to understanding the process. Problem representation involves end goals, a goal hierarchy, activated product knowledge and choice rules and heuristics. For many consumer decisions the problem representation involves several interrelated subproblems, each with its own set of subgoals, organized as a goal hierarchy. Consumers use simple decision rules called heuristics for finding, evaluating and integrating beliefs about the alternatives relevant for each subgoal in a goal hierarchy. The entire set of decisions procedures a series of behavioral intentions or decision plan.
We also saw that consumers problem solving processes vary widely. Some purchase choices require very extensive problem solving efforts, while other purchases are made virtually automatically in a highly routinized manner. Many purchases involve limited decision making that falls somewhere between these two extremes. We described how consumers end goals, goal hierarchies, product knowledge and involvement affect the problem solving process. And we discussed how various aspects of the decision environment affect the problem solving process. We concluded by drawing implications of these concepts for marketing strategy.
Key Terms and Concepts
Choice 150                                                      Goal hierarchy             155
Choice alternatives 156                                   Heuristics                    162
Choice criteria 157                                          Interrupts                    167
Compensatory integration processes 160        Limited decision making        164
Consideration set 156                                     Noncompensatory integration processes 160
Consumer decision making 150                      Problem representation 154
Decision 150                                                   Problem solving          152
Decision plan 162                                           Relevant knowledge 155
End goals 155                                                 Routinized choice behavior 164
Extensive decision making 164 

Review and Discussion Questions
     1.      Give two examples to illustrate the idea that decision choices are always between alternative behaviors.
     2.      Describe the problem solving approach to consumer decision making and discuss why it is a useful perspective.
    3.      Identify three ways that choice alternatives can enter the consideration set. Describe a marketing strategy that could be used to get your brand into consumer consideration sets for each situation. Why do products or brands not in the consideration set have a low probbability of being purchased?
     4.      Describe the components of a problem representation. Give an example of how marketers can influence consumers problem representations?
    5.      Give an example of how two different “frames” for the same purchase decision could lead to different problem solving processes. Can you relate these differences to consumer product relationships discussed earlier?
    6.      Think of a purchase decision from your own experience in which you had a well developed goal hierarchy. Describe how that affected your problem solving process. Then select a decision in which you did not have a well developed goal hierarchy and describe how it affected your problem solving processes.
    7.      Assume the role of a product manager (product management team) for a product about which target consumers have a fairly high level of product knowledge. Consider how each of the formal integration processes would result in different responses to your product and how you could adjust marketing strategy to deal bwith these differences.
   8.      Give at least two examples of how a marketing manager could use the various types of interrupts discussed in this chapter to increase the likelihood of purchase of his or her product.
     9.      Discuss how consumers involvement and their activated product knowledge affect the problem solving processes during purchase decisions for products like new automobiles, an oil change, cold remedies and health insurance.
   10.  Relate the examples of decision heuristivcs shown in Exhibit 7.5 to the concept of involvement. When are these heuristics likely to be useful to the consumer? Under what conditions might they be dysfunctional?


Marketing Strategy in Action
Hallmark Cards
It is one of the least likely businesses ever inverted. However, Hallmark and its main competitors American Greetings and Gibson Greetings plus an assortment of so called alternative card companies make a good living selling sentiment to American consumers. In fact, a greeting card is one of the most profitable things that can be made with paper ink. Consider the “Three Little Angels” card, Hallmarks’ best selling Christmas card ever, which has sold over 36 million units and brought in as much as $22 million during the 19 years it has been produced.

Messages of congratulations and good cheer have been exchanged for centuries, but not until recent times have they taken the form of greeting cards. The fisrt greeting cards were Chrismast cards, invented in 1843 by a British businessman too busy to write his traditional Christmas letter. By the 1870s expensive Christmas cards were quite popular among wealthy Americans. Joyce C. Hall and Jacob Sapirstein (founders of Hallmark and American Greetings, respectively) are regarded as the architects of the modern day greeting card industry. (You can review the history of Hallmark at http://www.americangreetings.com/.) Hall and Sapirstein transformed a turn of the century fad for picture postcards into a social custom where consumers buy and send cards to convey their feelings and sentiments about birthdays, weddings births and deaths graduations and so on. Today’s consumer can buy a greeting card to signify virtually any situation and circumtance you can imagine (and some you can’t imagine). Sending greetings card is so popular in the United States that greeting cards constitute as much as 50 percent of the volume of first class mail.

The business Joyce Hall started in 1910 has grown into Hallmark Cards, Inc., a $3 billion worldwide organization head-quatered in Kansas City, Missouri. Hallmark publishes greeting cards in over 30 languages and distributes them in more than 100 countries and creates thousands of related items such as gift wrap, party goods, Christmas ornaments, jigsaw puzzles, ribbon and writing paper. Hallmark also owns Binney & Smith maker of Crayola crayons; Revell Monogram, the world’s largest maker of plastic model kits; and Hallmark Entertainment, producer of family oriented television programming.


Hallmark Products and Brands
Hallmark market greeting cards under several brand names. Including Hallmark Gold Crown, Shoebox, Ambassador and Expressions from Hallmark, as well as the flagship Hallmark brand. Hallmark brand. Hallmark’s other brands include Hallmark Connections (technology-based-products), Hallmark Keepsake Ornaments and Party Express party products. The Hallmark brand name is consistently ranked by consumers among the top 10 quality brands nationwide in any category.
The Hallmark brand is closely identified with more than 7500 independently owned card specialty stores that specialize in personal expression products, gifts and services. Hallmark branded products also are available through an additional 33000 outlets, including drugstore and grocery stores, discount stores and department and bookstores. The Hallmark and Shoebox brands, along with wrapping paper and exclusive Hallmark Keepsake Ornaments are exclusively available at approximately 4500 Hallmark Gold Crown Stores nationwide. The Hallmark Gold Crown stores must meet certain criteria for retailing excellence in all phases of operations.

The brands marketed by Hallmark include the following:
·         Ambassador. Hallmark’s trade brand for mass merchandise retailers such as grocery stores, drugstores and discount stores is sold in more than 22000 stores
·         Party Express. A line of party ware products faeturing matching printed plates, napkins, table covers, and decorations appropriate for special occasions.
·         Shoebox greetings. A collection of witty, irrevent greeting cards designed to compete with the so called alternative cards. The cards reflect todays lifestyles with topics ranging from male-female relationships to pregnancy and from stress in the workplace to congratulating a co worker on a promotion. Maxine a cynical and sarcasstic yet lovable old lady has emerged as Shoebox’s most popular character.
·         Mahogany. A greating card line created specifically for African-American heritage, tradition and culture. Introduced in 1987 as a 16 card offering today the brand includes more than 800 designs.
·         Prior. A card line for Hispanic consumers with bilingual (Spanish and English) messages and culturally specific captions that contains cards for dates important to Hispanic consumers such as Quinceahera (15th birthday), Siant’s Day celebrated in addition to or in lieu of birthdays, coparent (the close relationship between parent and godparent); and First Communion and Confirmation.
·         The Tree of Life. A line of cards for Jewish consumers that offers nearly 300 cards for holidays such as Passover, Rosh Hashanas (Jewish New Year) and Hanukkah.
·         Hallmark Business Expressions. Customized cards created to help business clients from lasting relationships with their customers and employers. It has designed custom cards for the New York Yankees, Dallas Cowboys, Radio Shack, State Farm Insurance and Blue Cross and Blue Shield of Massachussetts.
·         Shop online Allows consumers to shop for Hallmark products through the Internet.
·         Greetings Workshop. A desktop publishing program that enables consumers to create greeting cards at home using their personal computers. The cards can be printed and mailed as usual or sent electronically via email. (You can make a sample card at http://www.greetingsworkshop.msn.com/)
·         Reminder Service. Available through the Internet; will email you a reminder of forthcoming holidays, birthdays, anniversaries and so forth. This notice is intended to stimulate problem recognition and a subsequent problem solving session to select and buy a grreting card (hopefully a Hallmark card).


The Marketing Problem

Distribution is a key element of Hallmarks marketing strategy putting into products where consumers can access them easily and make purchase decision choices. Nationwide, Hallmark personal expression products are found in over retail outlets, including about 7500 independently owned card specialty stores 4800 of which are certified Hallmark Gold Crown stores. Another 33000 outlets are mass merchandisers including discount stores, drug stores, food stores and bookstores. The company uses a sophisticated computerized distrinution system to keep track of how the approximately 13 million cards it produces each day are distributed to these outlets.
In the mid 1980s Hallmark emphasized the Hallmark Gold Crown stores as the place to buy quality greeting cards and receive specia service. To buy the exclusive high end Hallmark cards and other products, consumers first had to decide to go a Hallmark card shop. This strategy of dedicated Hallmark stores seemed to work well for many years by the mid 1990s it was in serious question. Between 1990 and 1995, Hallmark overall market share had declined from nearly 50 percent to about 45% return on equity; historically in the 15 to 20 percent range had slipped to the 8 to 10 percent range.
Historically approximately 75 percent of Hallmark’s top of the line cards were sold in the specialty shops. But as distribution of greeting cards increased to mass merchandisers and other locations (airports and bus stations) consumers shopping behaviors changed. Fewer consumers were deciding to go to a card specialty store first, let alone a Hallmark store to shop for cards. Many time starved consumers found it easier to buy cards at stores they already frequented (grocery stores, discount stores, and drug stores) rather than make a special trip to a Hallmark store. Specialty cards shop once accounted for nearly 65 percent of greeting card sales, but that figure was less than 33 percent by the mid 1990s. Mass merchandisers (grocery chains, drugstores, and national discount chains such as Wal-Mart or target) were selling increasing numbers of cards Although Hallmark produced the Ambassador line of cards for sale in 22000 of these mass outlets, it does not sell its top of the line cards (Hallmark and Shoebox) there.

How should Hallmark distribute its many brands if sales at dedicated card stores continue to fall? Should Hallmark develop distribution deals to begin selling its more upscale cards to the mass marchandisers even at the risk of alienating the owner or operators of the Hallmark Gold Crown shops? Solving this difficult marketing problem requires understanding many aspects of consumer decision making and problem solving. But Hallmark has a major asset the Hallmark name has considerable equity and a strong reputation for quality and integrity particularly among older consumers.

Discussion Questions
1.      What is it about greeting cards? People have pointed out that it takes more effort, time and hassle to travel to store and shop for a card than it does to write a letter or make a phone call. If so why do so many consumers continue to buy and send greeting cards instead of choosing these alternative behaviors? Discuss your answer in terms of the means end framework.
2.      The typical decision making process for buying a Hallmark card is likely to vary in different situations: Think about buying a greeting card for a birthday versus buying a card for someone’s graduation from college versus buying a wedding card. Would consumer knowledge and involvement vary across these situations? Discuss how problem recognition, search and evaluation processes might differ across these three situations. What types of decision making would you expect for each situation?
3.      Consumers are able to buy Hallmark brands in various retail locations, for example, a Hallmark Gold Crown store versus a Supermarket. Thus understanding how and why consumers make store choices is particularly important to Hallmark. Discuss how store choice interacts with and influences choices of Hallmark products and brands, for example Hallmark brand versus the Ambassador brand.
4.      Do you think that Hallmark should modify its distribution strategy? What is your understanding of consumer decision making that leads you to make this recommendation?
5.      Marketing research estimates that women buy as much as 80 to 85 percent of greeting cards sold in the United States. Does the card purchase decision process for greeting cards differ for women and men? Explain your answer.

Sources: Susan Chandle, “Can Hallmark Get Well Soon?” Business Week, June 19, 1995, pp.62-63; Kate Fitzgerald, “Hallmark Alters Focus as Lifestyles Change, “Advertising Age, October 31,1994, p.4; Kevin Helliker,”Sweet Sells Year of Hallmark,”The Wall Street Journal, December 20, 1996, pp. B1 B3; the Hallmark company Website http://www.hallmark.com.
 

 

 

 


 

 


 
 
 

 

 
 
 

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