Decision and Purchase:Consumer Decision Rules, Output, Relationship Marketing

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Consumer Psychology (PSY - 514)

Lecture 38

Decision and Purchase

Understanding:

· Consumer Decision Rules

o Compensatory Decision Rules

o Non-Compensatory Decision Rules

Conjunctive Decision Rules

Disjunctive Decision Rules

Lexicographic Decision Rules

· Output

o Purchase Behavior

o Post Purchase Evaluation

Beyond the Decision Consuming and Possession

Relationship Marketing

1. Consumer Decision Rules

Consumer decision rules are the procedures used by consumers to facilitate brand (or other consumption related)

choices. These rules reduce the burden of making complex decisions by providing guidelines or routines that make

the process less taxing.

Two Categories of Consumer Decision Rules are:

1. Compensatory Rules

A consumer determines a brand or model options in terms of each relevant attribute and computes a weighted or

summated score for each brand. The assumption is that consumer will select the brand that scores the highest

among the alternatives evaluated. Compensatory decision allows a positive evaluation of a brand on one attribute

to balance out a negative evaluation on some other attribute.

2. Non-Compensatory Rules

Non Compensatory Decision Rule does not allow consumers to balance positive evaluation of brand on one

alternative with a negative evaluation of brand on another alternative.

Types of Non-Compensatory Rules

There are three types of Compensatory Rules

Conjunctive Decision Making Rules

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Consumer Psychology (PSY - 514)

b. Disjunctive Decision Making Rules

Lexicographic Decision Making Rules

Conjunctive Decision Making Rule

The consumer establishes a separate minimally acceptable level as cut off point for each attribute. If any particular

brand or model falls below that cut off point on any one of the attributes the option is eliminated from further

consideration. Conjunctive Decision rule can result in several acceptable alternatives. It becomes necessary for

consumers in such cases to apply some additional decision rule to arrive at a final conclusion. To select the first

satisfactory brand conjunctive rule is particularly useful in reducing the choices, after that consumers may apply

another refined decision rule.

Disjunctive Decision Rule

Disjunctive Rule is the mirror image of the conjunctive rule. In applying the disjunctive rule the consumer

establishes a separate minimally acceptable cut off level for each attribute. This will further minimize the choices

though still the choices will be more than one. Here the consumer may accept the first satisfactory alternative as

the final choice or may apply another rule that may be more suitable.

Lexicographic Decision Rule

The consumer first ranks the attributes in terms of perceived relevance or importance. The consumer then

compares the various alternatives in terms of single attributes in terms of a single attribute that is the most

important. If one option scores sufficiently higher on this top-ranked attribute it is selected and the process ends.

When two or more options ranks sufficiently higher then the process is repeated on the second highest ranking

attribute until the process ends.

Implications for Marketers

With the lexicographic rule, the highest ranked attribute (the one applied first) may reveal something about the

individual's basic consumer orientation. Buy the best rule might indicate that consumer is quality oriented, status oriented,

or economy minded.

Consumers' Shopping Strategy

According to shopping strategies consumers can be divided into following categories:

· Practical Loyalists those who look for ways to save on the brands and products they would buy anyway.

· Bottom-line Price Shoppers- those who buy the lowest priced item with little or no regard for the brand

· Opportunistic switchers- those who would use coupons or sales to decide among the brands that fall within

their evoked set

· Deal Hunters- those who look for the best bargain and are not brand loyal

2. Output

Output portion of consumer decision making model concerns two kinds of closely associated post decision

activities:

1. Purchase Behavior

2. Post Purchase Evaluation

1. Purchase Behavior

In studying the consumers' purchase behavior, it is important to understand what types of purchases consumers

make.

Types of Purchases

Consumers make three types of purchases:

a) Trial Purchase

b) Repeat Purchase

c) Long Term Commitment Purchase

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Consumer Psychology (PSY - 514)

a) Trial Purchase

When a consumer purchases a product (or brand) for the first time and buys a smaller quantity than usual this

purchase would be considered a trial. Trial is the exploratory phase of purchase behavior in which consumers

attempt to evaluate the product through direct use. For example when consumers purchase a new brand of

laundry detergent about which they may be uncertain they are likely to purchase smaller trial quantities than if it

were a familiar brand. Consumers may also be encouraged to try new product through such tactics as free

coupons, samples and or sale price

b) Repeat Purchase

When a new brand in an established product category (toothpaste, detergent powder, cola drinks) is found by trial

and found to be better than other brands, consumers are likely to repeat the purchase. Repeat Purchase is closely

associated with the concept of Brand Loyalty

Most firms try to encourage brand loyalty because it contributes to greater stability in the market. Unlike trial in

which consumer uses the product on a small scale and without any commitment, repeat purchase usually signifies

that the product meets with the consumer's approval and that s/he is willing to use the product again and in larger

quantities

Trial of course is not always feasible especially in case of durable goods. If consumers are purchasing refrigerators,

electrical ranges, washing machines. Along with the selling of durable goods comes the concept of Display

Centers.

Consumers can go to the cars display centers where they may sit in the car see every thing and may have a test

drive also. This is to furnish their trial of the product. With the advent of the internet display centers are now also

virtual (homes).

c) Long-Term Commitment Purchase

2. Post Purchase Evaluation

As consumers use a product during the trial purchase, they evaluate its performance in the light of their own

expectations.

There may be three possible outcomes of the trial purchase:

Actual performance matches the expectations, leading to a neutral feeling

Performance exceeds expectation, causing what is known as positive disconfirmation of expectations (which

leads to satisfaction)

Performance is below expectations causing what is negative disconfirmation of expectations (which leads to

dissatisfaction)

Important component of post purchase evaluation is the reduction of uncertainty; consumers might have had

about the selection. As part of their post purchase analysis consumers try to re-assure themselves that their choice

was a wise one.

In order to rationalize their decision they may:

Seek advertisements that support their choice and avoid the ads of competitive brands

They may attempt to persuade friends, relatives to buy the same brand

They may turn to other satisfied owners

The degree of post purchase analysis depends upon:

The importance of product decision

Experience acquired in using the product

It would be logical to assume that customer satisfaction is related to customer retention. The findings however,

show that retention may be more a matter of the brand's reputation especially for products consumers find

difficult to evaluate.

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Consumer Psychology (PSY - 514)

Beyond the Decision Consuming and Possessing

Historically the emphasis of Consumer Behavior has been on product, service and brand choice decisions.

Possessing, collecting and consuming things is another facet of Consumer Behavior. Consumer choices are the

beginning of Consumption process not merely the end of consumer decision making process. Some possessions

serve to assist consumer in their effort to create "personal meaning" and to maintain a sense of past.

Relationship Marketing

Relationship Marketing (Loyalty Programs) are used to foster usage loyalty and commitment to loyalty to

company's products and services. A real relationship marketing program is more than the use of database

marketing tactics to better target the customers. The consumer must feel that he or she has received something for

being a participant in the relationship.

Relationship Marketing programs have been used in a wide variety of products and service categories (retail credit

facility). Many companies call their programs a club, and some even charge a program fee. Membership in a club

may serve as means to convey to customers the notion of permanence and exclusivity inherent in committed

relationship.

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