Need Recognition

Influences upon Problem Recognition
Situational – you’re hungry, out of gas, at a business lunch
Consumer -  friends, family, people at work – “experts in a product class”
Marketing -  tactics that your firm can develop and use to illustrate a problem, show how your product or service “solves” the problem
 

Find out . . .
What triggers problem recognition?  Actually being in a problem situation? Talking to others? Seeing ads?
Provide consumers with the opportunity to recognize their needs for products or services – e.g,. MBA at night for employed adults
How deliberately do they search? Before purchase? After? Ongoing?
How do consumers search for the products/ services your companies provide?
 

Consumer Search
Internal search:  retrieval of knowledge from memory
External search:  collection of additional information from the environment
Is the collected information correct?
eg Do Hispanics use coupons?  Do Hispanics reject coupon use “because they are a proud people?”
 

Consumer Search
Internal search:  retrieval of knowledge from memory, what do you know about the doctors listed in your HMO booklet?
External search:  collection of additional information from the environment, what can your friends and coworkers tell you about the doctors in your HMO booklet?
Prepurchase search - simulated by the need
Ongoing search - regular scanning
 

How Much Search Is Done?
Extended (extensive) decision making:  much search, comparisons, rational, high involvement, compensatory heuristic
Limited Problem Solving: simple decision rules are applied, based on prior knowledge, heuristics, noncompensatory
Habitual or Routinized Response Behavior: no search, automatic, repetitious, known brands, low involvement
 

More Risk Means More Search
Monetary Risk

Functional Risk

Physical Risk

Social Risk

Psychological Risk
 

Can I Afford it? HMO?

Will it break down?

Will I get hurt?

What will my friends or family  think?

Will I feel bad about myself?
 

Search is related to the types of goods that are sought.
Specialty goods: those products that consumer has developed strong preferences.
Shopping goods: those products that the consumer must devote time and effort to compare and contrast.
Convenience goods: those products that the consumer is reluctant to spend time and effort to purchase.
Unsought goods: those we need but are reluctant to buy, funeral planning
 

Pre-purchase Alternative Evaluation
Does the set of alternatives meet consumer needs?
Evaluative criteria:  price, brand name, country of origin, etc.
Salience: relative weight of criteria - determinant attributes
Can you suggest some others?
What are evaluative criteria for health care? For tourism?
 

Pre-purchase Evaluation of Alternatives
The process of evaluating alternatives identified from search, which leads to product or brand most likely to satisfy the consumer

Can use new or preexisting evaluations stored in memory

Evaluative criteria: standards and specifications used to compare different products and brands

Pre-purchase Evaluation of Alternatives
 
 

Getting into the Consideration (Evoked) Set
Universal set: all alternatives
Retrieval set (what you are aware of) vs. Unawareness set (what you don’t know)
    Consideration set = set of acceptable alternatives
    Inert Set = aware of, would not consider
    Inept Set = aware of, avoided
What goes into the sets which you reject?
Cutoffs, signals (eg rating in Consumer Reports)
 

How Companies Can Get Into Consumers’ Consideration Sets
Ask to be in the set

Adjust one of the 4Ps

Encourage consumers to consider its brand and competitors’ brand

Attraction effect: enhance odds of becoming consumer choice by adding an inferior product to the consideration set
 
 

What Is the Relative Importance of Each Criterion?
Importance = salience
Salience varies by the product and by the situation
Some product attributes may be salient to some consumers, but unimportant to others
Determinant attributes: those attributes that have a direct influence on alternative evaluation and final choice.
Some attributes are both salient (important) and determinant (necessary), some are important but not necessary to consider
 

Noncompensatory Decision Rules
A weakness on one attribute cannot “compensate” for a strength on another

Disjunctive:  decide which criteria are determinant (or not) and then establish a minimum score for each one
Conjunctive:  all criteria are determinant, product must meet all cutoffs
Lexicographic:  comparison on the most important attribute - car must have good mpg
Elimination by Aspects:  use of cutoffs, must have mpg > 25

Poor medical care (determinant) can not be offset by a beautiful waiting room with good service
 

Compensatory Decision Rules
Attributes can compensate for each other
simple additive : sum number of times each alternative is favorably evaluated
weighted additive:  some attributes are more important than others
How does this work with toothpaste?
Healthcare?  MBA programs?
 

Heuristics: rules of thumb:  I always buy brand X
Price:  Higher priced products always have higher quality.
Natural products are always healthy.
Common Market Beliefs often are found in a given region or country -  do you believe any of these? E.g. “Cereals are served with cold milk.”
Brand:  Certain brands are used as guarantees of quality and satisfaction.
Brand equity:  a quantifiable value of goodwill
 

More Heuristics
Inertia - just repeat what you have always done
Variety seeking - something different each time
Brand loyalty - switching - alternating
How will direct marketing affect brand loyalty?
Country of Origin - “Buy American”
Japanese products have higher quality