BB Chapter Five : Evaluating and Selecting Alternatives
- 1. Chapter Five: Evaluating and Selecting Alternatives 5-1
- 2. Evaluating and selecting alternatives A further step in the consumer decision making process 5-2
- 3. Chapter 5: Evaluating and selecting alternatives 1. The nature of evaluative criteria 2. Tools for the measurement of evaluative criteria 3. Consumers’ individual judgments are not necessarily accurate 4. Role of surrogate indicators 5. Types of decision rules consumers may apply 6. Implications of evaluative criteria for marketing strategy 5-3
- 4. Evaluation of alternatives • Evaluation criteria – Price – Brand name – Country of origin • Determinants of criteria • Measurement of evaluation criteria – Identify important criteria – Perception of each product for these – Alternative performance of each product 5-4
- 5. Evaluation of alternatives (cont.) • Determining the alternatives • Evaluating alternatives • Selecting a decision rule – Non-compensatory – Compensatory – Constructive – Phased • Marketing implications 5-5
- 6. How Consumers Make Choices Rational choice theory assumes the consumer has sufficient skills to calculate which option will maximize his/her value, and will choose on this basis. The task is to identify or discover the one optimal choice. The decision maker collects information levels of attributes across alternatives, applies the appropriate choice rule, and the superior option is revealed. 5-6
- 7. How Consumers Make Choices In reality, all consumers have bounded rationality A limited capacity for processing information. Consumers also often have goals that are different from, or in addition to, selecting the optimal alternative. A metagoal refers to the general nature of the outcome being sought. 5-7
- 8. How Consumers Make Choices Metagoals in Decision Making • Maximize the accuracy of the decision • Minimize the cognitive effort required for the decision • Minimize the experience of negative emotion • Maximize the ease of justifying the decision 5-8
- 9. How Consumers Make Choices Three types of consumer choice processes: 1. Affective Choice 2. Attitude-Based Choice 3. Attribute-Based Choice 5-9
- 10. How Consumers Make Choices Affective Choice Affective choices tend to be more holistic. Brand not decomposed into distinct components for separate evaluation. Evaluations generally focus on how they will make the user feel as they are used. Choices are often based primarily on the immediate emotional response to the product or service. 5-10
- 11. How Consumers Make Choices Affective Choice Affective choice most likely under consummatory motives. Consummatory motives underlie behaviors that are intrinsically rewarding to the individual involved. Instrumental motives activate behaviors designed to achieve a second goal. 5-11
- 12. How Consumers Make Choices Attribute- versus Attitude-Based Choice Processes Attribute-Based Choice Attitude-Based Choice •Requires the knowledge of •Involves the use of general specific attributes at the attitudes, summary time the choice is made, impressions, intuitions, or and it involves attribute-by- heuristics; no attribute-by- attribute comparisons attribute comparisons are across brands. made at the time of choice. 5-12
- 13. How Consumers Make Choices Attribute-Based versus Attitude-Based Choice Processes Motivation, information availability, and situational factors interact to determine which choice process will be used. Example: the easier it is to access complete attribute-by-brand information, the more likely attribute- based processing will be used. So, brands with attribute advantages but lacking strong reputations… Should provide attribute comparisons in an easy-to- process format in their marketing and packaging. 5-13
- 14. How Consumers Make Choices Attribute-Based versus Attitude-Based Choice Processes Many decisions, even for important products, appear to be attitude-based. Thus, marketers often have a dual task: 1. Provide promotions that resonate with consumers making attitude-based choices. 2. Provide performance and supporting information to create preference for consumers making attribute- based choices. 5-14
- 15. Evaluative Criteria Evaluative criteria - various dimensions, features, or benefits sought in response to a specific problem. Most decisions involve an assessment of one or more evaluative criteria. 5-15
- 16. Evaluative Criteria Nature of Evaluative Criteria Evaluative criteria are typically product features or attributes associated with either benefits desired by customers or the costs they must incur. Evaluative criteria can differ in type number importance 5-16
- 17. Alternative evaluation and selection process 5-17
- 18. Perceived performance of six mobile phones in relation to six evaluative criteria 5-18
- 19. Importance of evaluative criteria to three buyers 5-19
- 20. The measurement of evaluative criteria • To enable the marketing manager to develop a sound strategy they must determine: – Which evaluative criteria are used by the consumer – How the consumer perceives alternative products in terms of each criterion – The relative importance of each criterion 5-20
- 21. Determining evaluative criteria to use • Direct methods – Asking consumers – Focus groups – Observation • Indirect methods – Projective techniques – Perceptual mapping 5-21
- 22. Evaluative Criteria Determination of Which Evaluative Criteria Are Used 1. Direct methods include asking consumers what criteria they use in a particular purchase. 2. Indirect techniques assume consumers will not or cannot state their evaluative criteria. • Projective techniques - allow the respondent to indicate the criteria someone else might use. • Perceptual mapping - researcher uses judgment to determine dimensions underlying consumer evaluations of brand similarity. 5-22
- 23. Perceptual mapping of soap brands 5-23
- 24. Uses of perceptual mapping • We use this method to help us understand consumers’ perceptions and the evaluative criteria they use • We can use this information to determine: – How different brands are positioned according to evaluative criteria – How the positions of brands change in response to marketing efforts – How to position new products using evaluative criteria 5-24
- 25. Determining consumers’ judgments of brand performance in terms of specific evaluative criteria • Rank-ordering scales • Semantic-differential scales (see table on page 130) • Likert scales 5-25
- 26. Evaluative Criteria Determination of the Relative Importance of Evaluative Criteria The importance assigned to evaluative criteria can be measured either by direct or by indirect methods. The constant sum scale is the most common direct method. 5-26
- 27. Determining the relative importance of evaluative criteria - constant sum method Evaluative criteria Importance (in points) Price 20 Size 15 Warranty 15 Quality of digital camera 5 Compatibility with email system 10 Ease of use 35 Total 100 5-27
- 28. Determining the relative importance of evaluative criteria (cont.) • Indirect methods – Conjoint analysis: a technique that provides data on the structure of consumers’ preferences for product features and their willingness to trade one feature for more of another. 5-28
- 29. Evaluative Criteria Determination of the Relative Importance of Evaluative Criteria Conjoint analysis is the most popular indirect method. Conjoint presents consumes with a set of product descriptions which they evaluate. Statistical analysis is used to derive attribute importance from these overall evaluations. 5-29
- 30. One possible application of conjoint analysis 5-30
- 31. Using conjoint analysis to determine the importance of evaluative criteria 5-31
- 32. Individual Judgment and Evaluative Criteria Accuracy of Individual Judgments Consumers can have difficulty judging competing brands on complex evaluative criteria such as quality or durability. Consumers can and do make such judgments. But even seemingly simple judgments such as price comparisons can be complex! The inability of consumers to accurately evaluate many products can result in inappropriate purchases. This is a major concern of marketing regulators. 5-32
- 33. Individual Judgment and Evaluative Criteria The Relative Importance and Influence of Evaluative Criteria Factors influencing the importance of various criteria: Usage situation Competitive context Advertising effects 5-33
- 34. Individual judgment and evaluative criteria • The accuracy of individual judgments 1. Use of a surrogate indicator 2. Sensory discrimination 3. Just-noticeable difference 5-34
- 35. Sensory discrimination and JND • Read details on pages 133-134 • We will touch on JND in a later lecture on Perception • Important BB topic 1-35
- 36. Use of surrogate indicators Consumers frequently use an observable attribute of a product to indicate the performance of the product on a less observable attribute Reliance depends on: Predictive value Confidence value 5-36
- 37. Individual Judgment and Evaluative Criteria Use of Surrogate Indicators A Surrogate indicator is an attribute used to stand for or indicate another attribute. For example, consumers often use the following factors as surrogate indicators of quality (a.k.a. quality signals): price advertising intensity warranties brand country of origin 5-37
- 38. Use of surrogate indicators (cont.) • Price – Used to judge the perceived quality of a large rang of goods • Brand – Often used as a surrogate indicator of quality E.g. jeans 5-38
- 39. Use of price to indicate the quality of jewellery 5-39
- 40. Individual Judgment and Evaluative Criteria Evaluative Criteria, Individual Judgments, and Marketing Strategy 1. Marketers must understand the evaluative criteria consumers use and develop products that excel on these features. 2. Marketers must understand consumer use of surrogate indicators. 3. Marketers must understand the factors influencing consumer perceptions of the importance of evaluative criteria. 5-40
- 41. Evaluative criteria, individual judgments and marketing strategy • Consumers use surrogate indicators – Marketers can ensure that their products are superior for these criteria by: Making direct reference to them in ads Using brand names Using celebrity endorsement Using country-of-origin 5-41
- 42. Use of celebrity endorsement 5-42
- 43. Use of country of origin 5-43
- 44. Decision Rules for Attribute-Based Choices Choice rules can be characterized as either compensatory and non-compensatory. A compensatory rule – high level of one attribute can offset a low level of another. Non-compensatory rules – high level of one attribute cannot offset a low level of another. 5-44
- 45. Decision rules used by consumers Conjunctive Disjunctive Elimination-by-aspects Lexicographic Compensatory 5-45
- 46. Decision rules used by consumers (cont.) 5-46
- 47. Decision Rules for Attribute-Based Choices Choosing Between Six Notebook Computers Final Choice Depends on Decision Rule Being Used Note: here we use the example of choosing between brands of notebooks. 5-47
- 48. Decision Rules for Attribute-Based Choices Conjunctive Rule: Rule Price 3 Establishes minimum required performance for each evaluative Weight 4 criterion. Processor 3 Battery life 1 Selects the first (or all) brand(s) that meet or exceed these minimum After-sale support 2 standards. Display quality 3 If minimum performance was: 5-48
- 49. Decision Rules for Attribute-Based Choices Conjunctive Rule WinBook, Dell, IBM, and Toshiba are eliminated because they fail to meet all the minimum standards. Minimum 3 4 3 1 2 3 5-49
- 50. Decision Rules for Attribute-Based Choices Disjunctive Rule: Rule Establishes a minimum required Price 5 performance for each important Weight 5 attribute (often a high level). Processor Not critical Battery life Not critical All brands that meet or exceed the performance level for any key After-sale support Not critical attribute are acceptable. Display quality 5 If minimum performance was: 5-50
- 51. Decision Rules for Attribute-Based Choices Disjunctive Rule WinBook, Compaq, and Dell meet minimum for at least one important criterion and thus are acceptable. Minimum 5 5 - - - 5 5-51
- 52. Decision Rules for Attribute-Based Choices Elimination-by-Aspects Rule First, evaluative criteria ranked in Rank Cutoff terms of importance Price 1 3 Weight 2 4 Second, cutoff point for each Display quality 3 4 criterion is established. Processor 4 3 Finally (in order of attribute After-sale 5 3 support importance) brands are eliminated if they fail to meet or Battery life 6 3 exceed the cutoff. If rank and cutoff were: 5-52
- 53. Decision Rules for Attribute-Based Choices Elimination-by-Aspects Rule Step 1: Price eliminates IBM and Toshiba Step 2: Weight eliminates WinBook Step 3: Of remaining brands (HP, Compaq, Dell), only Dell meets or exceeds display quality minimum. Minimum 3 4 3 3 3 4 5-53
- 54. Decision Rules for Attribute-Based Choices Lexicographic Decision Rule Consumer ranks the criteria in order of importance. Then selects brand that performs best on the most important attribute. If two or more brands tie, they are evaluated on the second most important attribute. This continues through the attributes until one brand outperforms the others. WinBook would be chosen because it performs best on Price, our consumer’s most important attribute. 5-54
- 55. Decision Rules for Attribute-Based Choices Compensatory Decision Rule The compensatory decision rule states that the brand that rates highest on the sum of the consumer’s judgments of the relevant evaluative criteria will be chosen. 5-55
- 56. Decision Rules for Attribute-Based Choices Compensatory Decision Rule Importance Score Price 30 Assume the following Weight 25 importance weights: Processor 10 Battery life 05 Using this rule, Dell has the After-sale support 10 highest preference and Display quality 20 would be chosen. Total 100 The calculation for Dell is: 5-56
- 57. Decision Rules for Attribute-Based Choices Summary of Resulting Choices from Different Decision Rules 5-57
- 58. Note in your text • They use the example of mobile phones instead of notebooks • Go through pages 138-141 • Understand the decision rules • The rankings of the brands (depending on the decision rule) are as follows: 1-58
- 59. Alternative decision rules and selection of a mobile phone Decision rule Brand choice Conjunctive Samsung, Nokia Disjunctive Motorola, Samsung, Sony Erickson Elimination-by-aspects Motorola Lexicographic Sony Erickson Compensatory Motorola 5-59
- 60. Summary of the decision rules 1. Conjunctive – Brands that meet a minimum level on each evaluative criterion 2. Disjunctive – Brands that meet a satisfactory level on any relevant evaluative criteria 3. Elimination-by-aspects – Rank brands on evaluative criteria – Select highest ranking brands until only one is left 4. Lexicographic – Rank brands on evaluative criteria importance – Select the one that is highest on most important criteria 5. Compensatory – Select brand that has the highest score over all the relevant evaluative criteria 5-60
- 61. Understanding target buyers’ decision rules to achieve product positioning 5-61
- 62. Summary of topics in this chapter We have discussed: • The nature of evaluative criteria • Tools for the measurement of evaluative criteria • Consumers’ individual judgments are not necessarily accurate • Role of surrogate indicators • Types of decision rules consumers may apply • Implications of evaluative criteria for marketing strategy 5-62