When purchasing high-involvement products or services, consumers go through a problem-solving process involving five mental steps: (1) problem identification, (2) infor- mation search, (3) evaluation of alternatives, (4) purchase, and (5) postpurchase evaluation. These five steps are diagrammed in Exhibit 4.3 and discussed in the context of buying a Caribbean cruise by a hypothetical person—Paul MacDonald, who is 33 years old and single.
Problem Identification Consumers’ purchase-decision processes are triggered by unsatisfied needs or wants. Individuals perceive differences between ideal and actual states on some physical or sociopsychological dimension. This motivates them to seek products or services to help bring their current state more into balance with the ideal.
Given that most of us have limited time and financial resources, it is impossible for us to satisfy all our needs at once. Instead, we tend to focus on those that are strongest. The size of the gap between our current and our desired state largely determines the strength of a particular need. A need can become stronger and be brought to our attention by a deterio- ration of our actual state or an upward revision of our ideal state.
A change in a consumer’s actual state can occur for several reasons:
● For physical needs, a natural deterioration of the actual state occurs all the time. A person’s body burns energy and nutrients. Thus, periodically we get hungry and tired and are motivated to find something to eat and some place to go to sleep.
● A person’s actual state may change as the result of the depletion of the current solution to a need. Our hypothetical consumer might be motivated to buy a cruise package because the condo in Florida he usually rents for his winter vacation is not available this year.
● In some cases consumers can anticipate a decline in their actual state. If Paul MacDonald knew that the condo owner was trying to find someone to lease the condo for the entire sea- son, he might decide to investigate alternatives for his winter vacation. Similarly, a change in a consumer’s desired state may occur for several reasons:
● The desired state may be revised upward because of new information or the development of an old need. Thus, MacDonald may have seen an ad showing how much fun a person can have on a cruise for a small amount of money or received such information from a friend.
● As one need is satisfied, the desired state on other need dimensions increases and becomes more demanding.
Information Search Having recognized that a problem exists and might be satisfied by the purchase and consumption of a product or service, the consumer’s next step is to refer to information gained from past experience and stored in memory for possible later use. To continue with our example, MacDonald’s knowledge about cruises derives primarily from advertising, his mother and father who recently took a cruise, and friends—most of whom are married. Since he has no firsthand knowledge of cruises, he will need to seek additional information, especially regarding accommodations, schedules, and fares. For a listing of the factors that are likely to increase information search, see Exhibit 4.4 .
Because services are intangible, difficult to standardize, and their production and consumption inseparable, they are more difficult to evaluate than products. Thus, most ser- vices are hard to assess until they are being consumed after purchase (cruises and restaurant meals). Some services are difficult to assess even after they have been consumed (legal ser- vices, medical diagnosis, etc.). These assessment difficulties can force consumers to rely on different cues, such as the provider’s credentials or reputation, when evaluating services.
How Much Information Will a Consumer Seek? People seek additional information about alternative brands until they perceive that the costs of obtaining more information are equal to the additional value or benefit derived from the information. Information is valuable to consumers to the extent that it helps make a more satisfying purchase and avoids the negative consequences associated with a poor choice. Thus, consumers are likely to place a higher value on—and seek more—information when the purchase is important. This importance derives from ( a) the strength of a person’s need for the product; ( b) the person’s ego-involvement with the product; and ( c) the severity of the social and financial consequences of making a poor choice. This is why people tend to seek more information about high-priced, socially visible products that reflect their self-image (cars, home, clothing, and, for some, cruises) than for lower-priced products that other people seldom notice, such as furnace filters or paper towels.
Even when products are very expensive and ego-involving, some consumers are unlikely to conduct an exhaustive search for information before making a decision because of the costs involved. Perhaps the biggest cost for most people is the opportunity cost of the time involved in seeking information. They give up the opportunity to use that time for other, more important or interesting activities, such as working or taking trips. For some people, however, the opportunity costs of shopping are low because they enjoy wandering through stores or scanning newspaper ads or Web sites for bargains. Also, as we’ll see later, the Internet is reducing the opportunity costs of obtaining at least some kinds of product information.
There are also psychological costs involved in searching for information. Collecting information can be a frustrating task, often involving crowded stores, rude salespeople, or slow Web sites. Also, some consumers become frustrated and confused when they have a lot of complex information to evaluate before making a choice. Consequently they cut their information search short.
Because services, more than products, are associated with greater perceived risk, the individual involved is likely to use more information sources in the attempt to better cope with the risk. This often leads to an extended information-acquisition process, which may include purchase postponement. It also means that consumers are less likely to make a trial purchase than with some products.
Sources of Information Assume that switching from renting a condo to a cruise is important and costly enough for Paul MacDonald to seek additional information before doing so. Which sources can he use? The three broad categories of information sources are personal, commercial, and public. Personal sources include family members, friends, and members of the consumer’s reference group.
Commercial sources refer to various information disseminated by service providers, marketers, and manufacturers and their dealers. They include media advertising, promotional brochures, package and label information, salespersons, and various in-store information, such as price markings and displays. Public sources include noncommercial and professional organizations and individuals who provide advice for consumers, such as doctors, lawyers, governmental agencies, travel agencies, consumer-interest groups and Web journals (or blogs).
Consumers are usually exposed to more information from commercial sources than from personal or public sources. However, many consumers are influenced more by per- sonal sources when deciding which service, product, or brand to buy. Consumers use information from different sources for different purposes and at different stages within the decision process. In general, commercial sources perform an informing function for consumers. Personal and public sources serve an evaluating and legitimizing function. Thus, MacDonald might rely on advertising and discussions with his travel agent to learn what cruises are available, what the schedules are for each, the kind and size ship used, how much each cruise costs, and the details concerning the various types of entertainment offered. It is highly likely that MacDonald would also seek the opinions of friends in deciding whether to take a cruise and in selecting a particular one. In doing so, he is consistent with the general proposition that consumers choose more personal sources for services than for goods because service consumption is highly personal and must be experienced to be understood.
How Is the Web Affecting Consumers’ Search for Information? The Internet is reducing the opportunity costs of information gathering, thus making it easier for people to make informed decisions. More than two-thirds of American consumers report searching for product information online, and a recent survey by the Consumer Electronics Association found that three-quarters of electronics purchases are researched online, even though most people still go to conventional stores to buy the product. And while the Internet may reduce the opportunity costs of information search, most consumers still spend a great deal of time researching their electronics purchases: 15 hours for televisions, 12 for digital cameras, and so on. Many manufacturers and service providers have established their own sites. Some of these sites not only provide information about product options and characteristics, but also offer tutorials about how to use the product, help lines, and other information geared to helping customers obtain full value from their purchases. For instance, the outdoor gear retailer REI provides 45,000 pages of product use information and tips, such as a clinic on backpacking, on its site, www.rei.com.
More important, many new sites have taken over much of the search for information about alternative offerings in a product category in exchange for a small fee from the consumer or advertising from manufacturers or dealers in the category. For example, www.cruisecompany .net provides detailed information on cruises organized by type of cruise, itinerary, or cruise line, in exchange for a commission on any cruise a consumer books through the site.
While such sites facilitate the consumer’s search for information about high- involvement products and services, they do not solve all the consumer’s problems. Most of the information provided by such sites is obtained from commercial and public, rather than personal, sources. Therefore, some consumers may not consider it very useful for evaluating alternative choices, particularly when it comes to choosing intangible services. Also, sensory information such as touch and smell, which can be important for evaluating foods, fashion items, and similar products, cannot be displayed on the Web. These shortcomings help explain why some sites, such as iTunes and amazon.com, publish product reviews and evaluations submitted by individual customers.
A more recent development has blurred the distinction between public and personal information sources. Personal Web logs—or blogs—provide a way for individuals to share their own experiences and opinions with a large public audience, and for potential customers to obtain personal insights from a vast number of product users.
The potential impact of blogs on buyer behavior is illustrated by the experience of the Kryptonite division of Ingersoll-Rand. On September 12, 2004, someone with the moniker “unaesthetic” posted in a group discussion site for bicycle enthusiasts the observation that the ubiquitous, U-shaped Kryptonite bike lock could be easily picked with a ball- point pen. Within days, a number of blogs posted a video demonstrating the problem. Kryptonite responded with a bland statement arguing that the locks remained a “deterrent to theft,” but more and more bloggers began writing about the issue and their experiences. By September 19, according to one Internet measurement firm, about 1.8 million people saw postings about the lock’s shortcomings in a single day. Finally, on September 22, Kryptonite was forced to announce it would exchange a new, redesigned product for any affected lock for free, a move that was estimated to cost the firm 100,000 new locks and more than $10 million (about 40 percent of the division’s annual revenue).
The impact of blogs on buyer behavior and firms’ marketing programs is growing rapidly since an estimated 23,000 new Web logs are started around the world every day. And other disgruntled consumers are posting videos to YouTube and similar sites illustrating their problems and frustrations with products or service providers. For instance, more than 340,000 people have watched Michael Whitford smash his nonfunctioning Apple Mac- book with a sledgehammer. It is important to note, though, that even very dissatisfied customers can be salvaged if the company takes quick and positive action. After Apple replaced his laptop, for example, Mr.Whitford wrote on his blog “I’m very happy now. Apple has regained my loyalty.”
Consequently, one authority advises that “there should be somebody at every company whose job is to put into Google and blog search engines the name of the company [or one of its brands], followed by the word ‘sucks,’ just to see what customers are saying.” Of course, firms might also try to take advantage of the growing influence of blogs by creating one of their own, but this can raise some ethical issues, as discussed in Ethical Perspective 4.1.
Evaluation of Alternatives Consumers find it difficult to make overall comparisons of many alternative brands because each brand might be better in some ways but worse in others. Instead, consumers simplify their evaluation in several ways. First, they seldom consider all possible brands; rather, they focus on their evoked set—a limited number they are familiar with that are likely to satisfy their needs.
Second, consumers evaluate each of the brands in the evoked set on a limited number of product dimensions or attributes. They also judge the relative importance of these attributes, or the minimum acceptable performance of each. The set of attributes used by a particular consumer and the relative importance of each represent the consumer’s choice criteria. In the case of our cruise example, the dates of the cruise, the ports of call, the entertainment offered, and the costs are examples of MacDonald’s choice criteria for selecting a specific cruise.
Third, consumers combine evaluations of each brand across attributes, taking into account the relative importance of those attributes. This multiattribute assessment of a brand results in an overall attitude toward that brand. The brand toward which consumers have the most favorable attitude is the one they are most likely to buy.
Product Attributes and Their Relative Importance Consumers use many dimensions or attributes when evaluating alternative products and services. Thus, in addi- tion to the above service attributes, MacDonald might also use the newness and size of ship, types of food served, availability of an exercise room, and kinds of gambling as additional ways of comparing his options. Usually, however, consumers base their evaluations on half a dozen dimensions or less. Exhibit 4.5 contains a general list of product attributes consumers might use to evaluate alternatives.
Different consumers may use different sets of attributes to evaluate brands within the same product category. But even when two people use the same set of attributes, they may arrive at different decisions because they attach varying degrees of importance to the attributes. Paul MacDonald is primarily interested in entertainment, demographics of those taking the cruise, and cost, whereas another traveler might attach greater importance to gambling, ports of call, and food.
A consumer’s personal characteristics and social influences—needs, values, personality, social class, and reference groups, among other things—help determine which attributes are considered and their relative importance. Environmental factors and the usage situation can also affect the perceived importance of various product benefits. For instance, some people buy more prestigious and expensive brands of beer or wine for their party guests than for their own everyday consumption.
Forming Attitudes toward Alternative Brands Even if two consumers use the same attributes and attach the same relative importance to them when evaluating prod- uct offerings, they may not necessarily prefer the same brand. They might rate the various brands differently on specific attributes. Differences in brand perceptions are based on past experience, the information collected, and how that information is perceived and processed. And as we shall see later, technology is making it increasingly possible for consumers to interact with manufacturers and suppliers during the production process so that product and service offerings can be customized to meet a customer’s preferences on important attributes. Consequently, Brand attitude may also depend on which manufacturer can be most flexible in customizing its product.
Purchase Even after a consumer has collected information about alternative brands, evaluated them, and decided which is the most desirable, the decision process still is not complete. The consumer must now decide where to buy the product. Choosing a source from which to buy the product involves essentially the same Mental processes as does a product-purchase decision. The source is usually a retail store but may also be a mail- order catalog such as L. L. Bean or a Web site like RedEnvelope.com. Consumers obtain information about alternative sources from personal experience, advertising, comments of friends, and the like. Then they use this information to evaluate sources on such attributes as lines of merchandise carried, services rendered, price, convenience, personnel, and physical characteristics. Consumers usually select the source they perceive to be best on those attributes most important to them. If their experiences with a source are positive over time, they may develop patronage loyalty and routinely shop that source—similar to the way consumers develop brand loyalties.
Consumers shopping in a retail store intent on purchasing one brand sometimes end up buying something different. MacDonald, for example, could be switched from one cruise to another by the travel agent. This happens because the consumer’s ultimate purchase can be influenced by such factors as out-of-stocks (no outside cabins on a particular cruise), a special display, or a message from a salesperson (“I can get you a better deal on a similar cruise if you can go two weeks later”).
Postpurchase Evaluation Whether a particular consumer feels adequately rewarded following a purchase depends on two things: (1) the person’s aspiration or expectation level—how well the product was expected to perform (delivery of a quality pizza while it is hot)—and (2) the consumer’s evaluation of how well the product actually did perform (the pizza arrived cold).
Consumers’ expectations about a product’s performance are influenced by several factors. These include the strength and importance of each person’s need and the information collected during the decision-making process. In the case of MacDonald, a persuasive ad or an enthusiastic endorsement of a given cruise by a friend who is a frequent cruise-goer may have caused him to expect more from his cruise than he would have otherwise. He may, however, attribute part of any dissatisfaction to his own actions—an unwillingness to participate in some of the entertainment. The fact that consumers are part of the service production process makes self-blame a real possibility. Nevertheless, even with services there is a danger for marketers in using exaggerated claims in product advertising. Such claims can produce inflated expectations the product cannot live up to—resulting in dissatisfied customers.
It is important to note that, as the diagram in Exhibit 4.3 indicates, the consumer’s evaluation of a purchase feeds back into memory where the information can be recalled for a similar purchase decision. Stored information about one or more negative past experiences with a brand or supplier will reduce the odds that the consumer will make the same purchase again. Consistent positive experiences can ultimately lead to Brand loyalty—the routine repurchase of the same brand with little consideration of any alternatives.
Some experts argue that consumers more often develop loyalty to service providers than to physical products because of the difficulty of evaluating alternatives before actu- ally experiencing the service. Also, repeated patronage can bring additional benefits, such as discounts, or more customized service as the provider gains more insights into the customer’s preferences. This helps explain why about 25 percent of all cruise passengers are repeat customers.
Ethical Perspective 4.1 Company Blogs—Honesty
Is the Best Policy
Given the growing popularity and influence of consumer blogs in many industries, firms are trying to get in on the act by sponsoring company blogs or encouraging employees to start their own. Most companies that want to blog try to walk a fine line: telling employee bloggers to be honest but also encouraging evangelism for the firm’s products or services. Unvarnished corporate propaganda almost always drives readers away, but honest people with real opinions keep them coming back.
One ethical no-no that can have severe economic consequences is trying to hide the identity of the company behind the blog. For instance, Mazda— hoping to reach young potential car buyers—crafted a blog supposedly run by a 22-year-old hipster named Kid Halloween. He posted links to three videos he said a friend had recorded off public- access TV. One showed a Mazda 3 attempting to break dance, and another had it driving off a ramp like a skateboard. Inevitably, the cars were totaled. Other bloggers quickly sensed a phony in their midst—the expensive videos were a tip-off—and began criticizing Mazda on a number of widely read blogs addressed to auto enthusiasts. Consequently, the firm was forced to pull the site after only three days. The lesson, according to Steve Hayden, who helps create blogs for clients of advertising giant Ogilvy & Mather, is that “if you fudge or lie on a blog you are biting the karmic weenie. The negative reaction will be so great that, whatever your intention was, it will be overwhelmed . . . You’re fighting with very powerful forces because it’s real people’s opinions.”
Source: David Kirkpatrick and Daniel Roth, “Why There’s No Escaping the Blog,” Fortune, January 10, 2005, pp. 44–50.