Pre-purchase Processes

1. Pre-purchase Processes • Need Recognition • Search • Evaluation

2. Need Recognition • Need recognition depends on how much discrepancy exists between the actual state (Consumer’s current situation) and the desired state (situation the consumer wants to be in). When this difference meets or exceeds a certain level or threshold, a need is recognized. Desired State Actual State Below threshold Degree of Discrepancy At or above threshold No need recognition Need Recognition

3. The Need to understand need recognition • One potential benefit of understanding need recognition is that it may reveal a market segment with unsatisfied desires. • Existence of unsatisfied needs and desires today lays the foundation for the new businesses and product innovations of tomorrow.

4. Influencing Need Recognition • Stimulating primary demand: Representing the total sales of a product category. (Generic Need Recognition) • Selective demand: Representing the sales of each competitor within the product category. (Selective Need Recognition)

5. Search • Motivated activation of knowledge stored in memory or acquisition of information from the environment about potential need satisfier. • Internal Search: Scanning and retrieving decision relevant knowledge stored in memory • External Search: Colleting information from the market place.

6. Internal Search • Determinants of internal search: • Existing knowledge • Confidence in existing knowledge • Satisfaction with prior purchase • Ability to retrieve stored knowledge • Internal Search • Successful (Proceed with decision) • Not Successful (Undertake external search)

7. External Search • External search motivated by an upcoming purchase decision is known as pre purchase search. • External search differs from ongoing search, in which information acquisition takes place on a relatively regular basis regardless of sporadic purchase needs.

8. Where do consumers go for information

9. How much do consumers search? • Cost vs Benefit perspective says people search for decision relevant information when the perceived benefits of the new information are greater than the perceived costs of acquiring this information. • As perceived risk of a purchase decision increases, so does search. • When consumer is uncertain about which product is best for their needs, search becomes more likely.

10. Consumer Knowledge and the amount of external pre purchase search More Amount of external pre purchase search Less Less More Level of consumer knowledge

11. Value of understanding consumer search • If the consumer is unwilling to devote more time in locating what they want, the company should streamline its products so that shoppers could locate items as quickly as possible. • If consumer is more prone to price information search, the company should pay attention to the competitor’s price while setting their own price. • A firm should focus its promotional efforts on those areas most likely to be searched by target consumers.

12. Pre purchase evaluation • Constructing the consideration set • Those alternatives considered during decision making compose consideration set. • Consideration set is build by external and internal search. • We recall choice alternatives form our memory and it is called as retrieval set. • Some times recognition rather than recall becomes more important in determining the consideration set.

13. Deciding how to evaluate the choice alternatives Forming Consideration set Evaluating alternatives Rely on pre existing evaluations Construct evaluations Categorical Process Piecemeal Process

14. Constructing new Evaluations • Categorization process: Evaluation of a choice alternative depends on the particular category to which it is assigned. • Piecemeal process: Evaluation is derived from consideration of the alternative’s advantages and disadvantages along important product dimensions.

15. Categorization process • A product’s evaluation depends on the particular category to which it is perceived as belonging. • Some companies use brand extension for this purpose. The hope is that consumer’s favorable opinions about the core brand will transfer to the company’s new externsion.

16. The transference of attitude toward the core brand to its extension depends on the extension’s similarity to the core brand High Degree of attitude transfer from core brand to extension Low Low High Degree of similarity between core brand and extension

17. Piecemeal Process • Consumer determine the particular criteria or product dimensions to be used in evaluating choice alternatives. • E.g. in deciding which automobile to purchase, consumers may consider such criteria as safety, reliability, power, acceleration, price, brand name, country of origin, warranty, mileage etc.

18. Strategies for evaluation • Cut off: Simply a restriction for acceptable performance. E.g. price. Consumers usually have an upper limit for the price they are willing to pay. • Signals: Stimuli used to make inferences about the product. E.g. name of the product infer the quality of the product or warranty may serve as a signal.