Pre-Purchase Processes∶ Need Recognition Search and Evaluation.pptVIP

How Good Are We at Evaluating Alternatives? Consumers are often not very good at figuring out which alternative is best for them - Tend to rely on certain signals (e.g., price,  brand name, warranty, package) to make  inferences about a product quality; however,  such signals may be inaccurate - Often possess limited abilities to accurately  evaluate choice alternatives * * * How Much Do Consumers Search? Cost versus benefit perspective: people search for decision-relevant information when the perceived benefits of the new information are greater than perceived costs of acquiring the information Benefit: making better decisions Cost: time/effort spent searching How Much Do Consumers Search? While making better purchase decisions is the primary benefit of pre-purchase search, this benefit depends on the perceived risk involved - Perceived risk represents consumers’  uncertainty about the potential positive  and negative consequences of the  purchase decision Consumers’ Knowledge and the Amount of Search How Companies Benefit from Understanding Search Adjusting the breadth of a product line based on consumers’ willingness to search Monitoring consumers’ price comparison activities to gauge their price sensitivity How Companies Benefit from Understanding Search Focus promotions on sources that consumers search most, including individuals that provide information Monitor search activities to identify new ways to reach and gain customers Pre-purchase Evaluation Pre-purchase Evaluation The evaluation of choice alternatives Intertwined with the search process Pre-purchase Evaluation Forming the Consideration Set Pre-purchase Evaluation Consideration set: alternatives considered during decision making (also known as the evoked set) How Companies Can Get Into Consumers’ Consideration Sets Ask to be in the set Offer incentives Modify the product offering Constructing the Consideration Set Primarily from Memory Retrieval set: consideration set t