Week6_decision_rules - MKT3311 MARKETING PRINCIPLE...

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MKT3311: MARKETING PRINCIPLE ADDITIONAL COURSE NOTES Week 6: Decision Rules The consumer decision process could be briefly categorized into the following stages: problem recognition -> information search -> evaluation of alternatives -> purchase -> post-purchase evaluation. The following discussion on decision rules is focused on Stage 3, Evaluation of Alternatives. We will briefly address how a consumer evaluates product alternatives. We assume that a consumer looks at each product alternative as a ‘profile’ of its attribute values. For example, suppose a graduating senior has received three job offers, and she thinks of each offer in terms of the following attributes: salary, potential to advance, proximity (to home), and satisfaction (with the nature of the job). For simplicity, suppose she rates each offer on a given attribute such as salary on a five point scale, from poor (1) to excellent (5). Suppose she rates the three job offers as follows: Products/Attribute s Salary Potential to Advance Proximity to Home Satisfaction Offer A 5 2 1 4 Offer B 3 4 5 2 Offer C 1 5 4 3 We can think of a four dimensional space, the four attributes being the coordinates, where the decision makers perceives the three ‘products’ (i.e., jobs). This is the ‘perceptual space’ here. [It is quite easy to visualize a perceptual space in two or three dimensions. Beyond that, it is harder to ‘see’, but I hope you get the idea.] Important Issue : Once the consumer comes up with a perceptual space, how does she make a choice? Alternative Decision Rules: No one knows for sure how a consumer makes a choice. Four basic rules which seem reasonable are listed below. Note that in real life, a decision maker can use a combination of these rules . Rule 1: Expectancy Value Rule: Here, we assume that when the consumer evaluates the product alternatives, she assigns an ‘expectancy value’ to each alternative, and selects the product with the highest expectancy value. She computes the expectancy values as follows:
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This note was uploaded on 02/22/2011 for the course ACCOUNTING 101 taught by Professor Jamesbrown during the Spring '10 term at Abilene Christian University.

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Week6_decision_rules - MKT3311 MARKETING PRINCIPLE...

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