We've seen that consumer decisions can be either very methodical and well thought out, or pretty impulsive and spontaneous. So let's dive in to the first situation. And look at how important are complex decision making follows a series of methodical steps. When your customers are in situations that require them to engage in rational decision making, they calmly and carefully integrate as much information as possible with what they already know about a product, painstakingly weigh the pluses and minuses of each alternative and arrive at a satisfactory decision. This kind of careful, deliberate thinking is especially relevant to activities like financial planning, that call for A lot of attention to detail, and many choices that impact a consumers quality of life. The takeaway here is that if you believe that your customers, in fact do undergo this kind of planning, you should carefully study steps in decision making, to understand just how they weigh information, form beliefs about options, and choose the criteria that they will use to select one option over others.

With these insights in hand, you can develop products and promotional strategies that supply the specific information people look for in the most effective formats. So let's take a look at the steps in problem solving that we know consumers undergo under these kinds of conditions. The first step is problem recognition. In other words, we've said earlier that every consumer decision is a problem solving exercise. So in order for this exercise to get started, people of course have to recognize that there's a problem to be solved. And that can be as simple as opening your refrigerator and seeing that you need a new carton of milk.

Or, of course, something much more complicated like deciding that you have to replace your car. Once you've recognized the problem, you're going to go through a process of information search, where you're going to look both inside your own mind that your own memory, which we talked about in an earlier module, and also add information external to yourself, you're going to do research you're going to be perhaps asking friends or family members looking on websites, etc, to try to find the options that might be available to help you solve the problem. In the third step, you evaluate those alternatives. That is you basically assign weights to each Some are more favorable than others. Many decisions have both pluses and minuses to them. So they can get pretty complicated.

In the next step, you actually make your decision, decide which product you're going to buy, if anything at all, and actually go out and procure the object. And then in the final stage, you receive post purchase feedback. That is, you decide whether or not your decision was a smart one. and that in turn is going to inform the process the next time the problem occurs. So let's start with a real world example that illustrates the process of problem recognition. Ford's plan to promote its Fusion Hybrid model focused on people who aren't thinking about buying a new car, at least not right now.

Problem recognition occurs at what Ford calls the upper funnel, when we experience a significant difference between our current state of affairs and some state we desire. So Ford's emphasis initially is not going to be to sell you a hybrid car. Instead, the company plans to convince you that your current car is not a satisfactory solution to the problem of achieving efficient transportation that is also good for the environment. Let's take a look at an old commercial for Maxwell House coffee from the 1960s that is kind of quirky and unusual, but it also illustrates the process of problem recognition pretty nicely, I think. Coffee wonderful. Coffee and wine.

New client science infant Maxwell House. Really big child company. Newtonian science instant Maxwell House gives you a cups and cups and cups dozens of extra cups of coffee with warm being flavored warm bean flavor because it's made from coffee beans still warm from roasting. That's why new instant Maxwell House is the freshest tasting coffee yet. So to make sure you always got plenty of coffee for the lamb in your house, get the new giant size instant Maxwell House you won't have to run out again. I think you can see in that rather strange commercial.

That Maxwell House is focusing on the upper end of this decision funnel, and basically trying to say you can avoid the problem in the first place very simply by buying a larger size. takeaway here is that your customers won't buy a solution until they think they have a problem. You can help them to recognize this just as Maxwell House did. Step number two is information search. And this is the process in which we survey the environment for appropriate data to make a reasonable decision. As a general rule, we search more when the purchase is important when we have more of a need to learn more about the purchase, or when it's easy to obtain the relevant information.

Younger better educated people who enjoy the shopping and fact finding process tend to conduct more extensive information searches And women are inclined to search more than our men. In the third stage of the process, we evaluate the alternatives that we've identified from the second stage of information search. And we group these options into different categories that researchers have identified. And you can see these here in this diagram. Essentially, we make a distinction between the brands that a person considers to solve the problem and the brands that he or she does not the brands that are viable candidates go into the consumers evoked set. So for example, if you ask someone to name a set of perfumes that they would consider buying for their wife, they may reel off a set of names.

And those are likely to be the brands that are in their evoke set. So as you can imagine, if you are a brand That is not in the consumers evoke set initially, you have a pretty big problem on your hands because it's fairly difficult to worm your way into that evoke set later on. So basically, you want to do what it takes to be in your customers evoke set. And you want it a lot. In the fourth stage of product choice, the consumer is now going to make a decision, typically from the options that have survived in his or her evoke set. And here we see that the consumer is going to rely on a decision rule of some kind.

The particular rule that the person uses, often is influenced by the level of involvement with the decision and there's that term involvement, again, that I've mentioned numerous times during this course. Essentially, to the extent that decision is important to him or her or it carries some kind of risk. The consumer is likely to be more involved with that decision, and is more likely to invest cognitive effort to really think through the pros and cons of each option. So in those circumstances, the consumer is likely to use a compensatory decision rule, he or she carefully weighs the pros and cons of each option. In some cases, literally making a list of the pros and cons perhaps you've done that and chooses the option that is the most palatable that is the one that has the optimal combination of pros and cons. And that requires a fair amount of effort to do that.

So in other situations, where the consumer really is not that invested in the decision, we're more likely to see the use of a non compensatory rule and that means that If an option is bad on any one dimension, it will automatically get knocked out of the consideration set. So the consumer won't invest the effort to look at the pros and cons of each one. But rather, the person will just eliminate the ones that don't meet some standard. And that makes life a lot simpler. Let's look at another vintage commercial to get a sense of how decision making might work. Well, everyone, Sir Arthur, you know I'm Islam, right?

I really need a break. Coffee, tea or milk, milk, but I'm on a diet, then have milk. The airline dietician told me that especially important for diarrhea. That's right. milks, the one beverage that gives died There's important nutrients they need, like vitamins, minerals, and protein, all of which adds up to vitality. And the vitality you get from milk last far longer than energy from other drinks, you know, down like so we have to keep our weight down and our vitality should always be as high as I can say nothing tastes better.

Get back to the refill coffee tea. Finally, in step five of the decision making process, we have post purchase evaluation and we've basically discussed this already in module number two, because this is the learning process right here. It's based upon our experience with the outcome of our decision. We're either reinforced positively or negatively. And therefore we kind of create a big feedback loop that goes back to the first step of the decision. making process so the next time around.

If that same problem occurs, we now have the additional data from our own experience and that's likely to guide our decision in the future.