Download Notes for Consumer Decision Making | AHRM 2404 and more Study notes Production and Operations Management in PDF only on Docsity! Chapter 12- Consumer Decision Making Reasons for Consumer Dissatisfaction As # of products increases, potential for problems increases Growing Complexity makes assessment more difficult Overconfidence in government protection Raised expectations due to education and advertising Choice and Info Overload Unlimited products in the market Volumes of technical information Most reliable information source is Consumer Reports Other Product Information Sources www.CNET.com WWW.epinions.com www.consumerworld.org Consumer Purchases Rules of thumb o Frequent buyer-loyalty-programs Searching for information before you make a purchase o Lowers the price paid o Consumer payoffs Gains from lower prices, better quality, or both Price Discrimination is NOT illegal o Seller charges different prices for different consumers Ex: Human Society Grocery store member card Hotel discounts for senior citizens/AAA members Price changes throughout the day (airlines, rental cars) Informed consumers pay a low or fair price ATM foreign transaction fee (members wouldn’t get charged) Comparison Shopping Rule of thumb: make 3 comparisons Great benefits from comparison shopping o Lower price o Better quality Other Purchase considerations Life-cycle costs Total cost of buying (include cost of credit, tax, shipping, etc.) Social issues o Fair treatment of labor, community support, etc. A purchase is a vote of support for the store Geistfeld Model of Consumer Choice Helps explain factors that determine o Optimal consumer purchase decisions Information needed: o Budget Constraint (ability to trade) Income Prices o Indifference curves (willingness to trade) Needs or wants Environmental Concerns Green Labeling o Ozone friendly o Biodegradable o Compostable o Recyclable 4 Advertising Concerns that affect consumers’ decisions Literal Truth o Can be supported objectively by facts Truth impression o Literally true but creates a false impression Ex: Tylenol “contains twice as much pain reliever” o Endorsement or testimonial o Comparative claim- unfairly comparing one product to another product Discernible exaggeration o So far from literal truth that no consumer is deceived Ex: “The best product on the market!” False Impression o Deliberately or unintentionally creates a false impression Ex: wonder bread saying by eating it your child will become really healthy and by the time they’re 12 etc. etc. not anything specific to the wonder bread