Major Decision-Making: Compensatory Decision - Term Paper Example

 TABLE OF CONTENTS EXECUTIVE SUMMARY 1.0 INTRODUCTION 1.1 Background Information ............................................................ 1 1.2 Objectives .................................................................................... 2 1.3 Description of the Compensatory Decision Rule .............................. 3 2.0 EVALUATIVE CRITERIA 2.1 Rationale for the Selection of Evaluative Criteria Used to Select Leisure Activity ............................................................ 4 2.2 Rank of Each Leisure Activity Against Each of the Evaluative Criteria Used to Select Leisure Activity .................................................. 6 3.0 COMPARISON OF DECISION-MAKING 3.1 Difference on the Rankings Given by the Respondents for Evaluative Criteria and their Choice of Leisure Activity Using the Theory of Demography ................................................ 8 3.2 Difference on the Rankings Given by the Respondents for Evaluative Criteria and their Choice of Leisure Activity Using the Theory of Personality ............................................................ 9 3.3 Description of Relevant Marketing Implications ........................ 10 4.0 CONCLUSION .................................................................................... 11 WORKS CITED APPENDICES Appendix No. 1. Respondent 1 Matrix Appendix No. 2. Respondent 2 Matrix Appendix No. 3. Respondent 3 Matrix EXECUTIVE SUMMARY In this study, screening rules were consistent with consumer optimization (compensatory). Based on the responses of the participants, the holiday which the respondents most likely to engage in is surfing in the Philippines. They have chosen other leisure activities. But serving got the highest score as the most chosen holiday destination. There are differences in the choices of the three (3) respondents. Respondents 1 and 2 Respondents 3 chose surfing in the Philippines. However, combining the total scores of the three, surfing in the Philippines got the highest score. With regards to the conduct of an analysis of Personal Characteristics leading to holiday choices, the choices made by the participants differs from one respondent to another. The rankings of evaluative criteria differs because each respondent take into consideration a lot of things. The choices are different because each respondent has different personality. Their choices are different from one another. In terms of demographics like age, gender, family situation, income, ethnicity and others, one respondent differs from another person.Different genders have different preferences. The same is true for age. Young people have different relatively taste and choices as compared with older people. In terms of personality, respondent 1 is an outgoing female. She is enjoying the company of her family and close friends. She has active life. Respondent 2 on the other hand, has an easy-to please personality. He does not have qualms on a lot of things. He is enjoying most indoor and outdoor activities. Respondent 3 is a lover of nature and water forms. He enjoys communing with nature and God’s beautiful creations. Personality trait influences decision making. Outgoing people choos thrilling holiday in groups. On the other hand, the introverts choose to lie by the pool or in bed, enjoy some television, books or the personal computer and internet. In this study, the respondents undergone searching process that leads to the gathering of information about a range of options. This, in turn, results in alternative evaluation. This involves making brands comparisons. The respondents thought of the leisure activity that they chose among categories. They chose among several different types – brands. When they decided to give up exciting activity, perhaps for socializing reasons. It has now become a class assessment instead of a brand evaluation. Major Decision-Making: Compensatory Decision INTRODUCTION Background Information At some points, consumer makes major decision-making. In instances like these, it is good to be well-informed and be ready to make the right decisions when purchasing important goods and services, obtaining some things which involve huge costs or real estate properties for the first time, and other major decision-making. Rules are used consciously or unconsciously. There are three types of rules. One is the noncompensatory rule. This is one in which the weaknesses of an alternative are not offset by its strengths (not designed to find “winners”). Another type is the compensatory rule which is allowing for trade-offs among strengths and weaknesses (find “winners”). And the last type is the decision heuristics wherein these are rules of thumb or short cuts that allow quick decision-making. Take time comparing before making a choice. In this case the information search as well as the alternative evaluation procedures show the way to an improvement of the marketing problem. In this case, there is now a need to a change in product or service to match his or her change in lifestyle. One major decision-making in our lives is choosing a holiday. It is subject to many competing influences. There are several choices and considerations. Will it be romantic, fun, expensive or simple? Will it entail too much costs? Will there be a need to get a loan to finance this? Will it be a holiday communing with nature? Will it be a holiday alone, or with a companion, or with the family, friends or others? Will my companion prefer other place? Will it be safe for the children? At any case, the effects this decision will be weighted for and against other factors. This paper discusses the holiday destination choices of three (3) people. Objectives The objective of this paper is to study the major decision rules used by consumers for evaluating alternative choices with respect to how they perform on relevant or salient attributes and the importance of each attribute. The study also aims to select the appropriate evaluative criteria to use for the selection of leisure activity, compare the differences among them determine the relevant marketing implications of the decisions. . Description of the Compensatory Decision Rule Compensatory decision rule is illustrated below: A compensatory screening rule is one where the deterministic portion of the utility of the offering must exceed a threshold value to be acceptable. In simple additive, the total scores on all evaluative criteria for each alternative and the highest score wins, assuming all criteria are of equal importance. In weighted additive, relative weight was assigned to each criterion based on perceived importance and then multiply the score by the relative weight to arrive at a weighted score, sum scores, highest weighted score wins (Marketing Science, 2011). EVALUATIVE CRITERIA Rationale for the Selection of the Evaluative Criteria Used to Select a Leisure Activity Evaluative criteria can be tangible or intangible. Tangible criteria are benefits based on such things as price, color, size, shape, performance. On the other hand, intangible criteria are benefits based on such things as brand image, ownership feelings. Criteria may be used in combination. Evaluative criteria can be tangible. Evaluative criteria are often used in combination, making it difficult to understand the influence of each on consumer choice. A study of alternative evaluation of women’s clothing bricks-and-mortar stores, for example, found that such criteria as price, quality of apparel, class of customers, merchandise displays, apparel styles, helpfulness of salespeople, and the benefits these imply were all combined in the consumer’s mind into a single criterion named ‘‘exclusiveness’’ (Lindquist, 1973). Rank of Each Leisure Activity Against Each of the Evalutive Criteria A list of six (6) different holiday destinations was created. Included in the list are some that are not the places that the researcher would not like to go but would appeal to other people. These places were gathered from chat to some people while developing this list. Below are the indicative pictures of the types of places that were chosen. These pictures were shown to each of the three (3) respondents. Playing Tennis in Tuscany Watching movies at the Mall Snow Skiing in Colorado Shopping in Hong Kong Surfing in the Philippines Playing Golf in Arizona A second list of six (6) evaluative criteria that people might consider when choosing their holiday was developed, as shown below: Exciting Entertaining Relaxing Empowering Fun Socialising There are many possible reasons we choose the holidays that we do. These two lists in a decision matrix are plotted in a tabular form as shown at the Appendices. This decision matrix was shown to three (3) people. They were asked to rank the evaluative criteria. That is, how important is each criteria in determining their choice of holiday destination. A scale of 1 – 5, where a weight of 5 indicates it is very important, was used. The three were instructed to give their rating on each of the holiday option on the list against each of the criteria. Responses of the three (3) respondents are shown at the Appendix 1, 2 and 3 at the end of this paper. COMPARISON OF DECISION-MAKING Difference on the Rankings Given by the Respondents for Evaluative Criteria and their Choice of Leisure Activity Using the Theory of Demography Depending on the demography, the rankings varies from one person to another. Based on the Malthus' theory, the "population increase would outpace the increases in the means of subsistence". This theory was counteracted by the anti-Malthusian theories since they believe otherwise, claining that the "earth's resources are sufficient for a great deal of population". Hence, more poeople can avail of what they want, like holidays or leisure activities. Women tend to have leisure that consists of activities near or at the home (Henderson, 1990). Leisure for them is perceived as a secondary concern. Opportunities for leisure exist, but only when other duties and other concerns have been addressed first. Expectations of a women and her role in society appear to transcend the opportunities outside the home. Men face the same constraint, but can define what is expected of them more so than women. According to Connell (1987), even in cases when the opportunities for women are equal as those for men, women still perform emphasized femininity. A good example was provided by West and Zimmerman (1987). They mentioned that mothers on golf courses are more likely to be labeled deviant and asked to account for the care of their families than fathers on golf courses. Men uphold a substance of manhood in such a consumptive practice as how they consume sports. Rather than demonstrating passively an actuation which is frequently measured as womanly. Hence, the males consume sports in an active, aggressive manner. Like in this study, respondent C is a male, hence, it can be deduced from his responses in the interview sheet that this respondent is enjoying highly aggressive leisure activity like surfing, in which he put in more weight in terms of rank. Researches also revealed that race and leisure behavior has correlation. Differences on racial groups and their choices of leisure activities were illustrated by West (1989). Difference on the Rankings Given by the Respondents for Evaluative Criteria and their Choice of Leisure Activity Using the Theory of Personality In the biological theory of Hans Eysenck, he argued that introverts have high cortical arousal. This leads them to avoid stimulation (Hogan et al., 1997). Hence, introverts is preferring to stay in the corner that they are comfortable. Extroverts, on the contrary have low cortical arousal. This causes them to seek out stimulating experiences. This type of personality is usually out in search for fun and excitement (McGinnis et al., 2003). Psychodynamic theories of personality highlight the power of the unaware intelligence as well as the experiences during childhood on personality (Freud, 1949). The choice of the kind of holiday to pursue can be rooted on what is on the unconscious mind or what had happened in the past. According to the author, there are three (3) constituents of personality. These are the id, ego and superego. They are responsible for (1) all needs and urges, (2) ideals and moral and (3) moderation between the demands of the id, superego and reality, respectively. All these three components work on each other in order to come up with a decision. Erikson, another theorist suggests that "personality developed through a series of stages". Choices varies as a person passes from one stage to another (Nye, 1996). Description of Relevant Marketing Implications Costumers outline a subset of brands from which they decision-making strategies. When a costumer deals with the question of at what place to go for a holiday trip, that consumer make a list of several leisure undertakings that are being considered. All these on the list is used for the decision-making methodology. There is an elevated complexity of decision as the consumer go up the decision-making ladder. Each decision produces more steps. More cognitive exertions would be utilized while assessing components of the deliberation set. As the costumer go along the decision-making process. There will be reduction in the quantity of eventual choices. The amount of cognitive exertion put on to the decision-making method is directly proportional to the degree of significance that the costumer puts on acquiring specific product or service. CONCLUSION In this study, same recognized problem, choice of a holiday leisure activity, led to different searches and evaluation procedures. It progressed from simple habitual leisure activity to a leisure activity comparison involving minimal search and limited problem-solving to a category comparison with fairly extensive problem-solving. The progression of alternative evaluation develop into increasingly complex procedures. The degree of involvement is not necessarily a function of the price. It is more related to the perceived impact on the quality of life of the consumer. The quality of life can be a direct result provided by the product or service. Likewise, it may be an indirect result from the social praises or consents given by the constituents of the contemporary group. WORKS CITED A choice model with conjunctive, disjunctive, and compensatory screening rules. Marketing Science, 22 June. Retrieved 25 April 2011. http://webcache.googleusercontent.com/search?q=cache:yXemX1QOpg4J:goliath.ecnext.com/coms2/gi_0199-4399154/A-choice-model-with-conjunctive.html+Compensatory+Decision+Rule&cd=10&hl=tl&ct=clnk&gl=ph&source=www.google.com.ph. Connell, Robert W. 1987. Gender and Power: Society, the Person and Sexual Politics. Stanford, CA: Stanford University Press. Engel, J. F., Blackwell, R. D., and Miniard, P. W. (1995), Consumer Behavior, 8th ed. Dryden Press: Fort Worth, TX. Freud, S. (1949). An Outline of Psychoanalysis. New York: Norton. Henderson, Karla A. 1990. “The Meaning of Leisure for Women: An Integrative Review of the Research.” Journal of Leisure Research 22 (3): 228-243. Hogan, Robert, Johnson, John, and Briggs, Stephen. 1997. 1st ed. Handbook of Personality Psychology. Academic Press. Lindquist, J. D. (1973), Retail Store Image in the Purchase Decision Process: An Empirical Study, unpublished doctoral dissertation. University of Michigan: Ann Arbor, MI, 253 and 270. McGinnis, Lee, Chun, Seungwoo and McQuillan, Julia. 2003. A Review of Gendered Consumption in Sport and Leisure. Academy of Marketing Science Review, 2003 (5): 5-6. Nye, D. Robert. 1996. Three psychologies: perspective from Freud, Skinner and Rogers. New Paltz: New International Thomson Publishing Company. Rothschild, M. L. andHouston,M. J. (1977), ‘‘The Consumer Involvement Matrix: Some Preliminary Findings,’’ in Greenberg, B. A. and Bellenger, D. N., eds., Contemporary Marketing Thought. American Marketing Association: Chicago, IL, 95–98 Schiffman, Leon and Kanuk, Leslie. 2007. Consumer Behavior. 9th ed. Chapter 16 Consumer Decision Making and Beyond. Prentice Hall. P. 524 West, Candace and Don H. Zimmerman. 1987. “Doing Gender.” Gender and Society 1 (June): 125-151. APPENDICES Appendix 1. Respondent 1 Matrix Respondents Name: A (requested anonymity) Interview Date: April 12, 2011 Evaluative Criteria (Rank 1-5) Leisure Pursuits 1 2 3 4 5 6 Playing Tennis in Tuscany Watching Movies at the Mall Snow Skiing in Colorado Shopping in Hong Kong Surfing in the Philippines Playing Golf in Atlanta Rank (_5_) Exciting 5 2 4 2 3 1 Rank (_2_) Relaxing 2 5 3 4 2 4 Rank (_1_) Fun 5 2 4 2 3 1 Rank (_4_) Entertaining 5 2 4 2 3 1 Rank (_6_) Empowering 4 1 5 1 5 4 Rank (_3_) Socialising 4 3 4 2 5 4 Appendix 2. Respondent 2 Matrix Respondents Name: B (requested anonymity) Interview Date: April 14, 2011 Evaluative Criteria (Rank 1-5) Leisure Pursuits 1 2 3 4 5 6 Playing Tennis in Tuscany Watching Movies at the Mall Snow Skiing in Colorado Shopping in Hong Kong Surfing in the Philippines Playing Golf in Atlanta Rank (_2_) Exciting 3 2 5 1 4 2 Rank (_6_) Relaxing 2 2 2 5 2 4 Rank (_3_) Fun 5 3 4 3 5 4 Rank (_4_) Entertaining 5 3 4 1 4 4 Rank (_1_) Empowering 3 2 4 3 5 4 Rank (_5_) Socialising 5 1 5 3 5 4 Appendix 3. Respondent 3 Matrix Respondents Name: C (requested anonymity) Interview Date: April 11, 2011 Evaluative Criteria (Rank 1-5) Leisure Pursuits 1 2 3 4 5 6 Playing Tennis in Tuscany Watching Movies at the Mall Snow Skiing in Colorado Shopping in Hong Kong Surfing in the Philippines Playing Golf in Atlanta Rank (_5_) Exciting 4 1 3 2 5 4 Rank (_4_) Relaxing 2 5 1 3 1 5 Rank (_2_) Fun 4 1 3 2 5 4 Rank (_3_) Entertaining 4 1 3 2 5 4 Rank (_6_) Empowering 4 2 4 3 5 4 Rank (_1_) Socialising 4 1 3 2 5 4 Read More