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Decision making-Microeconomic

Potato chips…
Potato chips signifies needs at some time
Marginal utility to price ratio if high results in
purchase else neglect
Marginal utility perceived here is value obtained
by consumption of chips
Risk Involved in the product (Allergy & Calorie
May be a time-pass, style association
EBM-Extensive problem solving…
Let us consider a hypothetical situation
•Farmer who earns Rs.10 a day as daily wages.
•Takes his family to carnival
•His son sees chips packet and asks for it

Inputs Dec. Process D. P. Variables

Problem Beliefs
Stimuli of Marketers and Others

Attitudes Group Influence

Neighbor supports
Alt. Eval.

Choice. Criteria Family Influence
Wife supports child
Satisf/Diss Compliance
EBM-Extensive problem solving…
Inputs-Stimuli of Marketers – attractive
packaging , BTL advertisements and activation
campaigns, Sales Promotions

Constraints – Economic marginal utility to price,

Distribution Channels, Brand Loyalty

In this case it exhibits a high involvement

Influence of decision process
Beliefs-Believes that the products marginal utility to
price ratio is not high

Attitudes & Intentions- Price not so important;

Taste, Displaying & Attraction is important

Evaluative criteria-Value versus cost

“Word of Mouth” is important criteria

EBM-Routinized response behavior…
In EBM model two different modes of operations by
consumers have identified.
1) EPS (Extended Problem Solving behavior)
*High level of involvement & perceived risk
2)LPS (Limited Problem Solving behavior)
*Low level of involvement & perceived risk
EPS model : Consumer recognizing a need from three
influences. Information stored in the memory
,Environmental influences , Individual characteristics
Information Search…
Consumer search internal memory to choose one among the
alternatives, like- Italian, American Flavors or may be between
Consumer expose to the certain stimuli & then choose one of the
Different categories attract more no of customers
Provide knowledge channels through advertising
Display shelves, racks-more margin to distributors
POP display, Sales Person persuasion are there
Alternative Evaluation…
In this stage consumer is comparing the
alternative brands through the information
which he has gain.

Final result of this stage is “ACCEPTANCE “

after brand judging .

Then the consumer purchase the brand & out

come would be ,SATISFACTION or
Advantages of the EBM Model…
EBM model consider many variables influencing
the consumer

It focus the involvement of the consumer

It emphasis on the decision making process &


EBM model is flexible

EBM model incorporate various consumer theories

Chips Advertisements…
Chips advertisements use the motive or exogenous
variables .
Bingo advertisements are aimed at increasing brand
awareness. Targeted at kids
 Exogenous variable – associated comical and coolness
for remembering product
 Main goal is to increase visibility for product .
Lays exhibits its product and the creation process of
 Increases the curiosity of consumer
 Motive persuasion for purchase of product by signifying
the product taste value
Thank You…