Chapter 5 Consumer Markets: Purchasing and Credit Use

Question 1

Classification of purchase decisions

Answer 1

• Purchase decisions by type of good 
– durable(dauerhaft) consumer goods
 – non-durable consumer goods 
– services 
• Purchase decisions by information processing
 – spontaneous decisions 
– habitual (gewohnheitsmäßig) decisions 
– extensive decisions: involve complex information processing

Question 2

syncratic decisions

Answer 2

made jointly by two or more persons in a household

• Syncratic decisions are more likely when:
– cognitive scripts are not available
– financial commitment is high
– social visibility is high
– the decision has implications for the whole household

Question 3

Conflict (Purchase)

Answer 3

– probability conflicts people agree about the goal, but disagree about the best way to reach the Goal
– value conflicts people disagree about the goal to be pursued
– distribution conflicts people disagree about the distribution of resources

Question 4

Stages of purchase decisions

Answer 4

– problem recognition
 – information search 
– evaluation of alternatives 
– product choice 
– evaluation of outcomes

Question 5

Problem recognition (Stages of purchase decisions )

Answer 5

• Types of problem recognition
– need recognition (mostly through changes in actual state)
– opportunity recognition (mostly through changes in desired state)

Question 6

information search (Stages of purchase decisions )

Answer 6

• Types of search

– pre-purchase search
• driven by involvement in the purchase
• motivated by wish to make better purchase decisions

– ongoing search
• driven by involvement in the product or product category
• motivated by wish to build up information for future use or by experiencing fun and pleasure
• can contribute to unplanned spending and compulsive buying

Question 7

hierarchy-of-effects models

Answer 7

• AIDA model assumes that advertising works through the stages of attention (A), interest (I), desire (D) and action (A)

empirical support is weak

Question 8

Information processsing model

Answer 8

• Elaboration likelihood model (ELM)
assumes that Persuasion (Überzeugungsarbeit) can occur through a central or a peripheral route

• Central route:
– if highly involved in a topic
– carefully consider arguments, evaluate arguments, change attitude accordingly

• Peripheral route:
– if not very involved in the topic
– react to heuristic cues and their Valence

• Reflective-impulsive model
– a specific behaviour is not either impulsive or reflective, but often comprises components of both processes in different strengths

– strength of reflective component will be higher if the topic is more important and consumers are held accountable for their actions
– strength of impulsive component will be stronger if consumers have a strong habit in a certain consumption domain

Question 9

Typology of consumer practices

Answer 9

– consuming as experience: consumption driven by search for emotional states and feelings
– consuming as integration: consumption serves to extend the self; consumers look for symbols to be similar to their idols
– consuming as play: desire of socializing; buy things to talk about, entertain others and to put themselves into the spotlight
– consuming as classification: consumption serves as a mean of differentiating and identification with a social group

Question 10

pathological buying (deutsch) + Unterteilung

Answer 10

krankhaftes kaufen

Unterteilung:
• Shopping addiction driven by intense positive feelings experienced during Shopping
• Compulsive buying driven by a reduction in tension and anxiety provided by shopping

Question 11

Money management

Answer 11

• “All in one pot” is typically practiced in relationships with low and middle income

• Other forms of money management:
– one has autonomous command over the Money
– separate funds segregated by areas and gender
– completely separate accounts

• Trend towards more autonomy and separate finances

Question 12

Model of purchase decisions in private households

Answer 12

assumes that decisions are influenced by
– product type
– power and harmony in the relationship and the resulting interaction principles
– conflict type
– regulation of benefits such as utility debts or influence debts

Question 13

Autonomous decision (+Formel)

Answer 13

decisions made by one partner while taking into account the other partner’s preferences
• Preference for a decision alternative is based…
– … on the extent to which it satisfies one’s own needs,
– … and on the value it has for the other Partner

𝑃𝑖𝑘 = 𝑓( 𝑏𝑖𝑘 ∗ 𝑆𝑖𝑘,𝑏𝑗𝑘 ∗ 𝑆𝑗𝑘)

𝑃𝑖𝑘… Preference of person i for product k 𝑆𝑖𝑘…
Person’s own anticipated satisfaction with the product 𝑆𝑗𝑘…
Anticipated satisfaction of the partner 𝑏𝑗𝑘/𝑏𝑖𝑘…
Weights for person i and the partner j

Question 14

Regulation of benefits

Answer 14

– influence debts: one partner may have more influence in a specific purchase decision and therefore incurs influence debts that need to be balanced out in future decisions
– utility debts: one partner may have more utility from a specific purchase decision and therefore incurs utility debts that need to be balanced out in future decisions

• Regulation of benefits: if one partner has had more influence/utility, the other partner can decide about the next purchase or buy something he or she profits more from

Question 15

Interaction principle

Answer 15

• Love principle
– high on harmony, power irrelevant
– partners are altruistic; each person does favours without expecting repayment; utility debts irrelevant

• Credit principle
– intermediate on harmony, power irrelevant; relationship resembles one between good friends
– utility debts can remain open for long periods of time, but balance is aimed for in the long run

• Equity principle
– low on harmony, power distributed equally; interactions between partners resemble those of business Partners
– utility debts need to be restored immediately

• Egoism principle
– low on harmony, imbalance of power in favour of one partner; interactions between partners resemble those of business Partners
– the partner with more power decides how and when utility debts need to be settled

Question 16

Methods of studying purchase decisions in the Household (synthetic families)

Answer 16

groups of strangers that mimic a traditional family structure by consisting of a male and a female participant of about equal age plus another younger person Problems: no real relationship, no common history and future

Question 17

Methods of studying purchase decisions in the Household (Diary Methods)

Answer 17

• Diary methods
– measures (usually short questionnaires) that are repeatedly completed in a real-life situation, at either a specific time or a specific event
– advantages: less recall errors, higher ‘ecological validity’
– problems: high effort for respondents

Question 18

Determinants of influence

Answer 18

• Informational pressure: relative knowledge and competence increase influence
• Interest: relative relevance increases influence
• Decision making history: balancing over time

Question 19

Process analysis of decisions in the Household (Influence tactics)

Answer 19

• Influence tactics ways in which partners in close relationships try to convince the other person of the accuracy of their own perspective and the advantages of their own preferences

• Various tactics
– Persuasion (Überzeugungsarbeit) tactics (e.g., doing small favours, insisting, coalitions,….)
– bargaining(feilschen) tactics (e.g., trade-offs, integrative bargaining)
– conflict avoidance tactics (e.g., deciding according to roles)
– problem-solving tactics (e.g., factual information)

• Choice of tactics depends on
– gender: women more integrative bargaining
– relationship quality and length of partnership: happy couples more emotionally positive tactics
– type of conflict
• value conflict: more persuasive tactics
• distribution conflict: more bargaining tactics
• probability conflict: more problem-solving tactics

Question 20

Time and outcome valuation model

Answer 20

Credit involves intertemporal choice: immediate pleasure of consumption and delayed burden of repeated repaying
• Consumers tend to underestimate the repayment
– cannot calculate the periodical instalments or costs of interest correctly
– underestimate the duration because of strong discounting of future costs

Question 21

debt account aversion

Answer 21

people focus on reducing number of debt accounts more than on repaying debts with highest interest rates