Chapter 9: individual decision making Flashcards
perspectives on decision making
- rational perspective
- behavioural influence perspective
Rational perspective
- economics of information
- focus on utility or benefit
- arrive at a satisfactory decision
- decision based on logic, research, careful evaluation
behavioural influence perspective
- impulse, can be influenced
- example a person choosing the more expensive shirt over the cheaper alternative
types of consumer decisions
- extended problem solving
- limited problem solving
- Habitual decision making
Extensive problem solving
- rational perspective
- try’s to collect as much information as possible from both memory and outside sources
- high involvement
- thorough decision making process that happens when the purchase is important, expensive, risky
- ex. Buying a car
(look at the chart)
limited problem solving
- straightforward choices
- use decision rules
- have some prior experience with the product or service
(look at the chart)
habitual decision making
- choices made with little to no conscious effort
- low involvement
- past experiences
(look at the chart)
stages of extended problem solving
- problem recognition
- information search
- evaluation of alternatives
- product choice
- consumption and learning
stage 1: problem recognition
- when we experience a significant difference between our current state of affairs and some state we desire
- problems arise in two ways (where you are now, where you want to be)
–> actual state - need recognition —> you realize something is wrong ex. Your computer is broke you need a new one
–> ideal state opportunity recognition —> don’t need anything right now, but see ways to improve ex. New phone has a better camera but your phone works fine
(look at chart)
stage 2: information search
- process by which consumer surveys the environment for appropriate data to make a reasonable decision
- perceived risk
(look at chart)
different types of search
- Pre-purchase search
– Ongoing search (stay up)
– Internal search (memory)
– External search (others)
– Deliberate search
– Accidental search
– Satisficing vs. maximizing
perceived risk
Belief that product has negative
consequences
– Different types of risk (monetary, functional, physical,
social, psychological)
– Risks be objective (physical danger as a physical risk),
or subjective (social embarrassment as a social risk).
stage 3: evaluation of alternatives
- evoked set vs consideration set
- product category: superordinate (abstract), basic, subordinate (concrete)
(look at chart)
- product positioning
- identifier competitors
- exemplar products
- locating products (ex. areas)
ex. IBIS World
evoked set
- alternatives a consumer knows about
- products a consumer knows about plus those prominent in the retail environment that are considered
- ex. want to buy a new tv only recall a couple brands
consideration set
- those that they seriously consider
- of the evoked set then ones you would actually consider
- ex. looking for a tv and out of the evoked set you only consider to of them those are the consideration set
product categories
- superordinate (abstract) ex. dessert
- basic ex. healthy dessert, unhealthy dessert
- subordinate (concrete) ex. ice cream, pie, fruit, yogurt
stage 4: making a choice
- evaluative criteria: dimensions used to judge the merits of competing options (
—> factors used to compare options - determinate attributes: features we use to differentiate our choices
—> key features that set options apart
stage 5 post purchase evaluation
- when we consumer the selected product or service and decide whether it meets our expectations
–> consumer satisfaction/dissatisfaction (CS/D): os determined by the overall attitude after a product has been purchased
–> expectancy disconfirmation model (video)
expectancy disconfirmation model
the perspective that we form beliefs about product performance based on prior experience with the product and communications
Our responses to the product can be influenced by whether the product experience is below, at par with or above expectations
- ex. users may believed that a certain technology is easy to use, but fine it complex during the actual usage
what people expect vs. What they actually experience after the purchase
compensatory rule
- a set of rules that allows information about attributes of competing products to be averaged in some way
- ex. buying a car a car with excellent gas milage might compensate for a smaller trunk space
two basic rules
- simple additive rule
- weighted additive rule
(look at equation)
simple addictive rule
- the consumer chooses the alternative with the largest number of positive attributes
- the choice is most likely yo occur when their ability or motivation to process information is limited
weighted additive rule
- consumers consider the relative importance of positively rated attributes and multiple ratings by importance before adding up
non compensatory decision rules
- a set of simple rules whereby a brand with a low standing on one attribute cannot make up for this position by being better on another attribute
- people simply eliminate all options that do not meet some basic standards
- shortcuts, habitual or emotional
- conjunction rule (minimum cutoff across all attributes)
–> ex. meeting the cutoff of 3, then sony - disjunction rule (high cutoff point on any attribute)
–> meeting the cuttoff of 5, either one - lexicographic rule (option selected is thought to perform best on the most important attribute)
–> ex. screen is most important, then LG - elimination by aspects rule
–> ex. if the cutoff is 3, then sony
prospect theory
- risk differs when the consumer faces options involving gains versus those involving losses
- four key parts
–> reference point (told your ride will arrive 10:30 but wait 20 you’ll be upset)
–> loss averse (losses feel worse than gains feel good) (losing $20 hurts more than gaining $20)
–> overweight small probabilities (buying lottery tickets or extended warranties)
-> risk is different for gains vs losses (would rather a sure 100 over a chance to win 200 and for a loss people prefer a 50/50 chance to lose 200 over a sure loss of 100
