CHP 9: Individual Decision Making Flashcards
What are the 4 decision-making perspectives?
- Rational - people calmly and carefully integrate information and arrive at a satisfactory decision
- Uses economics of info: collect information as long as the process isn’t too time-consuming (low cost) - Constructive - consumers tailor their degree of cognitive “effort” to the task at hand
- Consumers may not have well articulated preference; rather their preferences can be affected by various factors - Behavioural - Learned response to environment cues
- Experiential - process info more holistically; Emphasize the overall experience, feelings
Explain the 3 types of consumer decisions
- Extended: invited by a motive that is central to the self-concept and the decision is perceived to carry fair degree of risk
- expensive products; infrequent purchases
- high consumer involvement; extensive thought & search time
- unfamiliar product class & brands - Limited: somewhat straightforward and simple, but it does require some cognitive processing
- use heuristics
- middle-ground approach - Habitual: decisions that are made with little or no conscious effort
- low cost products; frequent purchases
- low involvement
Explain the 4 steps in the decision-making process
- Problem Recognition - occurs when we experience a significant state we desire
- Actual state: run out of product; need not satisfied (remind consumers)
- Ideal state: exposed to better products/different products (marketing efforts) - Information Search - survey environment for appropriate data to make a decision
- not always rational
- biases can occur - Evaluation of Alternatives
- categories occur at diff levels of superiority (e.g. basic, superordinate, & subordinate) - Product choice - purchase decision
- Dimensions used to judge the merits of compensating options are called evaluative criteria
- Determinant attributes are the specific attributes used to differentiate
Describe the different types of info searches
- Internal (memory) vs. External (environment) Search
- Pre- purchase vs. Ongoing Search
* Pre-purchase search: knowledge, better decision, satisfaction with purchase
* Ongoing search: building knowledge, personal influences, satisfaction with search and other outcomes, impulse purchase - Deliberate vs. Accidental Search
* Accidental: e.g., the mere exposure effect
What is the difference between a consideration set, inert set, and inept set?
Consideration/evoked set: comprises those product already in memory
Inept set: aware of but would not consider buying
Inert set: do not come to mind at all
What are non-compensatory decision rules?
Non-compensatory decision rules: people eliminate all options that do not meet basic standards
-a low standing on one attribute can not be made up by a high standing on another attribute
What are the compensatory decision rules?
a good attribute can “compensate” for other poorer attributes
TYPES:
* Simple additive rule - Choose the alternative with the largest number of positive attributes
- Weighted additive rule - Take into account the relative importance of each attribute
Rate the decision rules from highest accuracy & effort to lowest
- weighted additive
- equal weight
- lexicographic
- elimination by aspects
Describe the 4 main biases in the consumer decision -making process
- Mental accounting - How we organize, evaluate and keep track of our financial activities
- decisions are influenced by the way a problem is posed & by whether it is put in terms of gains/losses - Prospect Theory/Loss Aversion - more emphasis on loss than gain
- Losses count twice as much as equivalent gains - Decision Framing - how the decision problem is posed in terms of gains or losses
- e.g. positive vs negative - Sunk Cost Fallacy - Have paid it, reluctant to waste it
What are heuristics?
Mental rules of thumb that lead to a quick decisions
* e.g., high price – high quality
What are some product signals/types of heuristics?
Product Signals - aspects of the product that are visible; aid in infering product quality
E.g. company history, brand reputation, price, store reputation, advertising, packaging, country of origin
What is the difference between inertia & brand loyalty?
- Inertia: buying out of habit
- Brand loyalty: positive attitude, emotional attachment, related to self-image or past experience
what is the mere exposure effect?
describes our tendency to develop preferences for things simply because we are familiar with them
What are the 4 types of non-compensatory decision rules?
TYPES:
*The lexicographic rule - Brand ranked highest on the most important attribute is selected
*The elimination-by-aspect rule - Eliminate brands that do not meet the cut-offs on the most important attribute
*The conjunctive rule - Select brands that meet all cut-offs on all attributes
- The disconjunctive rule - Accept a choice that exceeds the standard for any attribute
