Consumer behaviour Flashcards
Rationality
-to consider the outcome of choices and recognise the net benefits of each one
-Rational agents will select the choice which presents the highest benefits
-Consumers might make decisions that harm them - buying alcohol because it is addictive
Influence of other people
-Peer pressure prompts consumers to make decisions that go against rational thinking
-Producers influence consumers choices by advertising using well known celebrities and influencers
-This is linked to herding behaviour
Habitual behaviour
-Consumers make so many purchasing decisions that they often rely on habits to speed up the process
-People often use heuristics (mental shortcuts/ rules of thumb), help people make quick satisfactory decisions even if not the perfect answer to a complex question
-Often use information from the past
-Gerd gigerenzer- optimal way for when we lack info or time
-Consumer inertia: they will continue to buy a product even if superior options exists because they are used to it
-Status quo/ default bias
-make repeat choices even when circumstances change
-Sellers recognise these habits and exploit them
Consumer weakness at computation
-The wider the range of choice, the harder it is for consumers to gather information and compute which products offers the most benefits
-unable to exercise self control, consumers enjoy instant gratification rather than waiting, procrastinate making decisions and onlt hink about short term
-Lack the information and ability to consider the costs and benefits
Nudge-type policies
-Aim to change the behaviour of consumers without taking away their freedom of choice- subtle intervention
Framing: the way a choice is described and presented
-generates different responses
-Framing positively increases consumption
Example:
-presumed consent for organ donations
-privacy settings automatically turned on
-healthy foods closer to the tills
-Mandated choice: required to state whether they want to participate
