Consumer Decision-Making Flashcards
(76 cards)
utility theory
when making a decision, consumers make the decision rationally
the decision is based on optimising the likely outcomes of their actions.
strength of utility theory
it explains how people make best choices, given enough useful information
demonstrates validity
weakness of utility theory
it’s reductionist
it ignores other factors that’s important to us when we decide to buy a product
you may make a rushed decision during a sale
satisficing theory
alternative to utility theory
decision is made based on finding an option that is “good enough” and then stopping
aspiration level
the level at which we will be satisfied varies from person to person according to our personalities and experiences
strength of satisficing theory
it has clear application to everyday life.
if everyone examined all information available, it would take many hours and a lot of effort, we would instead choose something good enough.
weakness of satisficing theory
someone’s aspiration level is rather vague and difficult to predict
how and why one person is satisfied with a product when another would want something different means that the theory cannot accurately account for all consumers.
inability to have a more precise definition of aspiration level means that this part of the theory lacks validity.
prospect theory
value rather than utility
people consider that an item is more precious when they own it, and that gains and losses are considered differently
endowment
when an item is more precious when owned than when owned by someone else
strength of prospect theory
it has clear application in everyday life
people will engage in risk seeking behaviour in order to avoid a loss.
advertisers frame their marketing campaigns to focus on how their products could protect consumers from potential losses.
weakness of prospect theory
inability to account for cultural differences in levels of loss aversion
compensatory strategy
used when you have to consider only a few alternative products.
u weigh the positive and negative attributes of the different products.
allow for positive attributes to compensate for the negative ones
strength of compensatory strategy
it uses detailed comparison to result in maximising the utilitarian value of a choice.
little effort needed because of websites and online decision making tools
enables to find sufficient information and compare products easily and quickly
weakness of compensatory strategy
- it is reductionist
- it reduces the product to the numerical value of its attributes and the decision making process to a mathematical calculation
- increases the time and effort needed to make a decision.
non compensatory strategy
each attribute evaluated individually, rather than allowing one variable to compensate for another.
used when there is a large choice of products and lack of full info or lack of time to process avaliable info
involves using heuristics:
conjunctive heuristic
lexicographic heuristic
elimination by aspects heuristic
conjunctive heuristic
you set a minimum acceptable cut off level for each positive attribute and choose the first product or several products that meet this criterion
lexicographic heuristic
you decide on a particular product on the basis of its perceived most important attribute.
elimination by aspects heuristic
we select according to a sequence, eliminating choices that do not have our most important attribute, then our second most important and then our third most important attribute and so on, until we are left with one choice.
strength of non compensatory strategy
it allows quick decisions when faced with many choices.
weakness of non compensatory strategy
it can exclude product that would have been suitable
choice of attributes is personal and can be easily influenced by friends, family and advertising
partially compensatory strategy
this is when we make our decision in a serial fashion, rather than in a “one off” way.
there are two partially compensatory strategies
majority of conforming dimensions
frequency of good and bad features
majority of conforming dimensions
when we take the first two possible products and evaluate them across all attributes, keeping the one that scores more highly across more attributes and dismissing the other.
frequency of good and bad features
all possible products are compared regarding the cut off values for their relative attributes and those having most attributes that meet or exceed the cut off values are chosen.
strength of partially compensatory strategies
they combine the rationality of compensatory strategies with the heuristics of noncompensatory.
they take a more holistic approach to the choice by weighing up all the possible attributes but also including individual preference in the weighing of these.
less reductionist than compensatory strategies