consumer decision making

Question 1

explain utility theory

Answer 1

• Consumers make decisions based on expected outcomes.
• The better the outcome for the consumer the more likely it is they will want to purchase
  item.
  The higher the utility use for the consumer, the more likely they will decide to make a purchase.

Question 2

Describe system 1 (fast-type) and system 2 (slow-type) thinking of a consumer (Shleifer, 2012).

Answer 2

• System 1 involves thinking fast.
• System 1 thinking is emotional, automatic,
  unconscious and effortless.
  Questions are answered quickly.
• involves quick decision making for everyday products (e.g. milk and bread).
• System 2 involves thinking slow.
• System 2 thinking is calculating, conscious,
  slow, controlled, effortful and lazy.
  This type of thinking is done by consumers buying more expensive items (such as a car or a house)

Question 3

Hall choice blindess when tasting food

Answer 3

• Took place in a supermarket in Sweden with 180 customers.
• Ppt asked to taste jam and tea. Rated each on a 1–10 scale
• then given jam/tea they did not show a preference for as the one they had preferred on the first tasting.
• Most participants did not detect that their preference had been swapped.
• They were blind to their first choice and accepted the alternative as their first choice on a second tasting.

Results:
– 33% of manipulated jam trials were detected (32% of tea)
- Detected more frequently in the least similar pairs for jam but not tea compared with the most similar pairs. T
- hose offered jam as free gift less likely to detect manipulation. T
- those offered tea as free gift or not – no difference in detection.

Question 4

Burke and scrull consumer memory

Answer 4

Experiment 1:
* Participants viewed 12 magazine ads and rated their purchase likelihood for the featured products.
* Results indicated that previously learned brand info was often forgotten/confused w new facts = difficulty in recalling the original material.

• Experiment 2:
• Similar setup to Experiment 1, focusing on proactive interference from ads for competing products.
• Findings suggested = advertising from competitors negatively impacts not only recall of a brand’s past advertisements but also learning/remembering new brand info
• No interaction found, potentially due to the brief interval between ad exposure and testing.
• Experiment 3:
• Participants evaluated 22 full-color magazine ads, assessing their value.
• results = competitive advertising significantly hindered the cued recall of brand information.

Question 5

Choice blindness

Answer 5

• Unconscious processes can influence consumer behaviour.
• Consumer decisions are made based onsituational influences as well as past memories.
  -where customer is unaware of their preferences and choices.
• When asked, the customer will be able to
  give reasons for their choice.

Question 6

Consumer memory for advertising

Answer 6

• Consumers presented w a huge volume of adverts, many of which are similar to each other
  leading to retroactive (new memories influence old) and proactive (old memories influence new)
  interference.
• Retroactive interference, e.g, where a consumer sees a new ad + may change the memory of an older one.
  -After seeing a new ad for a shampoo that promises extra volume you might start to forget the details of an older shampoo ad that claimed to reduce frizz.

Question 7

prospect theory

Answer 7

• consumer does weigh up the gains and losses but pays more attention
• to the potential gains rather than the losses.
• For example, when purchasing a lottery ticket the consumer thinks more about the possibility of winning rather than how much they paid for the ticket.

Question 8

satisficing theory

Answer 8

-Instead of seeking the best possible choice, individuals aim for a decision that is “good enough,” balancing between needs and the effort required.
- When choosing a car, a person may not find the exact match to their preferences (like color) but will settle for an available option that sufficiently meets their criteria.
- The level at which one’s satisfaction is achieved varies from person to person, influenced by their individual personalities and experiences.

Question 9

Compensatory startegy

Answer 9

-evaluating a number of alternative products by weighing their positive and negative attributes to determine their overall value on the decision.
- Decisions are based on identifying the most sig attributes
- Negative attributes of an option can be compensated for by its positive attributes.
- E.g a higher price for a plane ticket (negative attribute) may be offset by the convenience of a direct flight (positive attribute), compared to a cheaper but more time-consuming ferry journey.

Question 10

non comp startegy

Answer 10

• Used when there is a lack of time/info to thoroughly evaluate all product attributes.
• Rejects products based on sig negative attribute that cannot be offset by any positive features
• e.g, if a phone doesn’t have a camera it would be dismissed regardless of other positive attributes.

Conjunctive Heuristic:
- Setting a min acceptable level for each critical attribute.
- Products failing to meet this rejected, regardless of other attributes.

Lexicographic Heuristic:
-: Choosing based on the most important attribute first.
-If several options meet the minimum criterion for the most critical attribute, secondary attributes are considered in order of importance.

Elimination-by-Aspects Heuristic
- eliminating options that fail to meet increasingly less important criteria.

Question 11

choice heruistics

Answer 11

-mental shortcuts enabling the consumer to decide what to buy quickly (1),
e.g. availability (likelihood of product being available and also free from fault)
- representativeness (making comparisons between similar, available products) (1).

Question 12

partially comp

Answer 12

• Compare 2 products at a time across multiple attributes.
• Select the product that scores higher overall.
• Continue comparison with the next product.
• This strategy helps in evaluation + prevents premature dismissal of options.
• Choose products that meet or exceed these cut-off values for most attributes.

Question 13

jedetski internt decisions

Answer 13

Results:
- Non-compensatory strategies were more frequently used on Jango than on CompareNet.
- prevalent when users had to consider 100+ different product alternatives.
- Participants using Jango reported higher satisfaction (5.67) compared to CompareNet users (4.65).
- The choice of strategy did not affect users’ confidence, frustration, or perception of time.

Conclusion:
- The study confirms that difficult-to-compare alternatives= use of non-compensatory strategies.
- When alternatives are easier to compare= compensatory strategies

Question 14

take the best and anchoring heuristics

Answer 14

-based on one feature = A consumer buys a shampoo specifically for blonde hair because they have blonde hair, ignoring other attributes.

• Consumers use prior knowledge of a similar product as a standard for comparison.
  e.g Positioning a shampoo (Brand A) next to a more expensive option (Brand B) makes A seem like a bargain compared to if it were next to a cheaper option (Brand C).
• make a product appear either like a good deal/ overpriced depending on the comparative context.

Question 15

Wansick consumer decison making

Answer 15

Study 1 – To investigate whether multiple-unit pricing increased sales in a supermarket (2).such as pricing items as “2 for $5” instead of “$2.50 each

Study 2 – To investigate whether giving consumers high purchase quantity
limits (e.g. limit 3 per customer) increase sales

Study 3 – To investigate whether suggestive selling anchor (e.g. slogans) + discount level increased sales

Study 4 – To investigate whether internal/self-generated anchors limit the impact of anchor-based promotions