CP - CH 3 - Consumer Decision Making

Question 1

Define utility theory

Answer 1

The theory that a decision is made rationally and that a person makes a decision based on optimizing the likely outcomes of their action. This involves comparing all options and choosing the one that ranks highest.

Question 2

Disadvantage of utility theory

Answer 2

• impractical
  -customers aren’t this rational
• they may not be aware of this process of decision making

Question 3

Define satisficing theory

Answer 3

Stopping after finding a solution that is good enough and meets your needs.

Question 4

Disadvantage of satisficing theory

Answer 4

Cannot be easily applied to the retail environment.

Question 5

Define prospect theory

Answer 5

Proposes that people consider an item more precious when they own it and that gains and losses are considered differently.

Question 6

Define compensatory behavioral strategy

Answer 6

The value of one attribute can be allowed to compensate for another.

Question 7

Define equal weight strategy

Answer 7

All attributes are seen as equally important

Question 8

Define weight additive strategy

Answer 8

Some attributes are seen more important than others

Question 9

Define non compensatory strategy

Answer 9

Each factor is accounted for on its own, cannot be compensated for by another factor.

Question 10

Define all 3 non compensatory strategies

Answer 10

Satisficing - First product that meets all basic requirements is chosen. None of the others are considered. Typical for household items.

Elimination by aspects - Factors are ranked. If products don’t meet the first criteria, they are automatically disqualified, process continues like this.

Lexigraphic - Factors are ranked. If one product is superior in the most important factor it is automatically chosen.

Question 11

Define the 2 partially compensatory strategies

Answer 11

Majority of conforming dimensions - Compare 2 products at a time while keeping the one that does best

Frequency of good and bad features - The product that has the most features exceeding the cut off value wins

Question 12

Jedetski et al - decision making strategies - aim and hypothesis

Answer 12

Determine the decision-making strategies used by consumer online. It was predicted that they would use compensatory strategies when website enabled easy comparison and use non compensatory strategies when direct comparison was not available. Also predicted that number of alternatives would influence decision making strategy used.

Question 13

Jedetski et al - decision making strategies - design

Answer 13

• each of the 24 participants was asked to read a document about the decision-making strategies (3 compensatory and 3 non-compensatory)
• then they were given a quiz to test their understanding
• participants went to one of two websites and, each with a different design, and were shown how lists of alternatives could be found and refined
• they were made to speak aloud on their process as they decided which product to buy
• immediately afterwards they were given a questionnaire about their decision-making strategy
• they were asked how satisfied or frustrated they felt and how confident they were about their decision
• the experimenter recorded info about which item was selected, how many alternatives there were, and how long the decision making took
• this was repeated for 4 different items for each participant

Question 14

Jedetski et al - decision making strategies - results

Answer 14

• participants used more compensatory strategies on CompareNet (where it was easy to compare) vs Jango (where comparison was not allowed)
• less than 30 alternatives = compensatory straigies
• more then 100 alternatives = non compensatory stragteies
• websites that allow comparison are more satisfying to customers as satisfaction was higher for CompareNet
• there was no difference between the two strategies in terms of confidence, satisfaction, frustration, percieved time, or actual time

Question 15

Jedetski et al - decision making strategies - evaluation

Answer 15

used independent measures design
- no order effects = increased validity
- participants can’t find out aim of the study = increased validity
- participant variable could skew results

• teaching them the types of decision making reduces ecological validity

nomothetic approach
- offers a universal set of rules
- makes predictions easier
- mostly accurate

idiographic approach
- looks for individuality
- doesn’t allow for practical application

Question 16

Define heuristics

Answer 16

Mental shortcuts that can help us when making decisions but can also lead to errors in judgement.

Question 17

Define availability heuristics

Answer 17

Shortcuts based on how easy it is to bring something to mind. Helps us be cautious in negative situations. Can be based on inaccurate information of faulty thinking. Can ignore base rate information in favor if information that is easily recalled (ex. personal experiences)

Question 18

Define representativeness heuristics

Answer 18

Making judgements by comparing with best known example of category. If a new brand appears similar to the market leader, we may assume it is of good quality. Businesses use this by trying their product look similar to the market leader.

Question 19

Define recognition heuristics

Answer 19

More likely to choose a product from a brand that you are familiar with.

Question 20

Define take the best heuristic

Answer 20

Base the choice on one factor that you consider most important, and ignoring all the other factors.

Question 21

Define anchoring heuristic

Answer 21

Give the most importance to the first piece of information that we receive about something. All future information is either ignored or added to existing information but not considered equally important.

Question 22

Explain 2 factors that influence point of purchase decisions

Answer 22

Multiple unit price
- offer a reduced price if buying several units
- this can make a larger than normal purchase seem attractive
- can even work when there is no price difference per unit (stating price for several units makes customers expect lower unit price)

Suggestive selling
- suggesting items leads to larger purchase quantity

Question 23

Waskink et al - p.o.p decisions - aim

Answer 23

Examined factors that might influence how many units of a product a customer chooses to buy. Investigated the effect of multiple unit prices and suggestive selling.

Question 24

Waskink et al - p.o.p decisions - field experiment design

Answer 24

• conducted a one-week field experiment comparing multiple unit pricing with single unit promotional pricing in 86 stores
  -same size shelf label was used
• displayed the original price (99 cents) as well as single unit promotional price (75 cents) or the multiple unit price (2 for $1.50)
• 13 common food items were included in the experiment

Question 25

Waskink et al - p.o.p decisions - field experiment results

Answer 25

• multiple unit promotional pricing resulted in a 32% increase in sales over single unit control
• 12/13 products had higher sales with multiple unit pricing (statistically significant for 9/13)
• no self report data = data for increased sales unknown
• dont know if sales increased due to increased number of unit per person or increased number of people

Question 26

Waskink et al - p.o.p decisions - lab experiment design

Answer 26

• examined the effect of suggestive selling
• in this case suggested a new and innovative way to enjoy the item
• examined the effect of suggestive selling techniques with or without a price discount

shopping scenario
- 120 undergrad students

• offered 5 well known products at one of the three price levels
• actual convenience store price, 20% discount, 40% discount

-participants given suggestive selling claims that included no product quantity anchor (snicker bars - buy them for your freezer) or an explicit product quantity anchor (snickers bars - buy 18 for your freezer)

• participants were given no indication whether the price was a discount and were asked to give purchase quantity intentions for all the products)

Question 27

Waskink et al - p.o.p decisions - lab experiment results

Answer 27

• both suggestive selling and discount level increased purchasing quantity intentions
• suggestive selling increased purchase quantity intentions even without a discount
• including the product quantity anchor increased our chasing quantity intentions even without discount - customers may have been misled to think that quantity was necessary

Question 28

5 decision making styles (Scott and Bruce 1995)

Answer 28

• rational (various options are considered to achieve a specific goal in a logical way)
• intuitive (making decisions that feel right)
• dependent (consulting others and relying on their assistance)
• avoiding (putting off decision until the last minute)
• spontaneous (making quick and impulsive decisions)

The instrument used to measure decision making styles does not assign everyone to one style. Instead, it gives each person a score in each dimension which represents how much they resemble each style.

Question 29

del Campo et al - decision making styles - aim

Answer 29

interested to study the relationship between heuristics and decision making styles

Question 30

del Campo et al - decision making styles - design

Answer 30

• 2 experiments: 1 in Vienna and 1 in Madrid
• 320 participants approximately, wide range of ages, approximately equal number of men and women
• computer task to choose between 5 different options of eggs
• either given time pressure of 40 seconds o no time pressure
• four of the options were designed to target a particular heuristic or response
• fifth option was a filler stimulus
• after task participants were given a questionnaire asking questions about their reason for the decision, their buying behavior, their attitude towards the product and so on
• each participant also completed Scott and Bruce’s instrument to determine their decision-making style

Question 31

del Campo et al - decision making styles - results

Answer 31

• many differences between the two experiments so cultural aspects need to be further investigated
• in Vienna, time pressure led to significant shift from cognitive to take the best
• in Madrid there is only limited evidence which suggests that time pressure increases likelihood of using heuristics
• Those who scored high in spontaneity in Vienna were more likely to choose recognition than cognitive
• in Vienna those who scored high in rational style were more likely to choose recognition than cognitive, regardless of time pressure
• in Madrid those scoring high in the rational decision style were less likely to choose take the best compared to cognitive without time pressure however, this is reversed with time pressure

Question 32

Describe the 5 egg choices in del Campo et al study

Answer 32

1 - take the best stimulus = only 2.99 euro

2 - recognition = different container

3 - emotional = chicken mascot and “healthier chickens”

4 - cognitive stimulus = lot of extra information

5 - filler = lower quality egg

Question 33

Wansink et al - p.o.p decisions - evaluation

Answer 33

• field experiment = high ecological validity
• no self-report = no qualitative data = cannot know reason for change in purchase
• second study only used students = not generalizable
• app to real life = shows effect of different types of promotion
• useful for shop owners to maximize profits

Question 34

Define Thinking Fast and Slow

Answer 34

system 1
- thinking fast
- automatic, intuitive, unconscious
- relies on heuristics
- normal decision making
- can lead to errors

system 2
- thinking slow
- conscious, controlled, and deliberate
- relies on statistical analysis
- time consuming
- used less frequently

• definition of system 1 and system 2 differ based on the individual
• both systems can still lead to errors
• difficult to distinguish affect of system 1 on system 2

Question 35

Hall et al. - choice blindness - context

Answer 35

choice blindness - inability to notice mismatches between intention and outcome in a decision

Question 36

Hall et al. - choice blindness - main theories and explanations

Answer 36

our decisions are effected by implicit and explicit influences

choice blindness considers the interaction between the two

studying choice blindness allows us to see the extent to which we are constantly aware of our decisions after we make them

Question 37

Hall et al. - choice blindness - aim

Answer 37

were interested in whether choice blindness would be applicable to consumer behavior in real life settings

Question 38

Hall et al. - choice blindness - design

Answer 38

• field experiment - tasting venue in a supermarket in Sweden
• 180 participants, 118 female, 16-80 years old
• opportunity sampling - participants were asked if they would like to be involved in a quality control test for pairs of teas and jams
• each participant was asked to taste the jam and smell the tea and say which pair they preferred
• for each participant wither the jam or tea condition was manipulated
• half were told they would receive the chosen tea and jam as a gift
• the order of presentation, type of manipulation, and which jams and teas were used were randomly allocated
• experimenter 1 asked question, took notes, and managed the recording device
• experimenter 2 conducted the preference test
• in manipulated condition participants were asked to sample the first one and rate it 1-10
• while rating they flipped the jar so the second jam was present
• then participants tasted second sample and were asked to rate it this was also flipped
• now they were asked to taste their preferred sample again and defend it and indicate 1-10 how difficult they found the decision
• afterwards they were asked if they felt there was something unusual about the tasting set up or the alternatives
• then they were debriefed, they were explained the true aim of the study, and once again they were asked if they suspected any manipulation

Question 39

Hall et al - Choice Blindness - 3 criteria for detection of manipulation

Answer 39

• concurrent detection - noticed anything unusual immediately after tasting
• retrospective detection - claimed to notice deception either before or after debriefing
• sensory change detection - didn’t report any change but made comments about difference in taste after manipulation

Question 40

Hall et al - Choice Blindness - Results

Answer 40

• results of those that had concurrent detection weren’t used in the study
• 14.4% of jam and 13.8% of tea trials were detected concurrently
• 6.2% of the jam and 6.9% of the tea trials were detected retrospectively
• 12.4% of the jam and 11.5% of the tea trials had sensory change detection
• 33.3% of manipulated jam and 32% of manipulated tea trials were detected
• in contrast to the predictions, those offered tea as a gift were less likely to detect manipulation
• there were no differences based on incentives for jam
• there were no differences in perceived ease of distinguishing between the two samples, or confidence in decision between the non-manipulation trials and manipulation trials were there was no detection
• overall rating for perceived ease of distinguishing between the two samples and confidence rating was notably high for jam and tea
• most participants were blind to the difference between their intended choice and the actual outcome
• in 2/3 of detected trials they didn’t react at the time of tasting even with vastly different tastes and smells
• for non manipulated trials and non detected manipulation trials the ease of distinguishing between the two samples was high (7.3 for jam and 8 for tea)
• this means even though it was easy to distinguish they could not detect the manipulation
• even with a gift people missed manipulation, this means choice blindness exists even when there are real world consequences

Question 41

Hall et al - Choice Blindness - Evaluation

Answer 41

• opportunity sampling (quick, easy, and convenient)
• strong spread of people (16-80) = generalizable
• pilot study made sure that the jams chosen were easy to distinguish = increased validity because change in DV is known to be caused by manipulation
• helps understand the role of choice blindness

Question 42

Define retroactive interference, proactive interference, and retrieval failure

Answer 42

• information is hard to recall because new information is learned
• information is hard to recall because of previous learning
• forgetting that occurs due to retroactive or proactive interference

Question 43

Describe previous research on retroactive interference and proactive interference

Answer 43

• group 1 had to study a 1-page advert and rest while group 2 had to learn the same advert along with 2 additional ones
• participants were then given cued recall test, those in the rest condition were more likely to recall the advert (94>72)
• subsequent learning interfered with memory and recall

• group 1 had to learn one list of 18 items and group 2 had to learn the list after also learning a previous list
• after 48 hours those who only learned the one list were able to recall the information

Question 44

Burke and Srull 1988 - Brand recall - aim

Answer 44

Aimed to discover whether a consumer’s ability to recall distinctive brand information would be hindered if they subsequently view an advert for another similar product.

Also interested to see if memory was affected by the consumers information processing objective (the reason why they were looking at the advert)

Question 45

Burke and Srull 1988 - Brand recall - design

Answer 45

Experiment 1

• participants shown 12 adverts/ 3 of which needed to be recalled later and were presented near the beginning of the series
• IPO was manipulated by asking customers how likely they would be to buy the product and how interesting they thought the advert was
• the adverts were either similar products from different brands or different products from the same brand
• following viewing, they were given a questionnaire about their magazine and tv viewing habits as a distractor task
• then they were given a surprise recall test where they were given the brand name and product number of each of the adverts and were given 2 minutes to recall any information about the advert

Experiment 2

• designed the same way but intended to investigate proactive interference
• target adverts were presented at end of series rather than at the beginning

Question 46

Burke and Srull 1988 - Brand recall - results

Answer 46

Experiment 1
- recalled twice as much when they were asked about their intention to purchase rather than just rating the adverts on interest

• purchase intention leads to closer attention being paid
• recall was lower when viewing subsequent adverts for similar products or the same brand
• this shows retroactive interference because new learning interfered with the ability to recall info about the target advert

Experiment 2
- those with purchase intentions recalled more

• viewing similar adverts decreased recall
• did not find that IPO had significant effect on the influence of similar adverts

Question 47

Burke and Srull 1988 - Brand recall - evaluation

Answer 47

• highly controlled = high validity and reliability
• validity is high because extraneous variables are controlled
• adverts shown for same length of time
• standardized procedure = same instruction, same time, same distractor task - less participant variable = high reliability