Decision Making Process Flashcards
What are the 5 steps of Consumer Decision Making Process
- Problem recognition
- Information search
- Alternative evaluation
- Purchase decision
- Post-purchase behavior
What are the two sets of brands that customers consider?
Evoked set:
Brands that are evoked from internal search
Consideration set:
Brands that are seriously considered before purchase, including brands from the evoked set
What is Regularity?
If A is preferred over B in the choice set of (A, B), then A should also be preferred over B in the choice set of (A, B, C), irrespective of the characteristics of option C
What are 2 context effects that are created by consideration sets?
- Attraction effect
- Compromise effect
What is the Attraction effect?
When the addition of an inferior brand to a consideration set increases the attractiveness of another brand
What is the Compromise effect?
A consumer is more likely to choose the middle option of a selection set rather than the extreme options
3 Types of decision making process
- Cognitive decision-making rules
- Heuristics & mental shortcuts
- Affect-based decision making
What is the Compensatory model?
All salient attributes are compared and an overall weighted evaluation is used to make a choice
What is the process of the compensatory model?
- Multiply importance weights by belief ratings
- Sum all the (important weight * belief) products to get a score for each brand
- Brand with the highest total score is chosen
What are the 2 downsides of the compensatory model?
- A high level of cognitive effort and search is needed
- Tends to be only for high-importance products /situations, most decisions are not made using this rule
What are the 3 types of the Non-compensatory model?
- Lexicographic
- Conjunctive
- Disjunctive
What is the Lexicographic model?
It compares brands by attributes, one at a time in the order of importance
What are the pros and cons of the Lexicographic model?
Pros:
Easy to use as one can only focus on one attribute to decide
Convenient in cases where consumers know that there is one attribute that is very important to them
Cons:
Consumers may not know about the trade-offs they are making with respect to other attributes
What is the Conjunctive model?
Brands with attributes below a minimum cutoff are eliminated
When are the Conjunctive models best used?
In cases where consumers have so many alternatives that they have to first simplify the task
What is the Disjunctive model?
Brands with one attribute above a high, acceptable cutoff is chosen
When is the Disjunctive model best used?
When a consumer is looking for the best on any attribute; does not matter which
What are Heuristics & mental shortcuts?
Consumers often simplify decision-making tasks using simple rules of thumb / mental shortcuts
How are heuristics used subconsciously?
- May be recalled from memory
- May be constructed on the spot
3 Well known heuristics
- Availability
- Representativeness
- Framing - Risk aversion vs. risk seeking
What is the Availability heuristic?
Basing judgment and decision making on events that are easier to recall and imagine
What is the Representativeness heuristic?
Making a decision by simply comparing a stimulus with the category prototype or exemplar
ex. If a consumer believes that Honda cars are of high quality, he may conclude that Honda motorbikes are similarly high in quality
What is the Base-rate fallacy?
Information about the rate of occurrence of some trait in a population is ignored or not given appropriate weight
Explain the Framing effect
When problems are framed positively, people are risk-averse
When problems are framed negatively, people are risk-seeking
