Decision Making Process

Question 1

What are the 5 steps of Consumer Decision Making Process

Answer 1

1. Problem recognition
2. Information search
3. Alternative evaluation
4. Purchase decision
5. Post-purchase behavior

Question 2

What are the two sets of brands that customers consider?

Answer 2

Evoked set:
Brands that are evoked from internal search

Consideration set:
Brands that are seriously considered before purchase, including brands from the evoked set

Question 3

What is Regularity?

Answer 3

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

Question 4

What are 2 context effects that are created by consideration sets?

Answer 4

1. Attraction effect
2. Compromise effect

Question 5

What is the Attraction effect?

Answer 5

When the addition of an inferior brand to a consideration set increases the attractiveness of another brand

Question 6

What is the Compromise effect?

Answer 6

A consumer is more likely to choose the middle option of a selection set rather than the extreme options

Question 7

3 Types of decision making process

Answer 7

1. Cognitive decision-making rules
2. Heuristics & mental shortcuts
3. Affect-based decision making

Question 8

What is the Compensatory model?

Answer 8

All salient attributes are compared and an overall weighted evaluation is used to make a choice

Question 9

What is the process of the compensatory model?

Answer 9

1. Multiply importance weights by belief ratings
2. Sum all the (important weight * belief) products to get a score for each brand
3. Brand with the highest total score is chosen

Question 10

What are the 2 downsides of the compensatory model?

Answer 10

1. A high level of cognitive effort and search is needed
2. Tends to be only for high-importance products /situations, most decisions are not made using this rule

Question 11

What are the 3 types of the Non-compensatory model?

Answer 11

1. Lexicographic
2. Conjunctive
3. Disjunctive

Question 12

What is the Lexicographic model?

Answer 12

It compares brands by attributes, one at a time in the order of importance

Question 13

What are the pros and cons of the Lexicographic model?

Answer 13

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

Question 14

What is the Conjunctive model?

Answer 14

Brands with attributes below a minimum cutoff are eliminated

Question 15

When are the Conjunctive models best used?

Answer 15

In cases where consumers have so many alternatives that they have to first simplify the task

Question 16

What is the Disjunctive model?

Answer 16

Brands with one attribute above a high, acceptable cutoff is chosen

Question 17

When is the Disjunctive model best used?

Answer 17

When a consumer is looking for the best on any attribute; does not matter which

Question 18

What are Heuristics & mental shortcuts?

Answer 18

Consumers often simplify decision-making tasks using simple rules of thumb / mental shortcuts

Question 19

How are heuristics used subconsciously?

Answer 19

1. May be recalled from memory
2. May be constructed on the spot

Question 20

3 Well known heuristics

Answer 20

1. Availability
2. Representativeness
3. Framing - Risk aversion vs. risk seeking

Question 21

What is the Availability heuristic?

Answer 21

Basing judgment and decision making on events that are easier to recall and imagine

Question 22

What is the Representativeness heuristic?

Answer 22

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

Question 23

What is the Base-rate fallacy?

Answer 23

Information about the rate of occurrence of some trait in a population is ignored or not given appropriate weight

Question 24

Explain the Framing effect

Answer 24

When problems are framed positively, people are risk-averse
When problems are framed negatively, people are risk-seeking

Question 25

What are the 2 types of the Affect-based decision making?

Answer 25

1. Affect referral
2. Impulse purchases

Question 26

What is Affect referral?

Answer 26

A tactic whereby people simply remember their feelings for the product or service

Question 27

What is the effect of Affect referral?

Answer 27

1. Results in low-effort decision-making
2. Great way to simplify decisions
3. These consumers do not keep up with trends in the market, because they have a single-brand focus

Question 28

What is Impulse purchase?

Answer 28

Consumers suddenly decide to purchase a product they had not planned on buying

Question 29

Which 4 factors characterize impulse purchase?

Answer 29

1. Intense feeling to buy the product
2. Disregard for negative purchase consequences
3. Feelings of euphoria and excitement
4. Conflict between control and indulgence

Question 30

What is the effect of Post-purchase evaluation?

Answer 30

Consumers integrate information from post-purchase evaluation into their future decisions by informing any of the previous processes

Question 31

What is the Expectancy disconfirmation model?

Answer 31

Satisfaction is defined in terms of expectancies

Question 32

What must happen in order to achieve customer delight?

Answer 32

Performance must exceed expectations, via considering not only utilitarian features but also hedonic and aesthetic features