Exam 2 Flashcards
Problem recognition
the perceived difference between an ideal state and the actual state
Implications of problem recognition
When a discrepancy between the actual state and the ideal state exists, consumers may be motivated to resolve it by engaging in decision making
Actual state
the consumer’s perception of the situations it currently exists, which can be determined by simple physical factors (running out of gas), consumers’ needs (hunger/thirst), and external stimuli (remembering something happy
Ideal state
Perception of how consumers would like or desire situations to be across each consumption context; based primarily on expectations, past experiences, and future goals/aspirations; changes in life situations can change the ideal state
Using actual/ideal states in marketing
attempt to put consumers in a state of problem recognition which will motivate them to start the decision process and potentially leads them to acquire and consume. Create a new ideal state by encouraging dissatisfaction with the actual state
Internal search
the process of recalling stored info from memory
Methods of internal search
Recall of brands- when you think of drinking pop you think of a few brands. Recall of attributes- facts we remember about product/service, we generalize or summarize it. Recall of evaluations- overall evaluations are easier to remember than specific attribute Recall of experiences- recall of info from autobiographical memory in images/emotions
Consideration sets
subset of brands evaluated when making a choice. Varies in size, stability, variety, and equality. Think of a few sodas out of the whole soda population
Forms of external search
Retailer search- going to the store and seeing if you like it. Media search- ads, sites, company sponsored information. Interpersonal search- talk to friends, coworkers, neighbors, etc. Independent search- 3rd party reviews. Experiential search- get a trial or sample
External search marketing strategies
1.Marketers need to ensure info consumers want is readily available in the form they want. 2. Products/brands need to perform well on attributes that are frequently searched
Decision making steps/process
1.Need recognition 2. Information search 3. Information evaluation and integration 4. Commitment/action 5. Post-purchase evaluation and satisfaction
Decision making goals
be accurate, save effort, avoid negative emotion, and justify choices
Decision making and MAO
If MAO is high, consumers engage in a lot of search and try to “be accurate.” If MAO is low, consumers use heuristics for many choices and the “Save effort” goal is active.
Multi-attribute utility model
List different attributes you want in a product, then weigh their importance. Then the product amongst those attributes. Add up the attributes multiplied by the importance and the highest number is your choice
Problems with MAUM
Simple choices require complex mental calculations; rating the attributes can be tough; choices often involve uncertainty or missing info’ context matters (self-monitoring, public choices, peer pressure)
Attitude-based heuristics
using the alternative that is associated with the most favorable attitude is selected. Stored attitude and frequency heuristic.
Attribute-based heuristics
Comparing alternatives side-by-side, attribute by attribute. Lexicographic and elimination-by-aspects
Alternative-based heuristics
sequentially evaluate each alternative by starting with the first option you encounter, then determine whether it satisfies the need
Lexicographic heuristic
compares alternatives by most important attribute, and the option with the highest level of the key attribute is selected. This is selecting as opposed to rejecting
Elimination by aspects heuristic
Order attributes by importance, then set cutoffs for each attribute. Start with the important attribute and then eliminate options by those who don’t meet the cutoffs. This is a rejection strategy
Conjunctive heruistic
set minimum acceptable levels for each feature and then select the first one to meet the minimum levels. The first one you look at is important because if the first one meets your needs, you pick it. Its possible to get different results with the same info
Habitual heuristic
Decide based on habit, no strong preference. It saves effort; the outcome is the same but the driver is different
Representativeness heuristic
decide based on comparison to category prototype; a perception of similarity leads to assumption of similar quality. If we see a product that has similar qualities to iPad, we assume its as good as iPad
Brand loyalty
decide based on strong preference from past consumption, it reduces the perceived risk
Availability heuristic
we often go with the option that is most available and easiest to get
Stored attitude heuristic
use attitudes stored in memory to make a choice, so you select the option you like best based on attitude
Satisficing
selecting the first option you encounter that satisfies the need, even though it may not be the best, we do this when we have very suitable options, or on decisinos that are not that important
Frequency heuristic
evaluate whether a product is “good” in isolation (not relative to others). Simply count the good vs. bad features with not worrying about importance weights.
Reliance on norms/affect
buy based on what everyone else is buying
MAO and decision making/heuristics
is MAO is low, consumers use heuristics, if it is high they take more time to be accurate
Heuristics vs. biases
Heuristics is done intentionally when evaluating options. Biases are done unintentionally
Framing
The same info can take on different meanings based on the way the info is presented. It alerts the decision making process and imposes boundaries about how we think about a problem and how we gather additional info
Prospect theory
“Losses loom larger than gains.” Our utility function differs depending on whether we are in a ‘gain’ or ‘loss’ frame of mind. We are more willing to accept risks in an attempt to escape losses (we are more risk seeking with losses) we prefer safety when faced with gains (we are more risk averse with gains)
Representativeness bias
people judge the probability of something by considering how much it resembles available data. People neglect the relevant base rates. Example of Steve the introvert that everyone thinks is a librarian, but he is a salesman and we should have thought that because its a much better chance to be a salesman than librarian
Availability bias
the more readily we can bring to mind instances, the more probable we think an event is. (thinking more words start with ‘r’ than have ‘r’ as the 3rd letter)
Mental accounting
We have different mental accounts for different types of purchases/situations. (losing money at concert, may buy ticket may not in certain situation, same loss of money)
Anchoring and adjustment
We anchor on guesses and don’t sufficiently adjust. The “guess” anchors the estimate of individuals trying to make an intelligent estimate, it prevents them from moving far away from that number. (Highway in Hungary, different “guess” makes much different answers)
Selecting and rejecting
Differences in making the same choice when we are selecting or rejecting. When selecting, we focus on the positives. When rejecting we focus on the negatives. (Child custody case, parent B had more good qualities and more bad qualities, so he was selected more, and was rejected more)
Discounting discrepancies
We will go across town to get a $40 item that was $70 here. But won’t go across town for a $770 item that is $800 here
Attraction effect
(decoy effect) Preference changes to the asymmetrically dominated 3rd option that is introduced
Compromise effect
Brand gains share because it is intermediate, not extreme options. When trying to get someone to buy high-end package, introduce a super high-end package and the will buy the old high end package (now in the middle)
Asymmetric dominance
An option that is asymmetrically dominated when it is inferior in all (or almost all) respects to one option, but when compared to the other option, it is inferior in some respects and superior in others (could be tied)
Cognitive dissonance
a feeling of anxiety concerning whether the correct decision was made. Questions like “has anyone ever experienced this?” “what happened?”. bolster choice (make yourself feel better for picking it) minimize alternatives (convince yourself the other options aren’t good)
Regret
a feeling we should have picked a different option. Happens when we perceive an unfavorable comparison between the performance of the chosen option and the performance of options not chosen. Happens when we stop trying to convince ourselves it was an ok choice
Satifaction
feeling that results when we make a positive evaluation or feel happy with our decision. Satisfied customers pay high prices, make repeat purchases, brand loyal, and tell others
