Individual & Group Decision Making Flashcards
Purchase Momentum
When one purchase increases the likelihood of making additionall purchases.
Consumer Hyperchoice
Overabundance of choices for the consumer. Can lead to less satisfaction
Decision Making Approaches
- Rational Perspective
- Behavioral Influence Perspective
- Experiential Perspective
Rational Perspective
Belief that consumers take rational purchases basd on objectively info cons or pros
Behavioral Influence Perspective
Decisions are highly influenced by envirionmental cues like, store layout, product placement
Experiential Perspective
Emotional or Sensory experiences guide choices
Types of Consumer Decisions
- Habitual Decison Making
- Limited Problem Solving
- Extended Problem Solving
Habitual Decision Making
Decisions made with little or no conciouss effort
Characteriized by automaticity or routine.
Low Cost, Low involvement , Little research
Heauristics
Used in Habitual Decision Making , low involvement
Mental Shortcus, rules of thumb to simplify decisions.
Examples:
“Higher price = higher quality”
“Buy what I bought last time”
“Choose the brand Mom used”
Stereotype Heauristics
Products from certain countries might help in siplify decision making—not always accurate, but it simplifies choices.
Country-of-origin effects can function as a stereotype—a knowledge structure based on inferences.
Signal
Communication of underlaying quality through visible cues.
Inertia
Purchase out of Habit.
Buy the same brand out of habit, not loyalty, easy to switch
Brand Loyalty
Concious commited repeated purchases. Harder to change
Limited Problem Solving
Straightforward and simple but still require some cognitive processing.
Use simple rules or shortcuts.
Compensatory Rule
Compensatory Rule
Allow products strenghts to make up for its weaknessess
Types of Compensatory Rules
- Simple Additive Rule
- Weighted Additive Rule
Simple Additive Rule
Choose the alternative with the largest number of positive attributes
Weighted Additive Rule
Weigh each attribute based on its importance
Non-Compensatory Rule
Used for habitual or emotonal decisions.
Eliminate options that do not meet basic standards
If a product fails one attriibute its out
Types of Non-Compesatory Rule
Lexicography Rule
Elimation-by-Aspect Rule
Conjunctive Rule
Disjunctive Rule
Lexicography Rule
Pick the brand that scores highest on the most important attribute.
If there’s a tie, move to the second most important, and so on.
Elimination-by-Aspects Rule
Set cut-offs for important features (e.g., “must have 3 HDMI ports”).
Eliminate options that don’t meet the cut-off.
Conjuctive Rule
Set minimum acceptable levels for all attributes.
Accept only brands that meet every cutoff. Entails processing by brand
Disjunctive Rule
Set high standards for each attribute.
Accept brands that exceed the standard on at least one attribute.
Extended Problem Solving
In-depth evaluation and research. HIgh Involvement
Collect info from internal search (memory) and external search (outsde sources)
Expensive, unfamiliar products
Stages in Extended Problem Solving
- Problem Recognition
- Information Search
- Evaluation of Alternatives
- Choice
- Consumption and Learning
Problem Recognition
When we experience a significant difference between our current situation and desire state
Opportunity Recognition
Ideal state rises
Maximizing
Strategy that seeks to deliver the best possible result
Satisficing
Consumer settles for the good-enough option
Bounded Rationality
Decision-making process where individuals aim for a solution that is “good enough” rather than the optimal one.
Evoke Set
Brands they know and recall
Consideration Set
Brands seriously considered
Inep Set
Brands Known but Rejected
Inert Set
Unknown or Forgotten brands . Brands not comming to mind
Categorization Matters
How a product is classified affects what it’s compared to.
Marketers try to position their products in favorable categories (e.g., orange juice as more than just a breakfast drink).
Feature Creep
Too many features can overwheelm and lead to product retruns.
Evaluative Criteria
Attributes used to compared options (e.g., screen resolution).
Determinant Attributes
Help consumers make a choice. Criteria that actually influence the final decision. Educate consumers what attributes should be determinant.
Consumer satisfaction/dissatisfaction
Overall feelings or attitude a person has about a product after it has been purchased.
Expectancy disconfirmation model
If performance > expectations → satisfaction.
If performance < expectations → dissatisfaction.
Voice response
Direct complaints to company.
Private response
Telling others, boycotting.
Third-party response
Posting reviews, legal action.
Social Scoring
Both customers and service providers increasingly rate one another’s performance. (e.g., Uber, Airbnb).
Mental Accounting
How choices are framed affects decisions.
Decisions are made based on how a problem is posed, and wether it is put in terms of gains or losses
Decision Making Biases
- Sunk-cost Fallacy
- Loss Aversion
- Framming effect
- House money effect
- Choice Arquitecture
Sunk-cost Fallacy
Having paid for something make us reclutant to waste it
Loss Aversion
Losses feel worse than equivalent gains.
Framing effect
People react differently to the same choice depending on how it’s worded.
House money effect
People take more risks with money they feel they got “for free.”
Choice architecture
How choices are presented matters (e.g., organ donation defaults).
Prospect Theory
People evaluate outcomes as gains/losses from a reference point.
Losses hurt more than gains feel good.
People are risk-averse with gains, risk-seeking with losses.
People overweight small probabilities (e.g., buying lottery tickets).
Decision Polarization
Individuals on groups become more extreme in their decisions or opinions after discussing them.
Group discussion pushes opinions to more extreme positions.
More people are involved in a decision, each individual is less accountable for the outcome, so diffusion of responsibility occurs.4
Deindividuation
Individuals identities get sumerged within a group
Bandwagon effect (herd mentality)
People conform just because others are doing something.
Social Loafing
People put in less effort when working in groups
5 Roles in Group Decisions
- Initiator
- Gatekeeper
- Influencer
- Buyer
- User
Initiator
Starts the idea or need
Gatekeeper
Controls the information flow
Infleuncer
Tries to sway the decision
Buyer
Makes the actual purchase
User
Uses or consumes the product
Norms
Informal rules that guide what is right or wrong
Social Norms
Standards or acceptable behavior withing a group
Normative Influence
Norms guide what is considered acceptable in a group or situation. People often change their behavior to fit in
Descriptive Norms
Describes what most people do
Injunctive Norm
Indicate what is approved or disapproved by socity
Dynamic Norms
Show how behavior change over time
Conformity
A changed in beliefs or actions due to real or imagined group preassure
Reactance
Also called “Boomerang Effect”
Negative emotional state where consumers feel they are losing their freedom of choice
Red sneakers effect
People with non-comforming behaviors (like wearing red sneakers in a business setting) may be seen as more powerful or competent—if others think it’s on purpose.
Factors that influence comformity
- Cultural Pressure
- Fear of Deviance
- Commitment to Group
- Group Size & Unanimaty
- Suceptibility to Interpersonal Influence
- Environmental Cues
Conformity - Cultural Preassure
Different cultures encourage conformity to a greater or lesser degree
Conformity - Fear of Deviance
Avoid rejection or punishment by the group.
Conformity - Commitment to a group
More commitment = more likely to conform.
Principle of Least Interest: Those less invested hold more power
Conformity - Group size & unanimity
Larger, unanimous, and expert groups → higher pressure to conform.
Conformity - Susceptibility to interpersonal influence
This trait refers to an individual’s need to identify with or to enhance their image in the opinion of significant others
Conformity - Environmental cues
Warm environments can increase conformity
Reference Groups
person or group that significantly influences an individual’s behavior, evaluations, or aspirations.
Social Identity Theory
Individuals have multiple “selves” that are connected to various groups.
3 Types of Reference Group Influence
- Informational Influence
- Utilitarian Influence
- Value-expressive influence
Informational Influence
Rely on a reference group for information about a consumption decision, such as brand-related knowledge or experience.
Utilitarian Influence
An individual might make a consumption choice to satisfy the expectations of a reference group
Value-Expressive Influence
Use products to demonstrate a characteristic or value that aligns with a group they identify with or aspire to.
Aspirational Reference Groups
Groups you admire or aspire to join (e.g., athletes, executives).
Membership Groups
Groups you belong to (friends, family, school clubs).
Dissociative Groups
Groups you want to avoid being associated with (e.g., rival fanbases)
Factors that Increase Group Influence
- Propinquity
- Mere Exposure
- Group Cohesiveness
Propinquity
Physicall Closeness = More Influence
Mere Exposure
Familirity increases likelihood
Group Cohesiveness
Tight-knit groups have more influence
Social Power
The capacity one have to alter the actions or outcomes of others
Types of Social Power
- Referent Power
- Information Power
- Legitimate Power
- Expert Power
- Coercive Power
Referent Power
Wanting to become like someone we admire (celebs, influencers).
Information Power
High expertise power, someone holds power because they have information others might not have
Legitimate Power
Power from recognized authority (e.g., doctor in a lab coat).
Expert Power
Power from specialized skill or knowledge (e.g., product reviewers).
Coercive Power
Influence through fear or pressure (rare in marketing, but seen in fear appeals).
Brand Community
Groups formed around shared usage or love for a brand (e.g., Harley-Davidson riders, Peloton users).
Opinion Leaders
People who are knowledgeable about certain consumption categories and whose advice others take seriously.
Two-Step Flow Model of Influence
Proposes that a small group of influencers are responsible for the dissemination of information, because they can modify the opinions of a large number of other people.
Opinion leaders absorb information from media → then spread it to others.
Mass connectors
Influential members of social media networks
Types of Opinion Leaders
- Market Maven
- Surrogate Consumers
- Influencer (Power users)
Market Maven
Type of Opinion Leader
Persons that serves as a source of informatio about market place activities
Surrogate Consumers
Professionals who make purchasing decisions on behalf of others (e.g., interior decorators, stockbrokers).
Influencers
Highly followed social media users who shape opinions (e.g., fashion bloggers, tech reviewers).
The Self-Designated Method
Ask people if they consider themselves to be opinion leaders. (May be biased!)
Buzz Marketing
Activities undertaken by marketers to encourage consumers to spread WOM about the brand.
Strategy to generate organic conversations about a brand (e.g., viral challenges, teaser campaigns).
Nodes
Members of a network
Media Multiplexity
Communications in social media travels in many directions , and across multiple platforms
Megaphone effect
Regular users now have a global audience to spread opinions.
