Lecture 9

Question 1

What is a decision

Answer 1

= the selection of an action from two or more alternative choices

• includes decisions about:
• > whether or not to make a purchase
• > which brand to purchase

Question 2

Explain the three levels of conscious decision-making

Answer 2

1. Extensive problem solving
   - No established criteria for evaluating the product
   - Brands to be considered in the evoked set not yet selected
   - Common when buying expensive, important or complicated products for the first time
   - Needs a great deal of information to establish a set of criteria on which to judge specific brands and corresponding large amount of info concerning each of the brands to be considered
2. Limited problem solving
   - Consumers have basic criteria for evaluation product
   - Have not fully established preferences
   - Search for additional info like ‘fine tuning’ – gather additional brand info to discriminate between brands
   - When purchasing a new, updated version of something that they have purchased before (eg. replacing a laptop with faster processor, larger hard-drive)
3. Routinised-response behaviour
   - Consumers have some experience with the product category
   - Have well-established set of criteria with which to evaluate evoked set
   - May search for a small amount of information or purchase out of habit
   - Little need for additional information

• > Infrequent: frequent purchasing
• > Unfamiliar: familiar product class or brand
• > Extensive: little thought, search or time given to purchase

Question 3

Explain the four general models of decision-making

Answer 3

1. Economic model
   - >Assumes that consumers:
   - Always make rational decisions
   - Are aware of all product alternatives, understand pros and cons of these alternatives, can select best alternative
   - > The assumption of the economic model are unrealistic because consumers:
   - Have limited knowledge and information
   - Have existing habits and preferences
   - Are often unwilling to spend the time necessary to make the ‘perfect’ decision
   - > Therefore I soon as too idealistic and simplistic, there may often be another set of motives that could account for a consumers behaviour
2. Passive model
   - Opposite of economic model
   - Assumes consumers do whatever marketers tell them to do
   - Consumers perceived as implusive and irrational purchasers, ready to buy according to marketing efforts (object to be manipulated)
   - Model is unrealistic because consumers can be active and informed in their purchase decisions
3. Cognitive model
   - Falls between extremes of passive and economic models
   - Views consumers as a thinking problem solver
   - >Focuses on the process by which consumers seek and evaluate information about selected brands and retail outlets
   - > Consumers viewed as information processors that leads to formation of preferences and ultimately purchase intentions
   - Embraces the concept of bounded rationality
   - >Consumers are not rational in an economic sense but strive to make the best decisions given their limitations
   - > Consumers develop mental short-cuts (heuristics) to ease the burden of decision-making (unlikely to attempt to obtain all available information about every choice but rather seek sufficient information)
   - May use decision rules to cope with exposure to too much information (information overload)
4. Emotional model
   - Certain feelings may become associated with specific purchases
   - For such purchases, consumers spend less time researching and evaluating alternatives With various levels of automaticity
   - Possessions and beliefs serve to preserve a sense of past or play a meaningful role in the purchasing decision-making so more likely to buy things on an impulse
   - >When making an emotional decision, tend to buy impulsively rather than carefully earching, deliberating and evaluating alternatives
   - > Moods also important to decision making (emotion is a response to a particular environment), mood is an unfocused pre-existing state already present when a consumer experiences an advertisement, brand or product
   - > Influences when consumers shop, where they shop and whether it is alone or with others, also likely to influence how the consumer responds to actual shopping environments (those in a positive mood recall more information about a product than those in a negative mood)
   - >Those in a positive mood typically employ a mood maintenance strategy that avoids investing cognitive effort in any task unless it promises to maintain or enhance positive mood