"managerial Relevance" Flashcards
Linking heuristics with decision making
Decisions are often complex and difficult, individuals are bounded rational, they have to make decisions under several constraints:
Limited info / limited cognitive resource (time attention, memory) and limited motivation.
This is where heuristics are used which are cognitive shortcuts to make decisions quickly and efficiently. Eg the default effect bla or decoy, anchoring or adjustment
Loss aversion relevance
So potential losses motivate more than potential gains, so selling insurances you would use this theory to entice people to buy. Would you risk loosing your house if you don’t get this insurance
Managerial relevance of 4 weapons of influence
Reciprocity - use of not so free samples or gifts from sales person makes people feel due to society and norms to repay it. Use it as advantage.
Commotiment and consistency - the saying few their own legs so people add new reasons to justify and support a prior commitment, eg use of down payments, newsletters
Social proof - use of peer recommendations and peer observations, like bestseller lists, served more than .. customers.
Scarcity - examples like limited editions, limited stock, can lead to contagious competitiveness so competing with others for them creating that situation. Need for constant scarcity
International and culture differences
Need to Tailor marketing strategies to the differences in decision making of relevant target groups. It requires to clearly define the target group. That is to take into account difference in culture and consumption patterns and to tailor marketing strategies accordingly
Exposure
Consumers ultimately control their exposure to marketing stimuli. Eg avoiding commercials. Companies need to generate the need to activity create exposure to marketing stimuli.
Attracting attention from personal relevant, pleasant, surprising or easy to process. Problem is a stimulus loses its attention betting abilities as it gets more familiar.
Perceiving a difference: Weber’s law
Webers law is a noticeable change in a stimulus is a constant ratio of the original stimulus, meaning the stronger the initial stimulus the greater the additional intensity needed for the stimulus to be perceived as different.
Managerial relevance is should an increase be noted by the consumer or not eg product size reduction
Knowledge content and linking to brand image
Schema is an associative network linked to an object or person. Brand image is a schema that captures what a brand stands for and how consumers view it. Brand with favourable unique and salient associations have higher brand equity, sell for higher prices and have more loyal customers. Need to identify and understand the various favourable, unique and salient associations that consumers link to particular brands (and categories)
Fields of integration
Formal integration like form and colour codes
Content integration - brand associations, information
Proces integration - eg product returns, customer service
All three are about providing a consistent and experience of the brand - links to the customer journey how you keep them how you get them (consideration set)
Cognitive dissonance
Discrepancy of beliefs can lead to cognitive dissonance.
Cognitive dissonance is the feeling of discomfort when we hold contradictory beliefs (eg a marketing message is different from our belief)
Consumers solve discrepancy by changing attitude, justify by acquiring info to support, justify by ignoring info.
Generating belief discrepancy can create even more counter if consumers have strong beliefs
Influencing cognitive based attitudes using message source
Message needs source credibility; extent to which the source is trustworthy an expert or has status / reputation. Important factors like trustworthiness (word of mouth, product reviews), expert (scientist), status (ceo) and company rep(is it strong or weak).
Marketing messages must be credible to generate support arguments, to restrict counter arguments and avoid source derogations
Motivation
Motivation is the inner state of arousal that provides energy needed to achieve a goal.
Cognitive models of attitude formation: consumers exert a lot of effort to process a message and form attitudes based on their cognitive responses. But in many cases consumers put in little effort to process a message. They form attitudes based on simple associations; affect plays a crucial role.
Affect relevance is the emotional appeal of the message; positive emotions, negative emotions
Problem recognition
Problem recognition is the difference of the actail state and ideal state.
The relevance of this is it’s important to position a product as the solution to the product
Diagnostic information
Diagnostic info is info about a product/ brand attribute that helps to distinguish between brands ( eg if one brand is cheap and the other is expensive, price is a diagnostic info)
Diagnostic info mainly influences internal and external search of info in the consumer decision process. As it helps to discriminate / distinguish between brands it mainly drives purchase behaviour / influences brand choice
Deciding which brands to consider
Awareness set = set of brands of which customers are aware of
Consideration set = subset of top of the mind brands
Inert set = when brand you usually go for isn’t present what would you go for instead
Inept set = brands that you wouldn’t use no circumstance
When brand positing, when brand image you need to be in the consideration set
Compensatory models
Compensatory is a positive attribute can compensate for a negative one, eg cost benefit analysis.
Non compensatory models require less cognitive effort
Consumers might first use non compensatory models (to decrease large consideration sets) then compensatory models
