Part 2 Flashcards
Define multiple unit pricing and provide an example in a retail setting.
A form of promotional pricing where the product is priced for more than one unit, such “as two for one” sale.
For example, “On Sale, 4 Rolls of Bathroom Tissue for $2″ vs. “On Sale, $0.50/roll” In this particular experiment, the multiple unit pricing performed 40% better than the single unit pricing, even though the sale value is exactly the same. The brain uses the number four as the anchor.
What role does mental accounting play in decision making?
categorizing spending and saving decisions into “accounts” mentally designed for specific consumption transactions, goals, or situations; vacation account, emergency account
Define framing and provide an example in a marketing context
The initial reference point in the decision process.
200 saved or 50% chance 400 saved
What is the difference between compensatory and noncompensatory decision rules? Provide an example of each
compensatory- the consumer trades off one characteristic against another; SW
noncompensatory- selecting a product or service on the basis of one characteristic or subset of characteristics regardless of the values of other attributes; Ford, never Chevy
Describe elimination by aspects; how is it related to noncompensatory decision rules?
(non-c) attributes ordered by importance; alternatives acceptable on first attribute proceed to next attribute
Define and provide an example of prospect theory
losses have more influence than gains. consumers have stronger reactions to price increases than price decreases
What role does the endowment effect play on the value of an item?
people ascribe more value to things merely because they own them.
garage sales- price goods higher because you own them
How might a customer make a decision between two products that cannot be compared directly?
Consumers use an alternative-based strategy OR an attribute-based strategy.
Alternative-Based (top-down processing): overall evaluation, may use pros & cons
Attribute-Based (bottom-up processing): consumers form abstract representations to help them compare options
What are two decision characteristics that affect high-effort decision making?
info availability- the amount, quality, format of info
trivial attributes- attributes that not necessary but pushes a person to purchase
How does a decision made in a group context differ from a decision made for an individual who is alone?
when in the presence of a group, we tend to use different decision-making criteria, what image do we want to convey, selecting a choice that minimizes the likelihood of risk or regret of the group, and how we gather that info from the group members
Define representative heuristic and provide an example
comparing a stimulus with the category prototype; what does “made in china” mean to you?
quality of Apple products? (i.e., Apple = high quality is a common belief among consumers)
Define availability heuristic and provide an example.
basing judgments based on events that are easier to recall. hungry so think to eat at AMU
Define base-rate information and provide an example
how often an event really occurs on average. John is a man wearing goth clothes with long black hair listening to heavy metal music. is he likely to be Christian or Satanist?
Define the law of small numbers and provide an example
info obtained from a small number of people that represents the total population. go thru town, first 10 people see are children, come to conclude there are no adults in the town
What is satisficing, and what is an example of a company that seems to do well when customers use satisficing as a decision making tool
low-effort decision making, selecting a brand that satisfies a need even tho might not be best brand; subway eat fresh
