Problem Recognition-Decision Making-Satisfaction Flashcards

Question

What is MAUM?

Answer 1

- MAUM stands for: Multi-Attribute Utility Model - MAUM is a decision-making framework that explains and predicts how consumers evaluate and choose products/services based on the evaluation of multiple attributes

Answer 2

- The MAUM Model is derived from fundamental Economics principles (utility maximization behaviors) - With the MAUM, the most important (highly rated) attributes have significant impact on the choice outcome - The MAUM is highly predictive of actual choices made by consumers (when followed strictly and consistently) - The MAUM predicts choices that are considered “normatively accurate” when repeated across consumers

Answer 3

- Importance Weights (aka "Product Attribute") [Σ1] - Σ1=Sum of all the Weights up to 1, or 100% - Product Evaluation/Ratings [1-9 Scale, where 9 is best]

Answer 4

To Predict Choices, we multiply Importance Weights and Product Evaluations by

Answer 5

We can use MAUM when making a complex decision, like: - Buying a House/Car - Choosing Higher Ed Schools - Candidate Applications - Job Positions - Relationship Commitment

Answer 6

The Limitations of MAUM for Decision-Making/Choices are: - Complexity: eliciting judgments, defining & assigning weights - Subjectivity: decision-makers may have different preferences and interpretations to determine attribute/weights - Expertise Required: effective application to define/determine appropriate attribute/weights - Lack of Date Requirements - Can Involve Uncertainty and/or Missing Information

Answer 7

If MAO is Low, consumers use Heuristics (shortcuts; simple rules of thumb) for many choices we make; - So, the “Save Effort” goal is very active

Answer 8

When Heuristics are used, consumers may take shortcuts and even skip entire steps in the Standard Decision-Making Process, which typically results in a tradeoff between the Accuracy of the Decision and the Effort required to make the Decision

Answer 9

1) Attitude-based Heuristics 2) Attribute-based Heuristics 3) Alternative-based Heuristics

Answer 10

Attitude-based Heuristics are a category of decision-making shortcuts in which decisions are based primarily on EXISTING ATTITUDES toward a product/service rather than on carefully evaluating all available information. - Notable Examples Include: - The Stored Attitude Heuristic - The Frequency Heuristic

Answer 11

The Stored Attitude Heuristic involves simply using attitudes stored in memory to make a choice, or selecting an option the consumer likes best (based on the stored attitude) - EX: "When choosing a candy to buy from the store, I will get Nerd Clusters because I like them and know they are good in any mood, at any time."

Answer 12

The Frequency Heuristic involves evaluating whether a product is “good” in isolation (not relative to other brands), simply considering the good vs. the destructive features with no adjustments for the importance of features - EX: Pros & Cons List

Answer 13

Attitude-based Heuristics are limited by attitudes that aren't always comparable because they don't adjust/account for the importance of features - Product EX: Reese's Peanut Butter Cups: - "I love cups and the taste of chocolate and peanut butter, but I have a peanut allergy. That's 3 Pros and 1 Con, so I'll buy them. Unfortunately, I ended up in the hospital for my peanut allergy."

Answer 14

Attribute-based Heuristics is a category of decision-making shortcuts where decisions are made by focusing on a reduced set of attributes of a product/service, rather than carefully evaluating all available information; comparing alternatives side by side, attribute by attribute - Notable Examples include: - The Lexicographic Heuristic - The Elimination-by-Aspects Heuristic

Answer 15

The Lexicographic Heuristic compares alternatives/options by the most important/highest level of attributes an individual has selected - EX: Candy Bars from MAUM Example (Reese's, 3 Musketeers, Baby Ruth): - Identify the most important attribute (ie, Chocolate) - Then solely focus on this important attribute - Then determine which of the products performs the highest on this important attribute (ie, we choose Reese's PB because it had the highest "Chocolate" rating)

Answer 16

The Elimination-by-Aspects Heuristic involves ordering attributes by importance (using weights): - This process compares options beginning with the most important and eliminating options below one's acceptable cutoff, continuing until only 1 option remains - EX:

Answer 17

Under this form of processing, the attribute(s) drive decision making. - Compare alternatives by most important attribute

Answer 18

Alternative-based Heuristics are a category of decision-making shortcuts where decisions are made primarily by comparing available options directly against each other (often by focusing on salient attributes to quickly eliminate less desirable choices) rather than comprehensively evaluating all individual attributes of each product/service. - Notable examples include: - The Conjunctive Heuristic - The Satisficing Heuristic

Answer 19

The Conjunctive Heuristic sets cutoffs (the minimum acceptable levels) for each feature/attribute and selects the first product/service that meets the minimum cutoff levels. - EX: Candy Bars from MAUM Example (Reese's, 3 Musketeers, Baby Ruth): - Identify the most important attribute (ie, Chocolate) - Then solely focus on this important attribute - Then determine which of the products performs the highest on this important attribute (ie, we choose Reese's PB because it had the highest "Chocolate" rating)

Answer 20

Satisficing is where consumers try to select the first option/alternative that's suitable/acceptable, satisfying a need, even though it may not be guaranteed to be the best choice

Answer 21

- Decisions with very few suitable options (ie, finding the "perfect" pair of jeans) - Decisions that aren't that important/don't matter/have high stakes (ie, buying an extension cord that does the job)

Answer 22

Choosing the alternative(s) that meet the need drives the decision-making.

Answer 23

Brand Loyalty is a shortcut where consumers choose a brand repeatedly instead of its competitors based on STRONG PREFERENCES from past, positive consumption experiences with the brand - Accordingly, the trust associated with a brand (ie, brand loyalty) reduces consumers’ perceptions of risk - EX:

Answer 24

Habitual Heuristic occurs when consumers consistently choose a product/brand over its competitors based on HABIT/HABITUAL BEHAVIOR to save effort and time, while also maintaining consistency with previous behaviors, rather than due to strong preferences - EX: "Why do you choose the Laundry Detergent you do?"

Answer 25

The Representativeness Heuristic occurs when consumers make purchase decisions by comparing a product to a leading category item, assuming they are generally equivalent, but it isn't it just seems that it is. - However, this perception of similarity leads to the (mistaken/often incorrect) assumption that the 2 products will offer similar quality, functionality, and performance.

Answer 26

Reliance on Norms is a shortcut where consumers make purchase decisions based on what others are purchasing around them, often based on the perception of scarcity or FOMO, rather than by carefully evaluating all available information. - Make decisions based on what everyone else is buying - EX: Dr. Johnson's family gathered around unremarkable TVs on Black Friday at Best Buy when suddenly other shoppers began to arrive. He grabbed a couple and placed them in his cart, then people started pulling TVs without even looking at them.

Answer 27

Reliance on Affective Responses ("the gut decisions") occurs when consumers make purchase decisions based primarily on feelings/emotions rather than carefully evaluating all available information. - This decision-making heuristic is based on feelings and typically used to reduce or avoid negative emotions. - As a result, this often leads to quicker decisions, however, they are much less rational.

Answer 28

The Mental Accounting Bias describes how we have different mental accounts for different types of purchases. More specifically, we spend money differently for different categories of purchases (such as vacation versus everyday spending)

Answer 29

From Mental Accounting Bias, we learn that in Decision-Making, we should be aware of how we compartmentalize things and consistently spend across categories.

Answer 30

Prospect Theory describes how 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 certain gains (we are more risk averse with gains). - Stated simply, "Losses loom larger than gains."

Answer 31

We studied the "Plant Closing" Scenario to explore Prospect Theory.

Answer 32

From Prospect Theory, we learn that in Decision-Making, we should consider both options as if they were framed as a gain versus a loss

Answer 33

Selecting & Rejecting Bias describes that there are differences in making the same choice if we are rejecting an option as opposed to selecting an option. - When we are selecting (awarding custody) and we have to justify our choice, we focus our attention on the positive dimensions of the 2 options to determine which is better – Parent B is better on positive dimensions. - However, if our decision involves rejecting (denying custody) and we have to justify our choice, we focus on the negative aspects of the options – Parent B has more negative options than Parent A. - Interestingly, parent B is both more likely to be awarded and denied custody, depending on the way the question is framed.

Answer 34

We studied the "Child Custody Case" Scenario to explore Selecting & Rejecting Bias.

Answer 35

From Selecting & Rejecting Bias, we learn that in Decision-Making, ‘selecting’ is an option and is the default mode for decision-making. Accordingly, we should ask ourselves if we would make the same decision if we were ‘rejecting’ an option instead. If not, bias may be entering our decision-making process.

Answer 36

Discounting Discrepancies is

Answer 37

We studied the "A Trip to the Store" Scenario to explore Discount Discrepancies.

Answer 38

The Main Outcomes of the Study on Discounting Discrepancies are: - Situation A: 90% will travel for the watch - Situation B: 50% will travel for the video camera

Answer 39

From Discounting Discrepancies, we learn that in Decision-Making, how we measure things matters! - For example, how do we/you measure success? Based on Relative Terms or Absolute Terms? - Accordingly, we should decide how we evaluate our spending by making appropriate conversions and being consistent in our measurements.

Answer 40

Anchoring & Adjustment Bias describes our tendency to anchor on guesses and not sufficiently adjust away. - The “guess” anchors the estimates of the individual trying to make an intelligent estimate. - The anchor prevents people from moving far away from the initial guess as a reference point.

Answer 41

We studied the "Kilometer of Highway" Scenario to explore Anchoring & Adjustment Bias.

Answer 42

From Anchoring & Adjustment Bias, we learn that in Decision-Making, there are times when we limit ourselves (and what we think is possible) based on anchors imposed by ourselves or others. - Accordingly, we should try to generate multiple plausible decision scenarios, which can help us to break free from being anchored!

Answer 43

The Attraction Effect (or the Decoy Effect) describes a phenomenon in which an initial choice preference changes because a 3rd option (asymmetrically dominated) is introduced into the choice set.

Answer 44

We studied the "Apartment Selection" Scenario 1 to explore the Attraction Effect.

Answer 45

Asymmetric Dominance is an option that's considered when it's inferior in all (or almost all) respects to one choice option, but when compared to the other choice option, it is seen inferior in some respects and superior in others.

Answer 46

The Compromise Effect describes a phenomenon in which a choice option gains share in a choice set because it is perceived as an intermediate (middle) option rather than an extreme option.

Answer 47

We studied the "Apartment Selection" Scenario 2 to explore the Compromise Effect.

Answer 48

From the Compromise Effect, we learn that when a Decision-Making task is cognitively challenging, consumers often pick the middle option to avoid extremes, since it is often easier to justify the decision.

Answer 49

Satisfaction is the feeling that results when consumers make a positive evaluation and/or feel happy with their purchase decisions

Answer 50

- Food Manufacturing - Full-Service Restaraunts - Breweries - Cell Phones

Answer 51

- Internet Service Providers - Subscription TV Service - Video-on-Demand Service - Gas Stations - Hospitals

Answer 52

Satisfaction matters so much to firms and marketers because, on average, it costs MUCH more to acquire a new customer than it does to keep an existing, satisfied customer!

Answer 53

The Characteristics & Behaviors of Satisfied Customers are seen in those who are more likely to: - Pay Higher Prices - Make Repeat Purchases - Be Brand & Store Loyal - Share/Tell Others About their Experience/Satisfaction Levels

Answer 54

Post-Decision Dissonance is a feeling of anxiety concerning whether the correct decision was made; after making a decision, consumers may feel uncertain about whether they made the right choice - EX:

Answer 55

Consumers deal with Feelings of Post-Decision Dissonance by: - Bolstering their Choices - Minimizing Alternatives

Answer 56

Post-Decision Regret is a feeling that one should have decided upon a different option; this occurs when consumers perceive an unfavorable comparison between the performance of the chosen option and the performance of the decisions not chosen - EX: Buying the wrong car

Answer 57

Consumers deal with Feelings of Post-Decision Regret by: - Justifying their choices - Minimizing perceived risks - Actively seeking out positive information (i.e., reviews & testimonials) about their purchase - Postponing decisions to avoid feeling regret by creating decision rules

Answer 58

The 3 Main Theoretical Frameworks for Understanding Satisfaction are: 1) Disconfirmation Paradigm 2) Attribution Theory 3) Equity Theory

Answer 59

The Disconfirmation Paradigm is a theoretical framework that posits how customer satisfaction is primarily determined by comparing an offering’s performance against prior expectations, with differences creating disconfirmation, which impacts satisfaction levels; Consumers enter the purchase situation with prior expectations - EX: Will Ferrel Movies, specifically "Step Brothers"

Answer 60

The Theoretical Components of the Disconfirmation Paradigm are primarily determined by comparing: - Expectations - Performance - Feelings

Answer 61

Positive Disconfirmation occurs when the consumer finds the outcome to be better than expected; This results in consumer satisfaction

Answer 62

Negative Disconfirmation occurs when the consumer finds the outcome worse than expected; This results in consumer dissatisaction

Answer 63

In the Disconfirmation Paradigm, Feelings (emotions experienced during the experience) also play a role in affecting satisfaction and dissatisfaction independently of disconfirmation

Answer 64

Disconfirmation impacts Satisfaction Levels when a consumer evaluates a product/services' performance against prior expectations.

Answer 65

Firms attempt to manage satisfaction using the Disconfirmation Paradigm by: - Providing consumers with Return Policies - Focusing on exceeding customer expectations through high performance and clear communication - Carefully setting expectations - Delivering on promises - Actively seeking ways to exceed customer expectations This proactive approach can lead to higher levels of customer satisfaction, loyalty, and positive word-of-mouth, ultimately driving business growth

Answer 66

Attribution Theory explains how individuals find explanations for events - In MKT contexts, when a product/service don't fulfill needs, consumers will attempt to explain why

Answer 67

The 3 Theoretical Components of Attribution Theory are: - Stability - Locus of Causality - Controllability

Answer 68

Stability, as a Component of Attribution Theory, asks how often the event happens and whether the event is unique or commonplace.

Answer 69

Causality, as a Component of Attribution Theory, asks who is at fault in a problem and whether it was an internal or external issue/event

Answer 70

Controllability, as a Component of Attribution Theory, asks whether the event/issue could have been prevented.

Answer 71

Consumers evaluate the components of Attribution Theory by taking credit for their successes and denying responsibility for their failures; Thus, consumers almost always blame the firm when things go wrong, even when unwarranted.

Answer 72

Self-Serving Biases explain how individuals are prone to take credit for their successes and deny responsibility for their failures - The Results: Consumers almost always blame the firm when things go wrong, even when unwarranted

Answer 73

Fundamental Attribution Error explains how people tend to attribute another person’s negative behavior to their disposition (stable traits or personality)

Answer 74

Actor-Observer Asymmetry explains how people tend to attribute the cause of their own negative behavior to the situation; Observers tend to attribute the cause of others’ negative behavior to their disposition (stable traits or personality)

Answer 75

Equity Theory focuses on the nature of exchanges between entities and their perceptions of these exchanges.

Answer 76

Theoretical Components of Equity Theory include comparing inputs vs. outputs for consumers and firms. - More specifically, for equity to occur, buyers must perceive fairness in the exchange - the perception that their inputs are equal to their outputs.

Answer 77

Consumers' Inputs include information search, decision-making effort, emotions/feelings, time, and money

Answer 78

Consumers' Outputs include satisfactory levels from a product/service they expected

Answer 79

Consumers determine Equity through fair-exchange = desirable product/service at the right price/cost; consumer-centered

Answer 80

Firms determine Equity through satisfaction/dissatisfaction levels; firm-centered

Answer 81

Possible Marketing Strategies to implement the principles of Equity Theory to achieve customer satisfaction is: - Identify ways to DECREASE consumers’ inputs when needed OR - Identify ways to INCREASE companies’ outputs when required - EX: Netflix Inconvenience Email

Answer 82

Satisfaction is so important to Firms & Marketers because satisfied customers make repeat purchases and become loyal customers, which increases their profitability

Answer 83

It's about performance and disconfirmation for consumers: - However, for certain people, satisfaction is more about perceptions of equity - Interestingly, attributions influence Disconfirmation Paradigm (DP) and Equity Theory (ET) processes for everyone - DP and ET sometimes occur together, influencing each other simultaneously

Answer 84

The behaviors, characteristics, and outcomes of Dissatisfied customers tend to: - Stop Purchasing - Complain and Spread Negative Word of Mouth

Answer 85

To Improve Customer Satisfaction and Retention, Marketers can: - effectively resolve the complaints of dissatisfied customers - Remember customers between sales (contact on other occasions) - Build trusting relationships (expertise, reliability, concern) - Monitor delivery and satisfaction - Be there when needed (service, repairs, problems) - Always go the extra mile to help them - Listen to them!!!

Problem Recognition-Decision Making-Satisfaction Flashcards

- Define & Discuss: Problem Recognition & Information Search - Outline Decision Making Frameworks & Discuss Their Impact on Consumption -Discuss Post-Decision Processes & Customer Satisfaction Frameworks