Session 8 Consumer Behavior II

Question 1

Psychological Influences of Consumer purchase decision process

Answer 1

1.Motivation

2.Personality
 A consistent set of key traits
 Self Concept
    - Stems from idea of “multiple
selves” (ex.) 3 types:
1. actual self concept
2. ideal self
3. ideal social self

3.Perceptions

4.Learning
 Behavioral learning perspective
- Environment controls behavior
 Cognitive learning perspective
- Consumers control behavior through information processing & decisionmaking (seeking expert opinions)
- Focuses on internal mental processes
- Views consumers as actively seeking and using information to understand and master their environment
- Memory is critical to this process

Question 2

Types of Knowledge Structures (2)

Answer 2

2 S’s
Schema
- An associative network of interrelated meanings
that represent a personʼs declarative knowledge
about a concept.

Script
- An associative network of knowledge that
contains procedural knowledge about a concept.

Question 3

Non-Normative Models & Theories

Answer 3

 How do you think about consumers?

 How do consumers think?

Question 4

How you we think about consumers?

Answer 4

• judgements are based on own position and information out there– that biases there decision
  This formulates the predicted position of target

Question 5

How do consumers think?

Answer 5

 “Frames” can influence them
   - An Alternative to Utility Theory:“Frames” Matter (ie. Beer at the beach, how question is phrased)
    - prospect theory function
 The present is very powerful   
    - The future is hard to think about 
    - Future Self-Continuity

Question 6

Normative model

Answer 6

• 5 step consumer purchase decision process
• Rational approach
• Standard economic theory

Question 7

The Standard Economic Theory

Answer 7

 Customers assess options relative to their net worth.

 Pick the best option to maximize utility across all possible actions, times.

Question 8

 Motivational Approaches

Answer 8

People are less than rational, driven often by

unconscious and uncontrolled motivations.

Question 9

Behavioral Approaches

Answer 9

People, because of limited processing
capacity, use simplified ways of making
decisions. (e.g., anchoring, availability)

Question 10

An Alternative to Utility Theory:

“Frames” Matter

Answer 10

CB???

Beer on beach example

Question 11

Prospect Theory Value Function (was on exam) DRAW OUT

Answer 11

3 Tenets of prospect theory:

1. all decisions are made in relation to reference points.
2. diminishing marginal utility as loss/gain increased-> gaining 100 dollars does not feel 10 times better than gaining 10 dollars.
3. Losses feel larger than gains

Question 12

Non-normative models and theories

Answer 12

• Prospect theory value function

- The continuum of views

Question 13

Applications of Prospect Theory

Answer 13

 Price increases hurt more than price decreases
help.
- Elasticity to price changes: You cannot “make-up” for a 5% price increase by an equivalent discount of 5% later on
 Labels on products
- 75% lean versus 25% fat
 Because of loss aversion, the status quo is (too)
often chosen:
- Check boxes on web sites:

Question 14

"The continuum of views" 
ON EXAM (Draw out)

Answer 14

1. rational approach- normative model
2. bounded rationality- hueristics- able to think normatively but only sometimes
3. motivational appraoches- nonnormative, psychological approach to decision making

Question 15

How do consumers think?

Future Self-Continuity Hypthesis

Answer 15

Future Self-Continuity Hypothesis

The way the future self is perceived should be an
important predictor of decision-making

• Future self seen as stranger= Low motivation to save
• Future self seen as similar= High motivation to save
• At the extreme, the future self may seem like a different person

Question 16

A Vivid Future Self

Answer 16

“A failure of belief” and an inability to vividly
imagine future wants/desires can lead to poor
choices

Vivid examples affect behavior
e.g.,Tim Russert and heart checkups,
Pulmonologists and smoking

Question 17

Organizational Decision Making

Answer 17

 Recognize that organizations are still
customers…
 BUT, they tend to be more “rational” than
individual consumers…
 AND, they tend to make decisions in groups.
 Read book chapter 6, on Organizational Decision
Making…

Question 18

cognitive dissonance

Answer 18

postpurchase behavior
. Cognitive dissonance is most likely to occur after a consumer makes a purchase
- play up good things and play down bad things, find things wrong with alternatives to make self feel better about purchase decision

Question 19

Schema

Answer 19

• An associative network of interrelated meanings
  that represent a personʼs declarative knowledge
  about a concept.

Question 20

Script

Answer 20

• An associative network of knowledge that

contains procedural knowledge about a concept.