The Process of Decision Making Flashcards
What are the steps in decision making
- Problem recognition
- Information search
- Evaluation of alternatives
- Product choice
- Outcomes
What is problem recognition
Occurs when consumers perceive a difference between their actual/current state of affairs and a desired or ideal state
Two types of problem recognition
- Opportunity recognition : due increase in IDEAL state - seeing friends tv, better than yours
- Need recognition: due decrease in ACTUAL state - running out of milk
How do marketers stimulate problem recognition
- Create a new ideal state - you should be doing this, imagine how good you’ll look…
- Create dissatisfaction in actual state - you think you’re cleaning properly, but actually…
-Position offering as a solution to the problem
How do marketers influence problem recognition
Educate consumers
Remind consumers
Exaggerate a problem - infomercials
Create/exploit insecurity
What is information searching
Consumers attempt to obtain appropriate information to make a reasonable decision
Types of search
Where - internal vs. external
How? - deliberate vs. accidental
When? Pre-purchase vs. ongoing
What is an internal search
Retrieving information from long-term memory about products or services to help with problem solving
-Brands, attributes, evaluations and experiences
-Used more for LOW INVOLVEMENT products
Two must for successful internal search
- Correct CATEGORIZATION - is your product a member of the right category
- Correct RETRIEVAL - will your product be remembered
-Provide cues at encoding that will be present at retrieval
What is an external search
Process of collecting NEW information from outside sources
-HIGH INVOLVEMENT PRODUCTS
Factors that have an influence on how much we engage in external search
-Motivation to process information
-Ability to process information
-Opportunity to process information
Shortcoming - Confirmation bias
-Tend to ask questions that will confirm our hypothesis
-Tend to find evidence to support our existing beliefs and ignore evidence that goes against it
Types of perceived risks
- Monetary risk
2.Functional risk - Physical risk
- Social risk
- Psychological risk
Methods are evaluating alternatives
1.Evoked set
2. Multi attribute
3. Affect referral
Evoked set method
- Evoked: anything we are willing to consider - comes up in internal or external search
- Inept: brands consumers are aware of but will not consider as an alternative
- Inert: brands consumers are not aware of - so little info cannot make judgement
What is product categorisation
How consumers organise their beliefs about products or services
- Product in consumer evoked set are likely to be those that share some similar features
-Important to understand how consumers cognitively represent this info in a set of beliefs + the way we organise these beliefs in our mind.
System 1
Good mood
Reliance on intuition
Creative Gullible
Prone to logical errors
System 2
Bad mood
Vigilance
Suspicion
Analytical
Lose touch w/ intuition
Loss aversion
What you learn from going with a competitor
Leads to SUBOPTIMAL CHOICES
The Attraction effect
-Increase affordability
-Attraction effects are likely when there is an asymmetrically dominated decoy
-They are unlikely to be observed when the decoy is universally dominated.
Nudge
Any aspect of choice architecture that
