Unit 7 - Judgments and Decision-Making

Question 1

Decision Marking Process

Answer 1

1. Problem Recognition
2. Information Search
3. Evaluation of Alternatives
4. Product Choice
5. Post-Purchase Evaluation

Question 2

We do more extended processing in situations that

Answer 2

arouse negative emotions due to conflicts among the available choices.

Question 3

product categorization

Answer 3

a crucial determinant of how a product is evaluated. These classifications derive from different product attributes, including appearance, price, or previously learned connections.

Question 4

levels of categorisation

Answer 4

1. basic level category
2. superordinate category
3. subordinate category

Question 5

Basic level category:

Answer 5

the most useful in classifying products. At this level, the items we group together tend to have a lot in common with each other, but still permit us to consider a broad enough range of alternatives

Question 6

Superordinate category:

Answer 6

more abstract.

Question 7

Subordinate category:

Answer 7

it often includes individual brands.

Question 8

Positioning of a product.

Answer 8

The success of a positioning strategy often hinges on the marketer’s ability to convince the consumer that their product should be considered within a given category.

Question 9

Strategic implications of product categorisation → location of products in a store

Answer 9

• product categorisation can affect consumers’ expectations
• if products do not clearly fit into categories this may diminish our ability to find them or work out what they are meant to do once we have found them

Question 10

Evaluative criteria:

Answer 10

are the dimensions we use to judge the merits of competing options.

Question 11

Determinant attributes:

Answer 11

are the features we actually use to differentiate among our choices.

Question 12

A company’s reputation for

Answer 12

corporate social responsibility is emerging as one of the most important determinant attributes when people choose among brands.

Question 13

We can describe the processes we use when we are giving more thought to these decisions by dividing the types or rules we use into two categories:

Answer 13

compensatory and non-compensatory.

Question 14

Non-compensatory decision rules: (types)

Answer 14

we use them when we feel that a product with a low standing on one attribute cannot compensate for this flaw by doing better on another attribute.

Question 15

Non compensatory decision rules

Answer 15

1. The lexicographic rule:
2. The elimination-by-aspects rule:
3. The conjunctive rule:

Question 16

Compensatory decision rules:

Answer 16

give a product a chance

to make up for its shortcomings.

Question 17

Simple additive rule:

Answer 17

the consumer merely chooses the alternative that has the largest number of positive attributes.

Question 18

The conjunctive rule:

Answer 18

The decision-maker establishes cut-offs (limits) for each attribute. They choose a brand if it meets all of the cut-offs, while failure to meet any one cut-off means they will reject it.

Question 19

The elimination-by-aspects rule:

Answer 19

The buyer also evaluates brands on the most important attribute.

Question 20

The lexicographic rule:

Answer 20

Consumers select the brand that is the best on the most important attribute selected.

Question 21

Compensatory decision rules: (types)

Answer 21

1. Simple additive rule

2. Weighted additive rule

Question 22

Post-Purchase Evaluation

Answer 22

Post-purchase evaluation closes the loop. It occurs when we experience the product or service we selected and decide whether it meets (or maybe even exceeds) our expectations.

Question 23

If a person is not happy with a product or service, what can be done? One or more possible courses of action can be taken:

Answer 23

1. Voice response: Appeal directly to the retailer for redress (for example, a refund).
2. Private response: express dissatisfaction about he store or product to friends and boycott the store.
   • Careful with Word Of Mouth (WOM) and retailer reputation.
3. Third-party response: legal actions can be taken against the merchant, register a complaint with the Ombudsman or, perhaps, write a letter to a newspaper.

Question 24

Habitual decision-making

Answer 24

is formed by all those choices that we make with little or no conscious effort. Many purchase decisions are so routinised that we may not realise we have made them. Researchers call this process automaticity.

Question 25

Purchase momentum:

Answer 25

occurs when our initial impulse purchases actually increase the likelihood that we will buy even more (instead of less as we satisfy our needs). As an impulse to keep on buying.

Question 26

Inertia:

Answer 26

it involves less effort to throw a familiar package into the cart.

Question 27

Brand loyalty:

Answer 27

it describes a pattern of repeat purchasing behaviour that involves a conscious decision to continue buying the same brand.

Question 28

Priming:

Answer 28

cues in the environment that makes us more likely to react in a certain way even though we’re unaware of these influences.

Question 29

Framing:

Answer 29

how we pose the question to people or | what exactly we ask them to do.

Question 30

Sunk-cost fallacy:

Answer 30

if we’ve paid for something, we’re more reluctant to waste it.

Question 31

Behavioural economics

Answer 31

focuses on the effects of psychological and social factors on the economic decisions we make –and many of these choice are anything but ‘rational’.

Question 32

Nudge:

Answer 32

is a deliberate change by an organisation that intends to modify behaviour can result in dramatic effects.

Question 33

Heuristics:

Answer 33

mental rules-of-thumb which range from the very general (higher-priced products are higher- quality products’ or ‘buy the same brand as I bought last time’) to the very specific (buy Tate and LyleSilver Spoon, the brand of sugar my mother always bought for her baking).

Question 34

Most prevalent heuristics we commonly use:

Answer 34

1. Co-variation: relying on a product signal Product signal: we infer hidden dimensions of products from attributes we can observe. thE visible element acts as a product signal that communicates some underlying quality 2. Country of origin as a product signal A product address matters. In general, people tend to rate their own country’s products more favourably than do foreigners, and products from industrialised countries are rated better than are those from developing countries. 3. Market beliefs: if I have to pay more for it? We are constantly forming assumptions about companies, products and stores. These market beliefs then become the short cuts that guide our decisions.

Question 35

on Familiar brand names

Answer 35

Branding is a marketing strategy that often function as heuristic. When you fall in love with a brand, it may be your favourite for a lifetime.

Question 36

Many of our decisions are driven by our emotional responses to products or services.

Answer 36

Social scientists refer to these raw reactions as affect.

Question 37

Positive affect:

Answer 37

The prospect of owning a specific brand will make a person feel good. It is a determinant factor.

Question 38

Negative affect:

Answer 38

Disgust also exert a powerful effect on our judgements. People who experience this emotion become harsher in their judgements of moral offences and offenders.