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CB Chpt 9 Terms

Terms in this set (60)

**Decision Making Process Model
Refer to Slide 3
*Perspectives on Decision-Making
Rational Perspectives
Purchase momentum
Behavioural influence perspective
Experiential perspective
Rational Perspectives
-Integrate as much information as possible with what they already know about a product
-Weigh pluses and minuses of each alternative
-Arrive at a satisfactory decision
Purchase momentum
Occurs when consumers buy beyond needs
Behavioural influence perspective
Consumers buy based on environmental cues, such as a sale
Experiential perspective
Consumers buy based on totality of product's appeal
*Types of Consumer Decision-Making
3 Types
Extended problem solving:

Limited problem solving:

Habitual decision making:
Extended problem solving:
-Initiated by a motive that is central to self-concept
-Eventual purchase decision is perceived as a risk
-Consumer collects extensive information
-Internal and external search
-Careful evaluation of brand attributes (one at a time)
Limited problem solving:
-Buyers not as motivated to search for information or to evaluate rigorously
-Buyers use simple decision rules to Straightforward choices
-Cognitive shortcuts
Habitual decision making:
description?
Challenge for marketers?
-Automaticity: Choices made with little/no conscious effort
-Efficient decisions: minimal time/energy

Challenge for marketers...
Consumers must be convinced to "unfreeze" their former habit and replace it with new one
Problem Recognition
Definition?
2 types of recognitions (define)?
Occurs when consumer sees difference between current state and ideal state

Need recognition: actual state moves downward

Opportunity recognition: Ideal state moves upward
Information search:
-Process by which consumer surveys the environment for appropriate data to make reasonable decision
Internal versus External Search
-Internal search: Scanning memory to assemble product alternative information

-External search: Obtaining information from ads, retailers, catalogs, friends, family, people-watching, Consumer Reports, etc.
Online Search
new info shopper?
% first use what to conduct search?
% then use other ___?
% that follow company via ________?
Many of us shop without leaving home via Yahoo, Google and other internet sites
"New info shopper": individuals who automatically go to the internet first
60% of online consumers now search using Google or Bing as a first option
40% then go on to use other social media platforms
75% then follow the company's Facebook page post purchase
Do Consumers Always Search Rationally?
Brand switching:
Variety seeking:
-Select familiar brands when decision situation is ambiguous
-Desire to choose new alternatives over more familiar ones
*Biases in the Decision-Making Process
3 types?
Mental accounting:
Sunk-cost fallacy
Prospect theory
Mental accounting:
Framing a problem in terms of gains/losses influences our decisions
eg.
Money for necessities
Money for entertainment
Spending money from one account does not affect others.
Sunk-cost fallacy:
Reluctant to waste something we have paid for
Prospect theory:
Risk differs when consumer faces options involving gains versus those involving losses
**Prospect Theory
Refer to slide 19
-describes the way people choose between probabilistic alternatives that involve risk, where the probabilities of outcomes are known.
-Loss Aversion:(loss hurts more then gains feels good)
-diminishing returns graph
Amount of Information Search and Product Knowledge
- Inverse U shaped on graph
-info search increases till knowledge is moderate then decreases as knowledge is maximized
Search activity is greater when?
List 4 factors
-Purchase is important
-There is a need to learn more about purchase
-Relevant info is easily obtained/utilized
-One is younger, is better-educated, and enjoys shopping/fact-finding
-One is female (compared to male)
-One places greater value on own style/image
Perceived Risk
definition?
apparent when products are..?
what is objective and subjective risk?
-Belief that product has negative consequences
-Expensive, complex, hard-to-understand products
-Product choice is visible to others (risk of embarrassment for wrong choice)
-Risks can be objective (physical danger) and subjective (social embarrassment)
5 types of perceived risk
-Monetary- High ticket items
-functional- products that require commitment (new computer)
-Physical- vehicles, flamables, drugs, medication
-Social- clothes, jewellery, cars, pure bred dog
-Psychological- want to buy from inexpensive retailer but question labour practises
Evaluation of Alternatives
Choosing from the often very many available alternatives

-Extended problem solving
Occurs when choice conflicts arouse negative emotions (involving difficult trade-offs)

-Habitual decision
Consider few/no brand alternatives
Evoked set versus consideration set
We usually don't seriously consider every brand we know about.
In fact, we often include only a surprisingly small number of alternatives in our evoked set.

Marketers must focus on getting their brands in consumers' evoked set.
We often do not give rejected brands a second chance.
*Identifying alternatives
Refer to slide 27
Product Categorization
We evaluate products in terms of what we already know about a (similar) product

Evoked-set products usually share similar features

When faced with a new product, we refer to existing product category knowledge to form new knowledge
Levels of Categorization
Superordinate level (deserts)
Basic Level (fattening vs non fattening desert)
Subordinate level (pie, ice cream, cake) (fruit, yogurt, smoothie)
Strategic Implications of Product Categorization
-Product positioning
-Identifying competitors
-product location
-Product positioning
eg?
Convincing consumers that product should be considered within a given category
Tropicana + Omega 3
Identifying competitors
Products/services different on the surface can actually compete on super-ordinate level
Selecting Among Alternatives
Exemplar products
Locating products
Exemplar products
Brands strongly associated with a category "call the shots" by defining evaluative criteria
But "moderately unusual" products stimulate more information processing and positive evaluations
Locating products
Products that do not fit clearly into categories confuse consumers (e.g., frozen dog food)
Product Choice
Once we assemble and evaluate relevant options from a category, we must choose among them
Decision rules for product choice can be very simple or very complicated
Prior experience with (similar) product
Present information at time of purchase
Beliefs about brands (from advertising)
Ted Talk The paradox of choice
-GDP increased in last 30 years, less ppl were rated as very happy, decrease of 5%
-because making the choice allows a person to have doubt about their decision when faced with the prospect of immediate feedback
Evaluative criteria:
dimensions used to judge merits of competing options
Procedural Learning
Determinant attributes:
Determinant attributes:
Features we use to differentiate among our choices
-Criteria on which products differ carry more weight
-Marketers educate consumers about (or even invent) determinant attributes
Eg. Pepsi's freshness date stamps on cans
Heuristics
definition?
3 eg?
Rule of Thumb
-Can lead to bad decisions due to flawed assumptions (especially with unusually named brands)
eg. higher price= higher quality
-All brands are basically the same
-Larger stores offer better prices than smaller stores
-Items tied to "giveaways" are not a good value
Country-of-Origin as a Heuristic
We rate our own country's products more favorably than do people who live elsewhere
-Expertise with product minimizes country-of-origin effects
eg. olympic clothes
molson rant
Zipf's Law:
Our tendency to prefer a number one brand to the competition
Brands that dominate the market are sometimes 50% more profitable than their nearest competitors
Consumer inertia:
Tendency to buy a brand out of habit merely because it requires less effort
-
Brand Loyalty
Repeat purchase behaviour reflecting a conscious decision to continue buying the same brand
-Repeat purchase + positive attitude toward brand
-Endorsing brands personally online and by WOM
-Emotional attachment and commitment
-We are often less picky about where we buy our favourite brands
Having too many choices in the marketplace is referred to as ________.
Consumer hyperchoice
noncompensatory rule
a consumer who says that good performance on one or more attributes cannot "make up for" poor performance on other product attributes
lexicographic rule
a consumer selects a brand that performs best on the most important attribute for that product
elimination-by-aspects
Eg. applied a heuristic in judging men: they must wear expensive shoes and have an expensive automobile
conjunctive rule
must meet minimum standards on all of the key attributes she wants in a camera of this type or she will reject it, regardless of its performance on other attributes
compensatory
-rules give a product a chance to make up for its shortcomings
eg. gives high marks to a car which has a rebuilt engine. In his mind that outweighs or "makes up for" relatively lower marks he gave on its fenders and interior appearanceq
simple additive rule.
Choosing a product on the basis of its having the largest number of positive attributes
. weighted additive rule
the relative importance of positively-rated attributes; that is, "brand ratings" on each attribute are intuitively multiplied by their importance weights
Bounded rationality
Bounded rationality the view that consumers rarely have the resources to weigh every possible factor into a decision and so will often settle for a solution that is just good enough
Cybermediary
an intermediary that helps to filter and organize online market information so that customers can identify and evaluate alterna- tives more efficiently
Electronic recommendation agent
a software tool that tries to under- stand a human decision maker's multi-attribute preferences for a product category by asking the user to communicate his or her preferences.
Greenwashing
consumer backlash against a company's environmental claims
The Long tail
the phenomenon whereby companies no longer need to rely solely on big hits (such as blockbuster movies or bestselling books) to find profits; they can also make money if they sell small amounts of items that only a few people want—if they sell enough different items
Silent commerce
a new trend that enables transactions and information gathering to occur in the background without any direct intervention by consumers or managers
Satisficing
a decision strategy in which the consumer settles for an option that is "good enough"
Maximizing
a decision strategy that seeks to deliver the best possible resu
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