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Consumer Behavior Final
Terms in this set (91)
People are fundamentally rational and will adjust their choices and behaviors to best achieve their goals. Consequently, they will not make systematic errors.
People are irrational and make many errors that reduce their chances of achieving their goals. Some errors are regularly repeated systematic errors.
The idea that consumers are vulcans
Consumers are emotionless, deliberative thinkers
Purchase Decision Process
1. Product Information
2. Utility gained from the product/utility lost by paying the price
3. Utility Maximization
4. Purchase Decision
Economics v. Behavioral Economics
Status Quo Default Bias
Number of Choices
The Endowment Effect
Status Quo Bias
Economics: defining the status quo will not bias behavior
Behavioral Economics: defining the status quo changes behavior
Example: percent of population consenting to be organ donors
Economics: individuals have self-control; purchases are made relative to economic sacrifice
Behavioral Economics: some individuals lack self-control; to the extent individuals are aware of this, they will pay a premium to avoid being reliant on self-control
Example: portion control food options
Number of Choices
Economics: more variety is better; individuals can buy exactly what they need & simply ignore the less desirable choices
Behavioral Economics: less variety may be better; individuals may then end up actually making a choice
Example: the jam experiment
The Endowment Effect
Economics: perceived value is independent of ownership
Behavioral Economics: perceived value is NOT independent of ownership; people value a thing more once it becomes theirs, ownership increases utility
"The ratio of fructose to cellulose is an objective and unchanging property of apples, of course, but the experience of sweetness is a subjective property that increases when an apple becomes my apple". This is termed...
Consider the study involving coffee mugs. In one case, students were given a coffee mug as theirs to keep, and later asked for what price they would sell the coffee mug. In another case, students were asked what price they would pay for this same coffee mug. One group gave their average price as $2.25, and one group gave an average price as $4.50. Which group gave the lower average price ($2.25)?
The group that was not given a coffee mug, but was asked if they wanted one
Price Elasticity of Demand
A measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price
When the price of product Y increases, the demand for product X increases
When the price of product Y increases, the demand for product X decreases
If the demand is inelastic...
Demand is not affected by price
A socially defined occasion that triggers a set of interrelated behaviors that occur in a structured format and have symbolic meaning
Why are rituals critical to marketers?
They often involve prescribed consumption behaviors
Refers to the phenomenon that the addition of a dominated alternative into a choice set can increase the likelihood of an existing alternative being chosen, given that the existing alternative is superior to the new entrant on both attributes examined
Responses discussed and evaluated in class--need to be publicly justified
An alternative would tend to gain market share when it becomes a compromise or middle option in the choice set
Pain of Payment
When people see prices, the area of the brain associated with pain becomes activated
Feel too much pain, spend less money than they should
Feel too little pain, spend more money than they should
Includes all those factors particular to a time and place that do not follow from a knowledge of the stable attributes of the consumer and yet have an effect on current behavior
Four Types of Situations
The Communications Situation/Mood
The Purchase Situation
The Usage Situation
The Disposition Situation
Physical surroundings, social surroundings, temporal perspectives, task definition, antecedent states (moods or momentary conditions)
Influences consumer judgments of the quality of the store and the store's image
Atmosphere when describing a service business such as a hospital, bank or restaurant
Consumer behavior when in crowded environments
"Conservative when crowded"; safety-focused
Deal with the effect of time on consumer behavior
The reason the consumption activity is occurring
Consumers give gifts for the following reasons
Social expectations, ritualized situations, to elicit return favors
Moods (transient feeling states that are generally not tied to a specific event or object) or momentary conditions (temporary states of being)
How does music influence consumer behavior?
Which of the following statements is true regarding moods?
Ad and brand attitudes are often influenced in a mood-congruent manner
One aspect of purchasing from QVC is that the "offer" will expire within a certain amount of time, creating a sense of urgency among consumers. Teresa watches this channel frequently, and admitted that this aspect of the situation does influence her decision to buy something. Which characteristic of the situation is influencing Teresa and others' behavior?
Given what was said in class, when would Best Buy be better able to sell product warranties?
Much crowd in the store
The Nature of Information Search
Consumers continually recognize problems and opportunities, so internal and external searches for information to solve these problems are ongoing processes
Search of long-term memory to determine if a satisfactory solution is known, what are types of potential solutions, and ways to compare the possible solutions
If a resolution is not reached through internal search, then the search process is focused on relevant external information; ongoing search is done to acquire information and because the process is pleasurable
Types of Information Sought
Appropriate evaluative criteria, the existence of various alternatives, performance of each alternative on each evaluative criterion
Alternatives the consumer is aware of
Alternatives the consumer does not know about
Alternatives given consideration
Attention, Interest, Desire, Action
Internal Information Sources
Actively Acquired: past searches, personal experience
Passively Acquired: low-involvement learning
External Information Sources
Actively Acquired: independent groups, personal contacts, marketer information, experiential
Measures of External Information Search
Number of stores visited, number of alternatives considered, number of personal sources used, and overall or combination measures
Two Dimensions of Information Search for Marketing Strategies
The type of decision influences the level of search, and the nature of the evoked set influences the direction of the search
Brand in Evoked Set Leads to...
Maintenance Strategy, Capture Strategy, and Preference Strategy
Brand not in Evoked Set Leads to...
Disrupt Strategy, Intercept Strategy, and Acceptance Strategy
Which of the following statements is FALSE regarding information search?
Searching for information is free
The desired features or characteristics required to meet a consumer's needs are his or her
Karl and his wife are considering putting a built-in pool in their backyard. They were discussing who they could get to do it for them, and they realized they knew of five good pool contractors in their city. These five pool contractors that they thought of as potential contractors for them represent their _________________.
Three Types of Consumer Choice Processes
Tend to be more holistic, brand not decomposed into distinct components for separate evaluation, evaluations generally focus on how they will make the user feel as they are used, choices are often based primarily on the immediate emotional response to the product or service
Involves use of general attitudes, summary impressions, intuitions, or heuristics; no attribute-by-attribute comparisons are made at the time of the choice
Requires the knowledge of specific attributes at the time the choice is made, and it involves attribute-by-attribute comparisons across brands
Decision Rules for Attribute-Based Choices
Conjunctive Rule, Disjunctive Rule, Elimination-by-Aspects Rule, Lexicographic Rule, & Compensatory Rule
Establishes minimum required performance for each evaluative criterion; selects the first (or all) brands that meet or exceed these minimum standards
Establishes a minimum required performance for each important attribute (often a high level); all brands that meet or exceed the performance level for any key attribute are acceptable
First, evaluative criteria ranked in terms of importance; second, cutoff point for each criterion is established; finally (in order of attribute importance) brands are eliminated if they fail to meet or exceed the cutoff
Consumer ranks the criteria in order of improtance; then, selects brand that performs best on the most important attribute; if two or more brands tie, they are evaluated on the second most imporant attribute; this continues through the attributes until one brand outperforms the others
States that the brand that rates highest on the sum of the consumers judgments of the relevant evaluative criteria will be chosen
Attribute-based choice requires...
The knowledge of specific attributes at the time the choice is made AND attribute-by-attribute comparisons across brands
Which of the following is NEVER a type of consumer choice process?
All of the above are types (affective choice, attitude-based choice, rational choice)
Which of the following tends to be more holistic in nature, and the brand is not decomposed into distinct components that are evaluated separately from the whole?
Joseph is considering the purchase of a computer, and he is comparing brands on the basis of price, memory, speed, and reliability. He mentally ranks each alternative on these attributes and makes a selection based on these rankings. Joseph is using which type of choice process?
Given attribute cutoffs of Price = 5, Quality = 5, and Weight = 4, which of the following would be chosen using the disjunctive decision rule?
Compaq and NEC would be considered further
Which of the following is a noncompensatory decision rule?
All of the above (conjunctive, disjunctive, lexicographic, elimination-by-aspects)
Which decision rule establishes minimum required performance standards for each evaluative criterion and selects the first or all brands that meet or exceed these minimum standards?
Given the following minimum standards (cutoff points) Price = 3, Quality = 4, and Ease of use = 3, which of the following computers would be chosen using the conjunctive decision rule?
Occurs when a consumer has doubts or anxiety regarding the wisdom of a purchase made
Post-purchase Dissonance is a function of the following
The degree of commitment or irrevocability in the decision
The importance of the decision to the consumer
The difficulty of choosing among the alternatives
The individual's tendency to experience anxiety
After the purchase is made, the consumer may utilize one or more of the following to reduce dissonance
Increase the desirability of the brand purchased
Decrease the desirability of rejected alternatives
Decrease the importance of the purchase decision
Reverse the purchase decision (return before use)
Retailers can frequently take advantage of the fact that the use of one product may require or suggest the use of other products, e.g., dresses and shoes
Retailers can promote such items..
Jointly, display them together, or train sales personnel to make relevant complementary sales
Firms need to satisfy consumer expectations by: creating reasonable expectations through promotional efforts, and maintaining consistent quality so the reasonable expectations are fulfilled
Costs of finding, evaluating, and adopting another solution
Involves commitment to the brand
Net Promoter Score (NPS)
An indirect word-of-mouth measure of true attitudinal loyalty
There are three categories of Consumers
Promoters, Passively Satisfied, Detractors
NPS = ?
Promoters - Detractors
Connie just purchased her first new car, and she's actually feeling a little bad about it. She's concerned about how much money she spent and how long she will be making car payments. She's not sure she made the right choice, either. She liked another car a little better, but ended up purchasing another model. Connie is experiencing _______.
Which of the following is NOT an action a consumer may utilize to reduce dissonance?
Increase the importance of alternatives that were not considered in the purchase initially
Rebecca is a single woman in her 40s. She sold her Honda Civic and bought an Acura CSX, which is considerably more expensive, but she really liked it. She was going to her brother's house with her mother, and she asked that her mother drive. She didn't want her brother to see that she had purchased an expensive car for herself. Rebecca was experiencing _______.
Which of the following occurs when a consumer actively acquires a product that is not used or used only sparingly relative to its potential use?
Even if a dissatisfied consumer takes no external action, which of the following is likely?
Will have a less favorable attitude toward the store or brand
Recommended textbook explanations
Krugman's Economics for AP*
David Anderson, Margaret Ray
Principles of Economics
N. Gregory Mankiw
Essential Foundations of Economics
Michael Parkin, Robin Bade
Principles of Macroeconomics
N. Gregory Mankiw
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