REAL MK 345 Midterm

Availability Heuristic

Estimating the likelihood or frequency of an event based on how easily concrete examples come to mind.

Attribute Substitution

Automatically replacing a complex, difficult judgment or question with an easier one without realizing it.

Boomerang Effect

An unintended counter-productive outcome where descriptive norms cause above-average consumers to increase undesirable behavior (e.g., energy consumption) or below-average ones to slack off.

Decoy Effect (Asymmetric Dominance)

A phenomenon where an inferior option (the decoy) is added to make one of the existing options appear more attractive, shifting consumer preference.

Descriptive Norms

Norms conveying what people actually do in a given situation.

Elaboration Likelihood Model (ELM)

A persuasion framework dividing processing into the central route (fact-based, high involvement) and peripheral route (cue-based, low involvement).

ELM Moderators (Motivation & Ability)

The two core cognitive conditions that determine whether an audience processes information via the central or peripheral route.

Endowment Effect

The psychological bias where people ascribe more value to things simply because they own or possess them.

Framing & Anchoring

Cognitive biases where initial reference points (anchors) or contextual presentation (frames) disproportionately influence subsequent numerical estimates, valuations, or decisions.

Heuristics

Mental shortcuts used by System 1 thinking to simplify complex decisions, often introducing systematic biases.

Injunctive Norms

Norms specifying socially approved or disapproved behaviors, often used to counteract the boomerang effect (e.g., smiley/frowning faces).

K-Means Clustering

A quantitative segmentation method used to group consumers into clusters based on similar survey or behavioral data.

Loss Aversion

The behavioral economic principle from Prospect Theory stating that the psychological pain of losses looms significantly larger than the pleasure of equivalent gains.

Means-End Chain / Laddering

Qualitative in-depth interviewing techniques used to uncover the psychological connection between product attributes, functional/psychosocial consequences, and core human values.

Multi-Attribute Model

A structured decision framework where product attributes are weighted by importance, options are rated per attribute, and scores are multiplied and summed to determine the optimal choice.

Optimal Value Proposition (OVP)

The comprehensive bundle of economic, social, functional, and experiential value a product offers to satisfy target customer needs.

Positioning

Tailoring brand imagery, messaging, perceptual maps, and positioning statements (Target, Frame of Reference, Point of Difference, Reason to Believe) to occupy a distinct space in the consumer's mind.

Prospect Theory

A behavioral theory describing how people evaluate decision outcomes relative to a reference point, characterized by risk aversion, diminishing returns, and loss aversion.

Psychographics

Customer segmentation dimensions encompassing attitudes, identity, values, lifestyle, interests, and activities.

Status Quo Bias

The psychological preference to stick with the current state or default choice due to perceived transition costs and loss aversion.

STP (Segmentation, Targeting, Positioning)

The foundational marketing strategy framework

System 1 Thinking

Fast, automatic, instinctive, and effortless cognitive processing.

System 2 Thinking

Slow, deliberate, analytical, and effortful cognitive processing.

Willingness-to-Pay (WTP)

The maximum price a consumer is economically or psychologically prepared to pay for a product or service.