Chapter 9 Consumer Behavior

What are the three types of consumer decision making?

Cognitive- deliberate, rational, sequential

Habitual- choices made with little or no conscious effort

Affective- emotional, instantanious

To what does consumer hyperchoice refer?

the profusion of options in the marketplace that forces us to make repeated decisions that may drain psychological energy while decreasing our abilities to make smart choices

What are the five steps in the cognitive decision-making process? Understand each.

1. Problem recognition- whenever the consumer sees a significant difference between his or her current state of affairs and some desired or ideal state; this recognition initiates the decision-making process

2. Information search- the consumer surveys his or her environment for appropriate data to make a reasonable decision

3. Evaluate alternatives- Much of the effort we put into a purchase decision occurs at the stage where we have to put the pedal to the metal and actually choose a product from several alternatives

4. Product choice- Once we assemble and evaluate the relevant options in a category, eventually we have to choose one.

5. Post purchase evaluation- final stage when we experience the product or service we selected.

What is the difference between need recognition and opportunity recognition?

Need recognition- actual state

Opportunity recognition- ideal state

How do these relate to one's actual and ideal states?

The person who runs out of gas experiences a decline in the quality of his actual state (need recognition). In contrast, the person who craves a newer, flashier car moves his ideal state (opportunity recognition) upward.

What is the difference between prepurchase search and ongoing search?

Prepurchase search- recognize a need and then search the marketplace for specific information

Ongoing search- browsing just for the fun of it or because we like to stay up to date on what's happening in the marketplace.

What do we use as sources of information for internal vs. external searches?

Internal searches- consumers own lifestyle and way of thinking

External searches- what a consumer eats, wears, and believes (ex. Religious, political, family, clubs)

What type of consumers engage in the most information search?

Consumers who survey the environment for appropriate data to make a reasonable decision.

What are the different sets of options we might use when evaluating alternatives

Evoked set- those products already in memory plus those prominent in the retail environment that are actively considered during a consumer's choice process

Consideration set- the products a consumer actually deliberates about choosing

How is neuromarketing used to understand consumer behavior and decision making?

the use of brain-scanning instruments to identify changes in the brain when subjects are exposed to marketing stimuli

What is a knowledge structure?

organized system of concepts relating to brands, stores, and other concepts

what are the three levels

Superordinate- more broad and abstract level

Subordinate- includes individual brands

Basic level- the middle level typically the most useful for classifying products.

What are evaluative criteria and determinant attributes?

Evaluative criteria- the dimensions used by consumers to compare competing product alternatives

Determinant attributes- the attributes actually used to differentiate among choices

What is the difference between compensatory and non-compensatory rules?

Compensatory rules- a set of rules that allows information about attributes of competing products to be averaged in some way; poor standing on one attribute can potentially be offset by good standing on another

Non- compensatory rules- decision shortcuts a consumer makes when a product with a low standing on one attribute cannot make up for this position by being better on another attribute

How does the simple additive rule differ from the weighted additive rule?

Simple additive rule- select the option that has the largest number of positive attributes

Weighted additive rule- select the option that has the largest number of positive attributes, but taking into account the relative importance of the attributes by weighting each one in terms of its relative importance to the decision maker

How do the lexicographic rule, elimination-by-aspects rule, and conjunctive rule differ?

Lexicographic rule- a simple rule that selects the brand that is the best on the most important attribute

Elimination by aspect rule- a rule that selects the brand that is the best on the most important attribute, but that imposes specific cut-offs or "must haves"

Conjunctive rule- the decision maker establishes cut-offs for each attribute and chooses a brand if it meets all the cutoffs, but rejects a brand that fails to meet any one cut-off

What is habitual decision making?

choices made with little or no conscious effort

Under which two conditions might habitual decision making occur

Inertia- which means that it involves less effort to throw a familiar package into the cart

Brand loyalty- This describes a pattern of repeat purchasing behavior that involves a conscious decision to continue buying the same brand.

To what does bounded rationality refer?

a concept in behavioral economics that states because we rarely have the resources (especially the time) to weigh every possible factor into a decision, we settle for a solution that is just good enough

What are heuristics?

the mental rules of thumb that lead to a speedy decision

What are examples of market beliefs that might be based on heuristic thinking?

Brands, stores, Prices/ discounts/ sales, advertising and sales promotion, Product packaging

How do country of origin, brand name, or price serve as heuristics?

Country of origin- marketers often go out of their way to link a brand with a country to capitalize on associations people have with a specific country of origin.

Brand name- people have a preference for a familiar brand and tend to never change that preference over the course of their lifetime.

Price- Many people assume that a higher-priced alternative is better quality than a lower-priced option.

What does prospect theory suggest about consumer perceptions of gains vs. losses?

they identify principles of mental accounting that relate to the way we frame the question as well as external issues that shouldn't influence our choices, but do anyway (people are more likely to risk their personal safety in the storm if they paid for the football ticket than if it's a freebie. Only the most die-hard fan would fail to recognize that this is an irrational choice because the risk is the same regardless of whether you got a great deal on the ticket. )

What is loss aversion

the tendency for people to hate losing things more than they like getting things

What is the sunk-cost fallacy?

the belief that if we pay more for something we should not waste it

How does framing impact consumer decision making?

a concept in behavioral economics that the way a problem is posed to consumers (especially in terms of gains or losses) influences the decision they make

How does priming work?

properties of a stimulus that evoke a schema that leads us to compare the stimulus to other similar ones we encountered in the past

What is a nudge, and how do marketers use them?

a subtle change in a person's environment that results in a change in behavior

What is the default bias?

a tendency in decision making that makes it more likely for people to comply with a requirement than to make the effort not to comply