Decision Making

How do we make decisions?

Some seem automatic, others require long periods of time of analysis

We make decisions to solve our problems

Sometimes we make our decisions thoughtfully and rationally, other times we let our emotions guide us

Hyperchoice

Consumer hyperchoice = forces us to make repeated decisions that may drain our psychological energy while decreasing our abilities to make smart choices

Can too much be a bad thing?

Types of Decision Making

Much of what we’ve learned has led up to understanding decision making

Learning approaches

Emotions

Hierarchies of effects (thinking, feeling, doing)

Depending on the situation and its importance, our choices will be influenced by “hot” emotions, “cold” information processing, or lukewarm snap decisions

Constructive Processing

Constructive Processing = we evaluate the effort needed to make a given choice and tailor our amount of cognitive effort to expend to solve the problem

Self-Regulation

If we have a self-regulatory strategy, we specify in advance how we’d want to respond to certain situations

Implementation intentions = “if, then”

• dictate how much weight we give to different kinds of information (emotional, cognitive)

• A timetable to carry out the decision

• and how we deal with disruptive influence and may interfere with our plans

Self-Regulation

How can decision making help reach our goals?

Counteractive construal = exaggerate the negative parts of behavior that could interfere with our goals; helps to motivate us

Marketers sell products that use feedback loops to provide real-time information to consumers; gives a chance to change your behavior to improve chances of reaching goals

Morning Morality Effect – what happens when you’re too tired?

Ego-Depletion = self-control is like a muscle

Cognitive Decision Making

Occurs for decisions that require careful and deliberate thinking

How do consumers weigh information, form beliefs about options, and choose criteria to select one option over another?

Step 1: Problem Recognition

Problem recognition = occurs when we experience a significant difference between our current state and a new desired state

Marketers alter our standard of comparison

A problem can arise by

1. Actual state (need recognition) ex. car low on gas

2. Ideal state (opportunity recognition) ex. recognizing wanting a fancier car

Step 2: Information Search

Information search = survey the environment for appropriate data to make a reasonable decision

Prepurchase search vs. ongoing search

Moderately knowledgable consumers search for information the most…why?

Step 3: Evaluate Alternatives

Evoked set = alternatives consumers know about

Consideration set = alternatives consumers seriously consider

We’re more likely to add a new brand to our evoked set than one we previously considered but passed over

This is true even if a marketer gives additional positive information

Step 4: Product Choice

We often assume that the more features, the better

Companies have addressed this assumption with feature creep

But, consumers are actually happier with simpler products

Step 5: Postpurchase Evaluation

The true test of our decision-making process is whether we’re happy with the choice we made

Postpurchase evaluation – does our choice meet or even exceed our expectations?

Online Decision Making

How does online aid our decision making?

• Cybermediary = a Web site/app that filters and organizes market information for the consumer

• Intelligent agents = software that uses past user behavior to suggest new purchases

• Search engines

Search Engine Optimization (SEO) is key for companies online

Product Categorizations

The category we place a product into determines what other products we’ll compare it to

Companies change things up when they offer hybrid products (characteristics from two different domains)

Levels of categorization in a knowledge structure:

1. Superordinate level – more abstract

2. Basic level – most useful for classifying products; items we group together have a lot in common but permit a broad enough range of alternatives

3. Subordinate level – often includes specific brand

Evaluative Criteria

Evaluative criteria = dimensions we use to judge the merits of competing options

Criteria about how products differ from each other carry more weight than criteria about how products are similar

Determinant attributes = features we actually use to differentiate among choices

Rules of Evaluative Criteria - Cognitive

Compensatory rule = we allow products to make up for its shortcomings on one dimension by excelling in another

1. Simple additive rule = leads to the option with the greatest number of positive attributes

   1. Why might this rule not be as effective to use?

2. Weighted additive rule = allows consumers to take into account the relative importance of the attributes by weighting each one (similar to the multiattribute attitude model)

Rules of Evaluative Criteria – Habitual or Emotional (NOT ON TEST)

Noncompensatory rule = if an option doesn’t suit us on one dimension, we reject it without further consideration

1.Lexicographic rule = select the brand that’s best on the most important attribute

2. Elimination-by-aspects rule = still focuses on the most important attribute but imposes specific cut-offs (either you have the attribute or you don’t)

3. Conjunctive rule = processing by brand; choose a brand if it meets all the cutoffs but reject if a brand fails to meet any one cut-off

Today’s Major Takeaways

The three categories of consumer decision making are cognitive, habitual, and affective

A cognitive purchase decision is the outcome of a series of stages that results in the selection of one product or competing options

Depending on the category of consumer decision making, individuals will adopt different rules to help come to a decision