Chapter 9: Judgement and Decision Making Based on High Effort EXAM 3

Two decision characteristics that affect how consumers make their choices are

1. the availability of information on which to base a decision. (information availability and information format): information availability: The amount, quality, and format of the information can affect the decision-making strategy that consumers use. When a consumer has more information, the decision becomes more complex, and the consumer must use a more detailed decision making strategy, such as the multiattribute choice strategy. Having more information will lead up to making better choice only up to a point then it is information overload. Information format: The format of the information- the way that it is organized or presented in the external environment- can also influence the decision strategy that consumers use. 2. the presence of trivial attributes (trivial attributes): Consumers sometimes finalize decisions by looking at trivial attributes.

Compensatory model (a Cognitive decision-making model)

A mental cost-benefit analysis model in which negative features can be compensated for by positive ones. Consumers evaluate how good each of the attributes of the brands in their consideration set is, they make judgments about goodness and badness, and weight them in terms of how important the attributes are to their decisions. The brand that has the best overall score (attribute goodness times importance summed across all of the brand's attributes) is the one consumers choose.

Lexicographic model

A non-compensatory model that compares brands by attributes, one at a time in order of importance. If one option dominates in this top importance, then the consumer selects it.

Conjunctive model

A non-compensatory model that sets minimum cutoffs to reject "bad" options. Sets minimum cutoffs for each attribute that represent the absolute lowest value they are willing to accept. Ex: a consumer might want to pay less than $20 per month to finance a brief vacation and therefore reject an alternative with a higher monthly cost. When a carnival cruise charges $299 but offers a $14 per month deal for two years, it helps get over the hurdle of being too expensive. Because the cutoffs represent the bare minimum belief strength levels, the psychology of a conjunctive model is to rule out unsuitable alternatives (get rid of the bad ones) as soon as possible, something that consumers do by weighing negative information.

Disjunctive model

A noncompensatory model that sets acceptable cutoffs to find options that are "good". Similar to the conjunctive model, with two important exceptions. First, the consumer sets up acceptable levels for the cutoff-levels that are more desirable (find the good ones). Second, the consumer bases evaluations on several of the most important attributes rather than on all of them, putting the weight on positive information. Ex: so even though $20 per month may be the highest monthly payment a consumer will accept for a vacation, $14 per month may be more acceptable.

Attribution theory was developed to __________ how. Many times affective processing is ________________.

Attribution theory was developed to understand how. Many times affective processing is experienced-based.

When the consideration set is large, consumers might....

Consumers might use the conjunctive or disjunctive model to eliminate undesirable brands and then make their final choice among the brands that remain, using the multiattribute model.

Brand processing (a Cognitive decision-making model)

Evaluating one brand at a time.

Judgements of goodness / badness

Evaluating the desirability of something. our evaluation of the desirability of the offering's features. A consumer combines judgments about product attributes or actions associated with a product to form an evaluation of or attitude toward the product or service. They are also affected by how we feel. Consumers tend to form judgments of goodness or badness more quickly and consistently based on the intensity and direction of their affective responses.

Cutoff levels

For each attribute, the point at which a brand is rejected with a noncompensatory model. Reject any brand with attribute rankings below the cutoff.

Estimations of likelihood

Judging how likely it is that something will occur. Our determination of the probability that something will occur. Ex: when we buy a good or service, we can attempt to estimate the likelihood that it will break down, the likelihood that others will like it, and the likelihood that it will satisfy our needs.

Decision making

Making a selection among options (or activities) or courses of action.

Extremeness aversion

Options that are extreme on some attributes are less attractive than those with a moderate level of those attributes. options for a particular attribute that are perceived as extreme will seem less attractive than those perceived as intermediate. This tendency is the reason that people often find moderately priced options more attractive than options that are either very expensive or very inexpensive. Ex: If there are three different tomatoes, one very cheap, one medium cost, and one high cost. The sales of the medium tomatoes will get much higher. Showing a bread maker and then just adding a more expensive bread maker will double the sales of the cheaper one.

Inept set

Options that are unacceptable when making a decision.

Inert set

Options toward which consumers are indifferent.

Attribute balancing

Picking a brand because it scores equally well on certain attributes rather than faring unequally on these attributes. Consumers prefer a brand with attributes that score equally well on certain criteria more than a brand that has unequal scores across attributes.

Anchoring and adjustment process

Starting with an initial evaluation and adjusting it with additional information. The initial value can be information or an affective response readily available from memory; it can also be attribute information from the external environment that is encountered first. Consumer values and normative influences can also be strong determinants of the initial value. Ex: If Starbucks coffee form a positive initial anchor, than any additional information from ads or experience may adjust this initial value upward or downwards, but the judgment is more likely to be positive, based on the Starbucks image.

Decision framing

The initial reference point or anchor in the decision process. The way in which the task is defined or represented, this can affect how important a criterion is to our choice. Whether a decision is framed positively (how good is the product?) or negatively (how bad is the product?) influences the evaluation differently. Ex: A frame for a car purchase might be 1. buy an economical car I can afford or 2. buy a car that will impress my friends. Clearly different criteria will be employed in these two situations. Because the frame serves as the initial anchor in the decision process, all subsequent information is considered in light of that frame.

Time

The timing of a decision also affects which criteria drive our choices. Whether we use high-level (abstract) or low-level (concrete) construals depends on whether we are making a decision about what to buy/do right now or about something we might buy/do in the future. If the decision is about something we will buy or do immediately, our choices tend to be based on low-level construals- specific, concrete elements such as how close it is to home, how much dinner will cost there, and who is coming along. If we are making decisions for later our criteria tends to be more general and abstract like which restaurant will create the best dining experience.

Compromise effect

When a brand gains share because it is an intermediate or compromise choice rather than an extreme option.

Attraction effect

When adding of an inferior brand to a consideration set increases the attractiveness of the dominant brand. Making the decision easier. A good brand can look even better when an inferior brand is added to the consideration set.

Endowment effect

When ownership increases the value of an item. Losses loom larger than gains for consumers even when the two outcomes are of the same magnitude. Ex: when asked to set a price for an item to be exchanged, sellers typically ask for a much higher price (because they are experiencing a loss of the item) than buyers are willing to pay (gaining the item).

Characteristics associated with consumers

- expertise: consumers are more likely to understand their preferences and decisions when they have detailed consumption vocabularies- they articulate exactly why they like or dislike the brands they do. - mood: consumers who are in a reasonably good mood are more willing to process information and take more time in making a decision than those who are not in a good mood. - extremeness aversion: options for a particular attribute that are perceived as extreme will seem less attractive than those perceived as intermediate. - time pressure: as time pressure increases, consumers initially try to process information relevant to their choices faster. One of the main reasons consumers fail to make intended purchases, can reduce shopping time and the number of impulsive purchases. - metacognitive experiences: How the information is processed beyond the content of the decision. how easy it is to recall information in memory and how easy it is to process new information.

In a group, consumers face three types of individual-group goals

1. Self-presentation: consumers seek to convey a certain image through the decisions they make in a group context. 2. Minimizing regret: Consumers who are risk averse and want to minimize regret will tend to make choices that are similar to those made by the rest of the group, leading to uniformity at the group level. 3. Information gathering: consumers can learn more about the different choices each has made through interaction with other group members.

High-effort decisions decide five things

1. deciding which brands to include in a consideration set 2. deciding what is important to the choice 3. deciding what offerings to choose. 4. should they delay the decision or make it now 5. how can they make a decision when the alternatives cannot be compared

Consumers' decisions can be affected by the presence of a group, when each group member makes a decision they attempt to balance two sets of goals.

1. goals that are attained by the individual's action alone (individual alone) 2. goals that are achieved depending on the actions of both the individual and the group (individual group)

Affective forecasting

A prediction of how you will feel in the future. Consumers' predictions of what they will feel in the future can influence the choices they make today. Ex: someone buys a dishwasher after forecasting the relief she will feel at having an appliance to handle a chore. We can forecast: 1. how we think we will feel as a result of a decision. 2. how intensely we will have this feeling, and 3. how long this feeling will last.

Multiattribute expectancy value model (a Cognitive decision-making model)

A type of brand based compensatory model. When considering multiple attributes, consumers tend to give more weight to those that are compatible with their goals.

Alternative-based strategy

Called the top-down processing. Making a noncomparable choice based on an OVERALL EVALUATION. They develop an overall evaluation of each option-perhaps using a compensatory or affective strategy-and base their decision on it. When alternatives are less comparable, consumers tend to use an alternative-based strategy because it is harder for them to create attribute abstractions. Also suits consumers with well-defined goals because they can easily recall the various options and their results Ex: comparing each activities pros and cons and choosing one you like best with the strongest evaluation.

Two types of decision-making models used to make high-effort decisions

Cognitive and affective decision-making models There are two types of decision-making models that consumers use to make high-effort decisions. Consumers choose a model or use bits of various models, depending on the situation, and they may employ one or more decision rules, sometimes just because they want a change.

Attribute processing

Comparing across brands, one attribute at a time. Like comparing each brand on price.

Additive difference model

Compensatory model in which brands are compared by attribute, two brands at a time. (Consumers evaluate difference between the two brands on each attribute and then combine them into an overall preference. This process allows tradeoffs between attributes- a positive difference on one attribute can offset a negative difference on another.) Determines which attributes or outcomes exhibit the greatest differences among brands and use this knowledge to improve and properly position their brand.

Affective decision-making

Decisions based on feelings and emotions. Consumers make a decision because the choice feels right. They may decide that the chosen option feels like a perfect fit, regardless of their prior cognitive processing. Consumers that make decisions based on feelings tend to be more satisfied afterward than those who make decisions based on product attributes. Emotions can be recalled to play a central role in the decision process. Consumers select an option based on their recall of past experiences and the associated feelings.

Judgements

Evaluations of an object or estimates of likelihood of an outcome or event. JUDEMENTS DO NOT REQUIRE MAKING A DECISION evaluations or estimates regarding the likelihood that products and services possess certain features or will perform in a certain manner. Judgments do not require a decision. Given the importance of judgment in consumers' information processing, marketers need to understand judgments about 1. likelihood and 2. goodness or badness. Ex: you see an ad for a new Italian restaurant, you can form a judgment as to whether you will like it, how different it will be from other Italian restaurants, or how expensive it will be. These Judgments can serve as important inputs into your decision about whether to eat at the restaurant, but they do not require that you decide about whether to eat at the restaurant.

Goals

Goals clearly affect the criteria that will drive a consumer's choice. When the goal is to make a decision, consumers may judge products with unique, positive attributes and shared negative attributes as more favorable than products with unique, negative attributes that share positive attributes. Ex: deciding between chips and carrots, what is your goal? Is it to be on a diet or to get something good.

Metacognitive experiences

How the information is processed beyond the content of the decision. These are factors based on our decision processing experience, such as how easy it is to recall information in memory and how easy it is to process new information. It is not just the content of the information that influences the decision but rather how this information is processed is also critical.

Decision delay

If consumers perceive the decision to be too risky or if it entails an unpleasant task, they may delay making a decision. Or if consumers feel uncertain about how to get product information.

Imagery

Imagining an event in order to make a judgement. Visualization, plays a major role in judgments of likelihood and goodness and badness. Consumers can try to construct an image of an event, such as how they will look and feel behind the wheel of a new car, to estimate its likelihood or judge its goodness or badness. Visualizing an event can actually make it seem more likely to occur because consumers may form a positive bias when they imagine themselves using the product. Can lead consumers to overestimate how satisfied they will be with a product or service. Can also cause customers to focus on vivid attributes and weigh those attributes more heavily when forming judgments.

Biases in Judgment Processes

Judgments are not always objective. Biases and other factors may compromise the quality of the consumer's decision and affect consumer judgment in a variety of ways: 1. Confirmation Bias- Focusing more on judgments that confirm what they already believe and will hold those judgments with more confidence. They may ignore information that runs counter to their judgments. 2. Self-Positivity Bias- People tend to believe that bad things are more likely to happen to other people than to themselves. People might not process messages that suggest that they themselves might be vulnerable to risks. This is bad news for some marketers (like: health-care marketers, insurance marketers) who want to remind consumers that bad things can happen to them. 3. Negative Bias- Consumers give negative information more weight than positive information when they are forming judgments. Consumers weigh negative information more heavily in their judgments when they are forming opinions about something that is very important to them and for which they wish to have as accurate judgment as possible. 4. Mood and Bias- First, your mood can serve as the initial anchor for a judgment. Ex: if you are in a good mood when shopping for a CD, you will probably respond positively to any new music that you hear. Second, moods bias consumers' judgment by reducing their search for and attention to negative information. People want to stay in a good mood. Third, mood can bias judgments by making consumers overconfident about the judgments they are reaching. 5. Prior Brand Evaluations- When consumers judge a brand to be good based on their past exposure to it, they may subsequently fail to learn information about the brand's attributes that affect its actual quality. The favorable brand name "blocks" learning about quality-revealing product attributes that should affect consumers' judgments.

Elimination-by-aspects model

Similar to the lexicographic model but adds the notion of acceptable cutoffs. More attributes are likely to be considered. Consumers first order attributes in terms of importance then compare options on the most important attribute. Those options below the cutoff are eliminated, and the consumer continues the process until only one option remains.

Noncompensatory model (a Cognitive decision-making model)

Simple decision model in which negative information leads to rejection of the option. Consumers use negative information to evaluate brands and immediately eliminate from the consideration set those that are inadequate on any one or more important attributes. These models are called noncompensatory because a negative rating on a key attribute eliminates the brand, as is the case when some U.S. consumers reject a product because it is foreign made. Noncompensatory models require less cognitive effort than compensatory models do because consumers set up cutoff levels for each attribute and reject any brand with attribute ranking below the cutoff.

Affective decision-making models

The process by which consumers base their decision on feelings and emotions. This involves deciding on the basis of their feelings or emotions.

Cognitive decision-making models

The process by which consumers combine items of information about attributes to reach a decision in a rational, systematic manner. Two types of cognitive models are 1. compensatory versus noncompensatory and 2. brand versus attribute.

Noncomparable decisions (Decision making when alternatives cannot be compared)

The process of making decisions about products or services from different categories. Consumers adopt either an alternative-based strategy or an attribute-based strategy. Sometimes consumers need to choose from a set of options that cannot be directly compared on the same attributes. Ex: party, movie, or restaurant. Each alternative has different attributes, making comparisons among them difficult.

Which criterias are important to the choice

The relevance and importance of various decision criteria depend on a consumer's: 1. consumer's goals (goals) 2. timing of their decision (time) 3. how the decision is framed or represented (framing) Goals, decision timing, and framing have important implications for positioning and market segmentation. First, marketers can position an offering as being consistent with consumers' goal-related or usage categories. Marketers can influence how consumers frame the decision. Second, marketers can identify and market to large segments of consumers who have similar goal-related or usage-context categories. Third, to frame or reframe the decision.

Consideration set

The subset of top-of-mind brands evaluated when making a choice. Options they want to choose among. It affects what brands consumers are choosing among and hence whom the marketer is competing against. Decisions tend to be easier when the consideration set contains brands that can be easily compared.

Attribute-based strategy

called bottom-up processing, the choice is constructed or built up. Making noncomparable choices by making abstract representations of COMPARABLE ATTRIBUTES. Consumers make comparisons easier for themselves by forming abstract representations that will allow them to compare the options. To make a more direct comparison of options for an entertainment decision, for example, you could construct abstract attributes for them such as "fun" or "likelihood of impressing a date." Because using abstractions simplifies the decision-making process, consumers tend to use them even when the options are easy to compare. When consumers lack well-defined goals, they tend to use this.

Appraisal theory

examines how our emotions are determined by the way that we think about or "appraise" the situation. This theory explains how and why certain emotions can affect future judgments and choices.